SPOTLIGHT ON CIA WHAT IT IS ...WHAT IT DOES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP77-00432R000100340002-8
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 29
• Document Creation Date: December 9, 2016
• Document Release Date: June 7, 2001
• Sequence Number: 2
• Publication Date: December 2, 1974
• Content Type: MAGAZINE

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This publication contains clippings from the
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CONFIDENTIAL
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heat'. X ~31 0 0 - Wh a-~
F.
Interview with
William E.. Colby,
Director of
Is spying on enemies and friends, or subver-
sion of governments, immoral? Mr. Colby was
invited to visit the magazine. to give editors
his first comprehensive interview dealing
with CIA's worldwide operations.
Q Mr. Colby, many people around the world question the
moral right of the Central Intelligence Agency to spy on
friendly countries, as opposed to countries that are potential
enemies of the United States. Flow do you answer that?
A First, it's hard to distinguish so clearly between friends
and potential enemies, as over our history a number of
countries have been both. But basically the question comes
down to the concept of state sovereignty and the right of a
country to protect itself, which have long been recognized as
part of international relations. That includes the right to
carry out such operations in the world as are believed
necessary for self-protection.
I think that moralists over the years have accepted some
degree of clandestine work as part of the normal relationship
between states. In any case, is spying any less moral than
developing great weapons systems, or many of the other
things that nations do in their self-interest?
?. How do you decide whether to operate in a friendly or
neutral country?
A The decision concerning any intelligence operation is
determined by the answer to four questions: What is the
importance to our nation of the intelligence result being
sought? What is the risk of exposure? What would be the
impact of exposure? And how much does it cost?
In most open societies, you don't have to conduct clandes-
tine operations to get information. So you would be foolish to
run the risks and absorb the costs of a clandestine mission.
Obviously, in a friendly country the adverse impact of
exposure would be very great. So that is a very negative
factor. But there will be situations in some parts of the world
where a well-conceived, low-risk operation is necessary to
get some information which could be terribly important to
us. .
Q What about covert operations such as the one the,.CIA
conducted in Chile before the overthrow of Allende?
A Again, it's a matter of the United States taking a
decision that a certain course of action is important in the
best interests of our country, and friendly elements in
another one. There have been exposures before. The U-2
[spy plane] operation, of course, is a notable example.
Q Do you, as the Director of the CIA, decide that a covert
operation, such as against Chile, should be conducted?
A These decisions are very carefully structured. The
authority for them stems from the National Security Act.
This authorizes the CIA to carry out such other functions and
duties related to foreign intelligence as the National Security
Council may direct.
Furthermore, we explain to our congressional oversight
subcommittees in general how we propose to use the funds
that are appropriated annually for the CIA. We provide the
most-sensitive information and have no secrets as far as these
subcommittees are concerned. I don't necessarily describe
each operation in each country in detail, but if a member of
these subcommittees asks what we are doing in any particu-
lar country, I'll give him a full and fair picture.
Q Who actually makes the decision that a covert operation
should be undertaken?
A The actual operation is approved by a committee of the
National Security Council-the Forty Committee. If there is
high-level policy concern about the situation in some
country, we in CIA look at it and see what we might do that
would help implement national policy. Then we go up to the
Cennral In elilence
Mr. Colby's first involvement in intelligence
work was in the Office of Strategic Services
in World War II. He then earned a law
degree from Columbia Law School, and in
1950 joined the CIA. He served in Rome,
Stockholm and Saigon, and as head of the
Agency's clandestine services. He became
Director of the CIA on Sept. 4, 1973. He
appears, at right in photo, in the conference
room of "U. S. News & World Report."
National Security Council and say, "Here is what we think
we can do to carry out the general policy with regard to that
country." If the proposal is approved, we go ahead and carry
it out.
I'm not suggesting that CIA has been pushed or shoved
into undertaking actions of this sort; it's part of our job.
Q Is clandestine activity the major element in CIA activ-
ity--even in these days of detente?
A To answer that question, we have to stand back and
examine what the United States intelligence "community"
includes. It embraces the CIA, the Defense Intelligence
Agency, the National Security Agency, the intelligence
services of the Army, Navy and Air Force, the intelligence
units in State, Treasury and the Atomic Energy Commission,
and the FBI. All of these agencies, collaborate on the
intelligence job.
After all, intelligence consists essentially of the collection
of information-by overt, technical and clandestine means-
the assessment of all this information, and deriving conclu-
sions and judgments about what is going on or is likely to go
on in the world.
In 1971, President Nixon said that the Director of Central
Intelli gence should take a leadership role in this whole effort.
And I've tried to do this.
Essentially I have four jobs:
One of my jobs is to be head of the intelligence communi-
ty. Apart from the CIA, I don't have full authority over these
other agencies, but I do have certain influence on them
because of my responsibility to report on what they are
doing.
A second job is running the CIA.
Third, I have to be substantively informed about situations
around the world so that I can provide briefings, information
and assessments to the National Security Council.
Fourth is the job of acting as a kind of public spokesman
and handling problems like our recent troubles.
Now, to get back to your question: By reason of the way
the community is structured, clandestine activity, most of
which is clandestine collection rather than covert political or
similar action, does represent a considerable percentage of
CIA's activity. But if you measure it against the whole of the
intelligence community, it's a rather small percentage of the
total community effort.
Q Has detente changed the character of your work or
reduced the need for clandestine intelligence?
A I wish it would. If you get to the logical end of detente,
then we would have established a relationship with the
Soviet Union of mutual respect for each other's strengths, so
that our differences can be negotiated about rather than
fought over. This, in turn, should encourage the Soviets to
believe that they ought to be more open with their
information. But that's not the situation now.
Today the Soviet attaches can go to almost any newsstand
in this country, pick up a copy of a technical aviation or space
magazine, and from it learn a vast amount of detail about our
weapons systems. Unfortunately, we have to spend hundreds _
of millions of dollars to get comparable information about the
Soviet Union We couldn't fulfill o A J't
r esp
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Congress and the nation unless we did spend those millions
of dollars gathering that information.
?. There is pressure for CIA to restrict itself to the
collection of foreign intelligence such as you've described,
and abandon covert operations-that is, aiming at the
overthrow of governments. How do you react to that idea?
A Given the state of the world today, the Capitol would
not collapse tonight if the CIA were not permitted to
conduct such covert operations any longer. In fact, we do
considerably less of these than we did during the worldwide
confrontation with the Soviets and the expansionist drive of
the. Communists in the 1950s. And we do considerably less
than during the period in the '60s, when we were dealing
with Communist insurgency and subversion in a number of
countries. Changes in the world situation and our national
policies have decreased such activities. We still do some; but
covert actions of this type are a very small percentage of our
total effort at the moment.
Q. Why is it needed at all?
A There are a few situations where a little discreet help to
a few friends of the United States or a little help to a few
people espousing a certain policy or program in a foreign
country can enable us to influence a local situation in a way
that may avert a greater crisis in the future.
And times change. We might be faced with a real need for
early, quiet influence against a rising threat, which otherwise
we might have no alternative than to meet by force later. We
no longer want to send the Marines to such situations. I think
this flexible tool is important to preserve so that we can use
it if we have to.
Q Do you assume that undercover agents from friendly
countries are operating in the United States?
A Certainly I do. The FBI has identified a number in the
past.
You have to recognize that, in dealing with a lot of
countries around the world, it's accepted that we all engage
in the clandestine gathering of intelligence. Nobody gets
emotional about it. It's been going on since Moses sent a man
from each tribe to spy out the Land of Canaan.
0. There has been some comment that budget cutbacks
have hurt intelligence gathering to the point where Secretary
of State Kissinger goes into talks with the Russians with
inadequate information. Is there any truth in that?
A We obviously are suffering budgetary pressures from
inflation. I think we are still giving a very good intelligence
product to our Government. I have great confidence in it.
There have been some projects that we have turned down
because they were totally out of reach financially. These
have been in the category of things that would have made
our intelligence more complete, but I don't think that we
have yet dropped below a danger line. I don't think it has
imperiled our ability to negotiate.
However, as we look ahead a few years, we do have a
problem coming up because of the inflationary squeeze.
We've tried to respond to this by focusing our effort on the
more-important things and dropping off the things that we
may have needed in a different world.'
0. Where have you been able to cut back?
A Luckily, today we are not required to maintain the
scale of effort that we did in Southeast Asia, for example. Our
problems in some of the other parts of the world are more
manageable than they were when we were deeply con-
cerned about a large number of countries that were under
pressure of Communist subversion or insurgency. The im-
pact on the world balance then could have been quite
substantial if any one country had made a change in political
direction.
Today, I think the world balance is a little more stable, at
least with respect to major military threats to our country.
The real challenge for intelligence is to provide the kind of
information that enables us to negotiate and enables us to
anticipate future developments in countries that would be of
great importance to us. Obviously, the subject of economics
has become more important in the past few years. Terrorism
has become a threat to the safety of our citizens. Also, the
narcotics problem has grown in the past few years. But other
situations correspondingly have declined, and we've been
able to compensate.
?. Nfr. Colby, the CIA has been widely criticized for its
involvement in Watergate-
A The CIA did two wrong things in the Watergate affair:
The first was providing Howard Hunt paraphernalia for use
2
in his work for the White House. The second was providing
White House employes the psychological profile of Daniel
Ellsberg. They weren't earthshaking, but they were wrong.
We shouldn't have done them, and we have told our
employes that we won't do them again.
a. If someone called today from the White House and
asked the CIA to do something improper, what could you do
about it?
A Well, that's very clear. In my confirmation hearing on
July 2 last year, I said that if I was ordered to do something
improper, I would object and quit if necessary. That's easy.
Also our employes have been instructed that if they have any.
question about anything that they. are asked to do, they are
to come to me.
If anybody really tried to misuse the CIA in the future, I
think the organization would explode from inside. It really
would. And that's good, because it's the best protection we
have against this kind of problem.
0. Do you operate at all inside the United States?
A We have no internal-security functions or police or law-
enforcement powers. It is clear that our function is only
foreign intelligence.
What do we do inside the United States?
We have a large building up on the Potomac River with a
lot of employes. In order to know something about them
before we hire them, we conduct security investigations. We
also make contracts with people around the country to
supply us with things that we can use in our activities abroad.
And we have contracts for research projects so that we can
expand the base of our knowledge.
We have a service in our agency that talks to Americans
who may have knowledge of some foreign situation that they
are willing to share with their Government. We identify
ourselves as representatives of the CIA, and we assure these
Americans that they will be protected as a source-and we
will do so. But we don't pay them and we don't conduct
clandestine operations to obtain such intelligence from
Americans.
We have some support structures in this country for our
work abroad. We also collect foreign intelligence from
foreigners in America. This is intelligence about foreign
countries and has nothing to do with protecting the internal
security of this country against those foreigners. That is the
job of the FBI, with which we have a clear understanding
and good co-operation as to our respective functions.
?. A number of Congressmen complain that there is no
effective control over the CIA. Is there any reason why your
agency shouldn't be subjected to tighter supervision?
A I think we have responded to Congress's right and
desire to know about the details of our activities over the
years in the form that Congress itself has arranged. Now, the
arrangements we have with our oversight committees in
Congress are a lot more intense today than in past years.
Twenty years ago, all of this was considered a very secret
affair. Today, Congress is much more demanding. We
answer any questions our oversight committees ask, and I
must volunteer to them matters they might not know to ask
about. That's the way Congress wants it, and
we are responding. If we didn't, we'd be in
real trouble.
CL Mr. Colby, do you feel that the effective-
ness of the CIA is impaired by all the publicity
that you've been getting lately about secret
operations?
A Obviously this has raised questions
among some of our foreign friends about the
degree to which we can keep secrets. Leading
officials of foreign governments have brought
it up in discussions with me. Individuals who
have worked with us in various parts of the
world have indicated a disinclination to work
with us any longer because of the very real
dangers to them of exposure.
