'LIBYAN CONNECTION' SAYS A LOT (ALL BAD) ABOUT CIA MANAGEMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91-00901R000400150001-0
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 154
• Document Creation Date: December 19, 2016
• Document Release Date: October 21, 2005
• Sequence Number: 1
• Publication Date: August 28, 1981
• Content Type: NSPR

Approved For Rele
`PRESS STATEMENT RE ADDITIONAL FI'L It,GS WITH
THE OFFICE OF GOVERNMENT ETHICS
Mr. Casey's accountant and his investment advisor have reviewed,
at his request, his trust, custodial and other personal records for
the last ten years. This review brought to light additional security
holdings, emanating from pre-1970 transactions. Most have little or
novalue- Only one-produces any income. In addition, this review
3
revealed bank loans on which fir.. Casey and co-signers are contingently
obligated. Fir. Casey also reported an interest, in a patent anda
Computer- which is related to a business previously disclosed-
STAT
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 STAT
Approved For Release 2005/11/28 : CIA-RDP91-00901R000400
LOUISVILLE COURIER-JOURNAL (KY)
28 August 1981
Co ection s s. a lot (a'-
.CIA me U.
SPY AGENCIES are supposed to be.
able to keep secrets, but maybe the
Central Intelligence Agency has gone.
too far. Evidently, some who work at-
the agency haven't--been told -.thaf~- the-
Libyan regime' of Colonel Khadafy'is
considered by the U.~~ S~~..--~ov~ernment= to
be a band of troublemarer' tt ^terror-
ists, not friends.
That`s one explanation for reports
that former CIA agents, and at least
two who were then still, on the "Com-
pany" payroll, have shipped explosives
to Libya and trained terrorists there:
The more likely explanation, however,
is that CIA- management, because-.':of
rapid turnover at the -top in recent
years, has gotten dangerously- lax.
Whatever- the reasons, the results
have been shocking - and. disgraceful..,
As The :New York Times reported this
week, -active- and former. CIA., agents
were even able to lure a; 'group of
Green Berets, members' of the U: S.:-
Army's elite Special Forces, ? to Libya-
to participate in the ;terrorist training
program. One sergeant. -told.. howv, he
checked first with Army-counterintel-- 1
ligence - and was informed that- the
mission was "legal and aboveboard."
Neither the CIA nor the Army has
-yet explained publicly how the mission
came to be given a clean bill of
health. But the sergeant, after arriving
in Tripoli, meeting with the. head of
:-Libya's.' spy agency and being shown
an explosives factory,. got cold feet and
returned to America.
"I know the agency (CIA), does bi
?zarre things," he later-explained, "but
working for Libyan -intelligence- was:
too much."
CIA Director William Casey has a
..bi job on his hands- He's got to find
out what went wrong, and why. -And it
would help, obviously, if he and con-
gressional -oversight committees- could
end the agency's reputation for doing
"bizarre things." That reputation
makes it. dangerously : easy for -.ex-
agents, and others who claim "connec-
tions"' with the CIA, -to con -honest
folks -with unusual skills such as
Green Berets. - into thinking they're
serving their country, while- they're-ac: J
tually abetting international thug&:_,,.:;`
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 Approved For Release 20,~ /,1,1I423T(9 -RDP91-00901 R000400150001-0
C1",,'
114)=rva> Of Casey 'S t"o,rn-et? clients named
i
Associated Press
VA.SH1NGTt)N CA Director rWilliam J. Ca-
represented the Korean and1ndonesian gov-
errnrnents as a lawyer before joining the Reagan
A.dniinistration,,acxording to??information,filed
`i'hursda)r with the Secretary of the Senate. :er 13airy Goldwater (R-.Ariz.) chairman of
;
63 Senate intelligence. committee:submitteda
iie,toi ii7 clients arzd s-raid,it s;upiplemented a list:-
subinitted o} aeyr at hlszconfirniation hearing;
in :Januarys_f oldwater=.sa1dl -"the? names'were?
supplied byj Rogers. &-Wel1s,R theNew,-York law, thrrtx;;with whirls.;.Ca
sey`,was associated", from
19i4to 1981
he Intelligence Committee cortducted`a pre
lr.minarvn;inquiryr;,into;"Casey's past. financial
dealt ;s last'montti after l.hte,ClA chief`s hand-'
pigk deputIY,;_- lax 1luget,^. resigned while deny-
in of, ,of former=business iassociates
thalihnkta~teu in ianjproiaf?r:i~racticess r
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 Approved For Release 2005/11/28 : CIA-RDP91-00901R0001
ART-NIAPPEABE THE WASHINGTON POST
28 August 1981
STAT
fiA's Cas~j
)per 14)0 Clients,
enate List Shows
By Charles I1. Babcock
CIA Director William J. Casey-'has filed a new
"list with the Senate InteltigencE;Coramittee of
more than 100 legal clients, including large cor
iporations such as Pan Am, Kennecott Copper and;
'Merrill Lynch and the governments of Indonesia
And South Korea
Sen. Barry Goldwater (R-Ariz.), chairman of.
he committee, sent the new listing to the secre
tary of..the.Senate yesterday, noting that it sup-
platnented what Casey had supplied, the commit'
tee- at his -coiafirniation hearing 'early this year...
The earlier submission covered only the 'last .,two
years t _
-. Casey's former-law firm, ? Itcigers'"& ?: Wells- Of"
Now York, told the committee the list represented'
dients for which. Casey had billable time or oth-.
erwiise received credit" from 1976 to 1981.
Casey came under intense criticism in Congress
last month after Max Hugel, his choice to run the
CIA's clandestine- arm, was forced to resign be-`.
cause of allegations of financial wrongdoing while
,.a,. businessman. Goldwater and' other senators
--:called for Casey's resignation because of errors in.:
judgment but, after a.heaxing July,29, agreed he
was fit to sere..
A C.IA spokesman declined o comment'on the
new list:yesterday. The committee staff is' check
iiig Casey's records ? while . preparing'- a report` on'
the.llugel affair that is expected to. be completed
_sao softer the Senate reconvenes in two weeks.."
'Ar Justice Departuzent`afficial said yesterday
that Rogers &.Welis was a registered foreign agent
for Indonesia in-1977 and 1J78,.. trying to obtain
"U.S. ? foreign'. tax. credits for. 'Indonesian income
taxes paid by U.S. oil companies.'. Casey's r'ew list -
of clients also included Pertaminay; the Indonesian
'-.national oil company.
It could` not be learned immediately whether
::Casey had registered separately as a foreign agent`
ii.r whether he would have been required to do so.
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 Approved For Release 2005/11/28 : CIA-RDP91-00901R00040
a.,
L ivc:,,v !t :ttt 'i1.t a
,a. LE ',PP-E 28 AUGUST 1981
i aseyA e sList.of a in s
-f --an ei on In te 117~9enl C10
WASHING T oN, Aug. 27-- Willians J. '
Casey, Director of Central IrrteIligence;a
his provided information to a Senate
ccrimittee Showing that he did not dis
close Morethann70law clients in a finan_
cial statement filed at Senate confirma-..t
lion proceedings earlier this year. . -
In a statement submitted Jan:?27 to
the Senate Select. Committee on Inteili-
1/y.EDWARDT. POUND
S?pedal to Me Nero York Tt *,
fence, Mr. Casey; who practiced law in
-a1anhattan, listed 43 clients.
However, he recently notified the
committee that he had "billable time or
otherwise received credit" from his law
fir-M, Rogers & Wells; for 117 clients in
the period 197U1, according to.a docu-
ment filed in the Senate today by the
panel. 1.
A committee spokesman said today
that the additional information was pro.
vided by Mr.. Casey &t the request of the
'Committee.
{he supplemental list of clients shows
that Mr. Casey has done work for tiro
foreign governments, those of South
Korea and Indonesia, He also repre-
4=e,r.ted Pe,-1amisa, the Indonesian state
oil company..
I irm Registsered as Foreign A3ent
Records at the Justice Department
show that Rogers & Wells registered as
an agent for Indonesia for the period of
July .1977 through July 1973. Mr. Casey
did not register, and he declined through
en intelligence agency spokesman to an-
swer any questions about the supple-
mental list that he had submitted to the
co, mittee,
"Mr Casey Is continuing to respond to
the requests of the committee" and be-
lieves it would be "inappropriate? to
comment, said Dale L. Peterson, the
agency spokesman....
?'he Foreign Agents Registration Act
of 1138 requires the registration of any-
one who does business or public rela.-
tions on behalf of a foreign government.
Lawyers engaged in legal work for a for-
eeign country, and not political activity
or lobbying, are not required to register,
according,to lawyers familiar with the
art.
'1 e nature of Mr. Casey's work for
South Koreea, Indonesia and Pertamina
A committee spokesmann declined to
say whether the panel had sought addi-
tional information from Mr. Casey on
hi
s work for the foei it
rgnnerests.
Headed Export-Import Bank
port-Import dank from 1974 to 1976. In
that period, more tran $54 million in
United States-guaranteed loans were
granted by the bank to help finance a na-
ttonwide statellite communications sys-
tem in Indonesia.
The additional filing by Mr. Casey
alsoshowed that he had performed work
for two concerns that have been linked
in the past to organized crime figures.
T he companies are - Caesars World,
which operates casinos, and SCA Serv-
i ces Inc., a waste disposal concern.
Spencer Davis, a spokesman for th
e
intelliigence committee, said today that
in January Mr. Casey gave the panel a
Iist of clients for the previous two years.
Mr. Davis said that at the time the panel
asked Mr. Casey for a five-year list and[
recently renewed its request in thowake
of the controversy over the director's fi-
nanees.
According to Mr. Davis, Mr. Casey
explained recently that he filed a two-
year list of clients with the committee
last January because he had submitted
the same list to the Federal Office of
Government Ethics. Mr. Casey said that
the ethics office had asked for a two-
year list and that he-had inadvertently
given the same list to the committee,
hl.r. Davis said.
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 Approved For Release 2005/ 1128 P A IP91-00901 R000400
27 August 1981
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 Approved For Release 2005/11/28 : CIA-RDP91-00901
EArRED
A { A.:~'
T I C C,
ON .c'A'-T%_3
i yam arEx Green Berets 'raz e '
ing
Toss forLibylan Government
NEW CORK r'I S
26 AUGUST 1981
ye!
The following article is based on reportin,/by Philip Taubman and Jeff Gerth oc
and was written Mr. Taubman. - Fo
Special toTSeNowYnit7lmey`.`.
tr4
HONOLULU, Aug. 24,.- Four years said, -wasthe lack of any Federai-Ia9 I
ago, 10 men trained by the Army Special prohibiting the training of terrorists out-called Mr ? t.~mili.
Forces to be Amer'ica's elite commands side the United States by American citi- -t Bragg to counterintelligence offi-
trcops went to work for the Government erg; , vials at t Fort F report on the con
verration. "I thought it might be some-
of Libya, training terrorists thin
e rive
be a
know
ma
b
,
y
s
g su
Slow toAccept Responsibility re y
According? to, participants ;in the foreign power trying-to
lure us into
operation, and Federal -lnvesti?ators 'I7ie Army and the intelligence: agen something, he said
w o have since tried to reconstruct tile, c y investigator:; said, lave been slow to Talked Ml Night, He Say
events, the men went to, Libya with the accept responsibility for the activity of
tice Department morning, Mr. Thompson said.:
Ni-ae were, retired. members of too Started its investigation,. ended incon- The next day, Mr. Loo.:niscalled
Special r orces, better known as Green icfusively, according to I *.fense Depart- age this time to arrranae a meeting
Berets. The :10th, who recruited the nexttofficials. with Mr. Thompson and the men he was
othersJ'or the mission, wag a master ser_ ' Lieut. Col. Harold Isaacson, a spoke recruiting. They picked the Sheraton
_veant in the Green Berets and was on ac- .man for the Special Forces, with head- Motor Inn in Fayetteville.T. e time wash
tive du 13e had been recruited b y^^cf?sf rata.'IntelItgnc
Committee, and r eve a lot of f lends and cot tact over
here. Could you pare with- us your. thoughts about
irector William Casey-and some of Ube problems hies
hadat.the CIA, and also the business of Max.Hugel; the
deputy. director who wound up almost running that
;: r ; say ,,- i[t
F agency then quit"
A_ Well, the deputy director of`operitions `the feltdw
we refer to as DIX), is second only in importance to the
director himself :It's a,-very sensitive 'position.' one.
where the fellows who'are below the?'DDO-must have
good. communication and complete- trust and confi-_
dence. Max Hugel on his own was .a successful busi
nessman but he had no intelligence experience- The
reason Casey wanted him, according to the testimony,
was to use his background and connections as a busi-
nessrnan, international busin ssman, so we can involve
our--business--people--in-our intelligence gathering.
Whatever that means
Much of the campaign -'the campaign' against-
Hugel - did not come- from the Senate nor did it come
from the House.IL'must-have come from the agency.
Somebody-must'havedone some bird-dogging and re-
search, and looking around- snooping around, into files,
because I don't havethe time and the inclination,.. nor
do other committee. members, to check-"out on this fel- `
low. We feel if he's honest: and he "can keep secrets and
if that's the fellow Casey-wants, then so he it. But then
little things kept'sprouting up. I think these little things
were leaked" to il:c:-press by some-of the-fellows. in the
..-~t:.emu: ~s..:wc a-.z:v.r.~, -:.:r.-F`-~-c+Y?ati~ -
No r, Casey ; nomination was. approved because-we
thought with?Casey,.being, as close as he is to the presi-
dent;:?-it would be-a plus for the intelligence community.
Thestories against Casey;: brought about by so-called
exposes in the Washington Post and other papers, for
the most part were- minor;: inconsequential,, and nitty.
Now, for example, as-a lawyer Casey, must. have ha
died hundreds upon hundreds of client, ; and he is-sup-
posed t6 report as part,.of,his disclosure; the names,
occupations and the nature, of the case of any clienN
that-paidhim more than $500. So he h?d to go through J
a. computer-printout.,-He- missed one, one-that had noth
iri'to do with his integrity, just something it missed:
But it hit the front pales.
'
The articles suggested that somethin ; was being hid-
den.: Secondly, he had a client whp- was friendly with
Mr: So-and-so who had connections wit i the syndicate-i
the eouation bein ; - therefore Casey was close to the i
syndicate. Idly. God! If you use that kind of argument,,
you can condemn me for anything you want_
I think in this case, the press people responsible went
a bit overboard. I suppose.it's- part ,of reporting, but,:
well.-
-
-----2 -'
-
42' Sen. 'Barry Goldwatersaid Casey should quit;T
though. Remember?
A:.. Yes. But`afterwards he realized he was a- bit
premature and should nave Waired.?Lntileverytl7jng
came jn .i.
EX CER _[ ED
STAT
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`: D THE SPOTLIGHT
24 August 1981
'rei n afents no w have, dqy-to-day control
io a e, and covert-artion
/^_~~vp fir'
o e -ati?/nsa'
-.aExcyrlsI To 9Plfr1.)Girr.'
A.-brazen attempt by influential "Israel-firsters" in the policy echelons of
the, Reagan administration to extend their control to the day-to-day es-
pionage and covert-action operations of the CIA was the hidden source of
the controversy and scandals that shook the U.S. intelligence establishment
this summer.
The- dttal- loyalist,, whose domination over the federal executive's high
planning and strategy-rnaking resoui'cc is now Just about total, have long
meri
con-of o the I
t fi
l
h
'
dd
e
e on 315 }Jo
wanted to gra[. a Hi MU in t
worldwide clandestine services. They want. thin control, not just for them Arabs
Yet The SPOTLiGHT's best-inform-
selves, but on behalf of the Mossad, -;chi brought to power Francois Mitter-'ed sources, several of them intelligence
Israel's terroristic secret police. rand, the socialist communist candidate! officials with decides of experience,
An exceptionally' well informed and I who had.. the. personal support of Israeli concurred in the view that gaining a
responsible U.S. intelligence source --a
Prime Minister Mienacherri Begin,. a bit- lame measure. of control over the "in-
bri}}lint young attorney who quit a key ter foe-of former President Valery Gis-, nut" of America', global intelligence
rational securit rr only a :-north ~t o
y p Y card D Estaino. network was a prit e oal of the Israeli
p-otes: the C1 ''' r -)L' niCr Olli i+ACSSAQAESlSTED govcrnrnerit and c1 its Inner.circle of
ils whose first to}alty, is to lsrat,!--said But in ocher nations American CIS.
the high-handed Intrusion of Yfos xd a ents and supporcvrs in Washington.
station chiefs have resisted--and-, at I These experienced sources were inter
agents into some of, the- most sensitive times- - bitterly protested-the brash viewed under a p edge of strictly pro
enclaves of American statecraft has demands by. Mossad agents who expect- tected anonymity in the course of the ~rven ri se, ,for more than 'a 'year, to ed U.S. -intelligence support for their special inquiry-nttw 2'/z months long-
growing concern, dissension and inter-! violent intrigues against'`the local devoted by.-The Si'OTLIGHT's investi-I
necine conflict in the inner circles of government. f gative team to the crisis in American in-
Washington's intelligence and security In Spain, Britain, Argentina and Aus_,
- _, ; ! telligence caused by the unprecedented !
establishment. ' " ' ' r
_ - - - trig, where the Mossad's saboteurs and ! infiltration of the Mossad_ The sources
The resentment and. friction are event destabilization experts are hard at work
assessed the situation, with visible con-
more acute among?Arrierica.'s overseas against national leaders who have drawn tern.d
against
espionage and covert action stations:;In the. ire of Premier. Begin, senior U.S. , as extremely dangerous and
France, the CIA contingent, command "unconstitutional and unlawful. "One
clandestine--services officers have refus-, said it is `.`simply unbelievable .. there
ed by Israel-firster--Aar n Meyer tacitl Rag1f av Fr~l-o el st2b' PM?tR 'ftb' :O?(i1 00r"59~ -1P3 it in our history, or,
collaborated in the M it men. . - so far as I know in the history of any
In'Spain, 'according to this source -
who has had access to command-level
intelligence memoranda before he quit
and decided to talk to The SPOT-
LIGHT's investigative team in strict
coiifid nce-the three ranking officials
of the CIA station have offered to resign
rather than collaborate with the Mossad
in replacing the legally elected govern- ;
t with a regime "less friendly to the
of'terror and disinformation that ousted
';~
the pro-American.. Giscard, government. other nation ? -
 STAT
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RADIO ICI REPORTSI INC*.m
Issues & Answers
WJLA TV
ABC Net fork
August 23, 1981 12:00 Noon
Secretary of State Alexander Haig
Washington, DC
SANDER VANOCUR: Our guest, Alexander Haig, Secretary
of State, who met with President Reagan in California thi past
week to dealt with crises all over the world, with the inc easing
militancy of Libya's President Qaddafi, with the continue; tur-,
moil between the Israel is and the Arabs in the NiddIe East, and
with the constant threat of a riuc:l ear war with the Soviet Union .
Secretary of State Hai g w i I I be interviewed by i i p l o-.
mat i c correspondent E3arr i e Dunsmore. And I'm Sander Vano::ur,
ABC News chief diplomatic correspondent.
Haig.
VANOCUR: Our guest is Secretary of State Alexander
Mr. Secretary, you were once Chief of Staff at the
White House,. Had you been Chief of Staff at the White House
last week, would you have gone and telephoned President R,:agan
and told hirn about the engagement of.f the Libyan coast?
SECRETARY OF STATE ALEXANDER HA IG : Wel l , it's hard
to say. I think each situation has its own unique factors;, and
no one is the same as before.
I think, in this instance? Ed Meese was exactly right.
I spoke to Ed very briefly after we first learned of the incident.
And I think we both concluded that until we knew more, it would
not be worthwhile to notify the President. And I think Ed did so
before the issue became a matter of public knowledge, and when we
had the full facts before us -- that is, both Cap Weinberger and
myself and 131111 Casey.
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4701 WLLARD AVENUE, CHEW CHASE, MARYLAND 20015 656-4068
 T
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22 August 1981
THE. DIRECTOR o?:the CIA either has a
aaoa_memory or moremoney:tnan tie-can
unt
o
c
b
Wil
.
whos
co
~
;;
oth
liaaz . Ca y .
,
.
e..
y
c aree La the :CIA has' a1reaciy.taken. some.
'
unfo tunate
,.turns, hasdi covered:he failed 4
to- acc}uainfAhe?Governmerit Ethics Office I`
Vwi ssetstotalrngmoretl aguarterofa ::.
i4iase hadlfiefrom the>w~'or
Tanaw rememberingh~s"assetsfifi h Eth- ;
is Governmen Act--,a f11978=:requir s
'more-than-$I,OOO ThetTiihes discovered
that'd Casey, had bmittec l0uh'olding
s.
ry Wa ...Y~. ....vuuuai.c.u..d ationwb?-fet eraF jud ba xMr 'Cproinised it would follourup on points. ti 't
Ca hadui~t#f eeasuffi`ciea#lvcarefulwitl ,, nee4 clarificatioin'~New.oolnts:keen ' r "-
+ ed $1 `5i?'d t ibalwefarOusedl qom= -^ ' ~0N? mueSi;t~r~u~.a.~aiesX r~nttua c.{ariiu~aurr
nt8a :s#txt f Cf, lia6n investors: 'iyvrcan d"Dina even before-its'staff had' com--
%~rt tte an lnte}ltgeace whi'el did~a rather `tistrt7 g sense of :public respo~ sibtllty.~Mr
'~ .S?tgzfr?maY~~.doesn't fitthat descnption ;~
-
-
._4 a r. ..~. ..- ........ ....,...a.,....
