[to4-t0t06-t0092] e Bhi eee 1d Be ARERR! 1 SP Meee Di ame Mabe ae asatee ae di gS) NT an OUTING AND | RECORD » SURECT: [Opiionai) Yuriy [vanovich Nosenko - . (Payment of Certain Funds —-—--Treviausly Pranised) —_— FROM: | , | EXTENSION ee Sidney D. Stembridge | oe se ane ce een 6777 Oy atest ie ie oats ethmeretatones st sett athens th” | Acting Director of Security. TO: (Grfear designation, room number, and , ‘buildings - . ” a bade ni/e COMMENTS (Nuinter gach comment ia show fram whom “te whem, Brow a line across coiuma after oacn commen.) OFFICER'S INITEALS. RECHVEO |. FORWAADEO | ry i From General ‘Counsel ¢ to General | Walters: chief, CIR § A 2 3.1405 “We have reviewed this case ein’. considerable detail. ‘Teck vnically, the release s ign d.by Nosenko . eetaletohh a nl rs . et j ae ign ; ; POO. could be asserté “a in fact, however ee tee on the basis of the record, it appear: he is due this final payment and we. see no problem in your App roy ving ite . : en a ii! r3 4 oe . - ad i oa 7! ‘ wo BS 607 SS _ a — 13. ‘ i § Ln fee _— Pad, Ty. 7 ~ © 35. £ 1 4 rane See mE FOP tray SID aan mAeUT very POPPERNAL wa yee wSgisiy
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Tee a teat sand hatiagn ete NE a - ° va a 7 + mie 7 . . a . SNLY . Lal As ; MEMORANDUM M FOR: Director FROM . - Sidney D. Stenbridge Acting Director of Security VIA- : Deputy. Director for: ‘Operations ‘Deputy Director for Administration SUBJECT : Yuriy Ivanc ovich Nosenko | (Payment of Certain Funds ‘Previously Promised) lL This memorandum submits a proposal for your approval. The: proposal is. to immediately pay Yuriy Ivanovich Nosenko* | ~ €98 500 in back salary in settlement of an Agency commitment *.to him and to authorize a subsequent one- time payment of 910, DOG to him cirectly or as a contribution to his retirement for... - identifying a ranking British official William Vassall, as a _, recruited coviet agent. 2. Yuriy Ivanovich Nosenko is a 48-year-old former Soviet intelligence officer who is currently employed as an independent contractor by this Agency. Mr. Nosenko has for ‘some time been of the opinion that he is entitled to $28,500 ‘in back pay. .This amount represents the differunce between fe Ada ‘the salary actually paid to him during the 1 Ma rch 1969. to 1 March 1975 period and the $25,000 per year which was promised to him at the time of his defection in February 1964. At the time of his defection, Mr. Nosenke was also promised the addi-. tional 20, 0G0 for identifying William Vassall, a Britis sh Admiralty employee recruited by the KGB. S e iie serving as a KG se curity officer with the- Soviet Disarmament Commission in Switzerland, fr. Nosenko contacted an American diplomat in Gencva on 5B Jume 1962 and requested a sinaii loan to repay official Saviet funds which he had squandered. Based on this contact Mr. Naseuko was recruited shortiy thereafter by the Agency and he agreed to_ H2 IMPDe'e CL BY viGl-s§ a te ft: .; soe oe by aes
work as an agent in place. On 15 June 1962 Mr: Nosenko. fo . returned to the Soviet Union where he resumed his duties. as. — the KGB in Moscow. Mr. Nosenko worked in place in the Soviet.. Union until January 1964 when he returned. to Switzerland. “At ‘an intelligence officer with the Second Chief Directorate of that time Mr. Nosenko decided to defect and requested political ~~ asylum in the United States. 4. Mr. Nosenko defected in Switzerland on 4 February - 1964 on 11:February 1964. At the time of his defection, certain — financial commitments were made to Mr. Nosenko,.. These commit-_ ments were substantiated in a conversation with him on 7 February 1964 and were documented in a 10. February 1964. memorandum to the Acting Deputy Director. for Plans from. = | a Mr. David E. Murphy, Chief, Soviet Russia Division (SR Division)... ‘This memorandum stated as follows: a Bo -"Birst, I assured Subject [Mr. Nosenko] that I. . was satisfied that he was genuine. Based on). b~--.. this and assuming his continued ‘cooperation’ =. o-.. I said we would proceed to. make arrangements es . to bring him to the States. Second, I con- — i firmed ovr agreement to pay him $25,000 for each year in place ($50,000)-plus $10,000 for. his part in the Vassall case and our readiness to contract for his services at.