In that respect, we have been hurt. But I
like the way our society runs. I think it is
perhaps unique that the chief of intelligence
has to be exposed, as he is in America. But we
have a responsibility to the American people.
We are as responsive as we can be and still run
an intelligence service. We regularly brief
newsmen on world situations, we talk publicly
about our activities in general terms, and we
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release our information and assessments
whenever we can. I think America gains a
great deal of strength from this, even though
it's a big change from traditional intelligence
secrecy.
Q How do leaks affect morale at the CIA?
A You have to draw a distinction between leaks that lead
to criticism of our programs and policies and leaks that
expose our people. I think that we can and should stand up to
the criticism. But exposing our people can be very difficult
and also very dangerous.
You will recall Mr. Mitrione, who was killed in Uruguay.
[Dan Mitrione, a U. S. employe of the Agency for Interna-
tional Development assigned to train police in Uruguay, was
kidnaped on July 31, 1970, and later killed by Tupamaro
guerrillas.] He was murdered-that's the only word for it. He
was alleged to have been a CIA officer, which he was not.
I think it is reckless to go around naming people as being
identified with the CIA.
0. Why can't you prevent former CIA officials from
publishing books that reveal secrets of your agency and the
names of secret agents?
A There are criminal penalties for people who reveal
income-tax returns or census returns or even cotton statistics.
But there are no similar criminal penalties for people who
reveal the name of an intelligence officer or agent or an
intelligence secret, unless they give it to a foreigner or
intend to injure the United States. I think it's just plain
wrong for us not to protect our secrets better.
I am charged in the National Security Act with the
protection of intelligence sources and methods from unau-
thorized disclosure. But the only tool I have is the secrecy
agreement we require our people to sign as a condition of
employment.
We invoked this agreement against one of our ex-employes
who wrote a book. We didn't censor his opinions or
criticisms; we just tried to prevent him from revealing names
of people and sensitive operations, some still going on. We
are currently engaged in a civil action in the courts to
determine whether we can enforce the agreement he made.
I recommended legislation that would make it possible for
us to protect intelligence secrets more effectively. My
recommendations would apply only to those of us who
voluntarily sign an agreement that gives us access to these
secrets; it would not impinge on First Amendment guaran-
tees.
0. Mr. Colby, can we get back to the question of the
necessity for the United States to maintain a big, secret
intelligence operation in an era of detente?
A Yes-I didn't fully reply to that.
I feel it is essential to the protection of our country, not
only our military security but also in the sense of security
against the other problems we face overseas-economic
pressures, terrorism, local problems that can start in various
parts of the world and eventually involve us. Through our
intelligence work we must anticipate these problems and
take protective steps. If we don't know that another country
is developing a particular threat, we can be caught very
badly off base.
Beyond that, our intelligence work makes it possible to
engage in negotiations. The SALT [Strategic Arms Limita-
tion Talks] agreement between U. S. and Russia is the most
obvious example. Without the knowledge we had of Soviet
weapons through our intelligence activities, it would not
have been possible for us to negotiate.
We also have what I would call a peacekeeping role, which
I see of increasing importance in the years ahead. On a
number of occasions, we have seen situations developing in a
dangerous manner. By alerting our Government in good
time, it has been possible for it to defuse these situations.
0 What part do spy satellites and other forms of modem
technology play in your work of collecting intelligence?
A Quite frankly, technology has revolutionized the intelli-
gence business. You have seen the photographs that came
out of the U-2 operation over Cuba. You can realize the great
importance of this development if you think back to the
great debate in 1960 about a missile gap. People took strong
positions on both sides, and we at the CIA were trying to
determine what really was happening-whether a missile
gap actually was opening up in favor of the Soviet Union.
Today it would be impossible to have that debate because
the facts are known.
This kind of technical intelligence made the SALT agree-
ment possible. For years we insisted that any arms agree-
ment would require inspection teams to monitor on the
ground what the Russians were doing. Given their closed
society, they wouldn't permit it. That stalled negotiations for
years. Finally our "national technical means," as we politely
call them, were improved to the extent we could tell the
President and Congress that we can monitor the 1972 SALT
agreement without on-site inspection teams, and we could
make the agreement.
4 Some argue that satellites and other forms of technical
intelligence can do the job and that there is no real need for
clandestine agents ferreting out information. Do you agree?
A Not at all. Technical systems and open observation can
tell us a great deal of what is physically there in closed
societies. But they can't tell us what is going to be there in
three or four years' time because of decisions that are being
made in board rooms today. They can't tell us the internal
political dynamics to allow us to assess how such a society is
changing. And they can't tell us the intentions of people who
may be bent on deceiving us. Intelligence of this sort can be
obtained only by what we call "clandestine collection."
Q Looking at Russia's intelligence operation-the KGB-
how does it compare with ours in scale and effectiveness?
A I think Soviet intelligence is going through a change-a
good change. For years the big thrust was on stealing secrets.
You remember the atom spies in America and all that sort of
thing. In the past few years the Soviets have apparently
become aware of the significance of assessment-the analysis
function of intelligence. They've set up institutes to study the
United States, realizing that the facts are easy to obtain in
America. Their real problem is assessing what we might do,
which is a terribly complicated and difficult intelligence
problem.
C1 Are you suggesting that the KGB no longer maintains
spies in this country?
A Oh, they do-sure, they do.. What I am saying is that
they have moved from heavy dependence on espionage to
greater reliance on more-normal ways of collecting and
assessing intelligence. You can only say that's 'a change for
the good; it should give them a more accurate picture of us,
and it could hopefully reduce their espionage someday.
But the Soviets still run very extensive covert operations
around the world. In any kind of foreign mission they send
abroad-for example, delegations to international organiza-
tions-there always will be KGB people or people from
GRU, their military intelligence. They also conduct a long-
term program of training people and putting them in place
under false identities to stay for many years. Colonel Abel
[Rudolf Abel, a convicted Soviet spy, was returned to Russia
in exchange for U-2 pilot Francis Gary Powers in 1962] was
an example of that. They have the benefit, of course, of
indirect support from a variety of Communist parties around
the world. -
0. The Director of the FBI has said that there-now are so
many Soviet spies in America that he is having trouble
trailing them. Why do we let so many in?
A We let them in as diplomats, commercial travelers, or
in some other capacity. You have to realize that there has
been a very large increase in the number of Soviet citizens in
the United States, as compared with 10 years ago-partly as
a result of detente. Nov, if you get an increase in Soviet
citizens in this country, you are inevitably going to get an
increase in Soviet agents.
You see, in the Soviet Union the intelligence service is a
very, very powerful institution because of its responsibilities
for internal security as well as foreign. intelligence. They
have, in effect, merged the CIA, the FBI and our State police
forces. And their intelligence service carries a very high
degree of responsibility for preserving the power of the
Soviet state, for party discipline and for public discipline.
Consequently, the KGB has an institutional power that is
totally different from the FBI and CIA combined in our
country.
.I think our system makes its a better and a stronger nation.
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ERA INTELLIGENCE
SIZES UP WORLD'S TROUBLE SPOTS
The massive flow of information pouring into Washing-
ton requires William Colby, as Director of Central Intelli.
gence, to make constant evaluations of fresh global
developments bearing on U. S. interests.
Following, in his own words, is the appraisal Mr. Colby
gave editors of "U. S. News & World Report" of tensions
around the world, what they mean, what they could lead
to, and.the possible impact on the superpowers.
Strategic balance: U. S. vs. Russia. "The Soviets are
developing new missile systems that will increase their
strategic power considerably.
"But we do not see that in the foreseeable future they can
dominate us. We have both reached the point where we can
destroy each other, and the rest of the world-and they
know it.
"You ask if the transfer of American technology to the
Soviets is a matter of concern.
"We know that the military have a very high priority in
Soviet decision-making. We have procedures that put limita-
tions on giving them things of direct military value. And they
have a problem of adapting our technology, which works
because of our competitive system. That is a problem they've
got to do some adjusting to.
"The Soviets are, of course, well behind us technologically.
But they are able to challenge us in arms competition by
taking a much-more-disciplined approach, particularly in
assigning their best talent to arms work. One very interest-
ing thing is to compare the Soviet military work in space
with the Soviet civilian work in space. There is an obvious
qualitative difference between the two. The military work is
much, much better."
Detente: Why Soviets want it. "There are three main
reasons for Soviet interest in promoting detente with the
United States.
"First, they obviously want
to prevent the kind of horren-
dous confrontation that is pos-
sible in this age of superweap-
ons. The result of a nuclear
exchange between us would
be just so incredible now that
they realize that something
has to be done to avoid it.
"Secondly, they insist that
they be recognized as one of
the world's two superpowers
and get the status that their
strength implies. They might
some of those countries-including demands for greater
freedom of action.
"The old idea of total Soviet dominance and control is
under challenge even from some of the Communist Party
leaders in Eastern Europe."
Western Europe: Communist penetration. "One thing
the Soviets want is Communist participation in the govern-
ments of Western Europe.
"This is in line with Communist ideology, which says that
collapse of the European democratic system is inevitable, so
that the movement of Communist forces from minority
voices to participation will enable the Communists eventual-
ly to take over governments there and run them..
"Obviously, the Communists are playing a role in some
countries by reason of the 25 per cent or 28 per cent of the
votes they represent, and the difficulties of organizing
governments among the fragmented non-Communist par-
ties.
"There's been some increase in Communist Party in-
fluence. But several trends are running: One is the increase
in European Communist Party influence in these countries;
another is the apparent increase in the independence of
European Communist parties from Moscow's control, and
another is the non-Communist parties' reaction to this, to
detente, and to each other. It's premature to tell where these
trend lines are going to cross.
"We are certainly not saying, 'It doesn't matter whether
the Communists participate in power.' What I'm saying is
that this is a complicated, multifactored matter."
Cuba: Castro's policy now. "Fidel Castro's attempts to
export his brand of Communist insurgency to other countries
of Latin America didn't work.
"The Cubans have stressed in recent years the develop-
ment of state-to-state relationships. And they've been quite
successful with that new policy.
"As for Russia, the Soviets still rate Cuba as a geographic
asset-no question about it. It's a very substantial geographic
asset, but it's a very costly one to them in terms of the
support the Cubans have required over the years.
"Cuba's present activities in Latin America-stressing
state links-are, in general, of long-term use to Soviet
interests."
War in Mideast: Quite Possible. "Another round of war
between Israel and the Arabs is possible-quite possible.
"It depends in great part on peacemaking diplomacy.
Obviously, the Arab summit meeting at Rabat, which named
the Palestine Liberation Organization as the sole legitimate
representative of Palestinians living on Arab land held by
Israel, raises new difficulties.
"As for the Soviet role: They desire to play the role of a
major power in the Middle Eastern area. They are endeavor-
ing to express that through their naval presence, through
their military-aid programs, through their economic aid, and
so forth. Their policy right now is to keep that presence
active, keep the capability of influencing the situation. But at
the same time they have a considerable interest in continu-
ing detente with the United States. They've got to try to go
along a rather narrow track without abandoning their
influence, but, on the other hand, not seeing the whole thing
derail.
"The Soviets do get a certain amount of benefit from the
economic troubles that afflict the West as a result of the oil
problems, but they don't have to do much about that. It's
taking place pretty much on its own. On the other hand,
they have to realize that an aggressive move by them to cut
off oil could cause a reaction on our side; It would be a very
direct affront to any detente hopes that they have."
also benefit from a relaxation of the Western solidarity: that
characterized the 1950s and 1960s.
"Thirdly, they would like to accelerate their development
in economic and technical terms, because as they look at the
enormous power of the West-America particularly, but also
the other countries-they see it moving at a tremendous
rate. They hope to benefit by a greater degree of exchange
and borrowing from that movement.
"Generally, the Soviet concern over their internal disci-
pline is very high. This is partly a result of detente. They are
nervous about what detente can do in terms of getting new
thoughts and new political drives going within the Soviet
Union. And they just don't want that to happen."
