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178-10004-10115

2025 RELEASE UNDER THE PRESIDENT JOHN F. KENNEDY ASSASSINATION RECORDS ACT OF 1992

JFK Assassination System

8/27/201

Identification Form

Agency Information

AGENCY:

CHENEY

RECORD NUMBER:

178-10004-10115

RECORD SERIES: GENERAL SUBJECT FILE

AGENCY FILE NUMBER: INTELLIGENCE-REPORT BY JAMES J. ANGLETON

Document Information

ORIGINATOR: CIA

FROM: ANGLETON, JAMES

TO: ROCKEFELLER COMMISSION

TITLE: REPORT TO PRES. COMMISSION ON CIA ACTIVITIES WITHIN THE U.S.

DATE: 00/00/1975

PAGES:

37

SUBJECTS :

ANGLETON, JAMES

CONSPIRACY THEORIES, USSR

NOSENKO, YURI

OSWALD, LEE, RUSSIAN PERIOD

ROCKEFELLER COMMISSION

DOCUMENT TYPE: REPORT

CLASSIFICATION: Secret

RESTRICTIONS: 1B; 4

CURRENT STATUS: Redact

DATE OF LAST REVIEW: 08/09/1993

OPENING CRITERIA:

• COMMENTS :

See pages 5-7. Does not include attachments.

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178-10004-10115

REPORT TO THE PRESIDENTIAL COMMISSION ON

CIA ACTIVITIES WITHIN THE UNITED STATES

Mr. Vice President and Members of the Commission:

In

accordance with the Commission's request, my

former colleagues and myself submit herewith a critique

of the counterintelligence function in the Agency: We

welcome the Commission's interest in this matter because

it will be the first review of U.s. counterintelligence

at

such a responsible level in Government. In any

event, it is urged that authoritative attention, beyond

the life of the Commission, be given to the scope and

role of counterintelligence in the Intelligence Community.

This action is imperative because the current leadership is

almost totally uninformed and inexperienced in the specialty

of counterintelligence, and its authority for changes is being

permitted to go unchallenged. The result is reflected in the

failure to maintain continuity in this function. We believe

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that

unless there are some enforceable guidelines set forth

by a higher authority, the conduct of effective counterin-

telligence by the Government will be lost for years to come.

Counterintelligence is traditionally a vital plate in

the shield of national security. It also protects the

security and well-being of our Allies who have access to our

sensitive intelligence by virtue of identity of interests or

because of formal arrangements and pacts such as NATO. There

are also useful confidential interservice agreements whereby

certain foreign intelligence services conduct unilateral or

joint operations with our field stations, and the standard

of their security is of

continuing concern. In lower key,

it is also in the interest of CIA to aid the security serv-

ices of the remaining non-Communist countries where any

friendly elements exist.

Although we have been charged primarily with our

view

on CIA counterintelligence as such, we have included, as

perspective requires, the security and counterintelligence

interrelationship of other agencies and departments. Unlike

the collection and evaluation of positive intelligence,.

there has not been organized in Government, and particularly

in the Intelligence Community, any machinery to produce an

end-product which might be described to be national as dis-

tinguished from departmental counterintelligence. Very

little is logical regarding this subject, unless one views. the

historical framework of the function, in terms of the special,

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if not privileged, position of the FBI who had dominated the

Intelligence Community as it relates to counterintelligence.

Director Hoover

refused to submit his views or policies to

the scrutiny of the Intelligence Community where any problem

remotely impinged on the interests and/or jurisdiction of

the

FBI.

This

unassailable stance estopped any and all at-

tempts to bring the Bureau to account in any interagency

board of equals charged with counterintelligence oversight,

including the very effective President's Foreign Intelligence

Board (PFIAB) who were thoroughly apprised of the facts,

given their continuity and authority within the Community.

What emerged was a loose ad hoc liaison of third parties,

but never a meeting of chiefs with Mr. Hoover to hammer out

basic issues

relating to internal security and counterintelli-

gence. This was the state of affairs until the appointment

of Mr. Gray; counterintelligence as a function of Government -

with few exceptions - was frozen by Mr. Hoover. Mr. Gray's

tenure was marred by the turbulence of Watergate, and it was

only with the appointment of Mr. Kelley that

a new era opened

up. Unfortunately, nothing of consequence has been tabled

with Mr. Kelley on the outstanding issues.

Unlike the producers

of positive intelligence, those

engaged in counterintelligence are the primary consumers of

their own product, and the counterintelligence product is less

perishable than that of positive intelligence.

We have at-

tempted to remedy this omission over the years on an ad hoc

basis by distilling intelligence from counterintelligence operations,

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and we

have concluded that ad hoc arrangements are inadequate

for satisfying those who have a need for the counterintelli

gence end-product.