......aqua. a~
? 4 ~-.~ -,':'; kF,L+.? i ~ ..: ..i. ~',' -r.
for his C1 pos;tro shortlcibetheresponsibility of aperson.with
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0~1 ?kGS '41 01
`2 Ai i -
STAT
Show and Tell: When CIA Di
rector William J. Casey sent 20 car=
tons of documents on his past busi
ness dealings over to the Senate in
telligence Committee, it made an
impressive show of full disclosure.
flue it turned out that the mountain
of evidence was a veritable molehill:
One box of material, 19 boxes of
copies.
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1iou3`?'G?a CH G?ilc:L"~ (TX)
21 Au-lust; 19131
Now
I;'or an organisation that'-deals 'irk' Eisenhower in 1956 created a press
secrecy, the Central Intelligence Ag= ` dential advisory board "to further the
ency spends a lots f time-in~the lime availability of intelligence. of the high-
Ii.ght- Entirely too;much time. est order: President Kennedy waited
Early lr July,:CIA.Director William until after the 1961 Bay of Pigs failure.
J. Caseysaid in an.agencyne vsletter to appoint: such: a- board:, Presidents
that `.`the clifficalties o'f the "past;, are 'Johnson Nixon and Ford named advi-i
behind us" and;that;-henceforth;.-.the .- sory boards;=but President Carter did
C I:, iguisbedforrilerdiplomahc,military; and inte?
lll$ecrce pfficlais
' ,.
-
`
~
~~
yReceri ly i k a
x
C
Hale Foundation',a, pro-mtelIigence
airizatit5n;r.1ubhshd a -u f study extopirg
~boai'd' ;teeos~ and; s e the-
ma s rgutgts reyivat According to
SeCe esttrx
b
a
'
c
y I1am
J Ca
sey'`t' - current
LTA chter, -t fi"6ig~ reaps in:?U S tent..-c,. -
j colIectiartaai&tses'zs I1eiI fiorri..tz`re fhi_nking ot,such
board . rnembnrs"'a~ r Edwin II-:' Land thel?olaioid
camera
v
iza
d
r
Tai dWilliam 0 Baker the great Bell Laor.atones
j Tele2hon,
e
researcher }
they board inseveral, ;
header 4 `"b?e'xaie study says .. It was a
pane).,
ay dlfhattPrCMsedthefantastrcconcept of -
1-15 et o ? sful'rU spy FPIane ' "
even
i. Q Bence advisory board as.
esiablisliec,r
a, iIt-warsFa~l97~ board that Brought abouCa cb g in 4
_? C A-anaT
. r Ysis'7?roEedares which m 'turn
Produced a_~
E k and somber~estunate of the Soviet "''
ri,2dyd~ronounced ~change,'
,~, c -t r~,.cu~cza ?oursid~ .xh ~~
end xuifil a a ~, rs:. o will;;
7 , 6
nafnAr A moropol}r ors;truth and
. ... ___... .r_.-,. ..a -~
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ARTlCL AT''EAWI~D THE WASHINGTON POST
ON 12 August 1981
X d 1T.C~~...........
emocratic Special Counsel-Quits
Committee Investigation of Casey
The Democratic special counsel of tlbtt, notified him that the firm had i
the Senate Intelligence Committee done extensive legal work for Broth- i
investigating CIA Director. William er International Corp. and its former
J. Casey has resigned, citing poten- president, Max Hugel.
tial conflicts. of interest, relating to Hugel, a Casey protege during the
his New'York law firm and matters, 1980 presidential campaign, was, ap-
under investigation by the commit pointed chief of the CIA clandestine'
tee., service in. May and -, was forced to~
:'',Bernhardt K. Wruble, 39; wasap- resign .last month following allega
pointed July 3t as minority counsel- tions of improper past business prac-
to :assist- Fred D. Thompson,:: counsel tices,. which he, denied
fog the Republican ? majority..Com Casey's" judgment in; appointing'
mittee staff lawyer Peter M. Sullivan Hugel, the hurried background in-
has . taken W ruble's place. vestigation that cleared Hugel and
A. spokesman for the committee Casey's own past involvement in
said that Wruble withdrew from the controversial business ventures all
investigation after., a member of his .._ are under review by the committee
law firm, Simpson, Thatcher & Bar- staff.
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ARTICLE APb..A p
Ob1 PAGE /42
THE BOSi'sii JL,?8E
11 W:Just 19,31
- CIA chiefs plight
The CIA certainly needs. lead"
r,
ship.: but leadership., history
records, can only derive its authoci----
ty from the assent. of.those ?led. Ifs:
by ,.the appointment-and:-resigaa"
tion?_ of. Hugel, Casey, hhas", already lost the-confidence of the CIA staff,
then Sen,-.Goldwater.is-.absoliitely--.correct.-that Casey should resign...ti
His effort to-lead a resentful intelli-,
Bence corps cannot endure under
such circumstances.
Whether Casey's business prac ~,
tices are or are not free of fault-Is. =
beside the point:
GERALD E= MILLER
Retired CIA C)ffiger,.;;
Wes'port Point
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 -7 u-
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The Editor's Page
11 the Luck o Out?
BY Marvin Stone
0460150
Just four years ago, people were saying what horse-trading have won him nearly everything
a lucky President Jimmy Carter had been-:so he asked of Congress, including his latest barn-
far. Now, the theme is what a lucky President burner victory on the three-year tax slash.
Ronald Reagan. has been-and "so far" must But it will be a while before we know if he
necessarily be added to that theme, too. asked for the right things. What if the benefits
Reagan has not burdened himself with a Bay of painful cuts in spending are completely off-
of Pigs fiasco, as John Kennedy did in his early months, nor did he inherit a nasty war in Viet- revenue losses fromtstax-rateereductio _by the
and
nam, as was Richard Nixon's bad luck. That's thus inflation takes off again? om u
plain good fortune for this President. Only the coFt-
But that is not all. The rate of inflation has ers are saying, and what computers say depends
dropped substantially. International oil prices ori.the assumptions that are punched in. A are not all in how have declined. Production. totals had risen for tiontheecountry must orocan susttainh der the
months before a recent slippage. The dollar has short run iii order to achieve eventual econom-
gained value abroad. Unemployment has is health. Soon people will be feeling the cuts
stayed within bounds. Reagan properly hesi- in food stamps, school lunches, medical care
tates to claim credit for all these developments and parts of Social Security. Along with exci-
because in large measure they derive from in- sion of waste there will be some, suffering.
herited circumstances. Still, they add to the The high interest rates that Reagan defended
President's stature. at the Ottawa summit meetin
Headlines involving Hugel and Casey at the g get a major share
-- asey a of credit for holding down inflation. But Ger-
CIA stir memories of Carter's ain over Bert many's Chancellor Schmidt, who went home
Lance. But this President so far has an led such muttering, is not the only one worried by them.
family tempests wisely. And the new President Federal Reserve Chairman Paul Volcker, who
was doubly blessed-or doubly wise -to find a presides over our tight-money policy, has had
jurist as sound as .Sandra O'Connor for the absorb a lot of flack from congressmen upset
opening accorded him on the Supreme Court. about what is ha
et
She was the woman appointee he needed. happening to the fund-starved
auto and building industries. Ingenuity and
If some of these events were luck as in a roll stamina are going to be required for a long time
of the dice, it's well to observe that what lies h
on
of killing him. 1e5? owe really have things under control?
Those same qualities of fortitude and happy. We all want the President's luck to hold, for
optimism have added up to a talent for getting that bodes well for the nation. But it is dear
his way. Those acid an unexpected aptitude for also that Reagan's big tests are still
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ahead for Ronald Reagan will require a great
It may be~ years' bef we t e monetary front.
deal more than that. Fortunately, he has more to relax the drive foroaesyn synthetic-fuel ca acity
to offer. He hits displayed the kind of luck and play down the need for oil conservation.
recognized through . history: as a Prime attribute Much the same is true in the rush to throw off
of a successful public man. The ancients environmental regulations.
thought that it was conferred on individuals by There remain also the problems of coping
the gods, and they spoke of being "born under with the rest of the world. When the give-and-
a lucky star." In fact, his is a rare combination take with our allies proceeds beyond smiles and
of personal qualities, which-foi? one thing-' communiques, can Reagan still make things go?
enabled the President to rebound with aplomb And what of future relations with our adversar-
from a bullet wound that'came within an inch ' I T%
U-81. II'''iS it ':rQIiLD
 c PAGE Z Approved For Relea 200 ? C 1 R000
10 August 1981
Washington ~hu'@
ISTAT
Why White House Went to Bat for Casey ... Fidel Castro's
Corner-Up ... Americans Now Targets of adhati Hit Men?
One reason that the White House
went to bat for William Casey, the
embattled CIA director, was the Pres-
ident's feeling that if Casey had not
been defended vigorously it would
have been an open invitation for ad-
ministration critics to try to destroy
other controversial officials.
Cover-up, Cuban style? Fidel Castro's
explanation for a dengue-fever epi-
demic that has stricken more . than
250,000 Cubans and killed more than
100 is bacteriological warfare by the
CIA. But U.S. health officials say the i
particular variety of fever is native to
Africa, .not the Caribbean, and are .
convinced it was% introduced into
Cuba by _Castro's troops returning
from Angola and Ethiopia.
Will Senator Goldwater's criticism of
CIA chief Casey sour the long friend-
ship between the Arizona lawmaker
and Reagan? White House aides in-
sist not, calling Goldwater's action
just a momentary lapse of judgment.
U.S. officials fear that former CIA
agents working for Libya's Muammar
Qadhafi are getting bolder inside this
country. Until recently, assassins had
been dispatched to kill Qadhafi's Lib-
yan opponents here, but now hit men
are believed to be after Americans
getting in the way of the Libyan
strong man.
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 STA T1
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R Approved For Release 200 &t'1I 8 CIA RDP91-00901R0004 0150001-0
10 August 1 ; 1
,Nothing that as apeased a'oout :J7iiliaM-'X7-.caseg's
wiiivolvement ixz business or hia'relations'with clients as
= a : lawyer i wry new. -Anyone wao remembers { his
chairman of the Securities:&
Exchange .Commission in 1971 almady Imows about his.
'problems.witirMultiponics:Inc. and other companies m
which e-invest or was involved. At the tnno~ysuss ?
NESS WEEK (Mar. 4,' 1971) editorialized, that someone
with that background should not serve as chairman of
the agency that was supposed to police Wall Street- But
Casey was confirmed and performed far better than we
or anyone else expected. He was a good chairman of the.
SEC and an effective watchdog of the exchanges and the
securities industry.
His investments and stock dealings were relevant to
his service on the sEC. It is hard to see how they could
have ariy bearing. on his qualifications to be director of
the-:Central - Intelligence Agency., But if any senators
had.tho'Ught they did, _the'time to bring the subject up
was during. Casey's confirmation., hearings.: Something
else had-'to, be involved in the sudden reopening of the
,:;.question by' theSenate Intelligence Committee. It is one:
thing to put a political< candidate- through his paces
before ;confirming~' him for = a':' st. i it - is
::. iegulat.orT Po
:something altogether different to drag.out'old charges, :i
and :use ,them asa`asubterfuge- for;_.openm up _ the
nation's intelligence secrets -The comnuttee was right..1
h quickly judging-Casey fit to serve.`
.:.The.. attack on Casey could play. into theVhands of'a'
group in:.Washin,gtonthat believes thatthe.U. S. should
have no intelligencecapability'andshouldnotindulge in'.
'" covert operations. hi a-, world where civilized nations
must deal with the. KGB and terrorist'i egimes in a. dozen
countries; . that:view`is:a%naive-and;=stupid denial of
reality As stories about suspected covert operations leak
from the group that holds such a view, the real purpose
of the attack on Casey becomes clear. It is intended to
sabotage the whole U. S. intelligence operation. If that
is.not.treason in the legal sense,ltCertainly gives aid
.W. _;'{-,?fis 2,C~ -~., T7 ~.v .?r 11', yl;
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o1 FAG L L2- 10 August 1981
Anatomy of a
Sad CIA Affair
Casey survives thefitror, -but
suspicion and intrigue linger
"It is the unanimous judgment of the
committee that no basis has been found
for concluding that Mr. Casey is unfit to
serve as director of Central Intelligence. "
i t was hardly it ringing endorsement, but
that statement by a sour Senator Barry
Goldwater nevertheless ended a two-
week furor in Washington over the fit-
ness of William Joseph Casey, 68, to stay
on as head of the Central Intelligence
Agency. The Senate Intelligence Commit-
tee, which Goldwater leads, promised to
push on with its investigation of Casey,
but Ronald Reagan's former campaign
manager clearly had won, on points, one
of the nastiest brawls in Washington since
the President took office. In a broader
sense, however, everyone lost. Casey re-
mained under suspicion. Goldwater and
other Senators who attacked Casey pre-
maturely had been forced to retreat. Ques-
tions about secret CIA operations, and the
character and judgment of the nation's
top spymasters, had been raised around
the world.
The Casey battle involved a complex
mixture of personal and institutional mo-
tives, the springing of leaks and planting
of misinformation, and a web of back-
stage intrigue that tended to obscure the
real reasons for the struggle. As pieced to-
gether last week by TIME correspondents,
the inside story reflects little glory on any
of the participants.
A central figure in the drama was the
increasingly crusty Goldwater, who con-
siders himself the Senate's leading expert
on intelligence. The venerable (72) Ar-
izona Republican was miffed when the
Reagan transition team failed to consult
him last January on who should head the
CIA. He did not like the choice of Casey,
a wily and tough Washington operator,
to direct the agency. Casey made matters
worse by virtually ignoring both Goldwa-
ter's committee and the House Intelli-
gence Committee, which take
their duties to oversee the CIA se-
riously. He even curtailed the
CIA's congressional liaison staff.
. Meanwhile, tension was ris-
ing between the White House
and the oversight committees on
just how much flexibility the CIA
should be given to conduct co-
vert operations and plant under-
cover agents abroad. The com-
mittees want to retain their own
close surveillance in order to
prevent the kind of excesses that
caused the CIA so much public
grief in the 1970s. Reagan, how-
ago"
Casey on his way to a "cakewalk" with Senate Intelligence Committee
Leaks and misinformation, not to mention a complex mixture of motives.
tration would be lifted. The CIA, for ex-
ample, might be able to use the Peace
Corps and students abroad as undercover
agents. This proposal has led some Sen-
ate Intelligence Committee members, as
one put it, to believe that "the White
House :favors anything over at the CIA so
long as it's not embarrassing."
Within the agency, philosophical
fights were brewing too. One faction, in-
cluding Casey's top deputy, Admiral
Bobby Inman (who had been Goldwater's
choice to head the agency), advocates
more emphasis on "pure" intelligence
gathering and analysis-calling the world
as the agency sees it, whatever the con-
flicts with Administration policy. Other
officials feel that the agency should tailor
its reports to the decision-making needs
of the President. Casey was seen by some
as reflecting this view. When a CIA re-
port failed to detect the degree of Soviet
influence over worldwide terrorism that
the White House is convinced exists, for
example, Casey ordered the study to be re-
done, and then redone again.
The agency was also split over an in-
ternal reorganization plan under which
order under whicPpt Vdlfeor,Releas
agency by the Carter Adminis- Goldwater, Thompson and Democratic Senator Moynihan
all of its work relating to the Soviet Union
would be consolidated in a single and
probably dominant directorate. At pres-
ent, responsibility for Soviet affairs is
parceled out to directorates that deal
with intelligence gathering, analysis and
covert operations. The reorganization was
first pushed by Max Hugel, the man
whom Casey chose to head clandestine
operations-a wheeler-dealer from New
Hampshire who was widely viewed in-
side the CIA as a political amateur and in-
competent spymaster.
Late last month two Wall Street stock-
brokers,. Thomas and Samuel Mc-
Neil, publicly accused Hugel of illegal
stock manipulation in the mid-1970s. The
timing of the McNells' attack, so long af-
ter the events that had turned them into
enemies of Hugel's, fueled suspicions that
it may have been instigated by Hugel's
CIA foes. When Hugel promptly resigned,
his mentor, Casey, suddenly looked vul-
nerable too. Goldwater, in particular, saw
the Hugel fiasco as reason enough to re-
place Casey for having chosen a misfit
for the sensitive job.
After the Washington Post
published the McNells' charges,
other papers followed up with a
story about an overlooked May
19 decision by a federal judge;
he had ruled that Casey and oth-
er directors of Multiponics, a
New Orleans agribusiness ven-
ture, had misled investors about
the finances of the firm. With
that, Goldwater swung into ac-
tion, ordering an investigation of
Casey's fitness for his job. Even
before the probe began, Goldwa-
ter and two other. Republican
Senators, Ted Stevens of Alaska
and William Roth of Delaware,
1 4uGasey to quit.
The anti-Hugel faction at
the CIA, sometimes using mem- J
V.
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bers of an "old boy" network of former
agents, pushed for a quick Casey kill. It
fed Goldwater the dubious information
that Casey had emerged from Multipon-',
ics' bankruptcy in 1971 with a profit of
some S750,000; he insisted he had lost al-
most his entire 5145,000 investment. The
same CIA sources apparently spread a
false report that Casey and Hugel had
planned a covert operation aimed at the
'`ultimate" removal of Libya's Strongman
Muammar Gadaffi from power. Misinfor-
mation was leaked to Newsweek that the
I-louse Intelligence Committee had been
so alarmed at the Libya plot that it had
written Reagan to protest. (TIME had also
learned about the alleged plot, but con-
cluded that the report was untrue.) The
White House- last week flatly denied
Newsweek's story. But then, in another de-
ceptive leak, apparently designed to stop
the: Libya. rumor;. CIA.sources. suggested.
that the West African nation of Maurita--
n.ia was the object of a somewhat similar-
sounding operation. In fact, both congres-
sional committees had objected to a much
broader, proposed.. CIA operation-one
that. did not involve physical attacks on
any national leader-to shore up U.S. in-
terests in.the Middle East. and North Af-
rica. This hasty.scheme reinforced Gold-.
waters.. view that, according., to one
Senator, "he just. couldn't stand watching
a bunch of amateurs running things."
s the attacks on Casey mounted, Rea-
gan kept asking aides: "Is there any-
thing to these charges against him?" The
White House began to qualify its back-
ing of Casey. But them the old pro coun-
terattacked. He made an effective series
of calls on Senators, admitting that he had
been wrong in appointing Hugel. Most
surprising of all, the reticent, publicity-
shy Admiral:Inmanwent on ABC's.Night-
line TV program- to deny rumor& that he
was leading a coup against Casey. De-
clared one . astonished former- CIA. spook:.
'`That's like seeing George Smiley appear
on the Gong Show. "
. Behind- the-scenes, Senate Majority
Leader Howard Baker worked to keep
Goldwater's committee. from appearing to
lynch Casey first and give.him a hearing
later. While publicly supporting- -Goldwa-
fet, Baker urged him to appoint Fred D.
Thompson, a longtime friend from Ten-
nessee who was Republican counsel in the
Senate's Watergate investigation, as. chief
counsel in the Casey probe. Thompson ac-
cepted the post,-promising a prompt but
careful study. Casey supplied the commit-
tee with volumes. of documents and, de-
manded a quick hearing. -
Walking into a Capitol elevator last
week, Casey confidently. declared, "Its,
going to be a cakewalk." During the five-
hour, closed-door grilling, most of the Sen-
ators, who had not had time to study the
.Casey papers, were less interested in his
business practices` tharr his- -leadership of
the CIA Some Senators complained about
dle East under. Casey. Others contended
that the CIA's analytical reports were too
"political." Mostly he was assailed on his
appointment of Hugel.
Casey took. Full blame for the ilugel
choice, admitting that it "turned out bad-
ly." He insisted that he was on the same'
side as Inman in wanting a non-political.
objective analysis of, intelligence- He
agreed that many of the restrictions on
the agency were proper. He promised to
cooperate fully in helping congressional
committees perform their oversight.
Still, the Senate committee's final ii
statement on Casey was a compromise.
Some Senators, including Washington's
Henry Jackson, Texas' Lloyd Bentsen and
Rhode Island's John Chafee, had urged
the committee to express its "absolute
confidence" in Casey. Others, including
Goldwater, New York Democrat Daniel
Patrick Moynihan and Delaware Dem-
ocrat Joseph Biden, wanted to avoid any
pronouncement until the investigation of
Casey's background was complete. In-
stead, the committee found him merely
not unfit" to continue.