Soviet empire: Starting to crumble? "The Soviets face a
problem as the states in Eastern Europe show signs of
dissatisfaction over. iron-fisted control from Moscow. The'
Russians have made it clear that they are not going to brook
any substantial break in their Eastern European buffer zone.
"But, at the same time, they obviously have the problem of
dealing with the new political ideas that are circulating in
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BALTIMORE SUN
25 November 1974
:.Colby beks
teinge ce.
l Washington t1Pf-The director
~of -_,the Central-t_ Intelligence
,Agency says stronger protection!
is:: needed to safeguard intelli-
jgence.secrets.
.William E. Colby, in, a copy-
righted interview published yes-
terday'in U.S. News--& '. World
`Report, said'he has Tecommetn-
f ded?-legislation to help protect
.such information. -
1. "There are criminal -.penal-
!ties for people who reveal in
tcome tax returns or. census re
!turns or even cotton statistics.
But there are no similar penal-
ties for persons who reveal the
name of an intelligence officer
or agent or an intelligence sec-
ret, unless they give it to a
foreigner or intend to injure
the United States," he said.
"I think it's Just plain wrong;
for us not to protect our secrets;
better."
Mr. Colby said recent publi
';city about secret CIA operations)
,has raised questions among for-'
reign friends about "the. degree
to which we can keep secrets."
Mr. Colby said that, while
this may hurt the operation, he
likes the' way American society
runs.
Open as possible
The agency, he said, is as
open as possible, briefing news-,
men and providing public in
formation and assessments'
whenever possible.
"I think America gains a
great deal of strength from
this, even though it's a big
I change from traditional intelli-
gence secrecy," he said.
Questioned about the Water-1
gate scandal. Mr. Colby said the
agency did two things wrong-;
providing paraphernalia for E.
Howard Iltint, Jr., convicted;
?Watergate burglar, and provid-`
ing the psychological profile of
Daniel Elisberg, the man who
leaked the Pentagon papers.
But he said steps have been
taken to prevent any future
misuse-of the CIA, with employ-
lees instructed to report any
such attempts directly to him.
"If anybody really tried to
misuse the CIA in the future,
he said, "I think: the organiza-
tion would explode from inside.
It really would. And that's
good, because it's the best pro-
tection..we have against ? this
kind of problem."
LOS ANGELES TIMES
18 November 19.74,
CIA Showing Ifs
Secrets in. Bid fo
Polish Its Image.
Criticism, New International
Attitude Bring Disclosures;
Lid Still on Vital Operations
BY MURRAY SEEGER
Times Staff Writer
WASHINGTON-One of the big-
gest of the bureaucratic icebergs in
Washington, t h e C e n t r a I Intel-
ligence Agency, is riding a. little
higher in the water these days.
Under the heaviest internal and
external. attacks of its 27-year histo-
ry, "the agency" or "the company"-
as its employes and those who deal
with the CIA call it-has initiated a
subtle campaign to refurbish its po-
litical standing and generate new.
public support.
In this campaign the agency is
disclosing more of itself to public
view, while leaving what it consid-
ers to be vital dimensions well hid-
den beneath the surface of essential
secrecy.
"If we don't protect the names of
our people abroad and people who
work with us, we won't have people
who will work with us," William E..
Colby, the career official who took,
over as CIA director last year in the
midst of the agency's worst prob-
lems, said recently. ?
"If we can't protect some of our.
technical. systems that give us infor-
mation, then the other side can take
countermeasures and we will no
longer be able to benefit from those
systems." he said.
The recent wave of criticism
against the CIA., the keystone in an
intelligence community that spends
about SS billion a year, was stimulat-
ed by disclosures of its peripheral
involvement in the Watergate scan-
dals and. its direct involvement in
Chilean politics.
CIA officials are equally disturbed
by the more recent phenomenon of
employes leaving the tightly closed
circle, where morale and loyalty tra-,
ditionaily have been remarkably
high, and selling their secrets in
books and magazine articles.
Although the official; say they are
willing to accept. informed criticism
of the agency's performance and ad-
just their operations to changes in
national policy, they are apprehen-
sive about the possibly fatal effects
of disclosures made by former
agents.
guard against secrets`,"being disc'
pensed by its current employes but.
the only restraint against former em-
ployes telling all is a contract they
sign when they joined the CIA and:
the. general laws against espionage.
The agency has been involved for;
months in an embarrassing suit di-
rected at blocking publication of
parts of the book, "The CIA and the
Cult of Intelligence," by Victor
Marchetti, a former agency official,
and John D. Marks, who worked for
the Department of State.
A more recent book, "Inside the
Company: a CIA Diary," by former
agent Philip Agee, has been pubs
lished in Britain, where, of course,
the agency. cannot block the print-
ing of anything it considers sensi-
tive.
To counter such publica-
tions, the agency is sup-
porting legislation t h a t
would make it a crime for
former employes to dis-
close. secret information.
Disclosures by former
employes and other pub-
lished information on the
agency's activities have
supplied ammunition for
private individuals and
congressmen who believe
the CIA should give up its
"dirty tricks."
"There is no justification
in our legal,' moral or reli-
gious principles for opera-
tions of a U.S. agency
which result In assn, sina-
tions, sabotage, political
disruptions or other med-
dling in another country's,
internal affairs, all in the
name of the American.
people," Sen. James G.
Abourezk (D-S.D.) said. "It amounts to nothing
more than an arm of the
U.S. government conduct-
ing a secret war without
either the approval of Con-
gress or the knowledge of
the American people," he
said.
The. traditional rationale
for such activity, that the
Soviet Union works even
harder to undermine and
overturn Iegiti mate
governments, was given
by President Ford at his
Sept. 16 press conference
when he was asked wheth-
er the CIA had an interna-
tional right to interfere in
the internal affairs of
Chile.
"Our government, like
other governments, does
take certain actions in the
intelligence field to help
implement foreign policy
and protect national secur-
it.v," Mr. Ford said. "I am
informed reliably t h a t
Communist nations spend
vastly more money than
we do for the same kind of
purposes."
man said in referring to some of the The added: "I think this is
recent insider tales of agency life. In the hest interest of the
"These are people who put their; people in Chile, and ,or_
faith is us." tainly in our best interest.."
The agency has strong authority to
conflict between Western-
style democracy and Com-
munisni has changed and.
that there is room for de-
bate on the agency's fu-
ture 'role.
"It is advocated by some
that the United States
.abandon covert action," he
said in a recent speech.
"This is a legitimate ques-
tion and in the light of
current American policy
it would not have a
major impact on our.cur-
rent activities or on the
current security of the
United States."
In recent history the
CIA developed and sent. an
a r m e d invasion against
Cuba at the Bay of Pigs
and armed a secret army
in Laos in the Indochina
"i war. However, it is sup-
porting few, if any, such
operations now.
In Chile the agency had
subsidized opposition par-
ties and newspapers in an
attempt to block the elec-
tion of Salvadore Allende,
a Marxist, to the presiden-
cy and later to prevent his
crushing of all political op-
position.
Although such opera-
tions apparently are sanc-
tioned under the general
public authorization
issued by President Harry
.S Truman when he estalb-
lished the CIA in 1!17
from the' remains of the
wartime Office of Strate-
gic Services, the, agency
has been given more rc-
cent, secret authority to
carry on covert actions
abroad.
More controversy than
that generated by the
overseas "dirty tricks"
was stimulated by the dis-
closure that the CIA had
helped one of its former
"old boys," E. Howard
Hunt Jr., in his clandes-
tine White House assign-
ments without knowing
what they were.
Domestic use of CIA au-
thority is clearly illegal.
Although the agency way-
erecl under the strong
Colo admits that the
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pre'ssure' of tfi;e Nlixo' 11
White House, it finally'
'fought back and saved its
dented reputation.
"It was lower-level peo
ple who blew the whistle
on Hunt," one agency
member recalled. A f t e r
giving the retired agent;
some equipment, the "low-
er-level" executives re-
ported his requests to
higher-ups, and Hunt was
cut off from' additional.
support.
On the international po-
litical scene, agency offi
cials are examining the,
historic role of covert
operations. They are con-
winced they must; retain
the capacity to take"direct,:
secret actions but feel'
there is less demand for:
such operations than there'
was in the past.
In t h e contemporary
world, American i n t e I.,
ligence experts have: made
two major contributions,
technology and research
in their field.
Secretary of State Henry
A. Kissinger confirmed
the skill of American intel-
ligence last July in Nos-
cow when he reported that.
Soviet 'experts had been
Startled by his knowledge
'bf their missile - installa-
tions as they discussed the
Text round of the strategic
arms limitation t a 1 k s
JSALT).
"In the 1960s we had a
great debate on the missile
gap," an intelligence ex-
pert said. "Now we can't
have that debate - we
have the facts . . the
SALT talks depend on this
'l Ind of intelligence."
Research and analysis
afire the chief functions of
the CIA. Most of its 16,000
employes work in a huge,
isolated building in subur-
ban Langley, Va., in
academic-like pursuit of
knowledge with the bene-
fit of "total. sources."
The CIA overseas agents
collect secret information,
which is combined with
public material and data
from electronic systems to
produce reports that are
supposed to be neutral in
political content and as ac
curate as possible.
"If we learn when an-
other power is developing
a weapons system when it
is on the, drawing board
instead of when it appears
in the field, then we can
do something about it," a
.CIA man said. "But if we
sec it only h the field, we
may be three or four years
behind."
:1 g e n c y officials call
themselves the "techni-
:, cians" of intelligence be-
`cause they are only part of
a larger community and
take their orders on opera-
tions from elsewhere.
Colby, an easy-going
.man of medium height
who hardly looks the part
of a secret 'agent who
worked behind enemy
lines in World War II, not
only heads the CIA but
holds the position of direc-
tor of central. intelligence
to coordinate. activities of
.all information -gathering
agencies.
He sits as head of the
'U.S. Information' Board,
which includes. the De-
fense Intelligence Agency,
National Security Agency,
the S t a t e Department's
Bureau' of Intelligence and:
Research, Atomic Energy,
commission, Federal
Bureau of Investigation
..and Department: 'of 'the
Treasury.
Experts from each agen
cy submit reports on:dif-
ferent intelligence issues;
and when conflicts hi. in=
formation develop, Colby
resolves them.
The missions of. the CIA,
Defense I n t elligenc&
Agency, National Security
Agency and other intelli-.
Bence gatherers are set out,
by another little known
coordinating group called
the 40 Committee, which
is headed by Kissinger
through' his position as
assistant to the President.
for national security.
.In defending itself from
criticism, the QIA pointed,
out that its instructions on,
covert operations, c a in e
from this super secret
committee whose, decisions
are approved personally-:
by the President.
"Being under pressure is-
nothing novel to the agenr'
cy,". a CIA man said reg.
cently. "The thing that is
different is the climate of
opinion in America, which:
is more questioning, more
demanding than it used to
be.
"We have tried to come
out and explain things to
the American people.
To gain new credibility
and political support, the
CL-~ is conducting a
Modest public relations
and lobbying campaign.
One agency source said
Colby met every morning
with his advisers on con
'gression.al and public af-
fairs. . .
When it came time to
receive congressional. con-
firrrlation for his appoint-
ment last y e a r, C o I b y
passed the word that he
had no objection to being
the first intelligence chief
to face the. Senate Armed
Services Committee in ari
open hearing.
"That's fine, I think it's
great," Colby said recent-
ly. "Frankly, I think it is
protection for the republic
that the head, of intelle-
gence is subject :to . that
kind of popular :and .con
gressional control."
The agency has estab-..
lished three levels of ex-
posure, starting with a
public stance that includes
the congressional hearing
and some speeches. .
