SPIES AND COUNTERSPIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91-00901R000500060007-3
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 5
• Document Creation Date: January 4, 2017
• Document Release Date: April 28, 2008
• Sequence Number: 7
• Publication Date: April 9, 1984
• Content Type: PREL

k STAT
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Ab UUTA'1'.N;1) YHESS
9 April 1931
SPIES AND COUNTERSPIES
"For a $50 subscription to Aviation Week magazine, the Russians can learn
about U.S what it takes us billions to learn about them," says William Colby,
former director of the CIA.
At his desk in the CIA, Colby used to wonder what the job was like for his
counterpart in Moscow, Yuri Andropov, then head of the KGB. Both men, he
imagined, were sitting in front of a large jigsaw puzzle trying to figure out
what the total picture would be.
"There was one difference. I didn't have all the pieces and I had to think
what was missing and what would the final picture be. He had too many pieces.
His problem was selection.
"Also, it must have been difficult for him to figure out what the U.S. was
going to do because our system involves separation of powers and requires a
coalition of forces to resolve an issue. In that sense, figuring out what they
might do could be more predictable because the power in Russia is all there in
the center and fewer elements are involved."
We have a new tale of two cities in Washington and Moscow today, with a
remarkable similarity to the period Charles Dickens wrote about. "It was the
best-of times, it was the worst of times... an age of wisdom.., an age of
foolishness..."
Arthur Hartman, U.S. ambassador to the Soviet Union, does not trust the walls
of his embassy in Moscow when he wants a private conversation with his wife.
They go out for a walk to talk, not too close to any structure where the KGB
might have a parabolic mike. Students of eavesdropping assume that Anatoly
Dobrynin, the Soviet ambassador to the United States, is equally cautious in
Washington.
Both men have reason.
The Soviets have been known to bug the Great Seal of the United States in the
embassy in Moscow and the heel of the left shoe of the U.S. ambassador in
Warsaw.
American intelligence agents have been Known to dig under the Berlin Wall and
tap into East German communications with Moscow. American electronic experts
have also intercepted the radio telephone conversations of Soviet leaders as
they drove through the Soviet capital.
Military attaches are generally regarded as "official spies" busily recording
what they see and hear. Nowhere are they busier than in Moscow on the
anniversary of the Bolshevik Revolution, when the world is given a peek at the
latest in Soviet weaponry rolling through Red Square.
It proved more than a passing look several years ago when the Soviets decided
to parade the 559, their newest missile. It was so big the parade had to be
re-routed and the new missile came by the U.S. embassy.
Continued
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At that moment, something ahead broke down, the parade stopped and for a half
hour the Soviet's newest and biggest missile was parked in front of the embassy
while Americans inside took pictures in gleeful abundance and dour Russians
outside took pictures of them.
In the global battle of intelligence, both superpowers are aware that both
use double agents. In fact, in 9959, at a dinner given him in the White House,
Nikita Khrushchev threw an arm around Allen Dulles, then CIA director, and
joked that both their countries could save money if they stopped paying the same
spies.
Khrushchev could not have thought his joke was funny during the Cuban missile
crisis of 1962. In that tense period, the U.S. had an agent inside the kremlin,
Col. Oleg Penkovsky, who kept Washington informed of the Soviet military
response to the crisis. Penkovsky was discovered a short time later and
executed.
Washington these days is believed to attract more spies than any other city
in the world. It abounds in busy Soviets who keep the FBI busy watching them and
others entering and exiting the Soviet embassy. Both Soviets and Americans
presumably watch the traffic at the Chinese embassy. The Chinese keep a low
profile.
The Senate Intelligence Committee has been told that Soviets or their
subsidiaries in Washington have tried to plant or recruit agents in the policy
levels of the state and defense departments as well as the NSA, CIA and the
FBI. They have also approached members of congressional staffs with access to
secret information.
Last year, the "acting" military attache in the Soviet embassy was expelled
before he did any more acting. The FBI nabbed him on a dark night picking up a
green plastic garbage bag at the base of a tree in a remote area outside
Washington. The bag contained film of classified U.S. military documents.
