MEMO ON FINANCIAL COMMITMENTS TO KGB DEFECTOR PDDONOR/1, NOSENKO
Originator: CIA
From: BLEE, DAVID H., DDO/CI
To: GENERAL COUNSEL
Document date: 02/23/1979
Document type: PAPER - TEXTUAL DOCUMENT

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2022 RELEASE UNDER THE PRESIDENT JOHN F. KENNEDY ASSASSINATION RECORDS ACT OF 1992

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ROUTING AND RECORD SHEET

SUBJECT: (Optional)

FROM:

EXTENSION

NO.

Steven K. Rubenstein

C/CI/A/DEF

TO: (Officer designation, room number, and

DATE

building)

CI 077-79

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9469

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MEMORANDUM FOR:

VIA

FROM

SUBJECT

General Counsel

: Associate Deputy Director for Operations

:

David H. Blee

Chief, Counterintelligence Staff

: Financial Commitments to PDDONOR/1

1. Attached is a memorandum for Chief, Counterintelligence

Staff outlining a situation in which PDDONOR/1, a senior KGB

defector, claims that the Agency still owes him $20,000 of an

original $50,000 commitment made to him at the time

of his

defection in

February 1964 by an Agency officer.

2. The memorandum describes in detail why PDDONOR/1

believes the Agency still owes

him the $20,000. Included

attachments are copies of various documents from the PDDONOR

file which impact on this issue.

It is requested that the Office of General Counsel

review this case to determine if a valid obligation exists on

the part of the Agency as claimed by PDDONOR/1. If you require

any additional material or have any questions please contact

Mr. §teven K. Rubenstein on extension 9469.

David It Blee

David H. Blee

Attachments:

A/S

CONCUR

Pant lena

irector for Operation

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2-23.79

MEMORANDUM FOR: General Counsel

VIA

FROM

: Associate Deputy Director for Operations

: David H. Blee

Chief, Counterintelligence Staff

SUBJECT

: Financial Commitments to PDDONOR/1

Attached is a memorandum for Chief, Counterintelligence

Staff outlining a situation in which PDDONOR/1, a senior KGB

defector, claims that the

Agency still owes him $20,000 of an

original

$50,000 commitment made to him at the time

of his

defection in February 1964 by an Agency officer.

The memorandum describes in detail why PDDONOR/1

believes the Agency still owes him the $20,000. Included as

attachments are copies of various documents from the PDDONOR

file which impact on this issue.

It is requested that the Office of General Counsel:

review this

case to determine if a valid obligation exists on

the part of the Agency as claimed by PDDONOR/1. If you require

any additional material or have any questions please contact

Mr. Steven K. Rubenstein on extension 9469.

David

Attachments:

CONCUR:

A/S

Jaba H. Stein

Associate Deputy Director for Operations

23 FEB 1979

Date

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? ATTACHMENT

MEMORANDUM FOR: Chief, Counterintelligence Staff

FROM

: Steven K. Rubenstein

C/CI/A/DEF

SUBJECT

REFERENCES

: PDDONOR

: A.

B.

Memo Dated 16 February 1970

From DC/Security Research Staff

Memo Dated 14 August 1972

From DC/Security Research Staff

C. Acknowledgement and Release Form

Dated 12 July 1973

A careful review of the PDDONOR file substantiates

the fact that there were three unequivocal financial commit-

ments made to PDDONOR at the time of his defection in

February 1964. These three commitments were:

a. He would be paid $25,000 for each of the two

years he cooperated in place. Total $50,000.

•b. He would receive $10,000 for his part in

identifying William Vassal, a British

Admiralty employee as a KGB agent.

C .

He would receive $25,000 per year salary

from the Agency.

2. The question at issue now is whether an additional

commitment was also made to PDDONOR to the effect that the

Agency would provide financial assistance to him to purchase

a

home.

According to PDDONOR, on 30 January 1964 in Geneva

prior to his defection in a conversation with his case officer,

Mr. Tennent Bagley he stated, "I will arrive with what I have

on my back - no home

- no roof - no anything."

The reply to

PDDONOR was

as follows; "This will be taken care of. It will

be provided."

This exchange in PDDONOR's view, constituted

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what he believes was a commitment on the part of the Agency

to provide him with financial assistance in the purchase of

a home.

A memorandum dated 16 February 1970, written by

Mr. Bruce Solie describes this verbal exchange between PDDONGR

and his case officer. (See Reference A). In addition, a

memorandum dated 14 August 1972 also written by Mr. Solie

(Reference B) states that "Nosenko stated that prior to his

defection in Geneva, he discussed his future with Bagley and

made three requests, these being:

a. Employment at $25,000 per year;

b. $50,000 in savings account;

c. Assistance in purchasing a house.

According to Nosenko, Bagley, a day or two later, informed

Nosenko that his requests had been approved and Nosenko

considers

this constituted a valid verbal contract."

3. From PDDONOR's viewpoint therefore an additional

commitment, quite separate and apart from the three listed

in paragraph I was made to him.