. At the next level, the
.CIA makes some of its re-
.search available to' differ-
e n t agencies, reporters
and academic 'groups. A
recent congressional re-
port on the Soviet,econoa
7ny, for instance, includes
chapters written. by CIA
experts that contain infor-
mation to be found no-
where else.
On a more mundane lev-
el, the CIA prints the only.
accurate street map of
Moscow, one based on aer-'
ial photographs of the city:
The Russians publish for
tourists only "schematic"
maps of their cities.
At a third level, the CIA
talks only to a small num-
ber of senators and .repre-:
Washington Post
25 Nov. 197!1
aerate
ee ..
,tutu, I :
j
A3&oc We
The- director of , the CIA,
William: c t. Colby, .says
stronger, protection is 'needed
to safeguard. intelligence se-'
crets. -In an. interview pub- j
lished"yesterday in U.S. News
& World Report, Colby said he
1 has recommended legislation j
to help protect such' informa-
"There are criminal penal-
ties for people who reveal in-
come tax returns or census re-
turns or even cotton statistics.
But there are no similar pen-
(alties for persons. who reveal
the name of an intelligence of-
ficer or agent or an intelli-
gence secret, unless they give
it to a foreigner or intend to
injure the. United States," he
said.
"I think it's just plain wrong ;
-sentatives on two commit-
-tees' that have the official
.duty. of overseeing its
work. They get "total in-
formation," a CIA man
said.
The, agency's secret
budget-estimated at $750
million a year, or less than
10% of what all intellig-
ence activity costs-is ap-
[proved by the congres-
sional committees but is
buried in various ac-
counts.
The agency staff ' has
been trimmed in an effi
ciency program started
when Secretary of Defense
James R. Schlesinger
served a short term as CIA.
director. Targets of this
campaign were older "ro-
mantic" officials and
agents more attuned to
the darker days of the cold
war than the modern era
of East-West relations. .
Although the most sev-
ere critics of the CIA have
not been satisfied with the
changes the agency has
made in its operations,
there is little doubt that
Colby has been able, so
far, to neutralize the most
. serious opposition without
giving away very much of
what he considers the
agency's vital secrets.
for us not to protect our se-;
crets better." . ;
Colby said recent publicity,:
about secret. CIA operations
has raised questions among
foreign allies about "the 'de-
gree to which we can keep se-
crets." -
The CIA, he said, is as open
as possible, briefing newsmen
and providing public informa-
tion and assessments when-
ever it is able, "I think Amer-
ica gains .a; great deal of
strength frorp this, even
though it's a big change from
traditional intelligence se- .
Crecy," Colby said.:. ' -'
Questioned about Water-!
I gate, he said the CIA made
two, errors--providing'para-t
phernalia for E'. Howard Hunt
and releasing the psycholo gi-
cal profile of Daniel Ellsberg, ,
But he said steps have been!
taken to prevent future mis.
use of the CIA, with employ-,
ear instructed to report such
attempts directly to him.
If anybody 'really tried to
misuse the CIA in the future,'
,he said, "I think the organiza-
tion would explode from in-!
side. It really would. And
that's good, because it's the i
best protection we . ; have
against this kind of problem."
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EARPER' S MAGAZINE
Dec 19Th.
Jim Hougan
The proliferation of private intelligence agencies has made
civilian espionage a growth industry
W ASHINGTON IS A PARANOID CITY these
days; if one listens intently enough, it's
easy to imagine the strains of Danse Macabre
welling up from the living rooms of George-
town and the CIA suburbs of Virginia.
Dusk delivers a sense of impending Walpur-
gisnacht, and the reason is clear: never before
have there been so many "spooks" abroad in
the land, so many spies and counterspies, clan-
destine analysts, secret movers, shakers, agents,
operatives, wiremen, and gumshoes. They come
from the CIA, of'-course-but. also from the
DIA, FBI, NSA, AEC;. and State Department;
from the intelligence sections of the Army,
Navy, Air Force, IRS, and the Treasury Depart-
ment; from the Justice Department's Internal
Security; Intelligence, and Organized. Crime
Strike Force divisions; from the Secret Ser-
? vice, narcotics-control agencies, and metropoli-
tan "Red squads"; from the -hundreds of "pros
pri:.taries," "conduits," and "covers" that some
of these agencies have maintained.'
The "intelligence community," once a mere.,
suburb of government, has grown to the dimen-
sions of a metropolis, a secret Pittsburgh in our.
midst. For the most part, it is a new community,
a postwar. boomtown built upon the mining
(and manufacture) of information. Its internal
organization owes less to coherent federal plan-
ning, than it does to the emergence of new per-
ceptual hardware and techniques (e.g.,. satel-
lites, computers, and systems analysis) whose
very existence has transformed relationships be-
tween governments, industries, and people.
There is no way to determine the exact size,
let alone the influence, of that community. Its
budgets are secret, its operations clandestine,
and its advice classified. At its fringes-where,
.for instance, the State Department and the CIA
meet---an institutional.osmotis takes place.
Funds for one agency are concealed in the bud-
get of another; military personnel are. "sheep-;
dipped,'' or placed under cover, and loyalties of
employees in one department are "turned" bye
operatives in a second.
It is difficult to accurately assess the number:
of intelligence workers, but Sen. William Prox-
mire estimated last year that the government
employs at least 148,000 of them. That figure is
low, however, since it encompasses only the
"downtown district" of the community-thee
part concerned with "classic" intelligence ob-
jectives on a full-time basis. Specifically, Prox-
mire's number (the only one ever published by
the government) includes only those employees
of agencies seated on the U.S. Intelligence Ad-
visory Board--CIA, NSA, DIA, Intelligence and;
Reports Bureau of the State Department, and:
.the intelligence sections of the Army, Navy, Air:
Force, FBI,. AEC, and Treasury Department. It.
does not include part-time operatives, subsidi
ary alien apparats,'' businesses which exist by
virtue of their contracts with the intelligence
agencies,** and the vast number of de facto:
agents and investigators distributed throughout:
government in supposedly "open" entities such
as the IRS and Justice Department. ' '
Whatever its exact size may be, the intelli-
gence community is huge and growing. At the.
very least, its wardrobe is large enough. to ac-
commodate 148,000 cloaks and perhaps _ an
equal number of daggers. Its special skills (infil-
tration, subversion, surveillance,. and espio-'
nag e) are in increasing demarid. While there are
still many different, sources of power. in the
United States, it is apparent that the nation's
drift toward technocracy entails a more com-
plete equivalence between data and power. More
than ever before, political and economic
strength accrues to those who have special ac-
cess to, or control over, lines of communication
and information that are not accessible to the.
''public. The spectacular growth of the federal
intelligence community, however, has resulted
in the spin-off of an invisible industry, a securi-
ty-industrial perplex whose influence is more
insidious for the fact that its activities are most-
ly unseen.
Spying for profit
N THE PAST DECADE, literally dozens of private
intelligence agencies have been created, join-
ing over 32,000 registered private eyes and
4,000-odd security firms. Staffed almost entirely
by former government operatives, the mercen-
ary apparats place their skills at the disposal of
the rich and paranoid, or work for a single cli-
ent. The proliferation of the private apparats is
attributable to two causes. The first is that each
year, hundreds of agents (fired, retired, or
merely ambitious) leave government for private
practice. Last year, for instance, the civilian
work force absorbed the greatest number of
CIA agents in its history. These were mostly
middle-aged men who had been with the agency
since its earliest days. Having risen to the up-
per echelons of the intelligence community, they
found themselves (in their late forties and fif-
ties) with ten or fifteen years remaining in
their working lives-and with virtually no pos-
sibility of further advancement. Forced into re-
Gen. Reinhard Gehlen's former apparat is an ex-
ample of this.
Some CIA examples: Southern Air Transport **Until recently, according to statements of its
(proprietary); the Kaplan Fund (conduit and Rob. r q WOW Po t, Psycholog-
ert R. _NfullenA~ ffEai8 lease 001/08/08 :7Clic1FP Z71iON ,F Q e of these.
 Approved For Release 2001/08/08 : CIA-RDP77-00432R000100340002-8
tirement by the CIA, more than 1,000 execu-
tive spies joined thousands of other retired
spooks in studying a new kind of classified ma-
terial: the want ads. But under what job head-
ings should they look? "Putsch Director"? "In-
terrogation Engineer"? "Propagandist"? Or,
more likely, "Marnagement Consultant," "Per-
sonnel Adviser," and "Public Relations Spe-
cialist." Of course, if they preferred to work
for themselves, they could follow the lead of
James McCord and others who had set up their
own firms and independently marketed their
strange expertise to industry.
A second reason for the emergence of the pri-
vate apparats is the multinational phenomenon.
Some -multinationals have been described as
"sovereign states." The metaphor is more than
apt, and one consequence of its currency is that
the federal intelligence community no longer au-
tomatically equates the national - interest with
the multinationals', investments. It is increas-
ingly apparent that what's good for the multina-
tionals is not necessarily good for America (as
the Navy learned when, during the last Mideast
crisis, its ships were refused fuel by a supposed-
ly "American" oil company whose executives
feared to offend their Arab partners and hosts).
Certainly, the longterm foreign policy goals
of the United States do not always coincide'
with the timetables of the multinationals, even
when their interests are mutual. The CIA, as
ITT director John McCone found out when he
sought to sabotage the economy and manipulate
the elections of Chile, does not make its opera-
tions contingent upon the availability of million-
dollar grants from private industry." Because
the CIA is not for hire, it cannot be trusted.
Whether it's guarding "proprietary informa-
tion" at home, encoding communications, infil-
trating governments in the Middle East, or fund-
ing counterrevolutions in Latin America, the
multinationals would rather do it themselves. To
preserve their investments and increase their
profits, corporate giants and paranoid tycoons
therefore shell out millions to develop their own
intelligence services or to hire the expertise of
firms whose loyalties are for sale. The costs are
tax deductible. There is nothing wrong with
this per se (as they say). Gunboat capitalism
has generally gone the way of gunboat diplo-
macy: in 'big business, as in international poli-
tics, a subtler strategy is required today than
was ever necessary in the past. It is, however, a
basically antidemocratic strategy in that it de-
pends upon the surreptitious manipulation of
institutions, information, and public opinion-
an operational style inimical to, and destructive
of, an open society. The skills of the intelli-
gence community are, after all, the skills of war.
The multinationals' reliance on those skills sug-
gests that they recognize the sometimes martial
nature of their relationship to other countries,
to government regulation, and to the public.
Spookery's spread to the private sector
therefore poses two dangers. First, by applying
intelligence and counterintelligence tactics to
public opinion, it threatens to transform the
society into a nation of "friendlies" whose or-
dinary activities are controlled by hidden per-
suaders of which they know nothing. (In this
regard one sees the oil companies' recent ad
campaign for what it was: a propaganda fugue
designed to pacify a countryside of raped con-
sumers.) The second danger is that commer-
cial intelligence activities threaten to compro-
mise the neutrality of government, and thereby
threaten the security and rights of all. Agents
who leave federal service for private employ-
ment often take with them not just their special
expertise but their "connections" as well. Fre-
quently, former agents retain informal access to
privileged information, and it is obvious that
some even retain an ability to influence the:
actions of their old agencies.
After years of probing organized crime, the`
Senate Permanent Subcommittee on Investiga-
tions (chaired by Sen. Henry Jackson) has be-
gun an inquiry into precisely this area. Of par
ticular concern are: the extent to which federal
agents "moonlight"; former agents' continued
access to secret or privileged data and dossiers;
the ability of "retired" agents to inspire or
otherwise influence federal investigations; "joint
operations" between private apparats and fed-
eral agencies; and the suspicious transitions of
some federal agents to extremely lucrative jobs
with industry.