Busy as they are in Washington, the Soviets or their intermediaries have been
busier in the Silicon Valley of California. By legal or illegal means, through
complicated purchases or dummy corporations or plain, old-fashioned spies, they
intently pursue U.S. high technology. The Soviets are well behind the United
States in the development of computers crucial to modern warfare.
We watch them. They watch us. We are ahead. They catch up. They are ahead. We
catch up. Everybody is stronger. Nobody is safer.
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brUKANE SPOKESMAN (WA)
1 April 1984
C
By SHERRY DEVLIN
Stefi correspondent
f ore~gn policy?i
proper tool f
MOSCOW, Idaho - Does the
United States have any business
sticking its nose - that is, its Cen-
tral Intelligence Agency -. into i
other people's politics?
President Dwight D. Eisenhower,
said yes. He told CIA operatives to
engineer the ouster of Guatemalan
President Jacoba"Arbenz..in.1954.
They succeeded. .
President John F. Kennedy, said
yes. He authorized the Bay of Pigs
assault on Fidel Castro's Cuban dic-
tatorship in 1961. It failed.
President Lyndon- B.. Johnson
said yes. He OK'd repeated CIA
plots to kill Castro. All failed, de-
spite the use of Mafia hitmen and
Cuban nationals.
President Richard M. Nixon said
yes. He gave the CIA $10 million to
bribe Chilean congressmen not to
ratify the election of President Sal-
vador Allende_in September1970.
The vote was ratified. .
"We have witnessed government
after government being over-
thrown in Latin America, all guided
by the invisible hand of. the United
States," says Larry Birns, a foreign
policy analyst...
"Not one of these so-called secret
wars has ever been debated in a
public forum or approved by vote.
of Congress," Birns said. "Not one."
Instead, U.S. - presidents from
Harry Truman to Ronald Reagan
have used the CIA as .their strong
arm abroad, said Birns, moderator
of last week's Borah Symposium at
the University of Idaho.
Truman used the intelligence
agency to save. Western Europe
from the Communist threat of the
late 1940s, subsidizing leaders, po-
litical parties and unions in Germa-
ny, France and Italy. : -
From there, the CIA took' its in-,
fluence peddling across the globe: {
the Philippines, Vietnam, Iran.
Guatemala, Chile, Cuba, Angola,
Laos and most recently Nicaragua.
"The record of CIA intervention
is dismal, with no clear successes
and many disastrous failures," said'
Amos Yoder, UI political science!
professor and an organizer of they
Borah conference.
This year's symposium zeroed in
on CIA intervention in Latin Ameri-,
ca, with emphasis on Chile and Ni-
caragua.
-
The seven panelists, including
former CIA operatives, Latin
Americans and political anal
yysts,
raised a long list of questions. Few,
were answered. . ,
Does U.S. support for the 10,000
troops fighting Nicaragua's leftist'
Sandinista government constitute
international terrorism?
Did the CIA engineer the over-
throw and death of Chile's Allende
in ,September 1973? What did- the
United States stand to gain by de-
posing Allende and installing Gen.
Augusto Pinochet?
Does continued use of the CIA for
intervention weaken this country's .
moral and political position abroad,,.,
and stimulate retaliation?
.1. 1
Should there not be more explicit
legislation to control the CIA -
as one participant said, "put a leash
on the dirty tricks?"
William Colby, director of the
CIA from 1973 to 1976, provided'
the defense of covert operations-
abroad.
"The CIA,"? Colby said, "enables -
our leaders to make foreign policy
and defense decisions on the basis
of knowledge rather than in the.
haze of ignorance and suspicion."
Jaime Barrios, a Chilean ' exile -
now living in New York City, pro-
vided the indictment.
The CIA-backed government in
his native country has created"an
economic wasteland ruled by coer
cion, intimidation and terror," Bar-
rios said.
'The United States has robbed a -.
whole generation of Chileans of the
opportunity to determine their own
destiny," he said. "La CIA has few
friends in Chile."
The trouble started, Barrios said,
when Allende won Chile's 1970
presidential election with 36 per-
cent of the vote.
Nixon was incensed. Allende,
said Nixon, was another Castro.
"During the two months follow-
ing Allende's election, the CIA
planted 1,000 articles in the Chilean
press describing the horrors of so-
cialist rule," Barrios said.