As to the recipients, they should include

selected officials who are involved in the estimating process

as well as policy makers up to the Cabinet level. This has

not

been

the case in the past, and as a result of this void,

there has existed a conflict of views at both the policy and

estimating levels regarding intentions, capabilities and the

peculiar political dynamics of the Soviet Bloc. Experience

would indicate that the basis differences in interpretation

and evaluation are seemingly unbridgeable. What is required

as

soon as possible is an authoritative forum with access to

all-source information in which differences may be joined and

adjudicated.

We believe that the result would give the guidelines

and targets for political action follow-up and would have a

significant impact on interdepartmental policies which are

not unrelated to the Soviet Bloc realities which we have un-

covered

in counterintelligence.

Specifically, reference is made to cases which involve

a determination regarding the bona fides of Soviet defectors

and Bloc sources whose positive information is given the

broadest dissemination even though the source is suspect.

From the beginning it has been defectors who have given us

the most vivid appreciation of the clandestine activities of

the Soviet Bloc. It is through defectors that one gains

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knowledge regarding the identities and use of penetration

agents

and agents of influence who are, in turn, the kingpins

of Soviet strategic deception.

An example of recent vintage which illustrates the

range of confusion is Mr. McCone's response on television to

a question that certain information was not turned over to

the Warren Commission because the source was the KGB defector,

Nosenko, whose bona fides at the time were not fully estab-

lished.

After having asserted

that much effort always is devoted

to the problems of bona fides, Mr. McCone related that he had

been informed that the Agency's position now regarding Nosenko;

as a result of a painstaking examination, was that he is

bonafide. Astounded by this statement, the undersigned called

the Agency officer who was the former executive assistant to

Mr. McCone for clarification. He opined that Mr. McCone

could not remember everything but that he would look into the

matter. As of this writing there has been complete silence

as to the identity of the Agency's spokesman.

To understand the significance of this anonymous bestowal

of bona fides requires some further explanation of the Nosenko

case.

Several thousand man-hours have been expended in inter-

viewing Nosenko and analyzing his information. While there

were those somewhat removed from the case who accepted his

bona fides, a contrary view was registered by the following:

the Chief of the Soviet Division (who

is now the Director's

National Intelligence Officer for Soviet Production) ; the then

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Deputy

Chief of the soviet Division, even though he was the

first contact of Nosenko's in the field; and his chief as-

sociates in the Division. In favor of Nosenko's bona fides

have been the Office of Security and certain other members

of the Soviet Division. The most persuasive detractor of

Nosenko has been the KGB

defector, Golitsyn. He is regarded

to be the

most knowledgeable KGB defector to come our way.

After a lengthy analysis, he concluded that Nosenko was a

dispatched agent provocateur. His views are also shared

independently by another Soviet Intelligence Officer who

defected to the Agency. The Counterintelligence Staff ar-

rived at the same conclusion. The question of bona fides

is unresolved. It has been permitted to fester without any

authoritative conclusion because it is an interagency prob-

lem affecting other Soviet Bloc cases which are controlled

elsewhere in the Community. Nosenko's information revolves

around the following subject matters:

1. President Kennedy's Assassination:

Nosenko's story is that while he was in the

KGB's internal intelligence, he read the case

file on Oswald.

Given the timing of his de-

fection, shortly after the assassination, his

account - not borne out by the initial poly-

graph - may be viewed as exonerating the

Soviets of any complicity with Oswald, thus

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supporting the flimsy documentation on

Oswald handed over to the U.S. Government

by the USSR. This would also tend to disa-

vow any relationship between the USSR and

Cuba in clandestine activity.

2. Penetrations: With one or more

exceptions,

he stated that there were no

penetrations of the U.S. Government. This

assertion flew in the face of the overview

which Golitsyn gave to us regarding Soviet

Bloc penetration of Western

services and

strategic deception.

3. Order of Battle of the KGB at Home

and Abroad: There are many instances where

Nosenko's information contradicts Golitsyn's.

We have concluded on the basis of present evidence that

Nosenko

was dispatched to the West to mutilate the counter-

intelligence leads which had been revealed by Golitsyn.

As to his observations regarding Oswald, it was the Soviets

who have pushed the deception theme to the effect that

Oswald was an instrument of the military - industrial com-

plex of the eastern United States. This thought was first

raised by Khrushchev in Cairo in an unusual interview which

he had with an American journalist. It has since been pur-

sued by the Soviets through

various channels, mainly KGB,-

and it is now common currency in Soviet newspapers and other

media.

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The Nosenko case goes to the quick of the

counterintelligence problem facing not only the FBI and the

Agency but all Western Intelligence and Security Services,

many of whom have received information derived from Nosenko.

It is evident that as presently organized, the

Intelligence Community is

incapable of correlating intelli-

gence production with the product and analysis of counter-

intelligence information.

Given the inability of the Intelligence Community to come

to grips with the problems raised by counterintelligence, it

is suggested that the only solution to the very unsatisfactory

situation today would be the appointment of an ombundsman who

would be authorized to act directly on behalf of the

National Security Council on serious interagency problems which

have a direct bearing on the plans and capabilities of the

Communist Bloc and involve the more sensitive operations of

counterintelligence. Alternatively, consideration could be

given to the responsibilities of the Chairman of PFIAB, which

might be enlarged to satisfy this need.