There is substantial evidence that all these.
practices take place and that, in fact, they may
be rather common. In the area of "joint opera-
tions," for instance, one notes the extraordinary
cooperation extended by Justice Department of-
ficials to Howard Hughes in his take-over of the
Nevada gambling industry. As for "access to
secret information," a government source re-
cently complained to me that Exxon's Venezue-
lan subsidiary, Creole, Inc., has a larger intelli-
gence budget than the local CIA station-and
that, in recognition of this, the two organiza-
tions have consolidated their files: in Venezue-
la, at least, what's good for Creole is apparently
good for America.
0
NE MIGHT GO oN, scoring a litany of in-
stances in which the federal intelligence and
investigative machinery seems to have been
penetrated by, or come under the undue influ-
ence of, special interests. More helpful than
such a list, however, would be to understand
how a private . intelligence apparat actually
works, how it came to exist, and who its clients
and employees are. With that knowledge it may
be possible to do more than take note of past
abuses.
The ideal firm to look at is one which places
a comprehensive array of sophisticated intelli-
gence skills at the disposal of clients whose busi-
ness directly affects the public.
There are a number of such firms, though
exactly how many is unknown. The private in-
telligence agencies carry their penchant for dis-
cretion to the verge of anonymity; they are, as
they prefer to be, an invisible industry.
Still, one or another firm occasionally finds
its way into the headlines. Thus, one learns of
the Wackenhut Corporation's aggressive com-
pilation of dossiers on Florida citizens, and of
its secret analysis of "Communist penetration"
in the Caribbean. Dektor Counterintelligence,.
hired by the White House to account for gaps
in the Presidential tapes, has also received pub-
* Actually, McCone should have known this since
he is himself a former director of the CIA (1961.65).
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licity. Maheu & Associates, reported to have or
ganized two assassination attempts on Fidel
Castro, has come under scrutiny through its
owner's contretemps with Howard Hughes and
its dealing with the Greek shipowner Stavros
Niarchos. McCord Associates has received at.
tention from the press ever since its owner,
James McCord, ,was nabbed at the Watergate.
The best example of a private apparat, how-
ever, is probably International Intelligence, Inc.
(Intertel), a mysterious firm whose activities
have impinged on the affairs of Howard Hughes,
Robert Maheu, Robert Vesco, the Plumbers,
ITT, Bebe Rebozo, and even the Mafia. Indeed,
it has a particular contemporary relevance in
that its very existence seems to have cast a shad-
ow of paranoia over Richard Nixon-and, at
least indirectly, contributed to the former Presi-
dent's political reversal.
In 1971 Jack Caulfield, a White House opera-
tive, was so concerned about. Intertel--which he
described as `.`an intelligence gun for hire"-that
he recommended a counterintelligence cam-
paign to neutralize the firm. Caulfield alleged
that one Intertel agent was expert at "bag jobs"
and warned ' that the firm "continued to have
unauthorized access to sensitive government
files in many areas." What- alarmed Caulfield
was the volatile mixture of political and eco-
nomic associations that surrounded the firm.
Like Democratic superpol Larry O'Brien, many
Intertel agents'a n the employ of Howard Hughes
had a deep affection for the Kennedy 'family.
The controversial relationship between members
of the. Nixon family and Hughes, coupled with
the political sympathies of O'Brien and agents
at Intertel, suggested the possibility of revela-
tions embarrassing to the President in an elec-
tion year. Partly to combat the private apparat,
Caulfield concocted Operation Sand Wedge, a
scheme that included the establishment of what
he described as "a Republican Intertel." This
was to be an "independent" intelligence agency
called Security Consulting Group, Inc. Unable-
to decide who should head the firm (Caulfield
nominated himself while others insisted on Rose
-Mary Woods's brother), the White House ex-
panded the activities of its internal "plumbing
unit"-with known results.
Caulfield's proposal illustrates a corollary of
the private apparats: they feed upon each oth-
er's paranoia. It also tends to confirm what
many journalists have come to believe: taps on
the telephones in the Watergate complex seem
to have been an exercise in counterintelligence.
International Intelligence, Inc.
HERE ARE A NUMBER OF WAYS to describe
lritertel, but the most delightful comes from
the Senate Watergate Hearings. In them, a
special counsel to President Nixon defined it as
"a commercial firm specializing in the identifi-
cation of typewriters." That droll summation is
akin to describing Playboy as a "Midwestern
little magazine." in fact, Intertel is a network
of paladin agents whose collective expertise in-
cludes specialties from within the fields of law
in-,. and the behavioral sciences. The firm has
its headquarters on the second floor of the Hill.
Building in Washington, a few steps up Seven-
teenth Street from the White House. It also has
branch offices in London, the Bahamas, Toron-
to, Detroit, New York, and Los Angeles. The
firm declines to provide a client list, but it is
known to advise stock exchanges, investment
bankers, newspapers, airports, insurance cor-
porations, pension funds, billionaires, govern-
ments, gambling joints, and multinational cor-
porations. Tom McKeon, Intertel's executive
vice-president and general counsel, says that the
organization accepts foreign and domestic cli-
ents alike but that its primary marketing target
is the Fortune 1,000 group. Most of the fim's
services are provided to clients under oral agree-
ments, and the bulk of its revenues come from
a handful of customers.
.What Intertel does is protect proprietary in-
formation (secrets) whether it's on tape, in
print, or in an employee's head; perform back-
ground investigations and "employee attitude
assessments"; establish industrial "intelligence
systems" and guard against . corporate espio-
nage; provide "defensive electronic surveys" to
learn if their client is being bugged; authenti-
cate or discredit documents; undertake "com-
munications integrity analyses" to learn if their
client needs scrambling or cryptographic equip-:
ment; hermeticize the data in computers; sani-
tize public images; shred red tape, monitorrele-
-vant government Iegislation, and lobby; advise.
on geopolitical "switch-trading opportunities";"
identify stolen stocks and bonds; prevent the
theft of securities; and make "industrial site re-
location surveys," a sort of sociopolitical eco-
nomic analysis that will tell you, among other
things, whether the place you're moving to has
enough railroads or too many Reds. And lots,.
lots more, all of it couched in the most recondite
language imaginable.
What Intertel will not do is tell you if your.
wife is cheating, though that might come up if
she's also stealing your money, selling your se-
crets, blabbing to Jack Anderson, or concealing
her links to the mob.
Intertel is, in other words, a "management
consulting firm" that specializes in confidential
intelligence services. Lest anyone think that In-
tertel is just a group of depleted gumshoes,
double-chinned cops-cashing in on feet that
long ago went flat, the following is a selection of
roles its agents have fulfilled: chief, Special
Projects Section, National Security Agency; di-
rector, Intelligence and Internal Security Divi-
sions, Internal Revenue Service; deputy director
of security, National Security Agency; chief,
Intelligence Division and Organized Crime
Strike Forces, Bureau of Narcotics and Danger-
ous Drugs; deputy director of security, U.S.
Department of State; supervisor of Intelligence
Activities, Federal Bureau of Investigation;
chairman, Criminal Intelligence Services (On-
tario); commissioner of Scotland Yard; super-
visor of Espionage and Internal Security Inves-
tigations, FBI; senior adviser, U.S. Department
of State, Southeast Asia; coordinator Of INTER-
POL operations for the Royal Canadian Mount-
enforcement, intelligence gathering, economics, * Switch-trades are international deals in which the
data processing, accounting, systems engineer- seller is paid, at least in part, by valuable consider.
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ed Police; supervisor, Organized Crime and In-
telligence Squads, Internal Revenue Service;
chief, Justice Department's Organized Crime
Strike Force; detective supervisor, Special In-
vestigating Unit and Narcotics Squad, New
York City Police Department; director of en-
forcement, U.S. Bureau of Customs; chief, Mar-
ket Surveillance Section, Securities and Ex-
change Commission; and J. Edgar Hoover's only
nephew. There are, in addition, more than fifty
professionals and special agents from virtually
every other precinct of government, and it
should be noted that Intertel's director of intel-
ligence operations is Edward M. Mullin, former-
ly of the FBI and the CIA.
CLEARLY, INTERTEL IS to most other manage-
meat consultants as the CIA is to the
Planned Parenthood Federation. The firm is
nothing less than the legal incorporation of an
old-boy network, whose ganglia reach into vir-
tually-every nerve cell of the federal investiga-
tive/intelligence community. There is nothing
"wrong" m that. Civil servants are not chattels
of the state, and if they decide to sell their skills
in the marketplace, so what? But some who are
skeptical of the motives of, for instance, How-
ard Hughes and ITT may become concerned
upon learning of the special talents and knowl-
edge that their assets command. To this, Tom
McKeon says, "We don't act as a shield or um-
brella for anybody. We won't let ourselves be
uses that way."
And one would like to believe hint. But the
fact is that the firm is for hire; it does what it's
paid to do, and its clients are secret. "No one
likes to admit they've got a problem," McKeon
explains, '*but each of our clients has or else
he wouldn't come to us. That's why we don't dis-
close- their names."
It's not the motivation of Intertel that de-
serves to be questioned but that of its clients. A
communications integrity rity anal} pis" sounds
fine (it's meant to), but what if the resulting
scramblers, codes, and cryptanalysis equip-
ment are used to ruin the economy, or subvert
the political institutions of a foreign democ-
racy? Are the "analysts" responsible?
"Document authentication" also sounds fine,
but what, if the client twists the resulting infor-
mnation in order to deceive the public?
"Background" inquiries may also be of value,
but not if the private investigators are part of
an elaborate strategy involving federal agents
and White House operatives acting in tandem
on behalf of very special interests. ITT, a client
of Intertel's, has tiptoed through all these areas,
and used the intelligence agency in at least two
of them.
The potentials for abuse are many, and sus-
picion of the private apparats is only natural.
What makes Intertel of particular interest, how-
ever, is the notoriety of some of its known cli-
ents and the widely diverging views about its
motives.
Some instances: Caulfield was convinced that
Intertel was engaged in "black" operations. In-
tertel denies it does this and, in fact, says that
it doesn't accept politicians as clients or engage
in any political work at all. Huntington Hart-
ford, heir to the A&P fortune,.is suing Intertel's
parent firm for millions, charging that profits
Approved
from a casino that Intertel oversees have
been fraudulently reported. Intertel denies the
charge and points out that Hartford has yet to
produce any meaningful evidence of his asser-
tion. Yet another view of Intertel is held by
Robert Afaheu, former confidant of Howard
Hughes. After Intertel took charge of the bil-
lionaire's Las Vegas casinos following Hughes's
flight to the Bahamas. Malieu thought that his
boss had been kidnapped. An attempt to "res-
cue" IIughes was thwarted by Bahamian offi-
cials accompanied by Intertel agents.
Not everyone agrees that Intertel is aptly
compared to Ian Fleming's SPECTRE. Some in-
sist that the firm is better compared to the Fan-
tastic Four, and point out that it was organized
for the express purpose of "crime prevention."
One Senate investigator who became curious
about Intertel left their offices scratching his
head. "It's surprising," he said. "The guy who
owns the company is tight with Nixon and Re-
bozo, but almost all its operatives, from the
top on down, are old Bobby Kennedy men.
Really, they're plugged into all the good guys
in Washington."
A check with Sen. Edward Kennedy's staff
confirms that view. As one Kennedy aide said,
"Intertel? They're our friends, man, that's who
they are. I almost went to work for them my-
self." But, he hastens to add, Intertel's rela-
tionship to the Kenneclys is platonic rather than
contractual. "They've never done any work for
us," he says. "In fact, my understanding is that
they don't do any political work at all."
Trouble in paradise
NTERTEL WAS NURTURED in the geopolitical
humus of the Bahamas, an archipelago of
more than 2,500 rocks and islands that fan out
from the southern coast of Florida. It was rich
soil for the emergence of a mission-impossible
agency, a milieu peopled by hustlers, hoods,
high rollers, playboys, pimps, billionaires, Brit-
ish colonials, and dirt-poor blacks. For most of
their history, the Bahamas were controlled by a
group of white merchants 'known as the Bay
Street Boys, a power bloc that ran the islands.