Consequently, he now argues

that a payment made to him in July 1970, in the amount of

$20,000 and which he used as a downpayment on a house, was

the

fulfillment of this additional commitment and not part

of the $50,000 he was promised for his two years in place.

This despite the fact that in the 14 August 1972 memorandum

as Mr. Solie states in paragraph 5, •

• "Nosenko also

considers that the assistance in purchasing furniture, a

house, etc., which he has been given since 1969 should be

considered as cancelling the matter of the $50,000.

4.

What seems to have occurred is a change of position

on PDDONOR's part.

While previously acknowledging that the

original. $50,000 commitment had been met (paragraph 5 of

Reference B) PDDONOR now takes the position that of the

below listed payments

only $30,000

should be applied against

the $50,000 commitment.

The July 1970 payment of $20,000

should be applied against a separate commitment to provide

assistance in purchasing

a home.

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$2,000 in March 1964

$8,000 in May 1969

$5,000 on 1 July 1970

-

$20,000 on 1 July 1970 (According to PDDONOR this

payment should not be applied

against

the $50,000 commitment)

$15,000 on 12 July 1973

Thus, according to PDDONOR's reasoning $20,000 is still due him

as part of the original $50,000 commitment.

discharges the US Government and the Agency from any claim for

(Reference C).

In addition, the issue

of the $20,000 he says is still owed him does not surface in

the file until September 1978, 14 years after his defection.

The explanation of why this issue would

arise at this late

date is not clear from available records.

6. Attached are copies of those documents which impact

on this issue.

Because of the complexities of this case I

recommend that we request the Office of General Counsel to

review the entire case and provide a ruling on the legitimacy

of PDDONOR's claim of $20,000.

After such a ruling we can

discuss our

future course

of action.

7. All classified Secret.

03

Steven K. Fubenstein

Steven K, Rubenstei

Attachments:

As

Stated

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OpoEMAL PORM: NO, 10

truel: + 600) 101-108

UNITED STATES GOVERNMENT

Memorandum

SECRET

TO

Files

FROM : Deputy Chief, Security Research Staff

SUBJECT:

BERTOTALLY,

•Bruce A.]

DATE: 16 February 1970

1. On 3 February 1970, the undersigned discussed with the

Subject certain personal matters which are or could be problems in

the future and which should be given appropriate consideration in the

• near future. Jerry Brown/SRS was also present and it is expected

will assist in the future in many of the routine handling problems

which could or will arise.

2. This memorandum is intended to present an up-to-date

report of the current situation in Subject case for any current action

oI possible future action.

3. Subject is presently residing with wife at his previous

address. There do not appear to be any particular domestic problems.

The wife of Subject is six years older than Subject, but Subject was

well aware of this at the time of his marriage. Numerous comments

by Subject indicate that he is attached to the family of his wife and in

the opinion of the undersigned, the Subject is accepted as a member

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"quit claim" and contract, ignored any previous promises and has

continued and will continue to ignore any previous promises to Subject

in any discussions with Subject.

20. As indicated above, a complete list of promises made

to Subject in 1964 is not available and for purposes of consideration

of whether Subject should be given some additional financial assist-

ance are not required. It is probably sufficient to list certain known

promises made to Subject on 30 January 1964 with the specification

that they had been approved by Mr. Helms. These promises included:

(a) $50,000 deposited in a personal account for

Subject.

(b) At least $10, 000 additional for the information

on VASSALL.

(c) Placing Subject under contract for $25,000

per year for an indefinite period - 5 years - 10 years -

with built-in provisions for retirement and other benefits

to make up for the career Subject "was giving up."

(d) Provision for living quarters. On 30 January

1964, Subject, during the discussion prior to his de-

fection,

stated he would "arrive with what I have on my

back - no horne - no roof - no anything. " The reply to

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Subject following the above statement was that, "This

will be taken care of. It will be provided. " Perhaps

this reply to Subject cannot be interpreted by a person

other than Subject as

¡ a promise of a house, but it can

be construed as a promise of something and there may

have been other discussions with Subject in regard to

housing in the United States.

21. Attached to the original of this memorandum are the

following basic documents:

(a) Copy of "quit claim" which was signed by

Subject in true name in April 1969 and notarized.

This particular document was actually entitled,

"Undertaking Regarding Obligations and Secrecy, "

. and referred to "current arrangements, " (separate

contract) so that there was some actual value re-

ceived by Subject for the "quit claim."

(b) Copy of contract which was signed by Subject

in true name in April 1969 with effective date of

1 March 1969. This particular document is a separate

document in that it does not make reference to the

separate "quit claim" but does contain a "Secrecy.

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OPTIOVAL FORM NO. 1O

GSA GEN. REG. NO. 27

UNITED STATES GOVERNMENT

Memorandum

SECRET

TO

: File

FROM : Deputy Chief, Security Research Staff

SUBJECT: Yuriy Ivanovich NOSENKO

DCISRE

DATE: 14 August 1972

1. On 7 August 1972 following a discussion of several items

of intelligence interest, NOSENKO mentioned the matter of the proposed

book, stating that he doubted it would sell a large number of copies.