As Attachment A, I submit a letter and attachment which

was

submitted to the Secretary of Defense on 31 January 1975.

Given the march of events and the uncertainties involved, in

addition to the responsibilities of his high office, it is

understandable, perhaps, that the Secretary has not wished

to become entangled in disputations on this subject matter

as long as the Agency and its various Directors are being

subjected to investigation. Nevertheless, in our view, the

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issues involving Soviet strategic disinformation and our

defense posture go to the heart of national security inso-

far as they relate to estimates affecting the world balance

of power. Additionally, we believe it to be most misleading

for one to assume that estimates derived from technical col-

lection alone justify the negotiation of finite disarmament

and other. treaties with the Soviet Bloc governments unless

there is corresponding high-level covert intelligence pro-

duction which supplements and confirms the findings of

technical collection.

This view argues against the philosophy now being aired

with Olympian aplomb that technical coverage alone is a

substitute for clandestine sources or that it gives a reliable

data base which justifies a super power to bargain away its

strength. (Attachment B sets forth

the views of

MI. Paul Nitze and

his first-hand impression of the SALT

talks. Of particular interest is his description of the

atmospherics:

(al the peculiar role of the KGB among Soviet

negotiators, and [bl how an uninformed U.S. representation

learned

from the Soviet delegation of changes in the u.s.

negotiating positions arrived at in Washington.

The KGB

attempted similar ploys during the Johnson Administration

with

a former high official of President Kennedy's on the

Vietnam issue.)

If

there

be validity to the information derived from

Golitsyn, then it would follow that detente and estimates

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derived therefrom are misleading with regard to the events

in Portugal, Vietnam and other areas where we are in com-

petition with the Soviets and the Bloc. A more accurate

picture could be obtained if the structure of the

Intelligence Community, in its processing of information,

were less concerned with public or overt data regarding

the Soviet Bloc intentions, such as the reporting of

Ambassadors and other representatives, and instead give

full faith and credit to secret information from bona fide

sources who are or were within the Soviet Bloc system and

whose warnings regarding disinformation have been uni-

versally ignored. To repeat, it is the opinion of these

sources that the bulk of information available to the

West through Soviet Bloc contacts, regarding the strategy

and aims of the Eastern Bloc, is, on the whole, spurious

and represents little more than coordinated handouts which

advance

• the interests of Soviet Bloc strategic disinformation

at many levels of communications.

The remainder of this

report represents the status, as

of March 1975, Of U.S. counterintelligence, primarily within

the CIA, but also, as the perspective requires, at the na-

tional level.

The discussion consists of four parts;

The authority under which CIA conducts

counterintelligence activities.

The nature of those

activities.

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summary of critical developments in

the history of U.S. counterintelligence from

1945

to 1975.

Recommendations which we respectfully

urge the Commission to submit to the President

for his consideration.

I.

THE AUTHORITY

The current version of National Security Council

Intelligence Directive No. 5, U.S. Espionage and Counter-

intelligence Activities Abroad, effective 17 February 1972,

is the charter for the conduct of foreign clandestine ac-

tivities by CIA and by the other members of the U.s. in

telligence and counterintelligence community. NSCID/5

defines counterintelligence as " ... that intelligence

activity, with its resultant product, devoted to destroying.

the effectiveness of inimical foreign intelligence activities

and undertaken

to protect the security of the nation and its

personnel, information and installations against espionage,

sabotage and subversion.

Counterintelligence includes the

process of procuring, developing, recording and disseminating

information concerning hostile clandestine activity. and of

penetrating, manipulating or repressing individuals groups

or organizations conducting such activity."

As defined, counterintelligence consists of two parts,

security and counterespionage. Security is essentially the

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static defenses erected against the clandestine activities

of

adversaries of the U.s., whereas counterespionage is

aggressive activity of engaging the adversary clandestinely.

NSCID/5 stipulates that the Director of Central

Intelligence

shall undertake specified actions in order to

ensure centralized direction of all clandestine activities

within the scope of the Directive. It also charges CIA

with primary responsibility for U.S. clandestine activities

abroad and permits

other departments and agencies to conduct

such foreign clandestine activities as are supplementary or

are necessary to their security. Departmental counterin-

telligence is brought together through two Director of

Central Intelligence Directives, one which requires coordi-

nation in advance with CIA on clandestine counterintelligence

operations abroad, and the other which stipulates that CIA

shall serve as

a central repository of foreign counterin-

telligence data to the Intelligence Community.

The flow of authority is from the

National Security

Council to the Director of Central Intelligence to the

Deputy Director for Operations to the central counterintelli-

gence unit of CIA or to an area division to provide whatever

assistance the Director may require to discharge his obliga-

tions under NSCID/5 and its

assignment to him of responsi

bility for the protection of methods and sources or under

other laws, orders and directives.

