PAYMENT OF PROMISED FUNDS TO SOVIET DEFECTOR NOSENKO
Originator: CIA
From: STEMBRIDGE, SIDNEY D, OS
To: DCI
Document date: 03/01/1976
Document type: PAPER - TEXTUAL DOCUMENT

## Page 1

4-00000

104-10106-10092

: 2023 RELEASE UNDER THE PRESIDENT JOHN F. KENNEDY ASSASSINATION RECORDS ACT OF 1992

CALENT ASSIFIE

•ONEYES ONLY

COL DENTIAL

ROUTING AND RECORD SHEE

SECRET

Yuriy Ivanovich Nosenko.

(Payment of Certain Funds

Previausly Pramised)

EXTENSION

NO.

FROM:

Sidney D. Stembridge

Acting Director of Security

TO: (Orficir designation, roum number, and

DATE

buildingi

DATE

6777

OFFICER'S

INITIALS

106

COMMENTS filmbar zach commens in sinor iron inom

to inhom. Drow a line seros soiumn atlar den cominanl.)

RECEIVED

FORWARDEO

Chiet,

• CI/R & A

2 B: 1405

3.

MAR

1976

3.

HAR 1915

DDO

7.6:26

From General Counsel to General

Nalters:

We have reviewed this case in

considerable detail. Technically,

the release signed by Nosenko

could be asserted. In fact, however

on the basis si the record, it appear!

he is due this tinal parment and we

see no problem in your approving

it.

DDA

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12 MAR 1976

7 D 5607

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JohnS. Warner

General counsel

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APPROVED FOR RELEASE 1993

CIA HISTORICAL REVIEW PROGRAM

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## Page 3

SSlci

EXES ONLY

J:7al:!!

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MEMORANDUM FOR:

FROM

VIA

SUBJECT

Director

Sidney D.

Stembridge

Acting Director of Security

Deputy Director for Operations

Deputy Director for Administration

Yuriy Ivanovich Nosenko

(Payment of Certain Funds

Previously Pronised)

I. This memorandun submits a proposal

The proposal is to immediately pay Yuxiy Ivanovich Nosenko

$28,500 in back salary in settlement of an igency commitment

to him and to authorize a subsequent one-time paymert of $10,000

to him directly or as a contribution to his retirement for

identisying a ranking British official, William Vassall, as i

recruiied Soviet 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 entitlod to $28,500

in back pay. This amount represents the di fforence between

the salary actually paid to him during the 1 March 1969 to

1 March 1975 period and the $25,000 per year which was promised

to ug tn in ghời nan

"e rdolialk

to hin it the time of his defection in February 1964.

At the

time of his defection, Mt.

Nosenko was also pronisod the addi-

cional

$10,000 For identifying William Vassall, & British

Admiralty employee recruited by the KGB.

3.

While serving as

" KGb security officer with the

oviet uisarmamont commission on owitzerland. ar. Nosenko

contacted

in anorican diplonat in Genova or & dune 1902 anc

requested

à smail loan to ropay ofricial Soviet foads which

he had squandered. Based on this contact Mi. Ansrako was

recruitod shoitiy thereaftor iy the Agency and i: agreed to

L2 IMPDET

Cl, Bx 010249

1b dott

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On 15 June 1962 Mr.

work as ato see soviot Chion where he resumed his duties as

returned to

an intelligence officer with the Second Chief Directorate of

the KGB in Moscow.

Mr. Nosenko worked in place in the Soviet

Union until January 1964 when he returned to Switzerland.

"At

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 and was brought to the United States under Public Law 110

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

Mr: David E. Murphy, Chief, Soviet Russia Division (SR Division).

This

memorandum stated as follows:

"First,

I assured Subject [Mr. Nosenko] that I.

was satisfied that he was genuine.

Based on

this and assuming his continued 'cooperation'

I said we would proceed to make arrangements

to bring him to the States.

Second, I con-

firmed

our 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."

5.

Shortly after his

arrival in the United States,

SR Division

encountered serious difficulties in attempting 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 detector.

As noted in paragraph four of

Nosenko was held undor highly secure conditions

Attachment A installation from April 1901 until October 1967;

at an Agency.

In October 1967 the primary responsihility for Mr. Nosenko was

transferred from SR Division to the Office of Security, which

conducted a thorough review of the developments in this case.

The conditions of confinement of Mr. Noseato were progressively

and in Actobor 1968 the bona fides of Mr. Nosenko tere

esthlished by the office of Security:

At this

point it should

in noted that the confinement of Mr. Nomiko was cited by the

SOONET

"i:.

2.