$25,000 per - year. Third, I explained the polygraph he would be expected to take as final. proof. of. his bona fides." re 5. Shortly after his arrival in the United States, the. Sk Division encountered serious difficulties in attenpting to — establish the bona fides of Mr. Nosenko. The SR Division con- cluded that Mr. Nosenko was not what he claimed to be and thus was not a bona fide defector. As noted in paragraph. four of | Attachment A, Mr. Nosenko was held under highly secure conditions at an Agency installation from April 1964 until October 1967. In October 1967 the primary responsibility for Mr. Nosenko w transferred froin SR Division to the Office ot Security, whic wd fh whi conducted a thorough review of the developments in this case The conditions of confinement of Mr. Noseako were progressive rceiaxed and in Qctobor 1968 the bona fides of Mr. Nosenke wer exenhlished by the Office of Security. At this point it shou ier sated that the cenfinement of Mr. Nouenko was cited hy the Y 4 and was brought to the United States under Public Law 110 ~~
eonpoday JON og Aico esp punoiiypeg | VID OL NENISE . Rocke £ feller Commission Report in June 1975 and that Mr. Nosenko- is aware of this citation. Mr. Nosenko has, however, made no threats. concerning possible damages as a result. of this con-_ . finement. Also, despite the difficult ‘period through which... Mr. Nosenko passed, he has been and continues to be a coop- erative. and. productive source. - 6. Mr. Nosenko has. ‘been of significant value to this ‘Agency as a source of information on KGB Second Chief — Directorate activities against U.S. Embassy personnel in Moscow. Mr. Nosenko named six members of tie Embassy staff who rejected KGB recruitment overtures during the 1953-1964. . period, and all have confirmed his assertion. A physical | search of the Embassy in Moscow’ also fully substantiated - information Mr.:Nosenko provided regarding KCB audio surveil- Jance devices in the Embassy. Mr. Nosenko also provided information leading to the identification of fifty-one American KCGB-targets and sixty-one non-American ‘GB agents. . The most prominent of these Soviet agents were a ambassador to Moscow, a director and a Foreign Ministry and a British Admiralty employee, n Vassall. -Mr. Nosenko is the most significant defector ‘we have had from the Second. Chief Directorate of the. KGB, and ‘as a result of this his contributions have. been of unique: importance. -- 7. Prior ‘to 1 March’ 1969 Mr. Nosenko received. no salary for his cooperation with this Agency. Effective 1 March 1962 Mr. Nosenko was employed as an independent contractor at the rate of $16,500 per year. Because of the previous difficulties “and uncertainties involved in establishing the bona fides of Mr. Nosenko, the extent of our commitments and obligations to him were not clear at. that time. Mr. Nasenko, therefore, Was not initially employed at the rate of $25,000 per year as he had heen promised. Mr. Nosenko'ts salary was increased annually, however, until 1 March 1975 when he began to receive the stipu-_ lated $25,000 per year. Once the bona sides of Mr, Nosenko were fivmly established and the earlier difficulties regarding his status were resolved, the initial commitments took effect and the payment of $125,000 (less federal income tax) was completed on 16 November 1972 in settlement of salary arrears for the period Auril 1964 to March 1969 (see Attachment B). On 12 July . 1973 «a final payment was made on the obligation of $50,000 due ; Mr. Nosenko for the periad 1962-1964, oe 216K