The immediate mandate

of the counterintelligence component, however, is derived from

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those responsibilities assigned directly to CIA land thus

chiefly from paragraphs 1b, 3b, 3c, 3d and 9 of NSCID/5, the

chief provisos of which have been noted above).

In our view the DCI is not exercising under NSCID/5

responsible centralized direction of counterintelligence

clandestine

activity. As indicated to the Commission in

verbal testimony,. the current Director has spent less than

four

to five

hours with the Counterintelligence Staff from

• the moment he became the Deputy Director for Operations

until the present. His knowledge of the activity during the

period when he was Chief of the Far East Division was one of

failure and is reflected in an Inspector General's report of

the period. This and some of his communications to the field

are a matter of record in the FE Division. Instead of exer-

cising leadership in resolving the serious problems of pene-

tration and disinformation, which are of prime importance to

the security of the country, under his aegis there has been a

decentralization and mutilation within the Agency and, there-

fore, within the Community of high-level counterintelligence

activity. We believe that substantial changes are needed

and that these changes should be effected with and through

an understanding of our counterintelligence mission, capa-

bilities and needs. In setting forth our collective views on

these matters, we do so, drawing on our professional experi

ence as to what needs to be set right and how it may be done.

The primary cause of the present vulnerability of our na-

tional security is the inadequate attention and serious lack

of understanding of the counterintelligence function.

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II. THE NATURE OF COUNTERINTELLIGENCE ACTIVITIES

The counterintelligence unit of the CIA bears a direct

responsibility

for the security of all Agency espionage and

counterintelligence operations conducted abroad. It is also

directly responsible for identifying and containing or con-

trolling hostile clandestine activity through such operations

as the following:

- The

identification of adversary

personnel, regardless

of citizenship or

location abroad.

- The penetration of foreign

services.

- The handling and utilization of

certain intelligence and counterintelligence

defectors from foreign

services.

- The management of double agent opera-

tions.

- The detection, analysis and nullifi-

cation of hostile deception operations,

including

disinformation.

- Counterintelligence analysis

and

operations directed against adversary

propaganda, defamation, forgeries and other

covert

activities.

- The exploitation of communications

intelligence in furtherance of counterin-

telligence objectives..

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• - The conduct of liaison abroad with

foreign counterintelligence and security

services and with foreign services

generally about counterintelligence matters.

- The conduct of domestic counterintel-

ligence liaison to ensure the necessary

sharing of information and coordination of

action..

- The maintenance of its own records and

the managerial supervision of CIA's central

repository of records to ensure that the

foreign counterintelligence in these holdings

is collated, analyzed and made available to

others in the Intelligence Community on a

need-to-know basis.

III. A SUMMARY OF THE COUNTERINTELLIGENCE HISTORY OF CIA

After the Second World War, except for a few stations

abroad, centralized U.S. counterintelligence practically

disappeared.

By October 1945, when O.S.S. was liquidated,

its counterintelligence branch, X-2, had become a wide-

spread net of overseas stations staffed by some 650 counter-

intelligence specialists.

Starting nearly from scratch,

X-2 had created and developed a thoroughly professional

U.s. counterintelligence capability in

a very short time

because it served a leadership that understood and respected

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the counterintelligence function and conferred upon it the

necessary measure of authority, autonomy and the essential

secrecy required for the conduct of this activity. Io better

understand the need for reform, it is believed that a short

historical presentation is essential. What is here submitted

is based on voluminous files and documentation which record

the shaky progress of counterintelligence as practiced by

the

.U.S. Government following World War II until the present.

After October. 1945 the concept of counterintelligence as

a separate and equal function withered away. On 17 October

of that year Brigadier General John A. Magruder, then the

director of the Strategic Services Unit (a short-lived

inheritor of O.S.S.), stated in a memorandum to

Mr. John J. McCloy that the valuable o.S.s. liaison

relation-

ships abroad were deteriorating because foreign services were

uncertain as to whether the United States would have a central

intelligence service. General Magruder was an honorable and

conscientious custodian of o.s.s.

Although CIA was established in 1947, and although the

first version of NSCID/5, promulgated in December 1947,

charged the Director of Central Intelligence with the conduct

of all organized federal counterespionage operations overseas,

the new Agency did not have a central counterintelligence

unit of mechanism through which it could meet its counter-

intelligence responsibilities.

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On 1 January 1949 a report was submitted to the

National Security Council at its request by men whom it had

appointed to a Survey Group: Messrs. Allen W. Dulles

(chairman), William H. Jackson and Mathias F. Correa. As

one who had played a key role in the Office of Strategic

Services, Mr. Dulles was familiar with the wartime role and

performance of X-2. He understood its record and mission

which

were succinctly stated in the War Report: Office

of Strategic Services.I The opening paragraph of this of-

ficial account of X-2 reads as follows: "Counterespionage

is a distinct and independent intelligence function. It

embraces. not only the protection of the intelligence in-

terests of the government it serves, but, by control and

manipulation of the intelligence operations of other

nations; it performs a dynamic function in discerning

their plans and intentions, as

well as in deceiving them.