The Reagan Administration had
hoped to free the CIA from controversy,
stiff restrictions and stern oversight. In-
stead, the agency is saddled with a di-
rector whose every, major move now
seems likely to be carefully scrutinized
and with morale problems resulting from
its own internecine plotting. Getting back
to its real work, the mission of forewarn-
ing the U.S. of its enemies abroad, may
not come easily. -ByEdMagnuson.
Reported by Jonathan Beaty and Johanna
McGeary/Washington
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10 Augus
'NATIONAL AFFAIRS
hind the Casey Flap
Based upon the staff review to date and
Mr., Casey's lengthy testimony today, it is the
unanimous judgment of the committee that
no basis has been found for concluding that
Mr. Casey is unfit to serve ...
ith that, Senate intelligence commit-
tee chairman Barry Goldwater last
week hosed down the fire storm that had
swirled around CIA director William J.
Casey for a fortnight. It was hardly an
enthusiastic acquittal, and a continuing in-
vestigation by the committee's staff could
still cause problems for Casey. But for the
moment the CIA chief had ap-
parently come through the
Reagan Administration's first
Cabinet-level political crisis
with his job intact. The sudden
turnabout in Casey's fortunes
prompted a new examination
of sorts. How could the con-
troversy have boiled up so fe-
verishly, then flattened out so
quickly? What lay behind it-
and what effect, if any, might
there be on the CIA?
In retrospect it seemed aclas-
sic Washington drama involv-
ing elements of high policy,
hard-nosed politics, personal
crotchets-and pure chance.
Fora time all these factors com-
bined to threaten Casey's job
and that of CIA deputy director
Bobby Ray Inman. And the
whole flap . seemed to under-
mine the efforts of some Ad-
ministration officials to restore
U.S. intelligence capabilities
while still respecting the civil
liberties of U S citizens and
warning, but from Post executive editor
Benjamin Bradlee. After a week of private
stewing Goldwater went public with a tele-
vised call for Casey's head.
. The Oversight Committees. Many
members of the Senate and House intelli-
gence committees were eager to support
Goldwater-and not merely out of respect
or affection for the mercurial veteran. Casey
had simply failed to keep them briefed in a
full and timely fashion. "There was a perva-
sive feeling across the [political] spectrum
that we weren't being kept as well informed
as we should be," said Democratic Sen.
curbing some of the agency's Casey with Senate intelligence panel: Chastened?
wilder cloak-and-dagger im-
pulses. A guide to the key players, their Patrick Leahy of Vermont. In fact, Leahy
motives and roles in the drama: said, the Senate panel found the CIA brief-
Goldwater's Gripes. The senior senator ing on Israel's bombing of an Iraqi nuclear
from- Arizona was more responsible than plant "so poorly done" that two encores
anyone else for Casey's two weeks of tor- were required-the last by Casey himself.
ment. From the start Goldwater was dubi- There also was a growing concern about
ous about Casey's appointment, much pre- "harebrained" schemes approved by Ca-
ferring Inman for the top post. He was sey-such as that. against Libya's Muam-
outraged when Casey, without consulta- mar Kaddafi (NEWSWEEK, Aug. 3).
tion, put bantamweight businessman Max The Intelligence Community. Some
Hugel, a pal from the Reagan Presidential past and present members of the nation's
campaign, in charge of the agency's super- intelligence agencies also were unhappy
sensitive covert operations. And he was with outsider Casey. Intelligence sources
nearly apoplectic when two former business were widely suspected of leaking stories
associates of Hugel decided to tell The about covert plans approved by Casey. * "To
Washington Post that they had collabo- No evidence linked the CIA or its "old boy" network to
rated with him on improper stock deal- the incident that began Casey's problems-the decision by
inchar that Hugel denied even as he former stockbrokers Samuel andThomas McNell to accuse
gs-- ges Max Hugel of financial improprieties. The two brothers
influence it this way is appalling," said Re-
publican Sen. Richard Lugar of Indiana.
Some factions of the intelligence com-
munity, however, were coming to Casey's
defense. According to one well-placed
source, the director had become a valuable ,
asset in opposing the urgings of "right-
wing ideologues" in the White House and
the Senate. Casey speaks frequently by
telephone with the President, and that
channel proved useful to Attorney General
William French Smith, FBI director Wil-
liam Webster, Inman and others in block-
ing efforts by the ideologues to ease restric-
tions on the CIA's domestic use of
electronic surveillance, mail openings,
physical searches and infiltration tech-
niques and surveillance of U.S. citizens
overseas. They also opposed a plan,
NEWSWEEK learned, to give the National
Security Council supervisory control of all
domestic counterintelligence operations
traditionally run by the FBI and the Jus-
tice Department. "The idea of controlling
counterintelligence from the White House
has the potential for providing a Water-
gate-style political nightmare," said one
Administration official.
The White House. When news of the
Senate committee's lukewarm endorsement
of Casey reached Ronald Reagan,. he was
already celebrating his big tax victory.
"You know why they cleared him?"joked
one staffer. "They had five hours of his
mumbling and they didn't want to have to
listen to it any longer." Reagan laughed
heartily. The President and his top aides
had not been sure how the committee's
investigation would turn out. And aides
undercut the director by expressing a cau-
tious wait-and-see position on the original
charges that he had mismanaged the agency
and acted improperly in private business
dealings. Eventually, supportive statements
by the President and his closest friend on
Capitol Hill, Sen. Paul Laxalt of Nevada,
buttressed Casey's position. So did a signal i
from the White House that if Casey were,
pressured to step down, his job would not go
to Inman-the Congressional favorite-
and that Inman himselfmight be forced out.
Through the Week White House officials
also tried to help Caseyby denying that there
had ever been a CIA plot against Libya.
They put out word that Mauritania was
actually involved, but NEWSWEEK con-
firmed that schemes against Libya had been
discussed with House intelligence commit-
tee members and that a second operation
was planned for anotherThird World nation
as well. It was not Mauritania, Administra-
tion aides later conceded. When a majority,
of the committee protested to the President
about the plan, most had the second opera-
tion in mind, though some thought the letter
they signed referred to Libya.
Senate sources said that it was the lack,
of fresh evidence against Casey, more than
resigned. Adding todii ruti hrjpWtwMIPa ' e &fta'p9 ' r4%_1'f$ ?I'L:9ttft q1:2(1i h4#
.h6t prompted the intelli-
tee to ease the pressure.
nt
not from Casey, who had several days' was s connected nneeccted with the he charges a against aginst Hugel. Goldwater alone felt that the appointment
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NATIONAL AFFAIRS
of Hugel was sufficient cause for the CIA
boss to resign; but when a proposal was
made to pledge "full confidence in Bill
Casey," another senator said, only a mi-
nority raised their hands. What rriost of the
senators expected was that a chastened Ca-
sey would now maintain closer contact-
probably taking up former CIA director
Stansfield Turner's practice of briefing the
panel personally, especially on covert
operations. By referring to "the team of
Casey and Inman," many of the senators
seemed to be warning the White House to
make peace with the deputy CIA director
despite their differences over the proper
role of the CIA. There was also talk of
legislating a fixed term for CIA directors
to insulate them from political pressures
and proposals to form a single Senate-
House intelligence committee to reduce
the chances of leaks about covert oper-
ations in the future.
For Casey himself, the fact that he is 68
years old made many suspect that he would
probably not serve a long term as CIA
director in any event. But given the peculiar
dynamics of Washington politics, Casey's
recent trials may stiffen his determination
to stay on the job at least as long as it takes
for the controversy to fade completely. And
that may take some time.
DAVID M. ALPERN with JOHN J. LINDSAY,
HENRY W. HUBBARD and ELAINE SHANNON
in Washington i
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li . s . -0,1S AND WORLD REPORT
lo August 1981
CIA's Casey
Weathers a Storm
William Casey is staying on as direc-
tor of the Central Intelligence Agen-
cy-but not without the close and con-
tinuing scrutiny of Congress.
The Senate Intelligence Committee
questioned Casey for 5 hours on July 29
and unanimously concluded that there
was no reason to remove him as CIA
director. Only days before, three Re-
publican senators-including commit-
tee Chairman Barry Goldwater (R-
Ariz.)-had called for Casey to quit.
How did Casey pull through? Some
help came in a statement of support
from Ronald Reagan, a Casey backer
ever since the New York lawyer direct-
ed his presidential campaign. But even
more important was Casey's personal
promise to keep the committee fully
informed about CIA operations.
The clamor for Casey to quit had
been prompted by his failure to tell
committee members two things about
Max Hugel, the outsider he appointed
as CIA spymaster. He had neglected to
inform the senators in advance that he
was naming Hugel to the key job, and
he failed to tell them about accusations
of financial misconduct that forced Hu-
gel on July 14 to resign. There also
were claims that Casey himself had
questionable business dealings.
Congressional oversight of the CIA
has been a touchy issue ever since Con-
gress learned of abuses by the agency
during the Watergate era. Those dis-
closures led to tight rules requiring the
CIA to account for its actions to eight
committees of Congress. Later, at the
CIA's request, that number was
trimmed to two-one in each house.
One Senate panel member noted
that Casey's reticence with Congress
was not unprecedented. Stansfield
Turner, Jimmy Carter's CIA chief, also
told lawmakers too little, the senator:
said, but later developed "the skill of
rapport." He added: "I think Casey now
has caught the spirit of consultation." ^
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The National Interest/Michael Kramer
Grist for the Probe
WI! LIAM PROXMIRE ONCE DESCRIBED
the William Casey problem this way:
"Mr. Casey has cut corners when he
considered it to be necessary to business
profit, He has wheeled and dealed his
way into a personal fortune, sometimes
at the expense of his clients.... And he
has made less than a complete and ac-
curate disclosure of his activities to Con-
gress."
Senator Proxmire isn't a member of
the Select Committee on Intelligence,
which is currently considering whether
Casey should continue as director of
Central Intelligence. But if he were, I
think Proxmire would be up in arms
again. In fact, I think he'd be reading the
very same words into the- record. Be-
cause Bill Casey appears to be a creature
of habit-and the latest Casey imbroglio
(which involves Multiponics, Inc.) re-
veals irregularities similar to those that
so enraged Proxmire. -
It's an imbroglio, by the way, that
hasn't much impressed the Senate Intel-
ligence Committee. Last week,. the com-
mittee gave Casey a clean bill of health
-although it was qualified to the extent
that the committee's staff is 'still in-
vestigating the director.
Proxmire's original assessment of
Casey was offered ten years ago. At the
time, Casey had been nominated by
Richard Nixon to be chairman of the
Securities and Exchange Commission,
the agency charged with protecting in-
vestors from securities frauds and -mis-
leading stock offerings. Proxmire-as
one would guess from the tenor of his
remarks-voted against Casey, and in so
doing he adopted a standard promul-
gated by the New York-Times. "The is-
sue ." said the Times, "Is'not whether
Mr. Casey has committed illegal acts-
the Senate is not a court of law-but
whether in view of the record he can
command the highest public respect.
The S.E.C. chairmanship is an unusually
sensitive and important position."
If anything, the CIA directorship is
even more important, and certainly it is
more sensitive.
If Casey finally falls, it will be because
he misled the Intelligence Committee
when he claimed lie knew little or noth-
ing about the activities of Multiponics, a
company he co-founded and which he
served as secretary and counsel.
In the law, it's called "scie tp~rr
layman's -lingo, it's 1N29e!"?YM
may recall it from the Nixon days-it's
the question Howard Baker loved to put
to the Watergate witnesses: What did
you know and when did you know it?
Here's the problem:
. Multiponics was founded in 1968 by a
group of people, including Casey, in or-
der to engage in various farming opera-
tions in four southern states. Within
nine months of its birth, Multiponics
raised additional capital by way of a
private securities offering. Multiponics
went bankrupt in 1971, and those in-
vestors Who purchased the corporation's
debentures-via the private offering sued
Casey (and his fellow directors) for mis-
leading them. The true nature of the
company's financial condition, said the
investors, was not disclosed in the circu-
lar that offered them the opportunity to
acquire a piece of Multiponics.
On May 19, 1981, a federal judge in
New York issued a memorandum de-
cision concluding that Multiponics-in
its offering statement-"omitted and
misrepresented facts that would have
been material to a reasonable investor in
determining whether to purchase Multi-
ponics stock." The court also held that
Casey di t deny knowled a of the
47f J/A QA-RDA91-0090
denied knowing that the offering circu-.
far was misleading, and he continues to
do so. Immediately after the court's de-
cision was first made public by colum-
nist Dan Dorfman on July 15, Casey tele-
phoned the Washington Post and said, "I
didn't mislead anyone. I didn't prepare
the circulars."
Casey's attorneys have filed a motion
to reargue the case, and Casey has in-
dicated that he views the court's action
as only an intermediate decision and
that eventually it will be appealed. As of
now, Casey's stance has had the political
effect of muting criticism of his actions
pending a final judgment.
In addition to phoning the Post, Casey
has maintained his defense of non-
knowledge in a more formal way. In his
official submission to the Intelligence
Committee--a copy of which has been
obtained by New York-Casey, through
Stanley Sporkin, the CIA's general
counsel, has said "he was not actively
involved in [the] management [of Multi-
ponics]," that he was "an outside direc-
tor [of the company]," that "his position
as Secretary of the Company was largely
ceremonial," and "that he did not attend
many Board meetings."
(Incidentally, to buttress the notion
that he was not intimately involved with
the goings-on of Multiponics, Casey ad-
vised Senator Goldwater by letter, on
July 26, that his $145,000 investment in
the corporation represented "less than
three percent of my total investment
portfolio at that time." And, indeed, r
Casey is a very wealthy man. The
financial statement he provided the
committee shows his net worth to be
$9,652,089. Of this amount, Casey has
$7,505,013 in securities.)
The preliminary investigation by the
Intelligence Committee's staff wasn't
really an investigation at all. In general,
the committee staff accepted Casey's
thesis without exploring its truthfulness.
But a check of court records, includ-
ing the sworn testimony by Casey during
the Multiponics bankruptcy proceed-
ings, in New Orleans-.vhich neither
the committee staff nor the FBI has both-
ered to acquire, and which Casey failed
to deliver to the committee even though
he was asked to produce all "relevant"
documents-clearly reflects that Casey
was intimately involved in Multiponics
and had knowledge of the offering that
the New York court has determined was
~iiisleadiing, Its' fact, the sworn affidavits
b t~ 44t C APs1 fglow directors state
Yet Casey has done just that. He has the following: "The Offering Circular
STA
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was prepared by t iam asey an
Lawrence Orbe [another Multiponics basis with ivlr. Wartels and Mr. Friedman
director]"; "the Offering Circular was [Casey's law partners] with reference to the
re aced by comp etent counsel . (an affairs of [Multiponics) while you were a
Director ob obvious reference to Casey ...)'; that of [tilultiponics]?
A: Yes. Stanley Barkley [still another director] Q: As a director, Mr. Casey. you feel that
"relied on William Casey (our New York you were able to keep reasonably well in-
counsel)." formed of the corporation's activities and 11 Beyond the sworn affidavits of Casey's have the information that was necessary in
fellow directors confirming his involve- order to function as a director of this corpo-
ment in the circular's preparation and in ration?
Multiponics in general, here are some A: Yes, I did..
excerpts from Casey's own sworn trial Q: During the term of your directorship,
how. often were you in touch with other
testimony: directors in order to acquire information
1 about [the corporation]?
Q: Mr. Casey, how much time did.you I,' A: Well, that has to be an estimate. It
spend in reviewing the affairs [of Multi- would vary from time to time. I would think
ponies] before you showed up at one of its that 1 had an opportunity to talk to members
A Well, that's kind of hard to answer,
meeting and the subjects that were coming
say during most of this period of time Mr. f about what was discussed, what came up at
Orbe, Mr. Moran [other Multiponics direc= I the. meeting,. and we would discuss any
tors], would be in New York and I would see aspects of it that I wanted further informa-
them perhaps twice a month. Mr. Wartels [a tion on when they wanted. my views, and
affairs of the company in detail, he would
brief me from time to time. 1 had frequent
telephone conversations with the manage-
ment and when they had something to dis-
cuss with me they would call andwhen I had
a question I'd call them, I didn't keep track
of my time but it was a considerable amount
Q:_ Well, do you know how many meet-
ings you attended in yourtenure as a Direc-
tor?
A: Oh, four or five, but I don't think that
means anything because I had many meet-
ings in New York in which these things were
thrashed out. My opinion was always re-
flected either by Mr. Wartels or somebody
else, that was my style of operating. and I
think the record will show that I had.a great
deal to say and a fair amount of influence in
the basic decisions that the Directors made.
Compare this answer with- Casey's
submission to the committee, in which
he sought to show that he was unin-
volved in the affairs of Multiponics by
saying that "he did tickt attend many
board meetings."
of the management or other directors twice
a month on the average, and I would have.
telephone conversations with them more
frequently than that, maybeon the average.
once or twice a week. Mr. Wartels and Mr.
Friedman attended a good many meetings
which I was not.able to attend, and, they
usually, if he needed my advice or wanted
my opinion, he'd either talk-to me ahead of-
time or talk. before in front of me, and we
would talk about things that had occurred at
the meetings that I couldn't attend.... Mr.
Friedman or Mr. Wartels brought back a re-
port, and I talked to them if necessary to
raise questions about transaction[s):I'think I
kept very. much on top of the important
things that the corporation was .doing..
As to_ whether the. offering circular
(and the debenture sale it concerned)
was an important thing. there can be lit-
tle doubt..Casey _ testified. that, he in-
troduced his fellow directors to the firm
that would handle the sale. This was.'i
before Multiponics was even incorpo-,
rated. The record reveals it was always !
the intention of the founders of the cor-1
poration to raise additional funds from
outside investors-a plan they set in mo-'
tion even before they had formally in-
corporated. What could be more impor-
tant than the implementation of that
scheme?And, by extension,Caseyhad to
Q: Now, sir, did you or any member of be vitally. concerned with the plan's
your firm. to your knowledge, ever review 1; progress-just as the New York court !
the minutes of [Multiponics] ... with refer- il determined.
ence to determining any legal problems or It would be wrong to dismiss this rec
f
legal issues with reference to the contents o
those minutes?
The minutes of the corporation clear-
ly reflect that the offering- circular was
discussed at board meetings.
A: Well, certainly I read the minutes reg-
ularly and followed the affairs of the corpo-
ration and the lawyers who worked on the
registration statement would have read
those minut to 4te ine w or
1rj~ZS~ILgIFi 4c44;1s i It
registration statement....
ord as too trivial to bear on Bill Casey's!
fitness for the CIA. This case-and there
are others-goes directly to the question
of Casey's probity and truthfulness. And,
if the country and the president and the
congressional committees charged with
overseeing the CIA don't know for a cer-
tainty that they can always trust the
word of the director of Central Intelli-
gence, then the director should not be in
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9 .August 1981
Yes- But Using Businessmen As Agents S
In the shadowy world of espionage, noth:
ina is more dangerous to an agent than to
have his "cover blown." As any fan of spyj
novels or adventure films knows, this mean
having the seemingly innocuous occupation
of the secret agent revealed- to-be-a sham
only a "cover" to his real work-spying.
Recently, the cover for many present and
future intelligence agents was blown during
a network television newsprograrri_ Not b
a. reporter, or by someone-, hostile to- the
agency, such as ex-CIA agent Philip Agee,
but by the Central Intelligence Agency's
own deputy director, Adm Bobby Ray In-
man.
During an - interview on ABC's "Night-
l:ne," anchor Ted Koppel asked why busi?-
nessman?Max C. Hugel had-been named to~
head up the most secret-and sensitive of all
CIA units the one responsible for covert
operationsoverseas.
Inman casually.replied that Ijugel had xff
years of experience abroad and "could. be
helpful in rebuilding the clandestine service
." Then, in a shocking gaffe or. terrible
lapse of judgment, Inman proceeded to ex-
plain just where America's enginies, inter-
national terrorists and foreig f ritics might
look for CIA agents. In the cryptic, jargon of
the. intelligence professional, he said that in
the future the CIA would "rely far more on
non-official (than on official) cover, the use
of commercial drops to provide the necessa-
ry cover for clandestine agents all over the
world." What is meant by "non official cover' 7
According to a CIA spokesman, it is..
some _;
one who works undercover, for a comrner,
cial enterprise; an intelligence person who
might ostensibly.,be working for a. business,
enterprise:' .
Inman's remark was no slip, then. Infact,
earlier in the Hugel a?fair,-CfA director WiI
liam'J..Casey said,- ::'.Hugel'sbackground1
in business overseas 'would-be' useful in ar~
ranging cover for security agents." In short
the CIA seems to be 'ready to, plant more
agents.in U.S.' companies=abroad and probes
ably to send more operatives out-as busi-?i
nessmen and women.. That,_of course,' isn t
new. Putting it on the record is.
,j3- MURRAY FROMSON and NOWAN SKL
Approved
It has been` a. long-standing but almost-
never- acknowledged practice for some
American businessmen and U.S.-owned
companies overseas to cooperate with the.