-§) There remains to. be paid: $28,500: (less federal. income tax) in salary arrears for the period 1 March 1969 to 1 March’ 1975 (see Attachment C) and $10,000. outstanding for the* Vassall case. .(He has never requested the latter amount but | the: ° obligation still exists.) Although Mr. Nosenko. signed Fe quitetain for the period prior to 12 July i973 (see Attachment: bd) nd may have legally waived his right to back salary prior to. Oo that date, the. earlier payment of $125,000 for the period. 1964-0 1969 recognized our commitment to Mr. Nosenko to honor all: | Cee at agreaments and established a precedent for paying him the’ total: salary difference. Ne also believe that we have a moral obii- _gation and that this obligation should be met. 9, This matter is being brought. to your attention since : Mr. Nosenko believes he has a valid claim to cited back salary. for the 1969-1975 period and in connection with the current. transfer. of full responsibility for Mr. Nosenko to the Counter- intelligence Staff, Directorate of Operations. It is, therefore, recommende ed that you approve the expenditure of $28,500 in full. oo payment of back salary for Mr. Nosenko. for the period. 1969-1975. eo. . fp O£ the $28,500, $27,667 can be paid for out of the FY1974 unobli- — t gated balance allot ted-to the Office of Security, with the (Foe: -Tomainder of $833 being charged to the Office of Security. PYL975": ,aliocation. . ; te, ‘10. It is further requested ‘that approval be granted for. ‘the $10,000 Vassall obligation, which could be paid “directly to: Mr. Nosenko at a tater date or preferably could be incorporated | tO a retirement program for him, which is being given consid- ation by the Courtevintelligence Staff.. If approved, these ~~ ausactions would represent a fulfillment of all commitments to . Ne. Nosenko as of this date and would serve to Fulfill outstanding Agency commitments to Mr. Nosenko prior to his transfer to the Counterintelligen ce Staff. co | 4
14-00000 Prete he NRG Nee oe mee nam oman reed RRS RENE oem oad at ats ASS CORES EES TEENS SSSR RS ih TERE SERS SNe nS SORE SB US BESSY RETO NTRS SEES a 3KE 3 SrSeaed eas kre Ceres ey & OCT 72 MEMORANDUM FOR: Director of Central Intelligence Executive Director~Comptroller * THROUGH Retroactive Reimbursement: of ‘Yuriy Ivenovich Nosenko SUBJECT 8 2p ee Op 1. This memorandum suggests action on the part of the Director of Central ‘nk elligence; e; this action is contained ix paragraph 9. 2. Mr. Yuriy Ivanovich Nosenko, a 45-year-old, foriner Staff Officer of the Committee for State Security (KGB) of the | : USSR, attended the Institute of International Relzetions, Moscow, Sos from i945 to 1950; was affiliated with Russian Naval Int telligence -.-- wee _ euring the 1953-1953 period; and was an officer with the KGB from March 1953 until his defection to the Agency in Genev2, Switzerland, on 4 February 1964, after having worked for Oi4._ for approximztely Bwo years. 3. A review of Mr. Nosenko's case reflects that, at the time of his defection, various official commitments were made to him, inclwiing ¢ a lump sum payment of $56,999. G0 based woon his nearly, y & years ' work inside the KGS: » $19, $0.09 bonus FO for his work on whe Yassai case; and 2 cunt gu ¢ Lag mn ¢orawultawe the GContrai Intelis his salary begen ira te 7 wpeitts Fhe A ane Pm ong with the Agency ae } : i i i i ‘ { ‘ ; ' t i a ry tet i cea aE TNT ae AD PESOS TROMETES - Sn Se ween sO 0g, i i i i | i i q Siew iwhiee vaces ENCE ra JECES Eye a3 RP " SENSI Ea . ee is ; Beh sa : 7 . Inipos EES sake HAY LoL vet : a we deere aed een AND s ar PR my | APPROVED FOR RELERSE 1983 = see Gm Om Fhe,
4, In the early debriefing of Mr. Nosenko, it became apparent that he was a particularly complex individual. To permit extensive and prolonged debriefing, arrangements were made to accommodate Mr. Nosenrko under highly secure conditions at ISOLATION, where he remained from 1964 to 1967, ‘These tight security arrangements were dictated,, during the initial phases at least, by the additional need to provide Mr. Nosenko with continuing personal protection, since there was the distinct possiblity that he would be targeted for execution if the Soviets should discover his whereabouts. . 