An effective counterespionage organization is therefore an

intelligence instrument of vital importance to national

security. "?

The Dulles Committee made recommendations designed to

strengthen CIA and its counterintelligence capability. The

1

Vol. I, Washington Organization, History Project, Strategic

Services Unit, Office of the Assistant Secretary Of War,

War Department, Washington, D. C., July 1949.

2

IbId.,

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189.

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1949 report is infused with an understanding of problems and

principles that have remained much the same for the past

quarter of a century. The following two brief quotations

are

illustrative:

... We ... propose that the branches of

the Central Intelligence Agency which are directly engaged

in clandestine actitivities, such as secret intelligence

[espionagel, counterintelligence, secret operations and the

like, be given a great measure of autonomy as to internal

administration, the control of their operations and the

selection of personnel."" The report also stated, "It'

seems apparent that the present counterespionage staff of

the Office of Special Operations should be materially

strengthened and more intensive counterespionage work

promoted."

Until the end of 1954, however, counterintelligence

remained structurally and in other respects subordinate to

the collection of positive intelligence. In August 1950 there

was a counterintelligence sub-unit called Staff C, but it had

a total strength of twenty-three. The Soviet Intelligence

Branch of Staff C consisted of three people.. The result was

a dispersion of the counterintelligence function among the

area branches and a degradation of the work to such lowest

common. denominators as name tracing, maintenance of

counterintelligence files and the like.

A notice of 20 December 1954 announced the formation of

a new, senior counterintelligence element, the Counterintel-

ligence Staff. For the first time CIA had elevated the

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counterintelligence function, as a Staff function, to full

parity with espionage and covert activities. One of the

first undertakings of the Counterintelligence Staff was

to determine who was doing counterintelligence work, what.

they were doing and under what circumstances.. This survey

was launched in 1955 and completed in 1956. It established

that except for

the Counterintelligence Staff itself, the

Operational Directorate had only 133 full-time counterin-

telligence officers, about 6 per cent of its total non-

clerical strength. The average grade of these officers was

GS-09, and their average Agency experience was five years.

Only one in four had had either basic or advanced training

in counterintelligence.

From the end of 1954 until April 1973, the apex of its

development, the Counterintelligence Staff grew in numbers,

skills and responsibilities. By the latter date its per-

sonnel strength, as I noted in my earlier report to the

Commission, consisted of

130 officers and seventy-two assist-

ants and clerical personnel. This total of 202 still con-

stituted only 3.7 per cent of the total Directorate of

Operations strength of 5, 662.

As a result CIA could not

meet its counterintelligence responsibilities adequately

even at this peak of on-board counterintelligence strength.

It is our view that the Operations Directorate ought to

devote no less than 10 per cent of its manpower to

counterintelligence and that no less than half of its

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counterintelligence personnel should be allocated to the

counterintelligence unit in Headquarters. This 10 per cent,

comprising 566 officer and clerical employees, would still

fall considerably short of our counterintelligence strength .

in the fall of 1945 when O.S.S. was dissolved.

The Counterintelligence Staff was nevertheless able

to work effectively against its major targets. The scope

of this

paper prohibits an adequate resume, but there is an

indication of the results achieved in the fact that during

the years 1961 through 1963 eight major Soviet penetrations

of American and foreign liaison intelligence services were

uncovered and that six of the eight exposures resulted

directly from CIA's counterintelligence work. Fifteen Soviet

agents were arrested, as well as more than twenty others

who were working clandestinely for one or another of the

East European

services.

In August 1973 as a result of the change in leadership

in the Agency, there was put in motion a series of baffling

administrative and functional changes which ignored the

state of the art; the need for resolving many inter-Agency

problems in counterintelligence, and, particularly, the

need to work out with the FBI in depth a number of conflicts

concerning the bona fides of sources; the handling of defec-

tors; and authoritative research and analysis pertinent to

these differences.

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The strength of CIA's counterintelligence unit was

cut almost in half - to eighty-nine; and by December 1974

the on-board strength of our counterintelligence personnel,

officer and clerical, was down to seventy-seven, a total

comprising 1.7 per cent of Operations Directorate strength.

This abrupt reduction in force was accompanied by the

transfer of four interlocking staff elements (International

Communism, Operational Approvals, Police and Counterintelli-

gence Liaison) to other jurisdictions. I do not know of

any reasons concerning the performance of the Counterintelli-

gence Staff or the scope of hostile clandestine intelligence

action against the U.S. which would justify this drastic

reduction and weakening.

With regard to the FBI it is a fact that for some years

prior to the death of Mr. Hoover, there were sharp differ

ences between the FBI and the Counterintelligence Staff

regarding the bona fides of Soviet intelligence personnel

who represented perhaps the prime sources of information in

relation to Soviet Bloc activity in the U.s., penetration in

the Government and the order of battle of the Soviet presence.