One of the most powerful Boys was Sir
Stafford Sands, an attorney whose private prac-
tice did not suffer for his public work as Minis-
ter of Finance and Tourism. One of his clients,,
an ex-con named Wallace Groves, paid the bar-
rister-knight almost $2 million in "legal fees."
Groves could afford it. Thanks to legislation
drafted by Sir Stafford, Groves was able to buy
up 211 square miles of Grand Bahama Island
for $2.50 an acre. It was as if a national fire
sale had been held because, only a few years
later, some of those same acres sold for $50,000
each. Sands was also responsible for obtaining
the permissions needed to allow gambling at
Freeport, a keystone of Groves's financial em-
pire.
By 1964 Groves's holdings were worth
many millions of dollars, and his power was im-
mense. Through one of his firms, he even had
the authority to deport "undesirables." In
achieving this, Groves had considerable help,
and not just from Sir Stafford. Help. also came
from a partner in Groves's Lucayan Beach Ho-
tel-Lou Chesler, a Canadian financier who
went to the banks for cash and to Meyer Lansky
 Approved For Release 2001/08/08 ; CIA-RDP77-00432R000100340002.8
for advice.
It is unknown if Lansky, reputed comptroller
of the mob, gave it-but he certainly had rea-
son to. Ever since Castro nationalized mob as-
sets in Cuba, organized crime had been seeking
a new site for its offshore gambling facilities.
The Bahamas were a reasonable alternative to
Havana, and Lansky repeatedly sought to obtain
influence there. Nevertheless, if he obtained that
influence-as many believe he did-proof has
so far eluded the courts.''
While these events were taking place at Free-
port, Huntington Hartford was endeavoring to
transform a dilapidated islet. named Hog into
the. Monaco of the Caribbean. The eccentric
grocery magnate renamed the island Paradise
and poured millions into its development. But
Paradise Island, . located across the channel
from Nassau, lacked two things- that were essen-
tial to its success: a bridge. to 'the mainland,
and a permit for gambling. Hartford was unable
to obtain either, possibly because his casino
would compete with the one owned by Groves,:4
and possibly because he'd made the blunder of
contributing to the Progressive Liberal Party
(PLP), the rival of the Bay Street Boys. Tot
save his position, Hartford sold all. but a minor-,
ity share of his Paradise Island interests to the
Mary Carter Paint Company-the firm that'
would become Resorts International, the found-
er of Intertel. Hartford's new partner, James M.
Crosby, wasted no time in closing a deal with.
Wally Groves, acquiring the services of Sir Staf-
ford Sands, and, shortly thereafter, securing the
necessary permits to gamble and build a bridge.
The Paradise Island casino was not due to open
until January 1968, but already the facility had)
.drawn the attention of the man who would be-~
come the president of Intertel: Robert Pelo
quin. At that time chief of the' Justice Depart
ment's first Organized Crime Strike Force, Pelo-:
quin had .spent his entire career in the inner,
precincts of the intelligence community: a com-
mander in Naval Intelligence, he later joined
the National Security Agency before moving on
to the Internal Security Division of the Justice
Department. One of the men most responsible
for exposing, or popularizing, the concept of a
national criminal conspiracy called La Cosa
Nostra, Peloquin had this to say about the Para-
dise Island transactions: "The atmosphere
seems ripe for a Lansky skim." *
A few months after making this notation,
Peloquin received a visit at the Justice Depart-
ment from James Crosby._Grosby asked Pelo-
quin's assistance with two problems. First, lie
wanted the name of a firm capable of handling.
security and checking personnel at his hew ca-I
sino. Peloquin said he was unable to recom.1
=end any such firm. Second,. Peloquin and'[
McKeon agreed. that Crosby was "literally;
scared to death" of a gambler named Mike'
McLaney, who, along with others, wanted a
piece of the action on Paradise Island.
With this second problem Peloquin was
forthcoming and admits initiating an investiga-
tion on Crosby's behalf. Just what else Peloquin
* Sir Stafford has testified that Lansky offered him
$2 million for gambling concessions on the islands-
and that he refused.
* This comment was contained in a Justice Depart.
anent memo written in 1966. Compan ? vice chairman i rd,director
Approved For Release 2001/0W08dl 114 o~~ 4 ~
i7:rAQfI~ -8a
did for Crosby remains unclear. What is certain
is that a. number of exposes appeared in the'
American press (Tire Wall Street Journal, Life,
and Look) describing the influence of "orga-f
nized crime" in the Bahamas. It has been alleged;
that Peloquin furnished information for at least'
one of those exposes, the one that appeared in
Lie.
Peloquin later admitted that he spent "a
great amount of my time negotiating with the
government of the Bahamas to exclude" various
persons from- the island. He also provided stra-
tegic, if unofficial, assistance and information to
the Royal Commission of Inquiry convened by
the Bahamian government to study the local
gambling industry, its links to the mob, and its
allegedly corrupt relationship with the Bay
Street Boys. The commission was headed by Sir
Ranulph Bacon, a former head of Scotland
Yard, who was later to become a director of In-
tertel.
By August 1967 the commission's work was
mostly clone, and so was Peloquin's. The Jus-
tice Department strategist retired from govern-
ment, taking with him the department's annual
award for outstanding service, conferred upon
him for his Bahamian investigations.
FEW MONTHS AFTER LEAVING the Justice De-
n partment, Peloquin was able to solve Cros-
by's other problem-taking charge of security at
Paradise Island and checking out the casino's
personnel. By then, the commission had accom-
plished several objectives. In exposing the Bay
Street Boys, it destroyed their influence for-
ever. A new government, headed by Lynden 0.
Pindling, a black, had taken power amid the
shock waves of the gambling scandals. (Sir
Stafford, whose activities figured prominently in
the commission's inquiries, retired to Spain.)
A second result of the commission's probe was
that, in focusing on existing casino operations,
it necessarily preoccupied itself with Crosby's
competition. Hopelessly entangled in the affairs
of Sir Stafford, Groves withdrew from the ar-
rangements he'd made with Crosby. Meanwhile,
Crosby's nemesis, Mike McLaney, had unexpec-
tedly fallen on hard times.
McLaney is the former operator of a casino
in Cuba, an ersatz socialite whose biggest long
shot seemed to have paid off with the election
of Pindling. Resentful of Sir Stafford and the
Boys, 11IcLaney claims that he financed the
Pindling campaign almost single-handedly. The
gambler insists that he would have helped Pind-
ling in any case, but adds that the aspiring pre-
mier promised to reward his largesse by na-
tionalizing the island's casinos and letting Mc-
Laney run theta in return for a split of the
profits.
Pindling is said to have reneged on his prom-
ises after his election. Indeed, he went even
further and declared McLaney persona non
grata. That may seem harsh treatment for a sup-
porter, but McLaney wasn't surprised. In testi-
mony before a Senate investigating committee,
McLaney alleged that his banishment was the
result of a conspiracy between Peloquin, agents
of the IRS, and the owners of Paradise Island.
Among Intertel's other directors are men who are,
or have been, president of the Dreyfus Corporation
and publisher of Life; president of Carte Blanche;
hoard chairman of the Royal flank of Canada Trust
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After strenuously denying any connection
with Meyer Lansky, and offering to take a poly.
graph test on the subject, McLaney was asked if
he thought "Lansky had anything to do with
the reneging of the prime minister" and the
gambler's subsequent eviction from the archi-
pelago.
"No, McLaney answered, "I thought Inter-
tel had something to do with it. Mr. Peloquin,
from the Justice Department, and three special
agents from [the Internal Revenue Service]-
they are the ones that conspired to run me out
of the Bahamas. . . . Those are the people re-
sponsible for getting me .... eighty-three days of
conviction [on a tax charge], and everyone
works for the gambling interests in the Ba-
hamas. Intertel was formed for them. When they
got rid of me, $2 million was furnished them by
Resorts International, and that formed a thing
called Intertel."*
Asked, "Who is behind Resorts Internation-
al?" McLaney said, "I don't know. It is misty,
shadows."
ESORTS INTERNATIONAL is an offspring of
the Mary Carter Paint Company. After the
casino on Paradise Island was built, Crosby
severed the Bahamas holdings from the rest of
Mary Carter, sold off the latter, and established
the new imprimatur. When the casino opened,
the new corporation's prospects seemed grand.
Peloquin left the Justice Department and set up
the law firm of Hundley and Peloquin, which
took on Resorts as a client. His partner, William-
Hundley, was a lawyer who shared Peloquin's
investigative background, having been chief
of the Smith Act Section in the Justice Depart.
nient's Internal Security Division.
Peloquin and Hundley served on the casino's
operating committee, supervising the work of its
manager, Eddie Cellini. The choice of Cellini to
manage the gambling joint was an odd one,
.however, since his brother Dino has been de-
scribed as Lansky's "top aide" and "right
arm.) Before long, Eddie became an embar-
rassment. "The publicity was awful," Peloquin
explains.. "Whenever someone mentioned the
casino at Paradise Island, they said it was run
by a brother of Lansky's top man. It was pure
guilt by association. After all, Eddie's fifteen or
twenty years younger than his brother, hasn't
got a record, and, besides, our bottom line was
higher than anybody's. If Eddie was skimming,
I'd like to know how he did it! Frankly, he was
the best manager we've ever had: he loved the
place and took real pride in it. But one day
Jimmy Crosby couldn't take the publicity any-
more. He told me, `Look, I don't care if he's
Pope Paul-can him.' So I did. And you know
what happened when I told Eddie he was fired?
He burst into tears. Does, that sound like Mafia
to you? Christ, I still feel bad about it."
One might have expected more consideration
from the chairman of Resorts International, but
there was a lot at stake. The new company's
stock had begun to take off, thanks in part to
a $4 million purchase of unregistered "letter
* Of the three IRS agents who probed into Mc.
Laney's affairs, two worked for Intertel while the
third secured employment with the casino on Grand
Bahama Island.
"Vincent Teresa, My Life in the Mafia, pp. 219
stock" by the fund-managers of Investors Over-
-seas Services (IOS-). By 1969 (a little more than
a year after the casino opened), Resorts' stock
had climbed more than 1,000 percent in value
-from about $5 per share to $60. Things were
going so well that Crosby began to give money
away. A close friend and business associate of
Bebe Rebozo's (it was Crosby whom Rebozo
called for advice when the banker got stuck with
a wad of stolen IBM stock), Crosby donated
$100,000 to Richard Nixon's 1968 campaign
only a few weeks after Rebozo introduced the
two men.*
The meeting between Nixon- and Crosby
seemed- to be a matter of love at first. sight.
Crosby even placed the company yacht, at the
candidate's disposal and later became an occa-
sional guest at the White House. Six months
after the election, Crosby hired James O. Gold-
en, reportedly ,at Nixon's request.
Like Peloquin and Hundley, Golden was at
home in the intelligence community. A former
Secret Service agent who'd served in Russia,
Central America, and the Bahamas, he'd been
Richard Nixon's personal attache during the
Eisenhower administration and held the curious
distinction of being an honorary agent of the
Philippine National Bureau of Investigation
(for services rendered there). Before he took
charge of security at Nixon's headquarters in
1968, he had worked as the international repre.
sentative of the Lockheed Corporation. In 1969,
Golden became deputy director of security for
Resorts International. After this, Golden went
on to other positions: vice-president of Intertel
(1970) and security chief' 'for the Hughes Tool
Company (1971). He is now chief of the Orga-
nized Crime Section of the.Justice Department's
Law Enforcement Assistance Administration
(LEAA), a job whose responsibilities include
setting up intelligence and strike-force teams
throughout the country.**
Despite the credentials of its security team,
the halcyon days of Resorts International have
been few: today its stock is trading at about $2'
per share. The decline can.be traced to-a num-
ber of circumstances. First, the Bahamian. move-
ment toward independence greatly diminished
the demand for local real estate, and thereby
maimed the earnings of an important subsidi-
ary. Second, Premier Pindling announced that
all casinos will be nationalized by 1977. Third,
casino profits are hard hit by special taxes.