.CIA. The individuals took on occasional
'::part-time -:assignments,. -while major
corporations permitted agents to operate in
the guise of sales representatives, engineers
and the-like::In such roles, the operatives
could move` with relative freedom about, a
country, gathering information and perhaps
directing-the activities of local agents.
"The=question is not so much one.' of In-
man's candor or the agency's morality, but
rather the. effectiveness of such a practice.
The CIA's-use of commerce as a cover-raises
doubts: about the legitimacy of all bona-fire=
businessmen, big or small, who choose to
.,work overseas:
As .foreign correspondents- in Asia for
many", years,' We' and. our colleagues often.
Wondered 'about some'-of the suspicious
characters we encountered.` There were
times when we also looked askance at some
so-called journalists who would mysterious-
ly appear in the midst of some crisis but who
never seemed to file their stories.
Following an unwritten journalistic code,
however, most reporters rarely, if ever, dis-
closed what' they knew or suspected about
business people or innocuous-looking trad
in- companies that were quite likely
"fronts'! for clandestine CIA activities.
Especially in the 19509 and early '60s,
during the height of the Cold War,. it was
just not thekind of story one reported. For
,,instance we.. all. knew that Air- America,' -
which went through a. half-dozen name .
changes as a contract airline in the Far East,
was owned and operated by'. the CIA Yet'
none of us wrote about it until the Vietnam-
Warwhen government duplicity itself be-
came a major issue.
. But in- the-1allout-.from the- recent con-
~:troversy over".CIA Director`Casey and his
former deputy director for operations, Hu-
gel-, plans to. step up use of American busi--
'
jnessabroad as spy network
covers have
'' Adra..Inman is a career specialist -in.intet-
ligence, widely regarded by his peers as one
of the best imthe.business. But after what he
said on TV. one could easily-imagine terror-
ists and KGB operatives around the globe
rubbing their hands in=glee Moreover, the
ec -ba'rrassment to friendly. governments
;Havana ignite the hind of prapaganda-ft s-1
RAM
yet help U.S. adversaries frorct:Mosco to
For V,a$ nra1vi
The admiral's gratuitous remarks' also
stunned the business community.
A. senior vice-president of a multinational
corporation operating in the Middle -East.
Asia and Latin America put it this way-"`It
jeopardizes the credibility of American:
companies that want to do. business abroad
--as well as the lives of their employees who
have- absolutely-- nothing-..to . do - with:-the
CIA.
An aerospace executive said;=!'Even,ihe
hint that a major.U.S_ firm- might, bes. in-
volved in espionage would have a chilling
effect on the ability of corporations to-do
business overseas.':
Richard King, former director of Califar--.
nia's Office of International Trade. and now
an international business adviser,said,'_TTle
multinational firms depend on a veryy Open
exchange'of information with foreign fisrns
in connection with joint ventures aria for
market research. To have any sort of suspi-
cion of a CIA connection .would most. as-
suredly cut back on that kind of free ex
change.,.
And a senior officer for one F ortune'500;
company cited the more profound implieq-t
?tions for. U.S. entrepreneurs and corporate;
representatives abroad. '"The possibility; of
stepped"=up terrorist activities agaiiist;
American businessmen ;is: frightening."- tiey
...
said.
In fact, the number of politically inspi d
killings or kidnapings for ransom of foreign
businessmen has grown dramatically in ie-
-cent years, prompting some American f& ms 'to increase armed protection of their oven-:
seas representatives
No question; the nation requires an efre'c--
tive . intelligence` agency: as -well as (:lie
-means _to _"ebver"'its clandestine activities.
The CIA. cannot realistically be expecteci:tor
hang out ,a sign on a storefront in Bangk6k
or Karachi, proclaiming it as the office of,the
resident. agent. But the .19806 are. not "tile
.1950s. The increasing need to have Ameri-
can businessmen. create jobs,' expand trade
and help to correct-our:balance of payrnei7ts
deficit makes the use of .these same tiusi-
nessmen by. the: CIA seem,. at the least, _e:K-
tremely counterproductive- Such, pracfKeos
Murray Fromson,'a former CPS .News ta? -
respiriulent and-Nornutii'Sktareirnta
h
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9 .iu tts 195111
W 311[ivC.i{11 T-1t lnol ed At first ifke~, another steamy sum-
mer capital scandal, the jowly CIA director besieged on every
side by snapping congressmen trying: to bring him, "to
earthe ~. {
But beneath. the very public battle over .William Casey's
tenure in the top CIA spat lies a far more important tug of war .
about what sort of a spy agency the United States wants to itin.,`
Will the CIA once again turn to.covert operations as the way' ,,
to solve U.S.' problems in ,the world, or wlli, it go the bight
technology . route,) emphsslzinsl electronic data collection and
quality ana(ysis~ 1 y;' t `l
In; the public. areda, this :?undarnental questioninevnr gott'"J
debated. Insteadi tlie.conta'nversy cantered on;the free-wheeling ?
financial dealings of, Casey ..' 1 , ; ,::1 t ';; + i.l .
With; ne-new evidence of Any' Caney wrongdoing: at ;hand, .;,
staunchlycdrisdrvatlve 15en.'Barry Goldwatet,(R.','Ariz );star-;-1
tied everyone, possibly himself, by publicly calling on Casey; [o
.quit. Goldwater's -statemei1t?'-fo1lowed"by` about 10 days a
mini-s'catidal iii Which' Casey's chbicc tb ;head'the'rlandestine
operations division of-the CIA, Max itugel, jvas, forced out of . -!
office by discIosures Ill shady business dealings
WII..T DIf) Goldwater'have? against,,Casey"Publicly,: the.
charge sheet against' Casey listed two items:, a lapse ? o? %
judgment in hiring Hugel, who lacked any professional qualifi
cations, and Casey's past financial dealings,: which already ,b,sd
been sifted through by several congressional'cornmittees When
Casey previously served if government
Regarding the IHugel~,,appointment,iG01dwatercharged.,;,,I
"That in itself constitutes the worst thing Casey has dbrie ;.I
Welly not quite
'the worst think Casey'did In the eyes o?'-many' intelligenc
coinmi nity'watehers here was to land.the,top jobatthe CIAO
Casey represents ttie "old school!, of, intelligeAcet works and. S
served in the predecessor'to the' CIA; the Office df Strategic
Services (OSS) during Works
PreKidenli
(as y,denandd this C A jWaba.r as71,repa yu m e nt fron`9 4"'t
fleagan fothis suceessful,tescue.efforts as,Reagan a campaign v
mahager, pulling tbgethera badly,di 'lded staff into aJyvinningf
team. S t y'the'Iiacstility=of Seri Barry'Goldwater, i"The-W'hiteHouse'hadto-do it for Casey,'ssass
chairman-of-the`Int.elligence Committee, wasneut `,,,.one~Lrinh-American' Democrat, "because of his
ralized byword-fr,om-the lhfte' house that Gold ;,- association with. Reagan,and because the agency:
waters dream Ciao tlirectoe 'lkdirr Bobby' Inman, ?-was the _CIA ";They may noL-feel.sa obligatecl'to
Inman went.on television andpledgedhis fealty It i riicCann's-ilI fortune to be order considera=
Casey,Naixl:itrwas aIl'over +'% tion-fora"post.that becomes politically more r_on-
Casey was on his..owm .abut'~they`did not'forsake , i Bet er for 1'fcCann, at the moment anyway, if he
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ITIVU -14
11
Six days after Sign. Barry Goldwater (R.-Ariz.), Rather than making $750,000, Casey said, "I lost
the chairman of the Senate. Intelligence Com- my investment=and materials being submitted will
mittee, called on William. J. Casey to resign as substantiate that -fact-". ;:Those materials were
Director of Central Intelligence (DCI), Goldwater delivered to the Intelligence Committee on Sun-
and the other-members of the Committee unani- day, July 26-
mously declared that "no basis has been found for But Goldwater, Sen. Roth, and Sen. Stevens
concluding that .Mr:. Casey is unfit, to, serve as weren't willing to wait for an investigation into the
DCI." The statement followed the panel's five- matter. On - July 24 Stevens,: the majority whip,
hour closed meeting with Casey on July-29 and a said Casey should leave "for the good of the agen-
review by the committee staff of the charges that cy." On the same day, Sen. Roth, up for reelection
had been made against the.CIA Director.- next year, declared that "The Director of the CIA
must be above suspicion, and to borrow a phrase
Although. the inquiry into Casey's business deal-
ings and his appointment of Max Hugel is not at an from President Eisenhower, `cleaner than a
end-a few points will be followed up by the Coin- hound's tooth.' " He said, "I believe it is impossi-
niittee:- staff----the events of the last week or so ble for Mr. Casey to effectively discharge his
represent a vindication. of Casey, who,, by all ac- duties," adding, "He should go-now."
counts, has moved assertively to strengthen the Adding his voice to the: chorus, Sen. Biden
CIA, and a slap in the face to. three. members of (D.-Del.) told the New York 7:mes, "I hope he's
the Intelligence Committee-Goldwater, Joseph not on the job Monday."
Biderr (D.-Del.), . aiid., William -Roth (R.-Del.)- It was left to a Democratic member of the com-
and Sen.'red Stevens (R.-Alaska), who called on puttee, Sen. Henry M. Jackson (D.-Wash.), to ex-
Casey to resign press the sentiments of many who believed that
Perhaps, the most curious aspect of the af- . Casey was being railroaded. In a July 26 ap
fair was the performance of Sen: Goldwater, a pearance on "Meet the Press," Jackson said, "it
stalwart. of the GOP and a long-time favorite looks like they're trying to lynch him in public,"
of conservatives. The Arizonan, wvho recently . adding, "I think very clearly they are trying to do
pushed the appointment of Sandra O'Connor Mr. Casey in without an opportunity to be heard."
to the`Suprerme. Court and labeled the Moral Jackson said the Hugel appointment was a
Majority, her' strongest opposition, as mistake, but that he was unable to explain the
"fascist," grabbed front-page headlines by other "so.-called issues" coming to the fore "all of:''
,.
leading the assault on Casey, a personal friend ;a sudden
of President Reagan. The truth is that the Hugel appointment, as Sen.'
On July 23, while- the -"Casey affair' was Paul. Laxalt (R.-Nev.) pointed out in a July 25
heating up Goldwater- called- a news conference to news conference called to defend Casey, was a
deny,-a CBS report that he had privately urged matter of intense consideration within the'agency
Casey to resign. He had called the item a and the consensus was actually developed within
"malicious lie." Under the impression he was go- the agency to go with Mr.- Hugel." CIA' Deputy
Gold-
Director Admiral Bobby Inman; who was
ing to defend the CIA 'director, White House of-
water's first choice to head the CIA, has stated
ficials were-dumbfounded when Goldwater public-
ly- called for. Casey's- ouster, saying the. appoint publicly that he supported the Hugel appointment.
ment of Max Hugel was sufficient cause ?"for', Furthermore; although? Casey has taken full
either Mr. Casey to decide to retir. a or . for the Presi responsibility for the Hugel selection,"Casey also
dent to ask him to, retire "`Goldwater also ques says
- Ctha officials It was thou posed bu el stexr
tioned Casey's involvement-in a New Orleans firm p g
called Multiponics. "I believe he's made the-state- ` penance as-an international businessman could be
went that he? lost $150,000- We had been told he I extremely.valuable to the CIA. . -
made over $7150,000r," Goldwater said- : ( In light of the facts in the case, the Hugel ap-
The next day, Casey, who had the strong sup pointment, according to Goldwater logic, was suf-
port of President Reagan throughout the con ficient cause for the entire top echelon of the CIA
troversy, issued a statement saying that Goldwater to be dismissed. But Goldwater only wanted Casey
had been prA &' c#iFmra gltp~pAi dtjM 81: CIA-Rf9P?9ilBII #RbONDI I$ "PlOecplained that
E August 1981
 "Goldwater's performance was rooted in his feel-. "professionals," rather than outsiders, to top
ing that he know filly --FAreFi L ateri2llW1/28pbC1i%tRDPB[t:-QSISOIR Q 1?Cit>; experi-
will ever know." ence consists .of his work as Chief of Secret In-
The other "so-called issues," as Sen. Jackson telligence for-the Office of Strategic Services, the
referred to them, were reportedly described by World War Il predecessor to the CIA. He has,
President Reagan as "old news." The May 19 rul- however, closely followed intelligence matters
Jng by a New York judge in the Multiponics ~ since then.),
case--a ruling that mysteriously "came to light" There is no doubt that Casey has stepped on a
only after the Hugel affair-was based on actions number of toes in the agency. In a July 27 speech
that Casey or his associates took back in 1968 and to CIA employes, he acknowledged that he had
1970. The White House noted that the issues in- refused to accept intelligence estimates prepared by
volved were not new and that they came up in a the National'Foreign Assessment Center (NFAC),
number of 1970's hearings leading to Casey's con- the agency's analytical unit. One of those estimates
firmation for other government jobs was alleged to be a report that failed to cite `the
As curious as the new focus on Casey's financial Soviet Union as a primary sponsor of international
dealings were the news reports that.the CIA had terrorism.
planned an elaborate covert operation against Explaining why he had not' accepted those
Libya or Mauritania, and that in a "rare" move estimates, Casey told the CIA employes, "My job
the House Intelligence Committee had objected to is to see that estimates reflect the full range of
the operation in a letter to the President. In fact, threats which our policymakers need to protect
according to informed sources, only a few against:`Far example, estimates have been pre,
Democrats on the- committee-not the full com- pared on Africa and Latin America which have not
mittee-had sent a letter objecting to a CIA covert addressed Soviet interests, activities and influence
operation. Such a protest is not unusual and, fur- there. Worse still, I have seen drafts of estimates
thermore,, the operation did not involve what prepared a year or more ago by analysts in this
Newsweek called a"'classic CIA destabilization buildinb which accurately predicted what has hap-
campaign" against a foreign country.
The purpose of the "leaks," sources say, was to
portray Casey and Hugel as concoctors of hare-
pened in Nicaragua and Cuba's new agressive
polices in Central America. We had this work at a
time when those developments certainly would
brained schemes who wanted to return the CIA to i have been carefully considered. Sadly, :.these
the days of "dirty tricks" and assassination plots. I analytical insights were strangled in the clearance
In a column that appeared last week in the
Baltimore Sun, Institute for Policy Studies
associate Garry Wills harped on this theme, claim-
ing that President Reagan "wants Casey to restore
. the CIA to its good old days of assassinations and
such."
The false. report that Democratic and Repub-
lican members of the I-louse Intelligence Commit-
tee had objected to a CIA -covert. operation was
designed to make it appear that-Casey's compe-
tency and judgment were under bipartisan attack,
these sources said....
Perhaps the. basic issue in the -"4Tasey af-
fair" is the question of what kind of a CIA we
want for the dangerous decade ahead. Sen.
Goldwater, it is known, wanted Casey out and
wanted Admiral Inman, the CIA deputy di-
rector,in.
There was a great deal of suspicion that Inman,
,
considered a member of the "old boy" network of the Soviet Union were interested in combatting ter-
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 Approved For Release 20QSA11/28 : CIA-RDP91-00901 R000400150001-0
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several ble newspapers led off the
editorial pages with headlines that. read Casey A LL IN ALL, IT WAS an unhappy experience.
who had been backed for the CIA directorship by
on -ABC television to deny that he had been
-.y his ships and let the CIA muddy-its own--waters.
Before Casey was cleared by the In
.;Committee;:. CIA secrets were revealed. And
possibly two plans, more likely CIA dreams
_
. e f4t-, ?;. - -. va Luc ~.cuuul 111LC111t,Cuee Agency-ft also
did the country no good. Casey, who ran
SIGNS OF WATER ATE were dancing in have been rewarded with a purely domestic
many a. journalistic noodle; And it was not a position. That's the way it used to- be. Campaign
slow waltz, either, after the Republicans on the managers, who were successful, ran the Post
Senate Intelligence Committee recalled to duty Office or the Department of Justice. Then any
Lawyer Fred D. Thompson- He had. served them errors made. would have no repercussions
.. .
ay_
lSla
s ago
o
ersea
yi ar
terg
Commit
v
s
on the
As a news story, hobo ly can fault its As' it was, Casey was treated most unfairly_
beginning.. Two Wall Street stockbrokers accuser! Libel and innuendo were heaped "upon- him
Max Huge), who was Casey's cbiof for clandestine around the clock. Out of envy McCarthy must be
operations of financial hanky-panky in the mid rolling in his grave. If Casey had been in charge
'70's. They may have been motivated by patrio- of poverty and not intelligence, I'm' sure the
tisin but one can still wond
Aicserica
r wh
it t
Ci
il L
k
h
e
y
n
v
oo
t
em so
iberties Union would have
many years to demonstrate it:, rushed to his defense long before. now. ;
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 STAT
Approved For Release 2005/11/28 : CIA-RDP91-00901R00040015
q T
:~r1TivLa iii%tL4~ y
THE T; 'yT c: y (GI E{ L i
..y_a .1. Cz 6 August 19c3 i
se ' r .y :
wasn't exactly a ' whitewash ? but it certainly
was a graywash, mixed.in some respects with
a splash.or.two of hogwash. It was the sort
of episode, menacing to-the professionalism
and maybe also the effectiveness of U.S.,intel-.
ligence; thatis:to be.expected when so sen-
sitive a position as the directorship of the in
telligence establishment ,is confided to: the
president's. campaign manager..
It is.-difficult to imagine a worse slot for
the adm'inistration'ssometime.political man- .
ager than the-attorney generalship, where fi-,,-
nal decisions about the. enforcement of the
The recent mini-uproar over Mr. William law are cleared and where Presidents Ken-
Casey, director of Central Intelligence, had nedy and Nixon installed campaign .manag-
a seasonal flavor - it resembled midsummer ers: But the Reagan people managed to find
heat lightning. There were startling flares of it. The directorship of Central 'Intelligence
light, too brief for illumination, followed by- is such a. slot. It ought to be filled, quietly,']
neither thunder nor rain., by a professional intelligence officer of deep
The Senate Intelligence Committee, some and contemporary experience, with a passion
of whose members..: were? baying for Mr. for anonymity; and not the shadow- of any sus-
Casey's scalp one day, were declaring almost -petted political or-partisan interest.;
the next that, no,`there would be no scalping: In Britain, if. we. are=not mistaken; it is a
Those whotcondemne' his appointment of crime punishable by- imprisonment e en to
the unsatisfactory. Max Hugel as director of `- publish then identity of!. the head of intelli-
CIA operations- (i.e.; clandestine activities; pence:: Perhaps that-is-Why British:' intelli-
i.e., spying) as "dangerous" on Friday were gence --.even,though it has been.rocked by
clapping prudenthands over their, mouths by scandals like the Burgess-McLean spy infil-
MMIonday morning.,It.was-strange. But there tratiom-in some ways worse: thane the sup-
is undoubtedly an explanation , ,ifs; only we posed;,EIA'.'scandals:of themid=1970s "- contin-.
knew it: ues to function quietly and professionally,
Mr. Casey F appears,; :from what 'little is without political flamboyance..
known, to have benefited from-.a- political In a'country. that-took. a sober view of the
counterattack on his'.Senate detractors 'by business of. intelligence, the appointment of
powerful friends - and also from ? leaked a campaign manager to head it -(even one
word from the White House to the effect that with a long-ago background in intelligence
if Mr. Casey.were forced out his successor of World War II vintage) would beinconceiv-
would not be the professional sought by those able. It would be an instantaneous scandal,
detractors. Meanwhile, we are diverted by be the appointee ever so competent. It goes
theories that the Casey affair is a strugglebe-... without saying -- that ? the-: frivolous -ap-!
tween certain "old boys" of the CIA who want pointment of a political amateur as spymas-'
to keep._the chain of command chummy and ter, following upon the first, would blow the
certain "-new boys", who want to horn in. It top off. Moreover, the committees. of Con-
seems a bit schematic to -us. 'frankly., gress charged to oversee intelligence oper
Maybe=-what.-'happened.it the Casey case ations would not present the mixed-up spec-
tacle presented a week or so ago by the Senate
Intelligence Committee. They would look be- I
fore leaping, and having leapt would not,
plummet mysteriously, into the.. gorge they
were.-leaping over.
Here is- another of those affair's"- that - as-
tound friends and allies who entertain the
exotic view that a great nation's intelligence
operations should not be vulnerable to`poli
tics and gamesmanship. It is not the, first. And
so long as politicians are assigned to manage
central intelligence, it obviously.will not be
the last. >~ .
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.'w_... '2?' R D
THE' Sf1 :G'I'oINi ) L"ir'T%*T T T`.r ) -cz 6 August 1981
There is a disquieting familiarity.
about The Star's recent editorial
(July 25) concerning William J. Cas?
ey, director of the Central Intelli
gence Agency. Calls for circumspec-.
tion in a presidential appointment,,
or the resignation of a key govern.
mental official like Mr. Casey, seem
to trip far too easily from the mouths.
of congressmen and the pens of edi-
tonal writers. Pious judgments bear-
iag little relevance to Mr. Casey's fit-
ness for office are most. definitely
not in order.