CIA was fortunate to acquire a KGB defector in

December 1961 who had spent many years at a very high level

of Soviet security acquiring the most sensitive information

in the full knowledge that when the time was propitious, he

would defect to the west and impart his information. By way

of simplification, it should be

noted that this individual

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SECRET SENSITIE

was responsible for the breaking of many espionage cases in

the West, but equally important he divulged Soviet plans,

strategy and organization effected in 1959 by the KGB under

the auspices of the Central Committee which in turn mapped

out in partnership with other services of the Bloc a pro-

gram of action whose principal targets were the isolation

of the U.S. as the "Main Enemy" and the ultimate change in

the balance of military power in favor of the Soviet Bloc.

During the later tenure of Mr. Hoover, which was

fraught with difficulties between the FBI ana members of

the

Senate, and included other changes hampering or limit-

ing the FBI's ability to conduct internal security opera-

tions, the hard issues of disagreement were never dealt

with on

an agency-to-agency basis.

To the contrary, as

the Commission is well aware, there was eventually a break-

down in liaison across the board between departments and

agencies of the Government with the FBI (with the exception

of the white House). Further, the internal disputes within

the Bureau Challenging Mr. Hoover's leadership were extremely

detrimental to any objective consideration concerning the

national security, and consequently years were lost in

pursuing the national counterintelligence objective.

During this period, in our view, national estimates and

evaluations were formulated in concrete establishment of

detentist philosophy which marked the real state of

Soviet Bloc subversion in the secret war.

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SECRET SEISINE

By way of explanation, we can illustrate the ineffectual

coordination with a case involving a long-term Soviet pene-

tration in the Agency. A very important staff agent was

unmasked by virtue of information supplied by the aforemen

tioned defector, but in the process the FBI officially took

the position that the candidate who was submitted by the

Agency was not the Soviet agent in question, and by memo-

randum they proposed that we submit all of the data to the

Department of Defense on grounds that the penetration agent

was more likely a past or present asset of the military.

Subsequently, a high-level source confirmed our original

identification, which in turn was accepted by the FBI. The

case is illustrative of the inability within this Government

to resolve interagency differences in all of those sensitive

fields affecting penetration.

The result of the 1973 changes was a decentralization

of counterintelligence, a retrogression to the

inadequacies

of the period 1949 to 1955. Now, as then, counterintelligence

in CIA lacks the necessary specialists and the requisite

interaction at the Agency's highest levels. Some of the

present grave problems are not new, but the recent changes

have greatly magnified them. Among our present weaknesses

are the following:

- An almost total

failure against

Soviet illegals

(intelligence officers

under deep, non-official cover).

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present CIA is not conducting a single

operation against a Soviet illegal.

- An incapacity to pursue unresolved

outstanding leads. We estimate that there

are some fifteen hard-core leads to

known

or probable penetrations by adversary

services into U.S. or Allied services;

that there are about one hundred leads

meriting

immediate study, analysis, in-

vestigation and exploitation; and that

there are no less than one thousand that

merit pursuit. All of them are now '

dormant.

- An inability to deal effectively

with the twin problems of devising and

carrying out strategic U.S. deception

operations and of nullifying adversary

deception. This serious weakness is not

imbedded in CIA alone, and it did not

result from the restructuring of Agency

counterintelligence.

The U.s. lacks

a single, duly mandated, centralized

authority for dealing with deception.

Those

few individuals and groups in the

U.S. Government, chiefly in the military

services, who are concerned with strategic

vania.

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deception lack ready or frequent access

to the policy level. They attempt to

frame deception plans in ignorance of

new policies, and they can obtain top-

level review of their plans only on an

ad hoc basis.

The remedy is not to

abandon deception and counter-deception

but to elevate these functions. Should

the Government do so, however, CIA would

now lack the required expertise.

- A dwindling cadre. A substantial

core of experienced counterintelligence

specialists is the first preequisite for

an effective counterintelligence program.

Only a few are left today. The problem

results not solely from the drastic reduc-

tion in force in 1973 but also from a

philosophy and system that have made it

almost impossible to replace either the

numbers of the skills of those lost

through attrition.

In the Operational

Directorate it is

the Area Divisions that are

linked by a command line to top CIA manage-

ment in Headquarters and to all 147 Agency

stations overseas.

The Divisions select

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young intelligence officers soon after the

completion of their initial training, at the

outset of their careers. They send many of

them abroad, direct their work through

Chiefs of Stations and Bases and bring them

back in accordance with the personnel needs

of Headquarters and the Field. The result

is a system of rotation that benefits both

the Agency and the employee. In contrast,

the counterintelligence

unit in Headquarters

has no representative of its own overseas.

To secure competent replacements, it must try

to intervene in the normal progress of

careers, to persuade officers and Divisions

that higher interests reguire a change of

their plans and to convince the officers that

they should choose careers in counterintelli-

gence

even

though their career advancement

is in fact likely to be impeded by this choice.

In brief, CIA has no system for developing

counterintelligence career officers;

sending

them abroad on a rotational basis

to acquire,

through a series of tours,

the necessary

experience as specialists; and providing them

with the same incentives and career prospects

as those of their peers in the Area Divisions.