Fourth, Resorts apparently blundered when it
sought, in 1969, to gain control of Pan Ameri-
can World Airways, whose subsidiaries own
several casinos and hotels in the Caribbean- (It
was as if Luxembourg had tried to annex Bel-
gium: when the smoke cleared, Resorts owned
only 3 percent of the airline's stock, having paid
S27 million for shares that are now valued at
less than $4 million.)
* The donation took the form of thirty-three checks
for $3,000 each and one in the amount of $1,000.
**Oddly, Peloquin and McKeon deny that Golden
worked for Intertel, even though at least one Intertel
brochure associates Golden with the firm. For his part,
Golden says that he was "in on the ground floor"
and insists that Crosby made him a vice-president of
the apparat.
and 220.
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 Approved For Release 2001/08/08 CIA-RDP77-00432R000100340002.8
The Hughes connection
AFTER YEARS OF DE FACTO existence, Intertel's
long gestation ended. In January 1970 Re-
sorts provided the financing that allowed the
apparat to incorporate as a "consulting organi-
zation created specifically to safeguard business
from the hidden risks of vulnerability to. crimi-
nal elements and to assist the states and cities inl
development of comprehensive crime controls."
Those in on the ground floor-Crosby, Peloquin,
Hundley, and Golden-believed that the fine's
services could be successfully marketed, and
there was every reason to believe they were
right. During the 1960s, the United States un-
derwent a moral upheaval that resulted in a. re-
definition of many conventional views. Much
attention has been paid to the effective leg aliza-
tion of pornography, but even more important,
economically, was the new attitude toward gam-
bling. What had once been a racket run by
mobsters became, by the decade's end, an in
dustry administered by government bureaucrats:
and corporations such as Hughes Tool, Pan Arn,`?..
and ITT. The vacuum left by "known gamblers"
was rapidly filled because no other business al
lows its owner to literally name the percentage
of his profit. The man who pioneered the take-
over of mob turf by legitimate business was
Howard Hughes. With a $546 million check
from his forced sale of Trans World Airlines,.
Hughes moved into Las Vegas under a:-med
guard in 1966 and began making offers no one
could refuse. Abetted to an embarrassing extent
by federal bureaucrats and state politicians,
Hughes quickly gained control of the state's
major industry. His acquisitions were so many
and so swift that the Justice Department's opin-
ion of him was divided: while one faction in-
sisted that Hughes was in violation of antitrust
laws, the Criminal Division applauded his pri-
vate war against the Mafia.
Hughes continued to look for new properties,
and one of the places that interested him the
most was the Bahamas. A secret study (entitled
Downhill Racer) was commissioned prior to
Hughes's move there. The report was any-
thing but favorable, citing political instabil-
ities, the likelihood of race riots, and the prob-
ability of an eventual social "cataclysm." Never.
theless, Hughes is now living in the Bahamas,
acquiring property there, and issuing orders that
his staff "wrap up" the government. What
caused the billionaire to change his mind, or
disregard the advice he'd commissioned, is un-
clear. What's certain about the move is that In-
tertel was deeply involved in his expatriation.
On Thanksgiving eve 1970, Hughes was
scooped from his headquarters atop the Desert
Inn and put aboard a plane bound for Paradise
Island. Acting on orders from top executives
of the Hughes Tool Company, Intertel took con-
trol of Hughes's casinos. Robert Maheu, the bil-
lionaire's longtime confidant and charge d'af-
faires, was summarily fired, as were other trust-
ed employees. Maheu charged that his boss was
the victim of a "kidnapping," and marshaled
evidence" to back up the allegation. A physi-
cian who had seen Hughes a few weeks earlier
claimed that the tycoon was too ill to have been
a
eu were trackinn M.
safely moved, ~~~~~ #eas2dorv8/pe~~~~OR~Q~~~9~stigating
clition, pneumonia, and anemia. He was, the
doctor said, receiving blood transfusions and
weighed less than 100 pounds.. That Hughes
should go to the Bahamas seemed-in view of
the secret study, his illness, and his disaffection
for blacks-eccentric in the extreme.
Toni McKeon, Intertel's general counsel, is
still sensitive about the Hughes operation. Seat-
ed in, his Washington office, feet propped on his
desk, McKeon said, "The Hughes organization
got in touch with us in the summer of 1970..
A few months later, in August or so, Peloquin
went to Los Angeles to discuss how the move
should be made. Now, you see, we try to operate
on the Five Ps Principle: Proper planning pre-
vents piss-poor performance. Well, we devel-
oped a plan, all right: it was about this thick.
[His thumb and forefinger measured out a space
that would hold Gravity's Rainbow.) While we
were still preparing for D day-that's what
we called it--the Hughes organization tele-
phoned and said, in effect, `Get every man
you've got out here right away. We're moving
tonight.' So there went the plan. I can under-
stand why Maheu thought Mr. Hughes had been
kidnapped; it was all so sudden."
The assignment to plan Hughes's exodus from
Las Vegas was a large and sensitive one; that it
should be entrusted to a firm which was only
a few months old seemed extraordinary to many.
A few, however, thought this was no accident,
and speculated that perhaps Intertel was formed
expressly for the purposes of "the Thanksgiving
coup." McKeon denies that, pointing out thatr
the firm's employees had proven their worth ini
federal service and that, moreover, no less al
personage than J. Edgar Hoover sometimes rec-1
ommended them for commercial assignments.
Whatever the case, the Hughes contract was
profitable and gave the fledgling apparat a spec-;
tacular start and plenty of continuing business.
Sailing to Byzantium
Y THE END OF INTERTEL'S first year, the firm
was enmeshed in a tense, if sometimes farci-
cal, game of spy-versus-counterspy. While Inter-
tel was investigating Maheu, and vice versa,
White House spy Jack Caulfield was investigat-
ing Intertel, convinced that the firm was a pri-
vate CIA working in behalf of the Kennedy in-
terests. What led Caulfield to that conclusion
isn't hard to guess. In 1968, less than a month
after Sen. Robert Kennedy was slain, Hughes
ordered Maheu to hire Larry O'Brien and the
"four or five key men in the Kennedy camp."
Maheu eventually succeeded, and O'Brien's firm
was retained by Hughes for the sum of $15,000
per month. Exactly what O'Brien (lid for that
sum is unclear-"public-relations work" i~ the
catchall description. But, whatever it was, he did
it for less than two years. After the Thanksgiving
coup of 1970, Hughes's relationship with O'Brien
ended, and the public-relations account was
transferred to Robert R. Mullen &- Company---a
firm with strong links to the Republican party
and the CIA.
At this point, the situation became one of
Byzantine complexity, and secret agents began
stacking up like lemmings at the seashore.
While Caulfield and M
h
 Approved For Release 2001/08/08 : CIA-RDP77-00432R000100340002-8
Maheu. (Intertel was also looking into Jack An-
derson's affairs on behalf of ITT, and into Clif-
ford Irvin-'s affairs on behalf of Hughes.) i
At about the same time, E. Howard }-cunt, an
employee of both Mullen and the White house
(who may or may not have also been an under-'i
cover agent for the CIA) was planning to bur
glarize the offices of a Las Vegas publisher
in order to purloin a sheaf of secret Hughes
memos. In these negotiations, Hunt conferred
with Hughes security agents-not Intertel, and
not Golden, but a third network headed by a
fellow named Ralph Winte..
Who is Ralph Winte?
Frankly, this reporter doesn't 'know and
doesn't want to ask. Enough is, allegedly, enough.
Or is it? While these events unfolded, yet an-
other dimension was added to what had become
a virtual plenum of intrigue: Robert Vesco.
Throughout 1972 Vesco was negotiating with
James Crosby to purchase most of the Para-
dise bland assets, including the casino which
Pindling had promised to nationalize. Vesco
reportedly offered $60 million for the properties,
a huge sum in view of their special problems.
At the time of the negotiations, Vesco.was the
target of a massive investigation by the Securi-
ties and Exchange Commission -(SEC). As a
result of that investigation, Vesco was accused
by the SEC of having organized one of the big
gest frauds in the history of money: an esti-
mated S224 million was allegedly diverted from
Investors Overseas Services (IOS) into the
pockets of Vesco and his cronies.*
At the same time, Vesco was also under study
by Intertel. One of Intertel's main functions as
a subsidiary of Resorts International was to
"advise management of their possible exposure
to organized crime - through companies with
whom. .. they are considering business rela-
tionships." Considering the connections and ex-
pertise at Intertel, one would assume that Cros-
by's own apparat would have advised against
the deal. In fact, however, Intertel raised no
substantial objections. Asked how that could
have happened, McKeon says, "Well, at what
point does a man become suspect?"
That explanation, however, must be dismissed.
The nature of Intertel's business is such that a
man becomes suspect very early. Moreover, In-
tertel's second director of operations is the
former chief of the SEC's Branch of. Market
Surveillance; certainly lie was not without ac-
cess to- information. And, if these were not
enough, Crosby himself ought to have known
that Vesco deserved suspicion since no less an
authority on the subject than Bernie Cornfeld
told him so. The founder and former head of
IOS, Cornfeld.is a sometime backgammon part-
ner: of Crosby's. In a conversation with Corn-
feld, the playboy-financier told me he had re-
peatedly warned Crosby that the SEC was about
to come crashing down on Vesco, and that the
deal shouldn't go through. Crosby ignored that
advice, Cornfeld said. (According to the SEC,
the transaction "came to a grinding halt" with
the commencement of the SEC lawsuit.) By all
accounts, it would have been a very profitable
deal for Crosby.
* Interestingly, the SEC brief contends that an
estimated $150 million of this sum was "hot" money
illegally invested in IDS by tax evaders and others.
14
Approved For Release 2001/08/08
The dance goes on
HF. INTRIGUES, OF COURSE, CONTINUE. While
Vesco was under study by the SEC and In-
tertel, agents of the Bureau of Narcotics and
Dangerous Drugs .(BNDD) were hired by an
associate of Vesco's to search the financier's
New, Jersey headquarters for hidden bugging
devices. (That was in the fateful month of June
1972).. Vesco subsequently repaid the organizer
of the search with $3,000 in gambling chips at
a Bahamian casino.
Only a year after receiving assistance from
the BNDD agents, Vesco was himself alleged to
be the financier behind an international heroin
transaction. That allegation, unsupported by
other evidence, was repeatedly made in tape-re-
corded conversations between an important in-
formant and a big-time Canadian smuggler.
In an apparently unrelated set of events, In-
tertel was itself involved with narcotics agents
during the early part of 1973. BNDD officials
approached Intertel in February with a proposal
called Operation Silver Dollar. This was a plot
to nab an unwelcome guest of the Hughes-
owned Frontier Hotel-a guest who was thought
to be dealing drugs. The BNDD promised to in-
filtrate the man's milieu if Intertel would
prevail upon the Hughes organization to finance
the operation. Intertel agreed, and, as a result,
the Summa Corporation provided . the under-
cover agents with a hefty bankroll. The agents
dutifully garnbled the money away, but the tar-
get of the operation was unimpressed by the
flashing cash. No sale.
By this time the reader may be thoroughly,
if thoughtfully, confused. That's probably as it
should be, however. My purpose is not to make
sense of all these intrigues (the task would de-
feat an Aquinas), or even to imply anything
more than a coincidental relationship in the in-
tersecting paths of Hunt, Hughes, Intertel,
Vesco, and so forth. Rather, my intention is
to indicate the degree to which. America has
haunted itself, and to describe some of the nodes
in what seems to be a maze of espionage.