"Nixon funneled $10 million into
the operation, telling the CIA to as
sassinate Allende if all else failed,";.
he said. "But on Nov. 4, 1970, Al-
lende was installed by the Chilean'.
congress."
The CIA, however, did not give'
up its campaign to destabilize
Chile's left-wing government. Over
the next three years, $8 million in "There also was a very close re-
A..,cr;non ..,........ r. :_s... nrs __ ?_.. .. . -%I- s>--,- --.
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Colby said the money went to the
country's moderate political par-
ties - those that supported trade
unions and a free press.
"We were looking toward the
elections of 1976," he said. "We
rather hoped the centrist forces
could recover their power. That ef-
fort, however, was preempted by
the military coup of September
1973."
Barrios described a more nefari-
ous involvement. -
"I don't believe 'a word Mr. Colby
has said," he told one Borah ses-
sion. "The lies, misinformation and
sabotage engineered by your CIA
undermined Latin America's oldest
democracy."
The September coup left as many
as 20,000 Chileans dead and many
thousands more in exile. Allende
was killed at the presidential pal-
ace. Pinochet was installed as dic-
tator.
"Chile under. the junta has suf-
fered a long tableau of human
rights violations and total social
control," Barrios said. "Pinochet
says destiny gave him his job. I say
the CIA gave him his job."
And the CIA will continue-'doling
out control of Latin American
countries as long as it is the covert
arm of the president's foreign poli-
cy advisers, said Ralph McGehee, a
retired CIA operative and critic of
agency policies.
"The agency's task is fo develop
an international anti-communist id-
eology," McGehee said. "The CIA
then links every egalitarian politi-
cal movement to the scourge of in-
ternational communism.
"As with Guatemala in 1954, the
CIA starts covert actions .by drag-
ging a red herring across the trail.
The Soviets are coming, the Soviets
are coming.
"A Soviet threat somehow justi-
fies all that follows."
"All that follows" includes assas.
sination of foreign chiefs of state,
the murder of thousands of suspect-
ed Viet Cong in South Vietnam and
the current offensive in Nicaragua.
"What you're forgetting, though,"'
Colby told McGehee, "is that this
isn't a black-hat-white-hat situa-
tion."
"Let's look at the real facts,"
Colby said. "Mr.. Allende was de-
posed because he tried to impose
socialism on a well-established Chi-
lean lean middle class.
- "The military overthrew Al-
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4L A'Ektircrpproved For Release 2008/04/28: CIA-RDP91-00901 R000500060007-3
April 1984
DKFAGE-4-L ---a
The story of the CIA's
Nugan Hand Bank-an institution Committed to
heroin dealing, money laundering,
arms trafficking, and covert dirty tricks.
lift)tll) NIOATI.I'
BY PENNY LERNOUX
J arly on a Sunday morning in Jan-
uary 1980, two policemen driving along a lonely stretch of highway near the
Australian city of Sydney came upon a Mercedes-Benz sedan with its lights
on. Inside the car slumped across the front seat in a pool of blood was the
body of a middle-aged man. In the dead man's pockets the police found the
business card of William Colby, a Washington lawyer who three years earli-
er had been director of the Central Intelligence Agency. On the back of the
card was the itinerary of a trip Colby intended to make to Asia.
Next to the body was a new rifle. Alongside it was a Bible with a meat-pie
wrapper as a place mark. On the wrapper were scrawled names-William
Colby's and California Congressman Bob Wilson's. Wilson was then the
ranking Republican member of the House Armed Services Committee.
The dead man turned out to be a Sydney merchant bankiamed Frank
Nugan. He was a co-owner of the Nugan Hand Bank, an Australian bank
with 22 branches worldwide. Investigators at first theorized that Frank Nu-
gan had killed himself because of business troubles. Only later was it
learned that among the people with whom his bank did business were a
number of prominent mobsters. But this would soon seem like a minor de-
tail. For Frank Nugan's apparent suicide triggered an international scandal
that continues to this day, involving heroin dealing, arms trafficking, money
laundering, the CIA, and enough high-ranking U.S. military officers to
,launch a major invasion.