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- An accelerating decline in the

quality of our counterintelligence liaison

relationships abroad.

Here too there is a

parallel with the problems that beset us in

the past and that gave cause to

General Magruder to express his concern in 1945.

Most of CIA's liaison overseas is

carried out with counterintelligence and

security services because only a minority

of nations maintain foreign espionage

organizations, whereas nearly all have

internal security services. Italy is

typical. It has a few

intelligence offi-

cers overseas, but 99 per cent of its

strength is at home.

The major Italian in

telligence

service is the Defense Intelli-

gence Agency (SID). The SID draws its

counterintelligence from the Carabinieri

(a semi-military organization with a net-

work of posts spread throughout the country)

and from all of the military services.

The

service has a vast array of domestic sources

that number in the high thousands and range

from the portieri who tend apartments

throughout Italy to high dignitaries of the

church and state.

The chief of the SID has

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SECRET SENSITIVE

direct access to the Minister of Defense,.

and some service chiefs have also had the

benefit of immediate access

to the

president of the republic. Through its

liaision with the SID the CIA greatly

augments its own resources at scant cost.

The same pattern obtains, in varying

• degrees,

in all of the countries (more

than one hundred) and most of the serv-

ices (more than three hundred) with which

CIA maintains liaison

relationships.

Counterintelligence liaison requires

close and expert attention. It is built upon

mutual interest; but through training, per-

suasion and other means the skillful liaison

officer

expands the shared basis and thus

directs or redirects the enormous counterin-

telligence resources

of the non-Communist

world against targets of primary importance

to the U.s.

In return for this vast strengthening

of our defense, our Allies look to us for

several advantages:

for example, a buttres-

sing of their frequently meager capabilities

in research and analysis. They must also be

confident that we can give a full measure of

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protection to secrets shared with us.

And they

look to us for leadership. At times we have

disappointed them.

An instance of this occurred in

September 1971, when the British expelled ninety to 105

Soviet intelligence officers from their country

in a

single action. They had noted a relent-

less buildup of the Soviet clandestine force

in their midst. MI 5, the British counter-

intelligence service, found that the fifteen

intelligence officers whom it had identified

in the U.K. in 1950 had grown by 1970 to more

than 120.

The PNG action was carried out

despite some qualms. The Soviets made only a

token retaliation. The Belgians followed the

British lead, though on a smaller scale and

without publicity. A number of liaison serv-

ices expected the U.S. to make a similar move,

and the FBI and CIA joined in recommending

such action here. But no initiative was under-

taken.

Now the fabric of our counterintelligence

liaison relationships

shows some

fraying be-

cause of clamor in the American press and a

consequent change of atmosphere.

Our partners

are no longer sure that we can act decisively

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in concert with them or even keep their

secrets.

To weather the crisis, CIA needs

a strengthened counterintelligence cadre in

its

Headquarters, one

able to give

full

support and judicious guidance to liaison

officers abroad.

- A mounting inability to cope with

the growing menace of hostile clandestine

activity.

The sudden reduction in CIA's

central counterintelligence capacity took

place at a time when

the intelligence

services of the Soviet Bloc, about twenty-

five in all, have increased immeasureably

their total presence abroad and their op-

erational initiatives, particularly in

respect to strategic deception and pene-

tration. The Soviet capability in economic

and industrial espionage has

always been a

very real danger to the U.s. and remains so.

For this reason I included a summary of the

Armand J. Hammer case in my earlier report,

and I resubmit it with this paper

(Attachment C). A second illustration is the

case of General Yevgenni Petrovich

Pitrovanov, also attached (Attachment D).

Our estimate of total Soviet intelligence

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strength abroad in January 1975 was

ca. 3,900, of whom 332 were stationed in

the u.S.

Soviet official presence in the

U.S.

and other countries has grown more

rapidly in

recent years than has the

corresponding number of identified opera-

tives, although we feel confident that the

ratio of about 40 per cent has not changed,

or not at least to the advantage of the

West.

As my previous report stated,

Director Kelley has warned of a growing

imbalance between our adversaries and the

forces

at his disposal.

We believe that

there has been a severe decline in the ef-

fectiveness of U.s. counterintelligence both

domestically and abroad. Something of the

aggressiveness of the hostile services is

shown

in their

persistent attempts to recruit

Americans abroad for such clandestine purposes

as penetration. During

the period 1965 through

mid - 1972, there was a total of 2,150 such

incidents (an incident being an outright at-

tempt to

recruit or an overture clearly intended

to lead to recruitment). Thus, in an average

year, 287 Americans overseas are approached by

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adversary

services with intent to harm. It

would be unrealistic not to expect the KGB and

other clandestine Communist services to

recognize that the present is a time of disar-

ray in U.S. counterintelligence and to seek

to exploit this advantage to the hilt.

- Inadequate information about the

intelligence and security services of China,

Cuba and Eastern Europe, especially the latter.

We have a large body of counterintelligence

about the USSR, and it has been entered into

computer programs.