As one who has served in govern-.
men z with Mr. Casey but was not ap-
pointed or otherwise dependent
upon him for my position, I can per=
sonally attest to the fact that Mr. Cas-
ey is a remarkable public servant. He
is bright, astute, decisive,-.under
under-
-_ ,Stands Washington life. and: tore
full, and is a dynamic and effective
leader. Contrary to press sugges-
tions. Mr. Casey is no political'pay-
off; he is the right man to revitalize
an agency badly- mishandled-by-the
last administration.
The attacks on Mr. Casey's past'
business dealings are even more dis-.
appointing. The recent Multiponics'
decision hardly reflects new'infor
ration about Mr. Casey; nor. does:it .
suggest adverse conclusions -abort
cision has been misconstrued. to the,
contrary.
This letter is written on behalf of
Mr. Casey, but without .his prior
knowledge or request; by one who is
familiar with Mr. Casey's profession-
al achievements and capacities and
some of the nuancesof the federal
securities laws. From,, that vantage
point, I can assure you that it would
be a tragic loss if Mrs Casey were to,
resign. or. be hounded :from. office.
The nation can ill afford to lose such
a valuable public servant and might
find it more difficult in the future to
attract men of high stature and com
petence to government service:-
Harvey L^Pitt
Mr. Casey and his .fitness for public- _' s
office. The lawsuit, now more than a While I m not,usualljroa the '-Sam'
decade old and concluded without a side-of issues_as;CharlesBartletr,.I=
:[Glut. involves.na-personal,,,:direc
tr.have.io_:express:agr greementwthhis.'.
wrongdimpose i viaMr. riouliabilier it July 29 Continent art1c e, 4"Cold seeks4
ty water's Outburst.
a corporate director who, along with - kir.`Casey's exonerationby Sena;
,other investors,, was injured by,.the.,, Goldwater's committee shows that
-,wrongful-actsof others-The prelimi the senator exercised badjudgment.:
nary f i nding of liability on the part.. in Ietting. fly at Casey in ""a clumsy
of the directors of the company is kangar0Q--court fashioti"
not a finding of personal wrong-
doing by ,.,I?. Casey, although the'de- H B,", go Ma ~t Sri
10 Lj~
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 Approved For Release 2005/11/28 : CIA-RDP91-009018000400
ARTICLE APP : D THE WASHINGTON STAR (GREEN LINE)
ON '. GY-a,-- 5 August 1981
&ser ProbBy Henry 'S. Bradsher Casey, including a federal judge's..
Washto3rou star staff writer' finding that he had misled investors
in the case of a New Orleans-based
Democrats on. the .Senate- Select
ing agricultural business:
Committee-on.Intelligence are look-
again. fora special counsel to in- The intelligence committee began
vestigate CIA Director William J. an investigation into both the ap-
Casey after _ dropping .-their . first pointment of Hugel, because of the
choice because of a 'past law firm absence of normal security checks,
connection:with former CIA spymas-, and the business background of Cas-
ter Max C. Hugel. eY? The6&year-old CIA director; who
z, ..' ran president- Reagan's' political:
Sources on Capitol Hill said yester- 'campaign. last year; testified before.
day that the: committee had planned the committee for five hours :last
to announce ..Monday.-.the,. ap-. Wednesday.:.
pointment of; Bernbardt .K. Wruble, After his testimony, some Demo
who on -an interim basis had, been .rats on the committee wanted- to-
the first head of._the.federal- Office continue the investigation,. while;
of Government Ethics. in- the Office some Republicans believed it should
of personnel Management be wound up: As a compromise,. the
But. Wruble' toldr the.r, committee committee issued a .cautious- state-
staff that the,law.firmthewas with ment that "no basis has been found..
before he.todk the government.eth- for concluding Mr..'Casey is unfit to
ics job had represented Hugel, a. New serve" in his job, but the investiga-
Hampshire millionaire business- tion would go on.
man. Hugel resigned from the.sen The Republican majority-on the
sitive post of CIA deputy director for. committee had earlier hired a spe-
operations after. two former busi cial counsel for the investigation. He
tiess associates publicly accused him is Fred D. Thompson, a Nashville.
of questionable stock market prat lawyer_and friend of Senate Majority
tices.. Leader Howard Baker who had been
The Hugel case led to new'ques- a Republican lawyer for the Water-
tioiis about past business practices of gate inquiry.
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4 August 19131
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 STAT
-
ARTICLE APPS ABProved For Rel p 1;5/V DP91-00901 R0004001500 0
ON PACE S 5 August 1981
;I 0n says: Casey's safe
This is a tale of two cities, New York and
Washington, and two luncheons canceled by former
Treasury Secretary William Simon and his good.
buddy William Casey. The luncheons, :set for last;
Monday, would have brought hundreds . of - Casey
supporters together to; urge President Reagan to
keep him as CIA director. Simon was chairman and
main speaker of the,, session to be staged. at. the
Waldorf-Astoria and George Shultz, also. a former
Treasury secretary,. was to star. in, the D.C.-luncheon.
"My speech 'would-have'been angry and I. would
call Sen. Barry Goldwater and-others who called for
Casey's -ouster as a. bunch- of gutless: wonders," said
Simon."I' flew in from Milan for the, luncheon, but
after Goldwater l?acked':off:,and. it`s- obvious that
Casey-,will stay, we agreed to cancel the luncheons."
Simon and Shultfrallied:to;Casey'a 'side .'after the
White House upset. a'planned rally'of former OSS
agents ?who served under"Casey, in-" World War II.
"Our.. plans were bigger, not, just -OSS. people but
friends of. Casey from everywhere' : said Simon. "I
would have called the Casey investigation ridiculous.
Then- I 'Planned to.. say. that we have made` public
we'll soon be run'by-'aead'emicss and neuters." ~ !;~
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 ARTICL; AP'
ON PAGE C
oved For F ~a~ 0 1 81y' c iA-RDP91-00901 R00040
Say McMinn out as v , Ireland
At least_one pair of Irish eyes will soon stop But a top administration source yesterday told
smiling aft* .a Reagan nominee gets the word that the People Page: "The President is set to pull his
the administration has pulled the rug out from nomination. It should come down in a couple of
under him. William E. McCann of Short Hills, N,J., . days. McCann no longer has a chance."
will. riot be named President Reagan's ambassador McCann, president of the Foundation Life
to Ireland, despite all the tough talk in administra- Insurance Co. in Chatham, N.J., was one of the top
tion- circles that the Prez would hang tough and-r. Northeast fund-raisers for the Reagan-Bush team:
send his name to the Senate, His main sponsor, said the. source, is Central
Allegations -have recently surfaced that Intelligence Director William E. Casey, who re-
McCann's- New. Jersey insurance company had cently survived a firestorm of his own involving
done business with a convicted stock swindler. some of his past business practices.
It =was back on St-Patrick's Day that Reagan So, who-will Reagan now tab for the Irish post?,
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 "t'GI,a&l.EBpproved For Release 2005/1.,18 P91-009018000400
cy s reported schema :to- get rid .of-
Libya's strongman,`?'Muammar: El
Kadafi::
On.EI Salvador, much of what was
said by Secretary of State Alexander
meat could-be toppled -ashandily as I
was Mr. arbenz's 27. years ago, there
are a lot.more governments now
in-
,
eluding many with diplomatic-or eco-
nomic significance to the U.S.. that
would be angered or threatened-.and
would have.n& inhibitions about say
ing sa
it; worth rernembering,;too, that,
the triumphs of the past don't always=
look quite so beneficial from the van- {
p,,tage point of history.
ernment, they have a habit. of holdinx;l
'afterward, as we-have recently been
.nected- with the detonations that
..Proved so damaging to American pur-
,
...poses a quarter-centurylater
n
.,_ 21-1
y
e
a
za
on
prog
a
;.
Haig and by other top-level spokes- which reportedly v'oa the'
endoise- that the CIA's shenanigans in Guate-
men was breathtakingly unconnected nlent of CIA Director-William Case malain the 19 Os were-ultimately for
with any of the real issues in that un- and of a White House panel, under the goodof'either Guatemala or the
happy country Vice -President Bush before .protests United States T - r r
few kno-vledgeable journalists from alarmed, members of the House a Virtually Without interruption`
tried to explain' some of the signifi Intelligence.. Committee` forced- the since--the Arbenz '
regime foes=ousted'>
cant background, and do.did -Robert ' administration to take a secondlook- ' bY, CIA-backed -rightists- in 1954,
White, the holdover U.S. ambassa- White the plan '-- was still alive, Guatemala has'been misgoverned b y
doe. Mr. White could have explained; succession 'of right-wing
if anyone werelisteniag, that military though. 'it must:have had great ap- a military
aid wasnunlikely'to strengthen a well pear. Consider: No more fighting the governments while being : brutalized
aid waig but weakocivilian regime like ,. - Cold War with one hand behind the by terrorism from both fight and left
back; no more Mr." Nice Guy. The that has: taken: tens of thousands of -
the Salvadarari 'junta; in Latin CIA as representative of Anterican lives. In the violence, all efforts at so
America, arr2iies have traditionally Will and powetwould againbefeafed;.'.. ,:cial and.,political reform have-been-
seem ther;zselves-riot'as-servants of Ct l; . as when it arranged the overthrow of -stunted,. and the country is being pro
vilian authority but as protectors of a t _ pellecl . toward a grim da
national, mystique-: that must Le &iohanuaed II!iossadegh. in Iran or the D Y nf' reckon-'
guarded against' the grubbiness'?f cr t IeftistJacobo Arbenz inGuatemala. ir+g.
vilian politics. `:: It-sounds.tea~ptin;,-Butthe'zvorld ti~hatever. `the: real or`-.imagined
~r outcomes . cjf those, -past,,episodes
Such- inconvenient realities were changed since the heyday of clan = however, and whatever the fantasies
not welcomed by-Mr. white's . supers '_ destine operators. In the early 19aOs
ors *
'the United States was unchallenae of old and new cold warriors in the '&
however: Fromall available evi a . Reaggaan. administration,,. there is no-?
dence, what concerned Mi. Haig was -,.. b13' dominant in the non-Gommu :going back.'. Those who do- not
showing that America h recovered' = nist world: Even when the CIA's foot remember the past are condemned to
from Vietnam and is'agaisa-prepared ' prints were too large to'be hidden; as relive it,. George Santayana- wrote:
to intervene-ire the, world against. g ' happened in Guatemala, few coup,The same can be said, perhaps, or'.
Soviet mischief= For that purpose no tries of any, importance to Washing those who remember, but do not uu
one need care about Salvadoran cir -ton had the inclination to protest the
derstd
an ,rL7rftsfance_s '7 he uprising rn?ifl ust agency's aetiona or were in 1 po
its ,..
s
-Burundi. gene jor t'ne bun in Asia and Leifer
Toda?that is no Ionper true E
y
First' we-- had'E1.'Salvador-:where
T-IELIVING the past in order to
come to terms with it may be
acceptable- therapeutic technique-
but it's hardly the way to conduct
foreign af`,'airs.
Yet that's what the. Reagan- ad-
ministration often seems to be doing.
.It ;caches into'tha;paest fbr'foreiarr
policies as if everything.. that went
wrong in the last 25 years or so can be -
erased by doing the same things over
again. to prove that.they can work of-
rAr~iolc~l~~ Isaacs} -~.;_ _
5 August 19;1
Iviost"ot"th'e'press;nieanwhile;':was as
'with- facile but, misleading compari
As soon as the single word "advra
the secretary of State gave the' ins e ra' entered'the-story; with its-inerr event;.- obviously... But _. Iranians`
pression he wanted -to; try Vietnam':; table echo-of America tip-toeing into =-remember, even if most Americans
in to maker it come out right. Now,. Indochina; :most other --issues that -.don't, that it was the CIA-run coup in,
_;there's the Central Intelligence Agen should :have ` been explored in. the ' `?' 1953 that let the Shah rule as well as
'
press and on television were-smoth=
The same policy as-psycotherapy
impulse seems to have- inspiied. the `=
Lib
an "d
st
bili
ti
;:
r
m
`_ bin. Isaacs,. a: former -c'orresp6n-mt
en Amenca, is writing a book on Wit-
For his efforts- to relate policy to if a dangerous ?r unfriendly govern
.... -, .'?`!:",a._,..r. .a es...._L 'X .L.,l- ...-. ~::. - i l;'i. .. ..~'am
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 Approved For Release 2005/11ff28t tQi4,-2D
EDITORIALS
F- ANY doubts remained about Wit
-
Ilan"Casey's manifest ineptitude as rhncn as clear from the time Mr. Casey'-
rs ,
Agency~po(CIs A), they' should. note ;,with-
stand"'- totally without qua if..operations A man
ex; to Mr"'
ure` r s for the
icat on
Casey s Iatest
.,.
ost
n
4
p
\
r Case
..~.. a blunder _,. y s.,choice-.for that lob,
H
el
ug
, was a? New Hampshire=buss ?:
Incredibly, at the ve
scandal threaten ed.to guif? h m, when about vJrnHug Istpossib y. j egal,-past_.
senators were calling for his' head be- business Practices 'forced his resignation
cause' of: his, demonstrably bad judgment
d
an
,speech - LEI_ into IEicus' 313x2 # fie
which}he- gaveiaway- niiinerous' secrets
about
about' the CIA ,;n' doinb ?so She violated M Casey's awn involvement in -legal`
l o.
'n.. ... nr., At .,. challenges to his mist i.,..... ,.__. ._.
r m
-
y c o
ic
er b
' ""y,` duds to--suspicions; about his; judg-~~
ofo sen se a3W
i
l ' `
the-agency's headquarters oW.July27.-to -'adefrimenttohisagencylegal.charges F
defend- himself.- before:: them ,regarding M .-
ntl
~
y 14 nis Tpost demonstrates his lack of con-
was intended to be a kind of pep talk.- corn for what damage he may inflict ori
That In itself is unobjectionable '
a
thg
genc hhd
ye .eas. _His speech: I st'
For reasons known only to him, how- week, in:which he.blabbed away,. agency
ever, Mr. Casey saw. fit in. his speech to se refs __ ~t
as . wnice House political muscle~succeed-
CIA directo r.;to nom ft. . previously undis ed in.clamping a muzzle onrthe.:Senate.
closed?'names of key..agency'.personnei I
. - Mr asey-d
speech;:alleserves.:no more oppoit
assu
overcapitnl 1Ytlt,ntgits nitres io shoot himself in the foot andhis:..
Fubh disetosureM - ~ a"
SS; n
A
Taordsrs 'Mrs ass .', CIA s,: nor are the nation's L
y'.therz:;`distr~uted qv;
,. whether the: ng ,we l-served by the continuation of
P3 t Is obeying its Cased tin cu rrentipost' nor*ore
'charts Iixiiitsi gainst spyjn'E'insid_- 5 th
,
ties:; That reference. "raises: questions' of-- bei ire.. Houses best interests , are, : not
}
agency's "domestic colie tidn activi-~` h eve effort.was misguided. Clearly Elie
Caseys fitness for office. :That pr
Live. and-:.disturbing:..jefer-encer.:.to-4-the t? -
and their duties; and to make a provoca- telligence Committee's `inquiry.--I:nta.
The? case against M agencyiir the heart He is clearly not;`the
Casey centers oil ersou` w
bad
d
d en a' he
natio
's;"i
tell r
p
g
}
n
rc
t
enrust to gua d this not on'a most sens
g cy; after atll. the 'Inc* pl
e.. ..-
ac
t
'
o euuust
toa
1 a mn 4 who, resented
.45
,,~ ;bah} at1 p He?shoutd resign The"Senate d';.
should
J?'* Nooses the
wr
j
ong insistutand,o
.ipon i,'soshuld:=.the?,W hite
option l~et`it s clear chat Mir Gassy
f
su
houseThe lger:a h
,onWiilirn Caseyeads`
~fe.frri this.affircirlon.x _~' '
the CIA, the greater the nick
t +
s- .t. .. ~?'.Ckt?" I i ... : tZ... 4i ti `:
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1-00901R000400150
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 Approved For Release 2005/11/28 : CIA-RDP91-00901R000400150001-O
JACKSONVILLE FLORIDA TIMES-UNION
4 August 1981
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 CHICAGO SUN-7-DE'S
Approved For Release 20O51,111R8T CI&RDP91-00901R000400
"I had him in my sights until he cut in his afterburners.
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 A I roved F lease 2005/11 /28 : CIA-RDP91-00901 R000
>3 TIC ?' '` '' THE WASHINGTON POST
t,).I C'+E C._ _ _ - 4 August 1981
'. `u
I If
Accolades at the Folger for Helene von Damm
By .Joseph McLellan
At 10 la:3t night, some of the most
p,."' erful men in the United States
stood in the Great Hall. of the Folger
Shakespeare Library, greedily inhal-
in tobacco fumes between the
entree and dessert of.a. dinner in the
Reading Room, where cigarettes and
cigars have never (well, hardly ever)
l;s n ignited before.
`The waiter took. away my ash-
tray," said 0MB _ Director David
Stockman (whose ashtray must have
been stolen from the .Great Hall to
reappear on his dinner table). "What
else could I do?"
inside, offering a token resistance
to social pressure, presidential assist-
ant Lyn Nofziger puffed on one of
the cigars without which he would
be unrecognizable. It was unlighted
(the waiters at the dinner-dance
were truly formidable), but one end
f intensive chew
i
d
gns o
s
of it showe
Mouse OIL your-l like a Who's Who in the Reagan as-i
t :Micke
h
y
a
s t
i reck;.ie`.'? asked an admirer ministration, including Attorney.
s~auirting at the small _ fiuure?+ General William French Smith; Sec-
ed oil on his black tie. "Certainly, -retary of Transportation Drew Lew-
said painted on
and indeed it was the, is, who appeared briefly and left
sr-ialt Disney hero, mitigating the early to deal with the continuing cri-
severity of a black-tie affair in they sis of the- striking air traffic control-
depths of Washington's dog days. lers; CIA Director William Casey,
Stockman, Nofziger. and a whole: fresh from his battle with conares-
siona invests at ors; Defense- Secre-
inistration
d
s
,
g
m
f Reagan a
battalion o%vialcolm Baldrige was busy defend-~
heavies gathered last night the tares chief ' of staff tiVembJame e s $aLcer;White ing ,ms efforts to t et people in his;
r olger Reading Room (a sanctuary, Douse cchhief of Ja
usually reserved for literary scholarsi FBI Director `Villiam Webster; department to writ:r clearly. "All I'm"
at or near the PhD level) to pay tri-t White House protocol chief Lee~eAn.-) trying to do," he smogs, "is get them tot
hate to one of the most formidable: nenberg and her husband, say what- they mean on one page. ,
figures in the current; power struc~ The guest of honor, w'no cams to I Then maybe we e n get something
s ecial as1 done. Stockman listened sympathe- i
tare. Helene von Damm, p the United States from Russian`
sistant to the president, whose desk occupied Austria after World'War Il tically, then moved off to a quiet
is just outside the Oval Office ands and had her introduction to Amer, corner for a private conversation
whose scrutiny is imposed on all wha scan politics working for the Political -with an aide.
aa into the inner sanctum. Thel Action Committee of the American Being held at the Folger, in a
pa
_J 1... 1',vn- ntr~l H4..]:nnl Aaanriation, was happy V_. A;?or -gar-?
Yu
- Joe D.- Miller,. deputy ex-
d
i
f
s
en
r
ecutive vice president of the Amar-
ican Medical Assaciat olr land Roy
von Damm's first employ"
Pfautch, proprietor of an organize-,
tion in St. Louis called Civic Service
Inc. If anybody: thinks von Damm is
l,
f
d
u
er
less than spectaculari;y won
--
ere
_-_ _
they w
their
last night, or they were keeping
mouths prudently shut.,
"Helene is one of the finest ladiesI Von Damm said that the now sees
I know," said White House counselors Reagan, on an average day, "some-
Ed Meese, "and has been a continual times an hour, sometimes half an
help to the president for 15 years. hour, sometimes never. But we have
It's a great pleasure to join in hog- known each other gong back to
oring her tonight." Nobody regis- 1968, and we can read each other; it
tered a dissenting opinion, though a is a very comfortable relationship
few were willing to talk about other - a totally comfortable and very,
subjects. Stockman, fresh from a se- easy relationship." Her husband
ries of stunning congressional victo- since May, Byron Leeds, .."knows,
ries, said he is "still working" on his i that Ronald Reagan w is here before
next major proposal. Meanwhile, he he was, and he is something differ-
said, "My next suggestion for the ent and special," she sit.
mcanS'using,?hitsiness is a cover not from thewrath`of Hugel and 1iug.c s nb.iective, Aecoid"in?trt all ..aside; d.ictrultfuF hs'ester bf
for CIA operations, " It is out- the CIA-but from an %nvectiga Newsweek m-igazine lit blon- the standard shapes of human
ra, cows," said at US oil executive Lion. into tile' $3' million (fi:6 ` day,'ava5 Libya. Ile .prepared a' motives.