aw,
as
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At the time of his death. 37-year-old Frank collapse. Stephen K. A. Hill, a Nugan
Nugan was facing criminal charges for de- Hand director who later testified that he re-
frauding shareholders in the Nugan-tamily wrote the books on Frank Nugan's in-
food business. Auditors had discovered structions, had had no problem with the
big cash payoffs by the company to peo- auditors during earlier meetings. On at
ple apparently linked to drug trafficking, least one occasion he was accompanied
Three months later, after the Nugan Hand by another high-ranking former U.S.-mill-
Bank collapsed, it was learned that Nugan tary officer, Earl P. ("Buddy") Yates, re-
had illegally diverted S1.6 million of the tired U.S. admiral and former chief of staff
bank's money to the family business. The for strategic planning with U.S. forces in
bank's directors knew of Nugan's legal Asia and the Pacific. Yates was the Nugan,
troubles. and one of them frequently ac- Hand Bank's president.
companied him to the hearings that led to Nugan, at that time, had taken to going
formal charges. This man was General to church almost daily. He wrote mystical
Edwin F. Black, former commander of notes to himself in a Bible, which was al- !
troops in Thailand during the Vietnam War ways with him. "Visualize 100.000 cus-
and later assistant army chief of staff in the tomers worldwide." said one. "Prayerize.
Pacific. He was then the Nugan Hand Actualize." And he spent money as if he
Bank's representative in Hawaii. owned the mint-S500,000 to remodel his
Frank Nugan was also in hot water with I family's lavish waterfront home in Sydney,
the bank's auditors. who had refused to complete with sand for an artificial beach.
acorove the accounts for the bank's Ba- On the day he died he was completing ne-
hama and Cayman branches. This meant gotialions for the purchase of a $2.2-mil-
1hat the bank was about to be decertified. lion country estate.
If it were decertified, it would lose its com- If such actions reflect suicidal intent,
mercial status with other banks and would none of Nugan's associates seemed
Thr
the
yea
ban
be
the
ca
a st
only in isolated bits and pieces, in part be-
cause of the U.S.-intelligence communi.
ty's reluctance to help or supply informa-
lion to Australian investigators.
The Australian government's investiga-
tion of the bank's dealings is still under
way, and among the details that have
emerged so far are the following:
? The Nugan Hand banking group par-
ticipated in at,least two U.S.-government-
covert-action operations.
? The bank had strong links to the U.S.-
intelligence community, and some of the
banking group's executives were involved
in large weapons shipments to American-
aided forces fighting against Communist
guerrillas in Angola.
? According to the report, retired Admi-
ral Yates, while president of Nugan Hand,
as part of a bank project urged a CIA con-
tract agent to threaten the Haitian govern-
ment with a coup. (Yates told the Wall
Street Journal that the overthrow threat
wasn't proposed by him but by a prospec-
tive bank client. Yates said he quickly re-
jected the idea.) .
? Most of the bank's business was
found to have been money laundering
rather than deposit taking.
? The bank was also involved in deal-
ings with international heroin syndicates,
and there is evidence of massive fraud
against United States and foreign citizens.
Corcrz1VZTF ,
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IJNITEL) PRESS iN1tK1NAIIUNaL
27 March 1984
CIA
NOSCOU, IDAHO
Former Central Intelligence Director William Colby said Congress vigorously
oversees the L.S. spy business.
However, former CIA agent Ralph McGehee claimed lawmakers and the public
were victims of the aaency's misinformation.
Colby on Monday told a symposium on Latin America that Congress proved it
monitors CIA activities when it halted the intelligence-gathering agency
activities in Angola in 1975.
. "There have been and still is vigorous supervision over Central Intelligence
operations, " he said. "Oversight committees work by fixing responsbility on a
small number of congressmen and committees so that, if thefiis some error, it
is clear that senators and congressman are responsible for the error.''
But McGehee told the University of Idaho audience that congressional
oversight committees only hear what the CIA wants to tell them.
''Unfortunately the oversight committees are briefed by the CIA which tells
them what it is doing in a country, " he said. "I have helped prepare briefings
for congressional committees, and I know how distorted those briefing materials
are. They are not presented with the true facts. "
He said the CIA deals in misinformation with the American people as the
primary target.
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