Our machines programs about

the services of Poland, Hungary, East Germany,

Czechoslovakia, Romania, Bulgaria, Albania

and Yugoslavia are, in contrast, non-existent

or moribund. They have been allowed to slide

because of the pressures of keeping up with

services as large and virulent as the KGB and

the GRU. The USSR itself has not made this

mistake. It orchestrates large-scale clandes-

tine operations against the West, assigning

roles to the apparatuses of the Warsaw Pact

states and to Cuba in accordance with their

capabilities. These

Soviet allies are exten-

sions of the Soviet capacity to wage under-

ground warfare, and therefore we need to know

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them intimately and to keep our knowledge

current.

Our performance falls too short.

- A lack of communication and inter-

action between the Director of Central In-

telligence and CIA's counterintelligence unit.

The present Director lacks counterintelligence

experience.

He has asked for, and received, only

one two-hour briefing on the subject. Most of his

predecessors, in contrast, were vitally concerned.

Through briefings and through operational parti-

cipation they acquired a real familiarity with

the wide spectrum of counterintelligence and the

problems that it inevitably engenders. The pres-

ent Director of Central Intelligence, on the

other

hand, has

managed CIA's affairs without

consulting me or other highly experienced

counterintelligence officers about Agency opera-

tions, programs or priorities. Those now desig-

nated

to succeed us cannot, with the best will in

the world, make a sudden leap that will carry

them across decades of intensive, daily experi-

ence

acquired by those who already have left the

Agency and those who are unquestionably leaving

in the not-too-distant future.

Thus counter-

intelligence is left with a growing threat, un-

diminished responsibilities, a sharp reduction

in capabilities and no. effective access to the

Agency's top managerial level on substantive

issues.

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SECKLA SCASTINE

IV.

RECOMMENDATIONS

The following

recommendations are presented for

the

consideration of the Commission with the sole intent of

revitalizing national counterintelligence and enabling it

to discharge its assigned responsibilities in furtherance

of national security. To this end we propose the following

changes:

1.

That the Operational Directorate of

CIA assign not less than one-tenth of its

component to counterintelligence.

2. That of this total about half be

assigned to a central counterintelligence unit

in Headquarters and

I that the remaining half be

divided among the various Area Divisions and

branches in Headquarters and selected Agency

stations abroad.

3. That CIA provide this cadre with

counterintelligence

training in depth.

4. That selected counterintelligence

personnel be rotated through Headquarters

and field assignments of growing responsi-

bility in accordance with career plans that

afford them opportunities for advancement

which equal those of their Agency colleagues.

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5. That counterintelligence designees

abroad work under the nominal command of

Chiefs of stations but

that they engage in

counterintelligence work full time and that

they have privacy channels of communications

with the Headquarters counterintelligence

unit which will ensure that access to their

sensitive information remains on a compart

mented, need-to-know basis.

6. That close operational liaison

between the FBI and the counterintelligence

unit be fostered, and that direct, operational,

domestic liaison with other U.S. departments

and agencies by the counterintelligence unit

be maintained to whatever extent the national

interest requires.

7: That the U.S. establish

a single

central organ to formulate policy for national

strategic deception and to deal with adversary

deception, specifically including disinforma-

tion. Further, that this body have the neces-

sary access to policy-creating levels of the

• U.S. Government and that it have the necessary

measure of jurisdiction over Governmental

components engaged in deception and counter-

deception.

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8.

I'hat CIA counterintelligence liaison

abroad

be improved through a judicious aug-

mentation of exchange of counterintelligence

information, including penetration leads, by

augmentation of U.S. capacity for leadership

in dealing with the common adversary, and

the expansion of the cadre of counterintelli-

gence liaison officers abroad.

9.

That CIA undertake a more vigorous

program to obtain further data about the

intelligence and counterintelligence services

of China, Cuba and Eastern Europe, so that

our knowledge of them becomes fully compara-

ble with our knowledge of the Soviet serv-

ices, and that these increased holdings be

placed

in machine records as

rapidly as their

size warrants.

10. That the U.S., and especially the

FBI and the CIA, intensify counteringelligence

work against

Soviet and other illegals.

11. That within the expanded counterintel-

ligence unit in CIA headquarters a defector

section be created and that this section be

responsible for supervising the operational

handling and continuing debriefing of desig-

nated defectors, both abroad and in the u.s.,

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the latter responsibility to be assigned in

agreement with the FBI and other affected

departments and agencies.

12.

That the chief of the counterintelli-

gence unit have direct and frequent access to

the Director of Central Intelligence and

other Deputy. Directors and members of the

Intelligence Community engaged in security and

counterintelligence to ensure that counter

intelligence considerations are given due

weight in the formulation of policy and that

counterintelligence capabilities are fully

utilized in defending CIA and other u.s.

departments and agencies against clandestine

activity, including penetration operations,

carried out by our adversaries.

I am Compliste

James Angleton

Attachments:

as stated

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STEST SIROTE

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