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SESHET

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WINNISH

Rockefeller 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 versonnel

in

Moscow.

Mr. Nosenko named six members of the 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-

lance devices in the Embassy.

Mr. Nosenko also provided

information leading to the identification of fifty-one American

KGB targets and sixty-one non-Anerican KGB agents. The most

prominent of these Soviet agents were a French and a Canadian

ambassador to Moscow, a director and a deputy secretary of the

Indian Foreign Ministry and a British Admiralty employee

Milliam Vassall. Mr. Nosenko is the most significant defector

we have had from the

as a result of this his contributions have been of unique.

importance.

Minist Nooneributions cave dean of

Second Chief Directorate of the KGB, and

7. Prior to 1 March 1969 Mr. Nosenko received no salaty

for his cooperation with this Agency.

Effective 1 March 1969

Mr. Nosenko was employed as an independent contractor at the

Because of the previous difficulties

rate stones vete te establishing the bona fides of

Mr.

Nosenko, the extent of our commitments and obligations to

him were

not clear at that time.

Mr. Nosenko, therefore, was

not initially employed at the rate of $25,000

per year as he

had beon promised.

Mr. Nosenko's salary was increased annually,

howaver,

until l March

1975 when he began to receive the stipu-

lated $25,000 per year.

Once the bona

fides of Nr. Nosenko vere

finly established

earlier difficulties regarding his

statu: were resolved, the initial commitments took effect and

the payment of $125,000 (less federal income tax) was completed

on ld tocomber 1972 in settlement of salury arrears for the

period April 1964 to March 1969 (see Attachment B).

On 12 July

1975 a final payment was made on the obligation

of $50,000 due

Nr. Nosenko for the period

1962-1964.

3

2/BR

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SUBMET

EYES ONLY

There renains to be paid $28,500 (less federal income

tax) in salary arrears for the period 1 March 1969

to 1 Narch

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 a

quitclaim for the period prior to 12 July 1973 (see Attachment D)

and may have legally waived his right to back salary prior

that date, the earlier payment of $125,000 for the period

1964-

1969 recognized our commitment to Mr. Nosenko to honor all:

agreements and established a precedent for paying him the total

salary difference.

We also believe that we have a moral obli-

gation and that this obligation should be met.

This matter is being brought to your attention siuce

Mr. Nosenko believes he has

valid claim to cited back salary

for the 1969-1975 period and

in connoction with the current

transfer of full responsibility for Mi. Nosenko to the Counter-

intelligence Staff, Directorate of Operations.

It is, therefore,

recommended that you approve the expenditure of $28,500 in full

payment of back salary for Mr. Nosenko for the period 1969-1975:

Of the

$28,500, $27,667 can be paid for out of the FY1971 unobli

gated balance allotied to the Office of Security, with the

romainder of $833 being charged to the Office of

Security. Fr1975

allocation.

10.

It is further requested that approval be granted for

the 510,000 Vassall obligation; which could be paid

directly to

Mr. Nosenko at a lator date or

preferably could be incorporated

Into a retirement program for him, which is being given consid-

cration by the Countcrintelligence Staff..

If approved, these

transactions would represent a fulfillment of all commitments to

Mir. Nosenko as of this date and would sorve to fulfill outstanding

Agency commitments to Mr.

Nosenko prioi to his transfer to the

Counterintelligence Staff.

Attachnents

32LT

4

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ATTACHMENT B

4-------

......

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120W2428

bo co..

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Exacsiite Rsgistax

72-5455

Б ОСТ 1972

MEMORANDUM FOR: Director of Central Intelligence

THROUGH

SUBJECT

: Executive Direcior-Coraptroller

: Retroactive Reimbursement of

"Juriy Ivanovich Nosenko

1. This memorandum suggests action on the part of the

Direcior of Central Intelligence; this action is contzined iu

paragraph 2.

2. Mr. Yuriy Ivanovich Nosenko, a 45-year-old, foriaer

Staff Officer of the Committee for State Security (KGB) of ihe

USSR, attended the Institute of lnternational Relatiors, Moscow,

from 1915 to 1950; was affiliated with Russian Naval Intelligence

during the 195i-1953 period; and was an officer with the KGS

from March 1953 until his defection io the Agency in Generz,

Switzerland, or 4 February 1964, aiter having worked tor Cii.

for approsimatsiy tio years.