5. Since October 1967, the primary r responsibility for MMe, Wosenko has been in the Office of Security, which conducted a thorough review of prior developments in the case. Mr. Nosenko was moved to the Washington, D.C. area in lat e 1967, and-the , case passed through various stages of phased normalization, as he was given an increased degree of freedom and independence, Mr. Nosenko was actually resettled on the econ omy in April 1969; he obtained a divorce from his former Soviet s spouse in Septernber 1969; and he later married an American girl in October 1969, During the period from October 1967 to April 1969, Mx. Nosenko _ did not receive a salary, but he was provided with a moderate amount of spending money. 6. As of April 1969, Mr. Nosenko signed a one~year contractual agreement for $16,500.00, including a clause giving sistance to him in resettlement expenses in the amount.of $8, 090,00. In March 1979, Mr. Nosenko Signed a new contract , fox two years at $18,500,00 per annum. At about this same time he was provided with certain financial assistance, $20,000.00 fox the down payment on a new house, and $5,000.00 for lated household expenses. Mr. Nosenko's contract was .t the new rate of G19, 500,00 per anmun on i March 1971, * S H a. a £ he rr 2 mo be ee aid the contract was again renewed in February 197%, at the « alixey of $21,009, 90 ser annurn, CG 9) 5 fe ” Se Qo byt po ui organization of t the KG a its opera ational doctrine, and ea nethods. Atleast a thousand formal memoranda have ‘been
14-00000 forwarded to the F Federal Bureau of Investign tion based on datz from Mr. Nosenko: He has conducted numerous special securiby reviews on Soviet subjects of specific intelligence interest, and he has proven himself to be invaluable in exvioring counterintelli- gence leads. He recently authored a book which is of interest to the Agency. In effect, Mr. Nosenko has shown himself to be 2 productive and hard working defector; who is "rehabilitated" and favorably disposed towards the Agency. 8. In the course ofa recent meeting with Mx. Nosenko, he brought up the subject of his missing salary, covering the to, pexiod from April 1964 to March 1969, Mr, Nosenko readily admitted that he is living very well at the present time, but he is not in 2 position to save any money for the future. He also expressed deep appreciation to the Agency for the financial assistance which was provided him through the years, and h he . considers this to have cancelled out the original Agency . obligation of a lump sum payment in the ammount of $50,000. 00. Mr. Nosenko, however, still feels quite strongly that he is entitled to be reimbursed for the salary which the Agency did not provide him over a five-year period. He understands, of .course, that income tax would have to be deducted from this back salary of $25,000.00 per annum. 9. In summary, the original oral agreement with Mr. Nosenko is fully documented and supports his claim; his resettle- ment since 1967 has been relatively smooth, with no significant security problems having developed; and he continues to function ai the present time as a highly productive and useful source of ormation on the KGB. In view of these various considerations, s requested thai this > payment of $125, 090. 00 to Mr. Nosenko 2 ese funds would be paid cut of unliquidated obligations applicable 4 to lapsed appropria he ons {Fiscal Year 1970 and prior years~--"M"'l Account). z # ae é f Pi ear ~~ cil f Cb 104 eee LO Tree Howard I, Osborn
14-00000 tacthartre 34. : ale - | » , : = : ‘¢ eh - ~ Retroactive Reimbursement of SUBIECT: Yuriy Ivanovich Nosenko ae CONCURRENCE: reputy Disecton for Support % Corres peed, atoms cow nis atk, bow. ocr. ps onas nee y cd ‘ jposwele tnt mE eden ted hte 69 . edt L ted end date? es pal, ~ Bra $ Ta tainating fen tie V2 925 Dow ; Pah a em — AL foe PS Ue ttasn, £ - i wutte z+ “ as : — EE ar hae j ioomas H. Karamessines ~ (De te) 2, * & At 2 £ 2. Deputy Director fy am as for Plans oh bee a aa los fe “ft / OF C2 if William &, Colby Executive Direftor-Comptroller dation in paragraph 9 is approvadior{aaget ST inital: of ast The recommen