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 Approved For Release 2005/11/28 : CIA-RDP91-00901R0004001
RTZC E A PE ..RED
OYP. 53
' s 2 miss
,r.
i3 i Y0-' i L)ATLY :dam; 5
2'.uusL 1981
i stocks
war to rj. ffe 01'
them missing, the- third dead. - _;
It has-tainted the-spy-chief of the Central Intelligence Agency and has touched the
director of the?CIA, a trusted associate of the President of the United States.-It has raised
questions about the judgment of the director who,
after all, heads-one of the most sensitive agencies in
the Western-world.
The story reaches into the Labyrinths of. the
Washington bureaucracy, the monied halls of Wall
Street and the congressional committee rooms on
Capitol Hill. It has led to the little town of Bridgton,
Maine, where-the body of a Queens man is buried.'
And, perhaps as bigger mystery is unfolding.
Queens-District Attorney John Santucci expects'
to announce this week whether to order the exhuma-
tion of the body of Dennis McNeil, the 42-year-old
brother of Samuel and Thomas McNeil, to determine
if he died suspiciously on June 1-two weeks before
his older brothers disappeared.. The brothers are,
being hunted nationwide. by the Federal. Bureau of~
Investigation.
WHERE'.. ARE,' SAMUEL and Thomas McNeil?
And, where is .-the more than $3 million in assets
mysteriously taken from the Triad Energy Corp.,- a
New York-based company that Samuel founded-and
headed; where Thomas-was a consultant, and Dennis
an administrative assistant?
The saga exploded like a bombshell July 14, when
a copyright story by The- Washington Post quote,1
Samuel and.Thomas McNeil's allegations of financial
improprieties- of Max Hugel, the deputy director of
the CIA and its head of. clandestine operations.
-The two McNells'charged that Hugel had supplied
them with inside information on two companies. in
1974, when they were managing a'small brokerage
firm. The use of inside information, corporate se-
crets not known to the -general ; public, to make
profits on stock. deals. is illegal 'under securities
regulatidns.
Hugel. denied, the allegations, Jcharging the
brothers were trying-to blackmail hirer.-But he
resigned ban b *.* ftjL GO5 4d
embarrassing the CIA_ , s f
The bantam-sized -Hugel had- been -a surprise
Where- are - Samuel nd
Thomas 1cNell and the
more than $3 million
taken from the Triad
Energy CG-
Computer Corp. in New ampsnire. A good tr1enc1 o
William Loeb, the powerful, conservative publisher.
of the Manchester (N.H.) Union- Leader, Hugel had
run President Reagan's successful campaign in
Nashua, N.H. Along the way, Hugel became the
protege of'-William Casey, Reagan's campaign direc-
top. When Casey. became CIA director, Huge[, 5$, got
the' CIA post.-:
APPARENTLY,-THERE HAD been.a-.lonj and
bitter relationship between the McNells and Hugel.
The McNells charged he drove'an earlier company of
theirs into bankri.iptcy_ jI
But what was the real reason why the bicNells
wanted. the -downfall of Max Hugel? Were they
simply doing their duty as citizens?_ Or were theirs
sinister, reasons? .
Samuel and Thomas McNelthave not appeared at:
Triad's small office- at Ill Broadway since before,
their-,charges ? against .Hugel appeared,- although
Triad associates said they have received phone calls
from Thomas McNeil after the death of his brother,
Dennis.. The death was attributed to a ruptured
spleen, along with intestinal bleeding as a result of'
:sWAI6RDP9100901R000400150001-0=._ -
Here the mystery takes a macabre turn- Dennis
McNeil was thought to have been suffering from;
STAT
 STAT
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NEW YOR?; i -I'ES
2 AUGUST 19e
I~
f
'kill -1 1~~U~5e
Reii
S
S-11
ByJUDITHMILLEI? ~ l j
WASHINGTON ~" w u
?Olt a while, it seemed all too familiar. A newspa
per account raised questions about a well-known
public official. Influential senators called upon him / .M ap k ;'. `
to step down for the good of the country. A commit 1 m? fY,
tee investigation was launched; probers and prey are fol- q~:
lowed around town by troops of reporters.
r 1 ;
But beyond that, the drama of William.. Casey failed
~~ry ~r c
to follow the script. Last week, there was no terse resigna a w
lion announcement. Rather, the momentum seemed to dis-
sipate as rapidly as it had built, leaving many genuinely !y
purdled. Virtually all Democrats and Republicans of the t d
Senate Select Committee on Intelligence, which is st ill offi f~` r Yf .
cially investigating charges of financial misconduct
raised against Mr. Casey, agreed that the affair was un-
usual in large part because the object of the inquiry was
the Director of.Central Intelligence. ' i F y
"Another important difference," argued Senator Richard G. Lugar, Republican of Indiana,, "was that it
?heNewYorkTune Ca ey
was the Senate Intelligence Committee . that was in . William J. . Casey
charge." The panel, Mr. Lugar noted, is unusual because the agency, but on allegations of impropriety in his former
it is handpicked by the Senate leadership to reflect a range . business dealings and on the lack of due process being af-
of "responsible" ideology and because of the sensitive na- forded him. They were outraged at colleagues who called
tureof the activities it monitors. for Mr. Casey's resignation before an inquiry had begun.
The Casey affair, however, has demonstrated that in Mr. Lugar said that the committee had last week in-
at least one critical respect, the intelligence panel seems vestigated the matter sufficiently to issue the preliminary
to have become similar to other Congressional panels. . judgmentexpressed byMr.Goldwater andMr.Moynihan.
"`The committee has become more like the Senate as a But Mr. Biden noted that the panel had not yet interviewed
whole," observed Senator Joseph R. Biden Jr., a Demo- a single former business partner of Mr. Casey's nor had
cratic member- "The separation of powers has been the staff reviewed the transcript of the court cases at
muted in every aspect under Republican control." issue. Nevertheless, committee members all agreed Like the community it watches, the intelligence panel was essential to the agency's stability that thy issue at
operates in an atmosphere-of secrecy unparalleled on i least some statement; ,the price of Ivir. Biden's'support
Capitol Hill. So, while panel members burned about Mr. was a Democratic counsel to assist in the investigation and
Casey's appointment of Max C. Hugel, a campaign aide acommittrnenttoexplore -loose ends." '
and intelligence novice, as head of covert services, their The committees were not always so attuned to their
sentiment was not publicly aired until Mr. Hugel was constituencies. Established in 1975 to investigate allega..
forced to resign in the wake of a financial scandal. tions of substantial improprieties, the Senate panel then
But when it did blow up, it became what Senator Rob- headed by Senator Frank Church, concluded after, a 15,
ert Packwood, private of Oregon, called a "one-week month inquiry that while the national intelligence system
p grumbling of the panel chairman, was a "permanent and necessary component of our gov-
Senator Barry Goldwater, that his choice and the agency's ernment," the agencies had committed abuses. Rather
deputy director, Adm. Bobby R. Inman, had not gotten the than rely on the previous practice of sporadic conversation
top agency job erupted in a suggestion at an impromptu with favored House ano Senate leaders, the Church com- -
press conference that Mr. Casey step down. Only four days mittee recommended permanent oversight committees.
later, aftera five-hour closed meeting with Mr. Casey, Mr.. Initially, the agencies, stunned and angered by the i
Goldwater.and the panel vice chairman, Senator Daniel public rebuke, resisted cooperation. But with the conser-
Patrick Moynihan, said "no basis had been found forcon- vative tide sweeping the country came the call for a rein- {
clad ng that Mr. Casey is unfit to serve:" } vigorated intelligence capability. Indeed, commmit-:.-
Whgt had happened? For one thing, Mr. Casey and . members are among the most vigorous propon-n:; ,:ne
Admiral Inman both visited members to assure them that agency's requests for greater resource, t.,cre flexibility
the agency would respond more quickly and fully to com- and exemption from public d sclosure laws.
of the.
' mittee calls for consultation. Friends and supporters of Biden, for instance says a thorough investigation sphator
Mr. Casey called committee members on his behalf.
charges against Mr. Casey is needed precisely because i
Also important was whispering from the White House Congress might resist unleashing the agency if it lacks
and the "Intelligence community" - former and current confidence intheoversight panels-
intelligence officials and their friends'- warning that The staff inquiry, therefore, is likely to continue. Pri-
scandal and a prolonged inquiry would deny the agency vately, however, some senators are concerned that Mr.
the morale and stability it requires to do its job. Even if Goldwater's quixotic and mercurial behavior may impair
Mr. Casey were to step aside, White House aides said that the effort. Others think he has been chastened by the Casey
the top job would not go to Admiral Inman, the commit- affair. "It's going to tone him down a little," a Republican
tee's favorite, and that he might even lose the deputy's committee member predicted. Perhaps. Still others are
post because proposed nominees for chief had former or nabout Mr. Case s con
curry t3$~Ef4 il Ib~s~ i2 Ae4/I8tYv0Al+R P'~1c MON dal over a failed covert
tary pnnel to occupyltap jobs at the agency. Finally, operation may again trigger calls for an inquiry - or ac-
the White House and Senate leadership successfully fo-
cueations that thepanel failed to do its job.
, cased the controversy not on Mr. Casey's management of
 AR '1CLE AArrnctf or Release 29W1 J .i 1 ADPVT00901 R0004001
o1i F.A Gr__._j__._..._._j 2 August 1981
:David Wise
I 'I
Will Control we
O~tsideEs or the
William J. Casey has survived as CIA director, at
least for the moment, but the wrong conclusions will
probably be drawn from the Senate investigation of
his activities and the pratfall from power of his spy-.
master, Max Hugel.
The moral of the story, some will assume, is that the
CIA should be left' to the professionals. That, of
course, is precisely what the powerful network of Old
Boys, both inside and outside the CIA, would like the
public to think. The intelligence professionals, the ca-
spies, prefer to regard "the agency" as their pri-
reer
vate preserve. Outsiders are poachers.
While the controversy may have appeared on the
surface to be a struggle between the Senate intelli-
gence committee and Casey, the real struggle was
over who will control the CIA. Arrayed on one side
were Casey and the president, who gingerly sup-
ported his CIA director. On the other side were the
Old Boys, the present and former CIA professionals,
and their allies on Capitol Hill.
It was an old battle played out again. with a new .
cast of characters. Back in 1965, President Lyndon
Johnson appointed Adm. William F. Raborn Jr., the
man responsible for the development of the Polaris
missile, as CIA chief. The Old Boys were annoyed.
Within weeks, stories found their way into print re-
porting that at CIA meetings Raborn was a muddle of:
confusion, "so unlettered in international politics," as
Newsweek put it,. "that he could" not pronounce 'or
even remember the names of some foreign capitals
and chiefs of state." Six months laterRaborn was out
as CIA director. With the admiral piped ashore, John-
son named a professional, Richard Helms, to the post.
Besides Raborn and Casey, at least two other out-
siders who served as CIA directors were targeted by
the professionals. President Nixon named James A.
Schlesinger to the job in 1973. Schlesinger fired a
number of Old Boys, 'arousing much ire within the
agency. Under Jimmy Carter; Adm. Stanfield Turner
managed to survive as CIA chief, but many old agency
hands refer to him mockingly as "the Admiral."
The current flap had its unobtrusive beginnings late
in March when Casey quietly moved John McMahon
out as deputy director for operations (the CIA's covert
side) to head intelligence and analysis. Then, on'May
11, Casey tapped Hugel, who had worked with him in
the Reagan campaign, to be the DDO.
Only four days later, on. May 15, Cord Meyer, the
covert-operator-turned-columnist, surfaced Hugel's
name, revealing the appointment of "a rank ama-
teur" to head the agency's cloak-and-dagger direr-
torate-The drama had begun. i .
Two brothers, former business: associates of the
Brooklyn-born Hugel, went to The Washington Post.
On July 14, within hours of the newspaper's publica-
tion of charges of improper or illegal business activities
by Hugel, he 'had resigned. There were those who
argued, albeit not seriously, that the disclosures only
proved Hugel's superior qualifications for the job. Ac-
cording to the Hugel tapes and other revelations in
The Post, the spymaster had threatened to kill a law-
yer who got in his way, warned his business associate
that he would hang him by the testicles and admitted
(in' his unpublished autobiography) that he was a liar,
infoirrier and a bunko artist. To top it all, he beat the
CIA lie detector. What finer background could any-
one have to head the CIA's dirty tricks division?
But Hugel went quickly down the tube. Perhaps;
one anonymous White House official speculated,
with some help from "former intelligence officials."
Whether anyone, inside or outside the CIA o eased
the ways for Hugel's fall, remains, like so much
t it is er
B
clo
ded in mi
b
th
e are-q,
.
u
u
out,
a
c-.Y i
lear that Casey's appointment of Hugel, a one-time
sewing machine manufacturer, rankled the CIA pro--
fessionals like nothing in recent memory.
From the tree-shaded lanes of Langley to the Fed-
eral-style homes of Georgetown, the sputtering could J
be heard wherever old spooks gathered. It was as
though a busboy had suddenly been made a Mem-
ber of the Club. Unheard of!
On the very day that Hugel resigned, stories mys-
teriously surfaced noting that a federal judge-two
months earlier on May 19-had ruled that Casey
and-others had "omitted and misrepresented facts','
to investors in Multiponics, Inc., a company that
owned farm acreage' in the South. In succeeding
days, Casey's. image came to resemble nothing so
much as a series of ducks in a carnival shooting gal- J
lery. One duck carried a sign reading "Multiponics."
Others read "Vesco," "ITT," or had similar labels of
cases in which the CIA director's name had figured,
in the past. No sooner would one duck be shot down
than another would pop up.. _ ..
Casey had concealed a $10,000 gift, said one
story. Casey had links to a New Jersey garbage .
man who might have links to the Mafia, said an-
other. Soon Barry Goldwater and other influential
Republicans were calling for Casey's resignation.
In the midst of it all, Samuel and Thomas McNeil, ~
Hugel's accusers, vanished.
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We i o..,-remembering President Car-
ter's difficulties with Bert Lance-gave Casey only
lukewarm support, but the CIA director rallied his
friends and supporters and had gained ground by
the time the Senate committee held its one day of
hearings into the affair on Wednesday and found
Casey not "unfit" to serve. 'I Here was some feeling in
Washington that Goldwater and other senators, in
their earlier calls for Casey's resignation, had rushed
to judgment. But Goldwater is clearly the CIA pro-
fessionals' favorite senator. "I don't even like to have
an intelligence oversight committee," he said recent-
ly. "I don't think it's any of our business."
Complicating the struggle was the figure of
Adm. Bobby Inman, Casey's deputy, who went on
ABC's "Nightline" in a rare appearance to defend
his chief and to deny that he, Inman, was "orches,
trating" the scandal in order to succeed Casey.
Inman, who was undoubtedly Goldwater's choice.
for the job of CIA director before it relent to Casey,
is an intelligence, professional--he formerly
headed - the National Security Agency-who is
often surprisingly outspoken.
"Clearly," he told Ted Koppel on ABC, "those
inside the agency would prefer that all the promo-
tions come from the inside."
As Inman suggests, the Old Boys would have us
believe that covert operations and clandestine cot
lection should be run by the professionals. The
difficulty is that the CIA professionals are, the
same wonderful folks who brought us the Bay. of
Pigs. They also produced Operation CHAOS, the
illegal spying on Americans who opposed the war
in Vietnam, as well as MKULTRA, the drug-test-
ing program in which Americans were lured from
bars by i.he CIA and given LSD,-without their'
knowledge, and HTLINGUAL, in which the
agency steamed open hundreds of thousands of
first-class letters in violation of federal law.
It was the professionals of the DDO who tried to
kill Patrice Lumumba by poisoning his toothbrush,
who wanted to make Castro's beard fall out by dust-
ing his shoes with thallium salts, who tried to cap-
ture a crocodile and hire an African witch doctor to
brew its gall bladder into a special posion, who at- .
tempted to"use dogs as mind readers and cats as.
eavesdroppers. And' who hired two Mafia thugs to
put botulinum in Castro's food. (The CIA tested the.
poison on monkeys first. The monkeys died.)
Casey does seem in his checkered career to have
walked very close to the edge of impropriety. An.
awful lot of people seem to have sued him over the
years. And his appointment of Hugel; who was ob-
viously modeled on Maxwell Smart; did show poor
judgment. But,'in principle, there-is no reason why.
reputable outsiders should not be appointed to the i
top jobs at CIA. At the very least, they will save us.
from the professionals.
David Wise writes frequently about intetii
Bence. His most recent book is-,,Spectrum," aJ
novel about a power struggle inside the CIA.
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 STAT
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ARTICLE A ' F ED PO N YOLK:( TT S
: T 1981
ON PAGE` w ;syy' 2 AUGUST
A portfolio from around the nation
T N= SENATC ;STARTED !N 'DEGEMOq, SEC9ET PEALS,
0r4 iE NNo( :U~r o~ FCurICAL PAYOFFS
D3n`s1iMTfll1 (
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 ARTICLE . 3 diFor Release 20?' " 2BW 01R000400150
ON PAGE.
is Qul''et,
orb ' over uase
not hi e
Demands for the resignation of Mr. Casey did go he would be replaced
Central Intelligence Agency chief Evil- not by Sen. Goldwater's favorite, Depu-
ham J. Casey, ,it appeared at week's ty Director Bobby R. Inman, but by
end, had blown over, as it had begun, someone from an informal White
much in the manner of a midsummer House list that was taken by committee
lightning storm. The sudden calm .may members to be unattractive.
mask, for the rest of the.,Summer at
least, discontent with Mr, Casey's stew- The most telling case. against Mr.
ardship of the United States"intelli- Casey, of"course;was his appointment,
gence apparatus: Beneath that discon- without consultation with the Senate
tent are sugstantial reasons for doubt- committee, of 14fax C. Hugel as chief of
ing his fitness for the office: covert operations. Mr. Hugel, who had
n
o experience whatever in intelli-
After several days- irr,which Sen:
Barry Goldwater (R:; Ariz.), chairman "fence operations was subsequently
of the Senate Intelligence Committee, publicly exposed as having been in
and others were calling openly for bir: volved in business dealings that were,
Casey's resignation; the committee met : in the kindest light, intolerably shod-
in secret, examined some records of . an. r Mr. Casey stood firm,
Mr. Casey's past business indiscre-
tions, talked to Mr. Casey at some In the course of the open controver-
length and issued .a formal statement sy, no significant new information was
that lie is hot unfit to serve. Sen. Jo- brought to light -- or apparently dug
seph R. Biden Jr. (D., Del.), no fan of - up by the committee's staff - on Msir.
Mr. Casey's, explained that the state- Casey's questionable business deal-
anent reflected "the overwhelming--. ings? .Certainly; nothing came forward
sentiment by the vast majority of the that suggests ' that his choice of Mr.
committee to get this matter behind us Ilugel was anything but gross bad judg
for the good of the agency:":::.. ment.
So much for that. The fact is that The Congress is exhausted from its
neither the committee nor the full budget and tax debates and most of its
Congress has the authority to fire him. members are looking forward to a
Having confirmed the appointment, summer recess, suspending serious
the only power over the matter which business. Perhaps that is just as well.
remained on Capitol Hill was. that of- But in the meantime, Mr. Casey's back-
moral suasion. ground clearly has not been. exhaits
Another fact a political one 'is that tively_ examined.. It; should be, by the:
had the committee-flatly- concluded committee, which has pledged to do so;
thgt Mr. Casey was unfit,.the.likelihood . -_atid by the.White. House,. which would
would have been. that: President- Rea-..-.serve ..Mr...Reagan and the effective`
gan and those around. him would have administration of the CIA by digging-
-been moved, as.a.-matter.of practical unrelentlingly. Mr. Casey is vulnera
politics and administration,, '_to have ble;' by his own misjudgments. That
,demanded thatMr.'Casey step down. In vulnerability cannot responsibly` be
`a flashy- 'political move,: the, White allowed to undermine the national
House ha& made it quietly clear' that if interests of the United States.
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ART I C:L APPEARED
ON :PAGE._x
ESSAY
WASHINGTON Boris Grishinurn,
ace operative. of the K.G.B. in Wash-
ington, who works undercover as hors
d'oeuvres specialist at Ridgewelt's
NE;`I YORK TIMES
2 AUGUST 1.981
means to replace Casey, too. (C.I.A. In,
Spector General Charley $riggs will be
asked by senators to investigate any
contacts with McNutts and C.I.A. per-
sonnel, and. any aid that subsequently
may have been given them in skipping
country with millions
When huge headlines appeared accus-
ing dirty-tricks boss as a man who may
have experience : n dirty tricks, Not Our
Kind fellow had to quit. But Goldwater
was prodded by John Blake, oh-boy net
member now Senate Intelligence staff
chief, to say, "Casey's gotta go too.-: `. 1.%
Pared by C I.A. last year and was
wrongly squelched within agency; also
criticized a recent analysis of Cuban ac-
tivity in Latin-America that failed to
take Soviet activity into account. Oh-
boy doves in the room, who already
stimulated stories through Hill allies to
stop formulation of Libyan plans, saw
hardline handwriting on wall.