. As to what legislation might be proposed to
curb existing, abuses, several possibilities come
to mind. Private intelligence agencies, no mat-
ter what euphemism they go by, should be de-
fined, identified, licensed, and regulated. At the
very least, client lists should be made public,
Moonlighting by employees of federal agencies
having intelligence-gathering or investigative
functions should be forbidden. Joint operations
between such agencies and profit-making orga-
nizations should also be proscribed by law. Fi-
nally, the transition of workers from govern-
ment to private industry should be closely ob-
served to detect instances in which it appears
that a former government worker retains influ-
ence over his old agency, or seems to have been
rewarded by private industry for tasks per-
formed in the federal service.
Of course, so long as there are skeletons in
the closet, .there will be spooks by the door.
Walpurgisnacht is here to stay. While we can-
not expect legislative. incantations to exorcise
the corridors of power, we may hope to conjure
light enough to see, and count, our shadows.
And that, at least, would make the danse a trifle
less macabre. 0
CIA-RDP77-00432R000100340002-8
 'Approved For Release 2001/08/08 : CIA=RDP77-00432R0001,00340002a8
ROLLING STONE
21 November 1974
.CIA men. are not-supposed to talk, but Philip?Agee, ex-Agency man,
:does=in -an. exclusive. interview with . Daniel.-',Yergin for ? ROLLING
STONE. Agee's book, Inside the CIA: A Company Diary, will be pub-
lished in England early next year. American publishers, wary of legal.
battles with.the CIA, are hesitant to release the book in this country.'
-.By DANIEL YERGIN:
In January 1972, a CIA station chief
'hurried to Paris to see one Philip Agee,
formerly. a CIA case officer in Latin
'America:'. The. Agency's elaborate in-
ternal control mechanism had screwed
up. Agee had just come back from sev- '
oral months in Havana-not exactly the
place for a former CIA agent to take his
holiday.'The Agency had, apparently,"
;found.this out by accident. While in
-Havana,: Agee had written a letter to a
magazine in Uruguay, where he had
formerly. served, warning of CIA inter-
vention in that country's 1971 elections.
He had added that he was.writing.an
.expose of the Agency's activities in
Latin* America based upon his own
experiences.
It was that last item that really wor
ried the J'.gency, and so now in Paris
.the station chief was blunt: The dire;-
ior of the CIA, he said, wanted to know
just what in ? hell' Agce,,was doing.
Agee ;realized that he had made a
mistake with his letter. Instead of ad-
mitting that he was struggling to write a
book, which might have provided suf-
ficient motivation for a timely accident,
he bluffed and said that he had already
written a book."-,:
. `?
The-.spooks were deeply disturbed.
On July 9, 1974, Senator Howard
Baker of the Watergate Committee re-
leased a report that mentioned CIA
documents from the summer of 1972
that referred to a "WH Flap." When
Senate investigators first encountered'
these documents, they assumed the WH
referred to "White House" flap. Later,-
the y discovered that the WH Flap.in'
fact.refcrrcd to a Western Hemisphere
Flap-and that meant Agee and the
revelations the Agency feared. After the "
belated discovery of Agee's literary in-
terests, the CIA, according to one of
the .documents;.had to "terminate pro-,
jests and move assets subject to com-
promise."
In July of this year, someone tried to
`cover up the entire blunder by leaking a
story that a drunk and despondent CIA
officer, "down in. his cups,'! had sat
down somewhere in Latin America with '
a KGB agent and spil!cd the refried
beans. The New York Times and other
news organizations, with the conspicu-
ous exception of Laurence Stern of the
Was/,i,,glon Post, bought the story at
first-but it was a fabrication. The CIA
A'CIA Diary. "No one has yet been able
to give a full picture of what agents in
the field do," Richard Barnet wrote re-
cently in the New York Review, "al-
though a book about to be published in
England, by a secret agent in. Latin
America for many years, may begin to
fill this gap." One, long-time Agency
watcher calls it-in its unpublished
form-"an underground classic."
'Agee's story is already ' a sensation in
the Latin American' press-where that
.press is not censored to a shrivel.
Agee is modest, calling it only a "small
window" on the CIA. Admittedly, in
the years between 1956-68, he served in
Ecuador, Uruguay and Mexico City,
none of them famous hot spots. On one'
level, his story is a* narrative of massive
American intervention in Latin Ameri-'
can 'politics.. It's also the day-to-day
story of CIA officers-busy, busy, busy
-competent and incompetent-buying'
off politicians, tapping phones, funding
strikes, organizing demonstrations and
provocations, setting up massive propa
ganda campaigns. It's a description of,
office politics-or rather "station" poliJ
tics, with1officers fighting and bidding
for prestige and importance.
Agee's book makes clear why the
Watergate bugging was no "third-rate
burglary," but rather, the whole mess
-the burglars and the plumbers, the
dirty tricks and the funneled 'money-
was. the pattern and technique of CIA
intervention abroad being brought
home, to disrupt and ultimately destroy
the American. political process.
Agee's story is also an American'
drama--the young, idealistic true be
liever, who enlisted in the cause of the
Good and the Virtuous, but who could
not finally understand the distance be-
tween his ideals and what he practiced.
Driven by the memory of his own role
in the relationship between CIA covert
activities and the epidemic of repres-
sive, right-wing juntas throughout Latin
America, he has again become a true'
believer-but now-pushed far to the
other side.
The train from London's Paddington
Station took more than six hours to roil
through the West Country in a bleak
rain to the station nearest Agee's quiet
retreat near Cornwall:Then a cab across
country to the tiny village on the edge
of a tidal estuary that is a favorite nest-
ing spot both for birds. and, for bird
finally disowned that particular story. -watchers. Agee, youngish,_(at, 39),'
However, in the years since the 1972 stocky, dark haired, wearing 'a. floppy
Paris conversation, Agee had finally sweater and with a bounce to his step,
written his book-lnsWV~rbry ffla :Re ' Aft fl/* r-nClAtftbOF O43
15
We chatted that evening, and then the
next day we started talking in earnest.
He did make clear that some areas he
:;would only discuss' at a later times
I began with a simple question.Why.`
believe him?
"'There can be no doubt that I am
who I say I am," he replied. "The CIA
has already confirmed that-they have
already taken measures to try to offset
.some of the damage. They closed that
,cover office in Mexico City, they trans..
(erred agents. So the CIA has lent cre-
dence. Anyone who wants to. can check
the events I say occurred. What's al-
'ready, been revealed about the CIA in
-other places also confirms what I say.
I.had so much material and such a small
place to put it into-there was no need
to embellish. I wasn't an important man
in the CIA. I was only coming into my
mid-career level when I resigned. And
Ecuador and Uruguay and Mexico'
aren't in themselves all that important,
but when taken as a' pattern and ex-'
.tended to the rest of the Third World, it
shows our secret foreign policy and our
'secret political police work."
.'.Of course, the world of covert politics
.and secret agents is so confusing, con-
voluted and dark that no reader should
uncritically accept what follows. We
cannot dismiss the possibility that the
"new" Agee works for the intelligence
service of a hostile country or of a:
friendly one or even for the Pentagon,
eager to besmirch the reputation of its
bureaucratic rival. On balance, how-
ever, Agee is almost surely who he says
he is. His story is consistent and has in
many ways been confirmed.
. In 1956, a CIA official suggested that
the Agency recruit Agee, then graduat-
ing with a degree in liberal arts from
Notre Dame. She knew his family well,
and he was a good prospect--a God-
fearing anticommunist, who as a stu-
dent chaired the proceedings in which
General Curtis "Bombs Away" LcMay
had received the university's patriotism
award. Agee at first rejected the over-
ture, but then, after returning to Florida
for law school (there's only a trace of
Tampa in his speech), took up the offer
to go into the Junior Officers Training
Program. Apparently such activity was
respectable, purposeful, vital and a
great way to see the world-and was
a good deal more interesting than the
family's laundry and uniform business.
He signed a secrecy pledge, passed
the ,lic-detector test, and heard Allen
Dulles and other senior officials explain
to the new recruits that God Himself
had instituted the practice of spying on
this planet. Agee spent two years in The
Air Force, in cooperation with the CIA,
and then spent six months at the CIA's
training camp-The Farm-outside
Washington. D.C., learning the. tech-
j~jjf~~~j covert and Para;
1'fa'rropera ions Foreign agents were
 Approved For Release 2001/08/08 : CIA-RDP77-00432R000100340002=8
periodically brought in for special train
-ing but security was so tight?that some'
did not even know they. werein the
United States..
Finishing training in-. JuIy< 1960,
Agee, equipped-."With the code;name
Jeremy $. Hodapp;~was assigned to the
Western'Hemisphere Division-which
-.was looked down upon elsewhere in the
Agency because-it was -filled with old
FBI men who had been absorbed into
the Agency when the nascent CIA had
assumed the FBI's Latin American op-.
. erations after World War 11.
-
Agee was assigned as a "case officer'.
to Ecuador, where seven employees op-
erated on a budget of $500,000. During
his years in Ecuador, two-reformist *
presidents-Velasco (elected by the.
largest majority - in? -the. country's his--
tory), and Arosemena -were thrown-
-out of office, primarily because of po-.
iitical disturbances.resulting from their`
failure to. break diplomatic relations
with Cuba and to strike much harder at
the local Left. These disturbances were
.instigated and directed bythe CIA:::-`
"We weren't: trying to. get them'
thrown out of office,".Agee recalled:
:"We were trying to get them to adopt
-certain policies we wanted' adopted.: It
-so, happened that they - resisted-and
they fell, both of them.".
Essentially, the Agency carried out a:`:
covert program- of destabilization to
create the political pressures -deemed
necessary for a swing to the right. They
worked through a wide variety of-paid j
agents. The list stretched from -top i
politicians and military figures (when
a member of the legislature became
Ecuador's vice-president, his CIA "re=
tamer" increased from $800 to $1000-a
month), to an official of the airmail sec-
tion of the Central Post Office (you're
always curious about the mail), to a
leading liberal journalist in the country
(who did at least stylistically touch up
the columns the CIA provided for his
byline), to a local distributor of Ameri-
can cars, even in an indirect fashion to
The YMCA basketball team (a good
way. to make. contacts-and they re-
ceived their sneakers through the diplo-
matic bag). Others included a member
of the Chamber of Deputies, Minister
of the Treasury, Secretary-General of
one socialist party and an Ecuadorian
ambassador to the United Nations-at
the time Agee left Ecuador, this man
was recommended for the august status
of Career Agent---sort of a CIA Hall of
Fame. .
This network was utilized to build up
a fear of communism and instability.
The Agency generated a campaign to
mobilize a cardinal into a crusade
against communism. It organized the
disruption of a visit by the Soviet am
bassador to Mexico. CIA agents in Peru
broke into Ecuador's embassy in Lima,
stole documents and faked others that
showed Ecuador as aligning itself with
Cuba-and led to Peru's breaking dip-
lomatic relations. An effort to bug the
Czechoslovak legation failed when, a
la Watergate, four Indian guards sleep-
ing in the room next door awakened.
The CIA, through goon squads, organ-
ized a series of church bombings, as
well as "spontaneous demonstrations" -.sometimes..:in'-headquarters..The. ?als.?,
in protest. rovaI process goes through the GIB..
All of this, Agee emphasized to me, and: then'" over to the. undersecreta:.'
should not. be misunderstood. ',That's level of the,, National Security Count'
the point,". he said. "The CIA may de= -Once. these documents are approv.-. .
stabilize and eventually bring about the they go back to the CIA,. so an assist::
fall of a government, but they will'not . secretary of state for inter-Americ_
_ necessarily say','nbw is the time, boys., affairs can say that the Agency has
In many,.cases,- the mititary-wiIl:not. programs of destabilization or. pre;
..necessarily know'what the CIA is do- ganda or however they describe it.
' ing behind the scenes.. They don't know does not know all that is going on. Ni..
...that all this propaganda is roming.but A her do the ambassadors."
in; the newspapers;. or on.the television Or, as Agee's first chief of station
or the walls or in the; fly sheets that. Ecuador explained to him .The amb:,
ate distributed The military iu Ecuador- sador knows nothing about the oper