Reason for this opinion, according to NOSENKO, was that he realized

the information was over eight years old and it was not in the form of

a "spy thriller. " He thought that the majority of readers who would be

. attracted would be those who had an actual interest in the KGB and its

effect on Soviet life rather than individuals interested in entertaining

reading.

2. NOSENKO then stated there was something he hesitated

to bring up, that he bad hoped it would have been mentioned previously

by the undersigned and that he hoped his mention of it would not be mis-

construed. NOSENKO then stated that the matter was the salary to

which he considered he was entitled for the period of five years (April

1964 - 1 March 1969). The latter date is the date the current con-

tractual relationship with NOSENKO became effective.

3. NOSENKO stated that he is very grateful for what has

been done for him since 1969 and that he has no animosity for what

occurred previously even though it was "five years from his life."

NOSENKO stated that he considered he is living very well although not

saving any money for the future. He stated that he had hoped to obtain

some extra money from the sale of a book but now doubts sufficient

copies will be sold for him to realize any sizable amount from royalties.

However, he is vitally interested in the book (or books) being published

since it, in his opinion, would "hurt the KGB. "

REFERENCE

WARNING NOTICE

SENSITIVE INTERGERCE SOURCES

AND METHODS INVOLVED

SECRET

CLASSIFIED BY 2365-16

EXEMPT FROM GENERAL DECLASSIFICATICH

SCHEDULE OF E. O. 11652, EXERIPTION CALGORY:

§ 58(1), E. (3) or (1) (airele one or sure)

AUFOMATICALLY DEGLASSIFIOD ON

1) 01

unless impossible, insert date or event

Buy W.S. Savings Bonds Regularly on the Payroll Savingi Plan

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4. By way of background on the topic of the "five years,"

NOSENKO stated that prior to his defection in Geneva, he discussed

his future with BAGLEY and made three requests, these being:

(a) Employment at $25. 000 per year;

(b) $50, 000. 00 in savings account;

(c) Assistance in purchasing a house.

According to NOSENKO, BAGLEY, a day or two later, informed

NOSENKO that his requests had been approved and NOSENKO considers

this constituted a valid verbal contract.

5. NOSENKO stated that in February-March 1964 he received

• a salary at the rate of $25, 000. 00 per year and he believes he also re-

ceived $5, 000. 00 of the $50, 000.00. NOSENKO also considers that

the assistance in purchasing furniture, a house, etc., which he has been

given since 1969 should be considered as canceling the matter of the

$50, 000. 00.

6. The matter which does concern NOSENKO is the salary,

less income tax, for the "five years" to which NOSENKO considers he

is entitled under the verbal agreement with BAGLEY in early 1962.

Since 1 March 1969, NOSENKO has not received $25, 000. 00 per annum

but this is not a point of discussion since he is very grateful for the

assistance which has been given to him during that time.

7. According to NOSENKO, he recognizes that if he had re-

ceived the salary for the "five years" under normal circumstances he

probably would have spent all of it. However, since his inability to

receive and spend the money was not of choice, he feels that he should

be entitled to the salary which he would have received. NOSENKO

stated he would invest any money he received and would use it to provide

for the future since he now has a wife and family responsibilities.

8. The reply of the undersigned to NOSENKO was that the

above would be brought to the attention of the appropriate officials. An

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effort was made by NOSENKO to obtain the opinion of the undersigned

as to whether his request was unreasonable, but only received a non-

committal answer to the effect that it did not pertain to any agreement

with NOSENKO in which the undersigned had any involvement.

Bruce L.

BLS:ko

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ACKNOWLEDGEVENT AND RELEASE

WHEREAS, Yuriy Ivanovich Nosenko, a former citizen of the Union

of Soviet Socialist Republics and an employee of the Committee for State

Security (KGB), first cooperated with Officers of the United States Govern-

ment and then, subseguently, defected to the United States; and,

WHEREAS, MI. Nosenko was promised certain sums of money for

his cooperation and defection, only part of which have previously been

paid to him; and,

WHEREAS, there remains a certain balance of money agreed upon by

Mr. Nosenko and Officers of the Central Intelligence Agency;:

NOW THEREFORE, in consideration of the sum of FIFTEEN THOUSAND

and 00/100 Dollars ($15, 000.00) the receipt of which is hereby acknowledged,

Yuriy Ivanovich Nosenko for himself and for his heirs, executors, admini-

strators and assigns, hereby releases and forever discharges the United

States Government and the Central Intelligence Agency and all of its

employees and representatives from any claim for money promised to him

fox, and/or at the time of his defection, and from any and all other claims

demands and liabilities in any form whatsoever arising out of or in any way

connected with his cooperation and association with the United States Govern-

ment and the Central Intelligence Agency prior to the date of this document,

12 July 1973.

WITNESS THE FOLLOWING SIGNATURE AND SEAL:

Yariy

Yury/ Ivanovich Nosenko

WITNESS;

On Behalf of the United States Government

Trees I

REFERENCE

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