Upshot: coup attempt has fizzled.
Goldwater seems out to prove "sena-
"
"
pr
ess
o
e
wanted `td'` Casey, Goldwater was pushed " forward by, S ""t"e wnicn-
nsfield Turn-
called _nress conference: to deny_it- But---- er. '-- ~: .
instead ofdenying, confirmed.'Confu-._. `At' dinner party in McLean other
sion attributed by gossipers to various=:. night, where my pickled- water chest-
causes; by other senators to need-for' nuts wrapped in bacon made big hit,
drugs to relieve intense pain in hip. agency doves were distressed at "burn-
Combined with well-timed release of old ing" Inman -- who did not know how he
story about Casey civil lawsuit. led to was being used but hopeful that
firestorm asking for Casey resignation. Casey and Reagan too will
Catering Service. is filing this report
explaining the Casey case to Yuri An-
dropov, his boss in Moscow
Isplot*byct~c}ueanC.IArbureaucra ? y
cY
using liberal media and. befuddled Re-
publican : senators to throw out hard- -
liners appointed by Reagan to toughen
up agency-Is being called Golderwater.
gate
Began iat, lasts year cvhert dovishr
- clique who make up what I overhear
them call "oh-boy! network"-got Sena.
for Garry Coldwater to push forAdmi.
rod Bcbby.(am not being familiar, that's
his name) Inman as Director of Central .
intellig-m _.. Instead, Reagan : chose
"Wild Bill" Casey, throwback to Cold
War Donovan era, who in turn ap.
pointed as dirty-trick boss a man the
oh-boy network considered..a pushy:
street fighter from Brooklyn and Not
Our Iand.
. Inman operated the "Big Ear"'of the
National Security Agency and protected
the Establishment by never releasing:'.
embarrassing "Kissinger withholds."..
Ile is seen by right-wing Madison Group
as soft on SALT,'and was made Casey's-
deputy as sop to Goldwater.;,(
Coup was then plotted. Coupleof Wall.
Street operators, ttee McNutt brothers (if
I overheard that correctly) may have
gotten in- contact with C.I.A. oh-boy net,-.:
who urged them to go to the media to dis-
credit new dirty-tricks boss and become
Republican Senators Stevens and - are proud of demonstrated influences f
Roth, thinking only of tax-cut fight, pan.. Senate and House intelligence conunit-
icked only Democrat Jackson kept tees. and think they can obstruct,
cool.. White ; House realized . that get- through Congress, any covert opera.
Casey-maneuver was intended to put j Lions that might aid Savimbi, the Kurds, {
Inman in-to restore method of national the Afghans, anti-Qadaffi Libyans, anti-
intelligence estimates preferred by oh- Khomeini Iranans, or anti-Sandinist
boys, and to smooth feathers of station Nicaraguans.
chiefs ruffled by Casey. -f Comrade Annd.ropov! The public expo.
National Securit
bos
s ult
e '
h
y
s
ra
ardI sure of the dettikli i
I-- .enn cquen C.I.A.
liners sore at Casey for approving rela- controlling the Intelligence Overseer in
tivelymildversion of upcoming Execu- III the Senate is unhelpful to us. Watch my
five Order on intelligence operations, reports for further details. And keep an
recognized they are better off with eye cn your own Number Tvo.
Case
th
ith I
y
an w
,,e
nman who is no softi
either but the candidate of the C.I.A ` Beginning today Wiitiam Satire' f
s
co
detentniks. To show Goldwater his coup umn will appear every Sunday and
could not succeed, they put out to News. Thursday. Anthony Lewis
who is n
,
ow
week the names of potential Casey re-. an vacation, will appear every Mon-
placements - definitely not Inman: [ day and Thursday.
Inman is now Outman. '
When Casey refused tocave in, and no
new revelations added fuel to firestorm,'
and'Casey allies George Shultz and Bill
Simon got to. Reagan, the coup attempt'
Iost: momentum. Sneaking suspicion
about instigation and motive of original
country-skipping accusers cooled off,.
some media:;.
In speech to C.I.A. operatives, ,givene'
to Senate in knowledge It would then
net of detenteniks. Said that an accurate
assessment of Nicaragua had been pre -
tor
and
senile" have same root, and
has shown he can be easilymanipulated
"
nf
i
n-l_-
by what he thinks ar
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 Approved For Release 2005/11/28 : CIA-RDP91-00901R00040015
2 r.u~ st 1951
Thniss .tca.xemaricabYe series- of -maneuvers"`
gone. the-mostdramatlcshiftin basic-economic,.-
'
policies it has:
exper eneed V im;nearly-half_ a
centaryw. Ainif that; among other things; is a sharp
remindetof justhow badly Reagan's-Democratic-
71
-opponents haver- underestimatedi-him
. f .In judg1ng a.; would?Y :president; politica}
factnWi`nformatlaa about.foreign policy. or the,
political philosophy::On. alL..these counts, Reagan
DroL":'srateanoti hfgher ` than Franklin'
Poosevelb=whom` thewlatei Walter Lippmann.
0nce~disnaissed as sim ljc as amiable man with
Actuallsr though, the most important-quality
E 3~.adershlp--~vhieh;=~ia::=turn; rests `'heavlly~:ion.:
.
persuasiveness:And in this respect; Reagan, like.
FDR, has shown himself a standout.
The common Democratic putdown of Reagan
In -his. pro-Whitw,House clays,.was-that he was A
"Just an actor". Butth,at isn't true; he had also
had a whole:second-career_as-=a -pitchman_for-,
-_Gener*-Eleetri~? lot-which,oftea-.tooIs- him
before, skeptical. blue-collar audiences
+ T h-13, experience, helped glve-.hhn the'cast of
minds- of- a good.'. sales es czaa:: insteadE of getting-
angry- at people who disagree-with- him,, he tries :
- - -
to figure--out- what. motivates:.
could change their minds
Perhaps most important of all,, Reagan has an uncanny Intuition aboutwhat is-politically possi
bie,. And- that' doesn't- always-.lead- him j o, com
pram: Only aa_week ago, the wise-:money in
%Ilashington:was (saying: that-CI1 ";Director Wit -.
liarnCasey wash dead duck A , on the-other .
ha. sniffed the -windd,--concluded;that it. svgs
possibleto.save Casey-andalmostovernlght the;,
wise money was proved :wrong. q- -
Litte?FDR`Tagain; eagais is; a ::true= political
in.xaovatorirThe traditional:"rewardx'aadTpunish-
mentswith .whiciz *a_,7President-used'sto. sway
C4 ngr have lost semze~-thoughtby no" nears-
a11=oL their'effeciiveness But,as--apionee_r in
the age _of mass- communications, Reagan knows :
that he;cat bring :differrewards and-punish-=:
m$nta ta..beaz=oascongresaznea by going over,'
The' ury is -sill onion whether the programs-
Reagaaad sitilltully sellesr the.wisest-possible
for.the broblemswe fA_ce~Hut hfs;abilitytQ rally,
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s't 191
.are,,, Iiavittg`wun c.Ii- imn? the
CIass:.'Reanion;;? salooii+
gaunt for poI~ticaana and
journalists:- -ne~h1ock from
faced and 4AitlY.:4 vo fingers
missing; parachuted into Dierf.1
Another ,11a5r ~;th'e biggest
yoeri`ever aiv ind a`
hands
reputation-=that ncrone oes
tions-fork distiosua;.. silently.
of severa1`"of Ilhcle? Sam's
.enemies
around the world
Today the topecr, is the
future of CIA director Bill
Casey. flow lonycatr he stay,
in- his Job ?-Calla forhirn. to;
step-,down started- two weeks
ago: after the.resignariort:of
-d:vcnase-is?ilone to toe image)
in tne= wake of Rogers
since nhe . famous Congre?s-
eionaL'revelaxioas about The
.a-ency's-dirtytricks depart
train hveyears agc>
'i~lv:`ooe-.really;thnrks the
-"The three men"iiffer some{ `WlLLIA 1; CASEY-.
rind to Bobby -I man, an-d , r ~,eryarie grees; have;played
miral':witlr~z liavtrnrnnnri ,ri _t. .._._.:..a i- ,. c a r-J t hn,r
intelligence' work." Inixian< is, nr t-ifork. But rhnsha4 beerr-no
brilliant analyst -lie is? the in the wake of iii:
network goavgabaut its ~ lams `S, t a t'art.e d when the.
ing ,for A d'rn t> a 1 Inmain Neworicy businessmen: will
a g-a i" n st ilia', bel.regvered iig >tve :,evidence of
Qasey It i 2freretix3 `uf a: ur ?.`fluge!s:'stock'?manapulatiens.
zeaE'-:week 's nhett Americans They :were.'-S'a mue i.: and
L*are svatcdied Casey,' their Thomas - lleNlell; tshe :=save
chne?:: spy, `- maue~? at harm he ,Post' reeordin s of their.
Capitol flidly vP~3F1 `cony rsations with Hugel
trhato raa Ifers as hr tn,0; , y and then' almost' immediately
rtivesiigaterl `fot' slrady'busi, disappea?rc d '-They took with
tress deals _ Sys s d them, apparently, S3.3 million
No== one is.clui,te sure 110-W from the family litr.[, Triad
it -1 turn; out: or ~di
at the Energy Corp., of New York,
imtlirence of the old.a-bo;y and have,not been seen since.
network willcbe '" ~ 1 week rate, a third
Yau ask 'me what thi, isl ~ broCher,i I)enrhis -Nell, 41,
a1Y:about arrcl I sag; tn.at is a died ri .inysterious circum-
good.::guestioh,' .si, 4 s ay.. 'stanceshn June 1`Some people say it iy:7 The second question posed
Russians A_Jot of pal ole say{ by the ; Caseyraffair.is more
I arn.?stu~ricL 'Some pecple, profound. It is whether the
'tliink~ ,tt ?ts; politics ,''Stir tee United:'States .-and..particu-
t`I?eo rkth;trilF;itrs ilte aa~: bo.gl -1-ar1y.'the: CIA,, has:- tried to
5 ,.. u k++ '; s ll
kurr'aacovf.rt.. action campaign
a ,Casey'surv,ves,the izty sti to,
topple,the regime of
gations but the searcFr'cori-{ one dhafr of. k a
times tar t a inatj Ve(s s@ ri n Al
rhose-who-have-tried to-bring =liberals:?-have.:suspected,' but
hinr dorrri 'ibleanwh'iF&. more ;_?never,be'en, able to prove
resignation senior-7'Repub-
lica is- on Capitol Hill called
for Casey to step do vn, essen-
tially for 'bungling, Hugel's }
'appointment. "Amon -:them,
ironically" - wasHarry'. Gold-
water;:- the 1, conseryande - Re-
,publican friend oLLhe-CIA,
.,who is:-head` pfthe.`~Senate
:-Intelligence Committee
prompted by...members:of the
CIA's old. boy network on his
staff, had always wanted
Admiral . Inman, -a ..former
head':, of. the super, secret
National Security Agency, to
ruin the CIA.. His choice re-
flected the classic split''in the
at eney'.s ? activities -. Inman
be Levies= the., prime task of
the.CIA:is intelligence analy-
sis,"not,'covert actions. Casey
is -cover action man.
The next day the -White
House deniE d - ibva :was the
target and, a upport of the
d e n i a 1, Administration
` sources' tc Id the Washing=
ton-Post the African country
was in-.fact h'auritania.
Mauritaui, has. a' tiny
population rf one;:a id a half
million. and -ecently went
through . .t military -. coup
shifting its allegiance-,from
Morocco (friendly-- to
America) 'n : Libya :.,_ (un-
friendly).- Ni a;' this worth. a
full-scale, ' costly' cover
action ? If - u was this -part
of a ' larger plan `to topple
Qadhefi ?
It is car r ,Iy true -that
Washington -,:Tripoli rela-
tions hay deteriorated
sharply sin e Mr Reagan
came: to ott e. During May
a whole set,:-; of diplomatic
When the-llTasheington Post'
exposed'-'Hn,~ei.'s business
deals, Goldwarer pounced.
Hugel was Casey's man and
so -Casey' should resign, the
Senator demanded. Demo-
crats joined him.
The' : Senate.. Intelligence
.Committee demanded an in-
,vestigation- into-: Casey's busi-
ness ;dealings'especially one
affai'r'in which he is-alleged
to'?'have hniowingly =misled
investorsi agricultural
concer-n in%I963;?But the com-
United Sta-asclosed- _the
Libyan Miss,on in. Washing-
ton and told i American - oil
executives 'e th operations in
Libya to hewn an.:` orderly
.According to 'some press
reports, 'senior government
officials 40e,-,an . obviously would love to forget the whole
The committee,- chaired by Republican thing. The committee absolved Mr. Casey
S
n
H
ld
G
e
.
arry
o
water, talked with Mr. Ca-?-
say for a while Wednesday and concluded,
that he was fit to serve as head of the CIA?
despite the allegations of slick dealing in his; -
business enterprises and. poor judgment in.
picking his deputy
Mr. Casey was Installed at the CIA by
President Reagan, an old friend, after he
served as campaign manager for the presi-
dent In last fall's Republican sweep. Mr.
Casey is also former secretary and director
of Multiponics Inc., a farming enterprise
that In 1968 milked $917,000 from Investors
for the benefit. of its own officers and
directors.
President Reagan says the Multiponics
Incident happened a long time age and,
anyhow, It was merely a technical violation
on Mr. -Casey's part- The matter, was not
before its staff had even finished investigat-
Ing the situation, but it has promised to
"follow up on points that need clarifica-
tion, " and issue a final report sometime in
the future.
Mr. Casey's choice for CI9, deputy direc_
tor, Max Hugel, has already resigned fol-,
lowing accusations that he passed inside
Information about a firm he once headed to
some Wall Street brokers. The selection of
Mr. Hugel, a man with no credentials to be a
spymaster, has been cited as proof of Mr.
Casey's own lack of experience in the intel-
ligence business. But the Intelligence Com-
mittee had no taste for further embarrassing
the administration at this time. Its members
have given Mr. Casey a clean bill of health I
for now, but chances are his problems are i
not going to go entirely away.
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I':f; L ;~J O i 1`
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The CIA's feud by leak
Mr William Casey should be quickly cleared or fired,
but not subjected to long trial by innuendo
Damage will be done to America's Central Intelligence
Agency if the accusations against its present director,
Mr William Casey, are not immediately cleared up.
Neither the CIA nor America can afford such damage
to be done at the very moment when the agency hoped
it could put a dark decade behind it.
There are only two ways for the CIA to be able
quickly to get on with that job of recovery again, so that
it once more becomes the major prop it should be in
America's defence effort. Either Mr Casey should go.
Or his critics on Capitol Hill should conduct their
inquiry quickly and, if they exonerate him, as quickly
still their sniper fire. On Wednesday the senate intelli-
gence committee unani::nously decided there was no
need for him to resign, but distinguished senators were
still muttering that some points needed clarification.
Scrutinised to death? .
Mr Casey is an old fighTer, and he has been fighting
rather than giving up easily these past three weeks. His
careless mixture of lumbering old Republican gentility
from the top east-coast drawer and rasping commands
in the voice of a New York cab driver do not endear
him to many. He is impatient, highly political. He was
clearly slow to take seriously charges against him (see
page 30), some of which date back to before senate
confirmation hearings for other distinguished govern-
ment jobs he held in the Nixon years, at which they
were disclosed; and others which seem not to have been
disclosed when he was confirmed earlier this year in his
present job but which hardly seem to have involved
financial dealings of major consequence to a man of Mr
Casey's background. Indeed, it is unlikely that much
would have been made of any of these charges against
him had he avoided the crashing mistake of appointing
as his director of clandestine services at the CIA a
small-time millionaire who then had to resign in a hurry
when the Washington Post revealed questionable deal-
ings in his own business past.
Now that a lot is being made of the accusations
against Mr Casey, the issues raised are far more serious
than the actual charges. Can good and generally
honourable Iawyer/businessmen like Mr Casey afford
to accept ministerial challenge in Washington when
activities dating from before the Simon-pure era of
post-Watergate may be scrutinised to death? Can
'Washington's post-Watergate taste for "trial by innuen-
do", as Senator Henry Jackson calls the present
campaign, and trial by competitive press leaks, ever be
put to rest? Can the CIA itself ever stop the debilitating
internal wars which the Watergate era and the power-
shyness of the Carter-Mondale era are jointly responsi-
ble for? At present too much of the inside knowledge
that the CIA exists to procure is being used as
ammunition in its faction fights, instead of against Mr
Brezhnev's friends.
Mr Casey gets high marks from some intelligence
insiders for his tough way of managing the agency, his
efforts to eschew press briefings and yet to undercut the
agency's internal wrangling by bringing political choices
into the open. Others on the losing end of his ministry
detest him for his toughness, and leak their detestation.
Whether Mr Casey stays or goes, senators and con-
gressmen must squelch this habit of feud by leak in the
agency. Both congress and the White House must back
Mr Casey, or his?successor, to the hilt.
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 A.R T I C IJE APPEA i~.ED
ON
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THE WASHINGTON POST
1 August 1
981
ailed Lisi J. Client
0
man-cial Diselosw re -,,Kooorl
By George Lardner Jr. amendment submitted this week showed holdings.
Washington Post scarrWriter valued at $50,000 in Vanguard Ventures, $15,000:1
CIA Director William- J. Casey failed to list a in the Energy Transition Corp. and $10,000 in
New Jersey waste-disposal firm and other clients. SW'C Information Co. Scott said his office was in
in his financial disclosure report to- the Senate_
Intelligence Committee despite a rulecalling-for
disclosure of. all- but minor sources of income over
the past. five years. after'a closed-door session with Casey that it had
Instead, Casey apparently duplicated a list of na basis "for concluding Mr. Casey is unfit to
clients he had submitted to the Office of Govern- serve". as CIA director. But it, also decided, as.
merit Ethics, whose rules call only for the disclo-
sure of clients who had paid him $5,000 or, more-
in the last two years.
The- intelligence committee had asked hi:n in
January; in connection with confirmation proceed-
ings, for an accounting of all salaries, fees` and
other items of income over $500, and their
sources, during the past. five years.
As part of its effort to wrap up the Senate in-
quiry-into Casey's business affairs-that it started
last-month, the committee staff now has report-
edly asked Casey to dig back into his. records for
the last 10 years...
Casey had represented the waste disposal firm,
SCA Services Inc., a company with alleged ties to
organized crime, in.,1977 in an unsuccessful. effort
to head off Securities and Exchange Commission
action against the- corporation and some of its top
officers..
Although. SEC lawyers went ahead with the.
complaint, which alleged 'the diversion of some $4
million in company funds for personal-use- by its
officials, Casey reportedly negotiated a settlement
of the. case; whereby SCA neither admitted nor
denied the -charges. A- former chairman of the
SEC, Casey was affiliated at..the, time with the
New York-based law firm of Rogers & Wells..
Officials it the Office of Government' Ethics
said yesterday that CIA lawyers also had notified
them' on Casey's-'behalf that he failed- to :disclose
stock holdings in three corporations on any of his
financial disclosure forrin.
David R. Scott, chief counsel of the ethics of-
Lice, which is part of the executive branch, said an
the process of obtaining more information about
the companies. -
Chairman Barry Goldwater (R-Ariz.) unenthusi-
astically described it, to "chase down some of the
loose ends" before wrapping up the inquiry and
writing a final report.
Goldwater had called for Casey's resignation .
only last week, but he did an abrupt turnabout.
By Wednesday, the senator "wanted to shut it,
[the inquiry] clown" altogether, one source said.
Several committee members such as Sens. Jo-
seph R. Biden Jr. (D-Del.) and Daniel Patrick
Moynihan (D-N.Y.), however, maintained that
? there were too many questions still unanswered,
concerning Casey's business dealings and Casey's
appointment of Max Hugel, a Reagan campaign.
-.colleague, as the CIA's chief of covert operations.'
"Hugel resigned July 14 after disclosure of alleged
financial misconduct of his own.
Still to be checked, for instance, are court
records.concernirig Casey's involvement with Mul-
tiponics,Inc., a bankrupt agribusiness firm based
in New,Orleans. Casey, who was an officer and a
- - director; played down his role in the company in
representations to the Senate committee, but, ac-
cording to trial testimony cited in a forthcoming'
New York magazine. article, Casey, said that "I
kept very much on top of the important things;
that the corporation was doing-",
.
Although committee members have said they
want to complete the inquiry this month, it could
stretch into September. A minority counsel, Bern-
hardt K. Wruble, 39, began work yesterday in tan-
dem with special counsel Fred D. Thompson,
hp G
wose apointmentoldwater announced Mon=
day
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 OTNT PACE-_,,
CIA
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THE c;C: IST
1-7 August 1981
ever for that job, with the possible excep-
tion of having learned Japanese many
years ago. "Max was very, very unsophis-
ticated and unknowledgeable, and he
thought he was a lot smarter than he
was", a former superior told the Wash-
ington Post. Just a few weeks ago, the
Post broke the story of NIr Hugel's ques-
tionable (and possibly illegal) business
dealings with a family of New York
stockbrokers.