3. A review of MI. Nosenko's case reflects that, ai the

time of his defection, varions official commitments wate made

to him, incluling a lump suin payment of $50, 090.00 based upor

his neazly two years' work inside the KCS; = $10, 000. 00 Lonus

for his work on the Vasnai case; and a cuntraci no a conoultaut

at a ariary o1 92?, 000. 00 pee ranum, jis. Mnsra'ie tae aavin:

ly tis agency Case Oficor Mei Mr. Monutiro s ie arcking fo:

the Centrai Intaligenre Agracy as olf Mauruary lante and brai

his salary began irom Met auto-

thit was d vethrt

-gE auront

wich the Agency Orso Ofucoa, oud io auly thct onadmri

file:,

WARMING HOTICE

SENSITIVE MATFELIGENOE SOURCES

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SICS ONLY

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APPROVED FOR RELEASE 1933

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4. In the early debriefing of Mi. Nosenio, it became

apparent that he was a parucularly complex individual. To permit

expensive and prolonged debriefing, arrangements were made to

accommodate MI. Nosenko under highly sacure 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

possibility that he would be targeted for execution if the Soviets

should discover his whereabouts.

5. Since October 1967, the primary responsibility for Mr,

Nosenko has been in the Office of Security, which conducted a

thorough review of prior developments in the case. Mi. Nosenko

was moved to the 'Washington, D. C. area in late 1967, and the

case passed through various stages of phased normalization, as

he was given an increased degree of freedom and independence.

MI. Nosenko was actually resettled on the economy in April 1969;

he obtained a divorce from his former Soviet spouse in Septernber

1969; and he later married an American girl in October 1969.

During the period from October 1967 to April 1969, Mr. Nosenko

did not receive a salary, but he was provided with a moderate

amount of spending money.

6. As of April 1969, MI. Nosenko signed a one-year

contractual agreement for $16, 500. 00, including a clause giving

assistznce to him in resettlement expenses in the amount.of

$8, 000.00. In March 1970, Mr. Nosenko signed a new contract

for tro years at $18, 500.00 per annum. At about this same time

he was provided with certain financial assistance, $20, 000.00

being for the down payment on a new house, and $5, 000.00 for

othes related household expenses. Mr. Nosenko's contract vas

renewed at the new iate of $19, 500. 00 per annum on i March 1371,

aud the contract was again renewed in February 1972. ai the sclary

0£ $21, 000.00 per annum,

?. in analysis of this case clearly indicates fat ir.

Nosenio has been an extremely valuable source, one who has

idenated many hundreds of Soviet Intelligence Officers, and ne

has otherwise provided a considerable quantity of useful information

on the organization of the KGB, its operational doctrine, and

methods. At least a thousand formal memoranda have been

EVES ONLY

SECRET

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forwarded to the Federal Bureau of Investigation based on dat

from Mi. Nosenko. He has conducted numerous special security

reviews on Soviet subjects of specific intelligence interest, and

he lias proven himself to be invaluable in expioring counterintelli-

gence leads. He recently authored a book which is of interest to

the Agency. In effect, Mx. Nosenko has shown himself to be a

Productive and hard working defector, who is "rehabilitated" and

favorably disposed towards the Agency.

8.

In the course of a recent meeting with Mi. Nosenko,

he brought up the subject of his missing salary, covering the

pe:1oa from April 190÷ to March 1969 Mr. Nosenko readily

admitted that be. is living very well at the present time, but he

is not in a position to save any moxey for the future. He also

expressed deep appreciation to the Agency ior the financial

assistance which was provided him through the years, and he

considers this to have cancelled out the original Agency

obligation of a lump sum payment in the amount of $50, 000.00.

ivir. Nosenko, however, still feels quite strongly that he is

entitled to be reimbursed for the salary which the Agenay did

not provide him over a five-year period. He understands, of

course, inat 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 IMr.

Nosenko is fully documented and supports his claim; his resettie-

ment since 1967 has been relatively smooth, with no significant

security problems having developed; and he continues to function

at the present time as a highly productive and useful source of

information on the KGB. In view of these various considerations,

it is requested thai this payment of $125, 000,00 to MI. Nosenko

be approved. These funds would be paid out of unliquidated

ohligations applicable io lapsed appropriations (Fiscal Year 1970

and prior years--"y" Account).

Howard.

Director of Security

EYES ONLY

SECRET

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## Page 12

4-00000

TIES DAL

SUBJECT: Retroactive Reimbursement of

Yuriy Ivanovich Nosenko

CONCURRENCE:

6Da:nz

(Date)

John W. Coffet

Deputy Director.

for Support

Thomas H. Karamessines

Deputy Director

for Plans

12 00d.22

(Date)

Sate, te

• William si, Colby

Executive Director-Comptroller

180572

(Unis )

the recommerdadio? in paragraph is approvado. cut

Richard Ileims

Director

18 DOT 1972

(Date)

EXES OALY

SECRET

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