Mr Hugel was cut loose by the White
House within hours, and Mr Casey lost
no time in disavowing any truly close
acquaintance with this man whom he had
during the Nixon administration, includ-
ing his candour on matters relating to the
fugitive financier, Mr Robert Vesco.
Then there is the bizarre incident in Mr
Casey's past involving his plagiarising two
and a half pages from a book written by
someone else. All these matters aroused
the senate intelligence committee enough
to make it hire a former Watergate inves-
tigator, Mr Fred Thompson of Nashville,
as a special counsel for the Casey affair.
Mr Casey said he was eager to testify
and clear his name, Three of his support-
ers, including a senator and the CIA's
Casey's Casebook
WASHINGTON, UC
There is a theory that if an American
politician is going to get into trouble, he
is far more likely to do so in the summer
It takes less of an event then to make the
news, and less of a scandal to shock the
public. and the press. Into the? breach this
summer has come Mr William Casey;.the
director of central intelligence. Mr Casey
has been fighting a very public battle to
keep his job. Such conservative Republi-
can lights as Senator Barry Goldwater of
Arizona have called for his resignation
(though Mr Goldwater has also with-
drawn his call). And the White House,
apparently trying .to avoid the sort of
fulsome and foolish backing given by
President Carter to his one-time budget
director, Mr Bert Lance, who stood ac-
cused of financial shenanigans, has been
measuring out its declarations of support
very carefully indeed.
Although he had served in the office of
strategic services during the second world
war, Mr Casey was not an automatic
choice to run the CIA and co-ordinate
American intelligence efforts generally.
But that was the job he wanted, and Mr
Rcagannwas so grateful to-him for-reor-
ganising his campaign for the nomination
after it had faltered early in 1980 that he
did not hesitate to go along.
The White House also gave Mr Casey a
.virtual carte blanche for the selection of
his closest aides and associates, and there
Mr Casey made an undoubted mistake:
the choice of Mr Max Hugel as deputy
CIA director for "operations" (the. agen-
cy euphe.niisux for clandestine services
and covert action). MrHugel, a rich, self-
made New York businessman who was
"100% Reagan"-as one of his friends
told the CIA during a background inves-
tigation--had no qualification whatso-
entrusted with one of the most sensitive general counsel, Mr Stanley Sporkin
jobs in the American government. But it
was too late. The appointment of Mr
Hugel raised such profound questions
about Mr Casey's judgment that the di-
rector's own record as a Wall Street
lawyer and businessman. came under
new, more careful examination by mem-
bers of congress and the press.
Some embarrassments have ensued. A
federal judge" recently ruled that Mr
Casey and other directors of an agricul-
tural company that went bankrupt many
years ago had misled investors in docu-
ments they circulated about the com-
pany. Mr Casey was a lawyer for a waste
disposal company that has been linked in
sworn testimony to organised crime. And
during his confirmation hearing for the
CIA job this year he neglected to tell the
senate intelligence committee about one
of his investments (as required) and
about the gift of a $10,000 interest in a
business venture..
Questions also remain about Mr
Casey's performance as chairman of the
Securities and Exchange Commission
(who previously worked with him at the
SEC), took the extraordinary step of
holding a news conference at a Washing.
ton hotel, arranged by a private public
relations firm, to express their confidence
in him. Several of Mr Casey's prominent
and most unimpeachable friends from
former administrations have announced
that they will give lunches in support of
Mr Casey in New York and Washington.
Meanwhile, as if to fulfil a prophecy by
Mr Casey's leading opponent, Senator
Goldwater, serious questions have now
arisen in congress concerning a secret
plan for some covert CIA action in Africa
drawn up by Mr Casey and Mr Hugel.
Initial reports (leaked by Mr Casey's
opponents within the agency?) suggested
that the plan was directed at Colonel
Qaddafi of Libya, but the White House
denied it; it was then said to involve
Mauritania and the struggle in the west-
ern Sahara. Members of the house of
representatives select committee on intel-
ligence took the unusual step of writing to.
the president to suggest that the plan was
poorly thought out and unwise.
Mr Casey may recover from these
exposures. The senate intelligence com-
mittee agreed on Wednesday, after meet-
ing for seven hours, that there was no
need for him to resign. But the CIA,
where it should be said that there are also
many strong supporters of Mr Casey's
cause and whose morale and effective-
ness Mr Reagan and Mr Casey hoped to
improve, has not been helped by this
latest bout of probes into its rulers.
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 STAT
MI t 1111&, S (FL)
Approved For Release 200$/1 V2&4dClKi bP91-00901 R00040015 ".4-..
Casey survives, for now
By its handling of the current investigation of Central
Intelligence Agency Director William J. Casey, the Sena e
Select ommi xee on n lligence is perpetuating and
:.refining the pattern of tunnel-vision and ineffectiveness it
began to weavj during Casey's c
this year. r. ?~ .
Just a few daycs?ago?comrnittee,Chairman Sen. Barry
Gi idwaterand two'other prominent Republicans
surprisingly calleorrasey's. resignation. Casey was
.CIA,'s`c adestineouerationsaftex+ ItageLsesigned in the ',
wak , cusationsrthat he hadibeeir1nv6lved in improper
financiaLpractices:while in-private business. Casey also is
shadowed. by. recelit~revelations that: he and others had
knowmgiy misl thvestors in.a N w Orleans-based
'--
.
ngri~business?irt!r1968~s
Why Goldwratersuddenlyr turned on Casey would make
a good=story. Certainlyitis reasonable 'ta wonder what
Goldwater's real^m~'otiveswere,`;especally since neither the
committee he-heads=nor the .fullSenate made-any-serious
attempt?to:?probe*.Casey'sbackground.during the
rAs President Reagan's allies'rallied behind Casey to
stenxthe cries-for his resignation, the intelligence committee;
which`had ordered a staff investigation of Casey's financial
difficulties, decided to meet privately with Casey. A curious
It certainly is puzzling for the committee to meet with
Casey and then, with Goldwater concurring, give him a vote
investigation of..Casey's financial dealings was completed- .
As one committee member was quoted as saying; the panel...,..
Despite the questions about Casey's judgment'in hiring
Hugel1and-about his own financial problems, the reasons for
entirely treat;. Neither are the reasons for the intelligence
committee's premature support of- Casey, except for the fact
.
shat the White'House obviously wants to do everything
l
o
kee
C
le
_y
-
p.
i
asey on 1.110 jV V.'
ostiIn`all this behind=the-scenes:i aneuvenng
xe the
a
..luestions,.hat a e;most basic to the'public interest -= the
matterof Casey?s fitness to head the CIA; the effect his
leaderslilpwight haveon that agency's effectiveness; and
the absolute truth. about~his financiaLhistory Those issues'
tj.c u1g tfalc~[lvii Auw=is wneCner'tne intellig_ence'-=:`'_'=
committ
~'s
staff
nvestig
ti
-wil
v
g
:
i
a
on
l re
eal aIl-the facts abou
Casey's financaa problems and his fitnessto serve.in the
t
;public ra
er t,or.whethertnewhitewashthatseemstobe.
on the-bards will be added tathe Senate's earlier
.1. 1
eLLk. 1.tg-a _ ti: ^,wki~~tib!'~..?rfi!?f.. y.~f::-..ti._f.-.,: t,..
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 Approved For Release 2005/11/28 : CIA-RDP91-00901R0004001
MIAMI IIERAI,D (FL)
1 AUGUST 1981
ever and the Senate for abdicating.its.resport-
fdrtheUintelligence job.'; sibility to check and balance the EYeci
... The focus 0.1iftAd r? r,r r
__--
p e amaged goods in a position, so
meet
dealings was his decision to use the critical that continued suspicion", and
u-
key post of deputyarncharge. of spies as a ture'scandals are certain to ari's'e.--'-
Political -patronage plum. The job. went When they do, the. public rightly wilt
to Max-Hugel,'a crude Reagan-cainpai:gn ''blamethe President forbad 'judgment
.crony with 'no- qualifications what
Lou", tnv es- that Mr- Casey's effectiveness, which
Ligation during: the recent scandal. _ was questionable from the start, ' now 'is
Mr. Casey's own bad judgment is evi- impaired even further. The Adrhinistra-
dent in the decade-old business entangle tion won a political fight at the cost-,6f
ments that still must divert his energy retreating on the front of sound gover-
and attention, f rom%,,the nation's critical nance. In pursuit of political solidarity, it
interests. Worse- even than:_his invest- acre t d d
e na- the wnite~House maneuvered to-avoid
tion's intelligence operations, he would the political embarrassment of'havirikn
resign. If the Senate's top; priority were- key appointee forced out. Senior senaa
-
its Constitutional responsibility to give tors who ought to know better partici-
advice and consent on major Presidential pated in politicizing the- decision on the
appointments, it likely- would not have .fitness of-the director of the CIA.
confirmed _him originally and certainly_.. The inevitable result of that fiasco is
would have conducted a tho oh
ar
pp er,.-r.alternately attacked - and
peek continually over his shoulder, to see feinted, calling for IvMr.,
i .Casey's resigna-
his fickle friends are falteringor his tion_twice and then concluding that he
political enemies gaining? fi should star on - It was clear that_.a num
Probably not. If William Casey s first : ber of Republican chits were called in as
concern were for the vielfare of i-1,
r
tively by a 68-year-old who has personal en'u ' ould constitute fraud.
t Goldwater, a chief CIA
court battles-yet.to fight.and. who must su
.ti
t --- - --_ -.. ua1culbullGC agency &1r:'.Hugel was forced to resign because
ta# is perhaps the-most sensitive of all of- allegations of business practices that, .
Federal bodies. Can it be run effec- if
d
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 STAT
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,ARTICLE A.I'PI,,1RED NATIONAL SECURITY RECORD
ON PAGE, __ THE HERITAGE FOUNDATION
AUGUST 1931
:, .: ;~ 0 jh~rsi
?Tracking'the Issues-throng 1
Diverting Attention from to ?
The outcry which icti to the resignation of Max Hugel,
third ranking official at the Central Intelligence Agency,
and which has badly weakened the prestige and effec-
tiveness of William Casey, Director of Central In-
telligence, is rooted in public and congressional concern
over the effectiveness of the intelligence community. The
fact that both of these officials lacked contemporary in-
telligence experience and were appointed because of their
work in the 1980 presidential campaign has been publicly
deplored by prominent public officials, and there has been
pressure for "intelligence professionals" to fill both posi-
tions. Mr. Hugel's successor, John Stein, is such a profes-
sional, a veteran of the operations directorate of the CIA.
There is a strong consensus both in Congress and among
the general public to improve the quality of American in-
telligence, and a feeling that this can best be achieved by
removing restrictions from the professionals in the com-
munity. This interest is demonstrated by the careful man-
ner in which the Senate is approaching the issue of exempt-
ing the intelligence community from the provisions of the
Freedom of Information Act. Currently two bills, S.1273
introduced by Senator John Chafee, and S.1235 sponsored
by Senator Alphonse D'Arnato, are being considered by
the Senate Select Committee on Intelligence. Both of these
bills are designed to help the intelligence community
preserve necessary secrecy while doing as little violence as
possible to the principle of freedom of information.
In other actions, Congress is moving closer to adopting
the Intelligence Identities Protection Act (S.391 and H.R.
4). This act is attempt to frustrate a number of groups com-
mitted'Io destroying U.S. intelligence, which among other
efforts publish names of individuals which they claim are
CIA agents. Opposition to this act has come primarily
from the American Civil Liberties Union, which contends
that careful study of State Department records will reveal
the identity of CIA agents and that hence this information
is in the public domain. The recent Supreme Court deci-
sion, Haig vs. Agee, which ruled that the lifting of Philip
Agee's passport in 1974 was constitutional, concluded:
"Agee's disclosures, among other things, have the
declared purpose of obstructing intelligence operations
and the recruiting of intelligence personnel. They are clear-
ly not protected by the Constitution." This Supreme. Court
decision is evidence that any effort to challenge the In-
telligence Identities Protection Act on constitutional
grounds will not be successful.
It is unfortunate that upgrading the performance of
American intelligence has become so firmly identified with
insulating the intelligence bureaucracy from outside com-
petition. This identification has been reinforced by the
Hugel affair. Before the election there had been recogni-
tion that within the intelligence community there were
severe problems with the analytical bureaucracy, and that
any effort to reform this would require at the very least
competitive assessmenko~ ggsFt8~-wei'69 reo2 1t P18 : dIA 1901 R000400150001-0
community. As the
We will ree
telligence Advis
ministration, a
distinguished Ar..~...H. tv ractivtttt u t,t?i~tant autlrr 01
national intelligence research and performance. We will
propose methods of providing alternative intelligence
estimates in order to improve the quality of the
estimates by constructive competition.
Yet Mr. Casey's commitment to the competitive
estimates process has been lukewarm at best. In his first
address to the CIA staff, he stated:
I found in SALT I, for example, that some of the
judgements were soft. They leaned toward a kind of
benign interpretation rather than a harder interpretation
of assessing or viewing a situation as being more
dangerous.... At the PFIAB I supported a competitive
assessment process, but I am open as to how that can
best he done. Like anyone else I am in favor s,} improv-
ing our analytical capabilities-that is something easy to
be for.
Mr. Casey's actions since this address was made have
confirmed its tone. None of the important critic:, of the in-
telligence analytical process has been appointed ~o the CIA
staff. A special National Intelligence Council at the CIA,
formed to "upgrade the system under which, national
intelligence estimates are produced," is dismissed by many
as decorative. They note that the chairman of the new
panel, Henry Rowen, was associated with many c F the in-
telligence failures of the 1960s and early 1970s while presi-
dent of the RAND Corporation, even though in the late
1970s he criticized the "CIA's optimistic assessments of
Soviet military strength." They also point out that the
panel is empowered only to make minor changes in the
existing system, rather than radical improvements.
Of even more concern are the persistent reports that the
plans for reconstituting PFIAB will no longer give it direct
access to the President. Instead, it will report to the Direc-
for of Central Intelligence. The "A-Team/B Team" ex-
periment in competitive analysis would not have been car-
ried out if PFIAB had not had this access to the President,
and there are real concerns that if PFIAB is so constituted
it will become a prisoner to the intelligence bureaucracy.
It would appear as though the result of the Hugel
resignation and the criticism it brought upon Mr. Casey
has been to increase his dependence on the intelligence
bureaucracy. His ability to challenge established institu-
tions and mental patterns within the CIA has been under-
cut, and any confrontation with department heads or na-
tional intelligence officers would have a detrimental effect
on his image If leaked. Firm action is needed by the White
-House in this situation. PFIAB should be immediately re-
established, `etnd with its backing Mr. Casey should be
given the authority to make some badly needed institu-
 ::i :E_._= +
rrrrn,r:~rr 7iT1rrrTq
THIS WEEK'S NEWS FROM
NA TO Alliance at Stake
Can Reagan Derail Soviet-
German Natural Gas Deal?
The most important topic brought up at the
Ottawa summit was not U.S. interest rates, which
many money men predict will soon begin to fall if
the President sticks to his economic; and monetary
ic trade with ti a Soviet Untori
t st
program b
te
, ..
ra
g
u
The President 'and his aides, including Secretary or!
State 'Alexander Haig, are said to have strongly
,counseled the allies -to unite behind a` far more
restrictive --technology transfer, policy ard
specifically:'warned German'. Chancellor ' Helmut
Schmidt not to go ahead with a deal in which West
Germany would become increasingly dependent on ~
the Soviets for energy supplies;
So firm was the U.S. position that the final com
munique, though a compromise, did incorporate
language calling for the allies to take economic ac-
tions that; "continue to be 'compatible with our
political security objectives.:"
Moreover, `at- U.S. insistence, 'leaders- of 'thee
seven major nations at Ottawa agreed to another
high-level meeting for the purpose of arriving at "a
better definition of what things should and should-'
not be sent" . to Moscow "in light. of Soviet expan-
What particularly concerns the Reagan Ad-
ministration is Chancellor Schmidt's apparent
determination to cut a deal with the Soviets on
natural gas. This deal, which Schmidt suggests.
is innocuous, may, according to Soviet experts
here, result in the Complete neutralization of
Western Europe.
Under the terms of this on-again, off-again-
project, which was initially okayed by President
Carter, the West would supply the Soviets with
materials and money so they could lay down a
3,600-mile pipeline extending from the rich gas
fields of northwestern Siberia's Yamal Peninsula,
across Eastern Europe, to the Federal Republic of {
Germany. At that point; it would be linked to an
existing Western European pipeline network for:
distribution. Once completed, the Soviets would
be able; to deliver an estimated 40 billion to 70
billion cubic meters of gas per year' into Western
Indeed;- so dangerous is this plan considered to,
be for. the West that Sen.' lake Garn (R.- Utah),
along with Representatives John LeBoutillier
(R.-N.Y:)-and James Nelligan (R.-Pa.), addressed!
a letter to, the President on June 5 in which he`
outlined his deep concerns. With Garn in the.
forefront, some 43 senators and House membersi
dispatched another -letter to Reagan three weeks
later asking for an "immediate" halt to any U.S.
participation in the pipline construction. Further-
more, Garn outlined several ideas-which the
'President ,used, at the Ottawa summi -which
would provide i~Vesfern.laurope . with alternative
sources Ofeliergy:
The President's decision to raise the subject at
the summit was also bolstered by a recent study put
out by two vice presidents of the Chase Manhattan
Bank. In their paper, called, "Soviet Gas to the,
West: Risk or Reward?" Miriam Karr and Roger
W. Robinsoti:Jr.. Underscgre, the grave dangers in'
the pipeline deal bit'.
Under the proposed project, they say the Soviets.
would, be mainlining gas to 10 European coon-!
tries--Germany, France, Italy, Austria, Finland,
$elgium,: the Netherlands, Sweden, Switzerland
and Greece. The largest variant of thg plan envi
sions deliveries to Britain and Spain as well ~s= ,
,` By 1990, according, to ' the authors, 1-"it:, is
estimated that the USSR would supply 35 per cent'
of Western Europe's gas requirements;'': thus mak.'
ing most of NATO increasingly reliant on Soviet
energy,sources.
Whereas today. the Soviets supply.just about 18
per cent of what West Germany consumes - in
natural gas, for instance, by 1990, assuming the'
pipeline is in place, the Soviet share will have more:
than doubled.' (Other studies show that France,';
which now receives 7 per cent of its natural gas sup
ply from the Soviets, will be relying on Moscow for
more than our times the quantity in 1990'. Aus=
tria, now receiving 55 per cent of its gas, supply
from the Russians, will be getting 70 per cent at':
the end of the decade.)
Moreover, note the authors,. many areas of Ger-
many are already overwhelmingly dependent on the
Soviets for natural gas. "For example, Bavaria at j
present depends on the USSR for 80 per cent to 90
per cent of, its total gas consumption. Major f
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Bavarian industrial consumers linked to Soviet gas
are the chemical, petrochemical and automotive
industries.
"The Saar and Rhineland regions rely on Soviet
sources for about 50 per cent of gas consumption,
while for Baden-Wuerttemberg and Hessen the
share is somewhat less than 50 per cent. It is
estimated that two-thirds of' Soviet gad goes to
of President:- Leonid I. Brezhnev ' i ... The. ac
celerated development and exploitation of Siberian'
natural gas: testiurces > is a matter ofd; highest.
economic and political [note: emphasis.ours[_pri
ority.' t) .
With his own gut reactions bolstered by the Garn4
letter and the Chase Manhattan study, t e resi-
dent,.Say informed sources, went to Ottawa intent
German. industrial users with the remaining one-
Not only would Western Europe, be' far more; dependent. on,the Soviets for energy. supplies, but
the Russians would be earning enormous. amounts
of foreign currencies. Moreover, they would be. in
a perfect position' to blackmail NATO... govern-
ments with potential cut-offs in natural gas. While
the Soviets are .said to have- a good _ track record
for observing commercial undertakings, disrup-
tions in Soviet gas deliveries to Europe have, occur-
red as recently as this year.
The authors of the Chase Manhattan study also
say. A Jess apparent dimension to-.East-West
resource `projects; is Moscow's long-term
strategy. of transforming economic dependencies.
into tools of international diplomacy; In the words,
the des . The President was a M vigorous y sup-
porte in is effort y enago c e r r
irger~ U.N. Ambassador Jeane Kirkpatrick
Nyg
ant IAcliteftait Wi ltam Casey. wc!n erger and
Casey, reportedly, pus. - - or the President to e
an exceptions ly tough stance with Schmidt, while
Secretary. o State exan er aig and -pectal
`I ade epresentatrve William Brock pressed for
t e sot" line.
~evert.iless Reagan brought up the subject at
Ottawa; much to Schmidt's discomfiture. Whether'
the President can eventually force Schmidt to back
down is problematical, but a goodly number of
strategic trade experts in Washington think it's ab-
solutely essential if NATO is going to survive as an
anti-Soviet force.
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