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Approved for Release: 2019/02/21 CO2606320 S E CRET --- Introduction Soviet I elligence WO k 0' 4" Against The .in The Early Post-War Years Heinz Felfe Hans Clemens Clemens' Recruitment by the MGB Felfe's Formal Recruitment by the MGB MVD Work of The Early 1950's: Increased Emphasis on Aggressive Penetration Felfe Settles In KGB Work in West Germany as a Sovereign Country: Felfe Broadens His Solopprea Source Protection and Tactical Deception Support of Soviet Policy and Political Deception New Directions? End of Operation "Kurt" Aftermath SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET ANNEX COMMENTS A. Biographical Footnotes; Soviet Spotting and Recruiting in the 1940's and Early 1950's, which Probably Paralleled and Supported the Recruitment of Felfe: 1. Helmut Proebsting 2. Max Wessel 3. Recruitment 4. Wilhelm Krichbaum 5, Oscar Reile B. Deception and Diversion Operations Initiated by the Soviets in the Early 1950's: 6. The Heinz Case 7. The Lilli Marlen Case 8. Artur Karl Weber Modus Operandi and Various Types of Defensive Playback; Case Summaries: 9. The Sokolov Case 10. ZUVERSICHT 11. MERKATOR KGB Personnel Appearing in"Operation Kurt": 12. Descriptions Provided by Felfe and Clemens of their KGB Case Officers SECRET Approved for Release: 2019/02/21 CO2606320 --Approved for Release: 2019/02/21 CO2606320 SECRET II, 11U:q.a..a..0ft.o.4 Soviet Intelli The Post-War Years Work Against in The Early The, history of this penetration has its beginning in the early post-war years. The spotting of people like Heinz Felfe by the Soviet Intelligence services was not accidental, but the result of a well-targeted, well developed recruitment campaign directed against former police and intelligence officers of the Nazi Reich. The thesis was simple: old intelligence hands will flock together, will seek to return to the work they know best. Some of these peop* such as old Brandenburg Division officers, Stahl elm and Freikorps members, might be susceptible to a Soviet approach be- cause of their general sympathies. Others, such as SS and SD members, who in occupied Germany were now war-criminals able to make their way only by hiding a pest which had once put them among the elite, would be the most valuable. The Soviet spotters were to be found almost everywhere in Europe - East and West - in the POW camps, in the war-crimes, screening commissions, in the courtrooms. The future West German Intelligence and Security Services could be penetrated almost even before they were created. In the closing days of the war, General Reinhard Gehlen of the Fremde Heere Ost had brought the remnants of his files and personnel to G-2, U.S. Army, for whom he presented a valuable and relatively unique source of information on Soviet order-of-battle. Under G-2's aegis his group burgeoned until by 1949 it had become recognized as the primary Western agency for the collec- tion of Soviet OB and eventually of CI information in the Soviet occupied zone of Germany. It was a loosely knit organization made up predominantly of former Abwehr and FHO officers who were held together by the officer's code of honor and individual bonds of friend- ship. From an institutional point of view, however, the problems of control, responsibility and security were serious. In July of 1949 G-2 asked CIA to assume �the responsibility for the organization and thus under- take a trusteeship which was to last seven and a half years. SECRET Approved for Release: 2019/02/21 CO2606320 gt Approved for Release: 2019/02/21 CO2606320 SECRET To the outsider, to its enemies, the Gehlen Organi- zation looked much more like an American puppet than it actually was. Many a Soviet Intelligence officer assigned to work against the Americans in Germany and Austria during this period was runhing operationsj against. the Gehlen Organization. Many a German was persuaded by Soviet appeals to his anti-American resentments to work against his own countrymen. In 1948 the Soviet State\S-curity Service (MGB) in East Germany made its-firimportant coup against. the Gehlen Organization.--dehlen's chief of operations for Northeastern Germany was arrested in East Berlin, and on the basis of his ,material, the Soviets were able for the first time tO7makeeietis penetration plans. y mid--19-5-2-ttre-wfork Sgainst various of Gehlen's field bases had progressed well, but an agent inside the headquarters organization in Pullach was stil lacking. (1) Particularly successful had been the MGB wor against Gehlen's field base for CE-CI in Karlsruhe._ This base was especially attractive because the major part of its work involved the penetration for security purposes of other German agenciwhile at the same -tar-E-6---6-ring a direct contact to the Soviets through its responsibility to run Soviet double-agent opera- tions: It was especially vulnerable because it was heavily staffed by former SD and SS personnel who in order to maintain their jobs were obliged at least pro forma to conceal their background and who still suffered to some extent from the old social and pro- fessional caste rivalries which kept the former Abwehr (1) Primary source of information on early MGB/MVD work in Germany is Petr S. Deryabin who was assigned to the MVD headquarters desk responsible for CE work in Germany from May 1952 to September 1953. He read the headquarters file of the Gehlen Organization in July 1952 and has stated that as of that date there was no evidence of a Soviet agent in the headquarters; however, we cannot rule out the possibility that there may have existed restricted files to which he had no access. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET and FHO officers in ascendency. In reaction to this situation there had gradually developed within the CE organization a sort of mutual aid society of ex-SS and SD personnel for'self-protecti9R_aad pr9fessional advancement, which in turn renderea71b7gYr-Darticularly susceptible both to simple blackmail and to the some- what more complicated appeals to revenge or vindication. (1) It was through this base, called GV"L", that one of the most able and tenacious staff penetrations of the Gehlen Organization was launched. (1) There have been a variety of formal and informal secret Nazi organizations in existence since the end of the Second World War. According to BEVISION the KGB has been able to penetrate and control them since their inception as recruitment pools and as enti�propaganda weapons. His infor- mation on th s subject, under his codeword "HACKE", is instruct/ye for CE analysts-ologgUaTsg in 42re-el-r-ly- rit.�1 '-par of the world. gfrs!41::1 SECRET - Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 5- SECRET II. (a) Heinz Felfe Heinz Felfe was born in Dresden in 1918, the son of a criminal police inspector. He started his own police career at the age of 13 as a vonnteer in a border unit. In 1938 he waS inducted into an SS Verfuegungstruppe, and from then on his schooling, legal training and subsequent assignment to a job in the Criminal Police was guided and fostered by the SS. In 1943 he went into the foreign intelligence section, )?R.SHA VI, where he worked first in the Swiss. section at headquarters, then in Holland - for a while under Schreieder of "Nordpol" fame. He finished the war as an Obersturmfuehrer in the Waffen SS and as a prisoner of the British. Of the many recorded im- pressions of him from various stages of his career, certain traits dominate: a highly intelligent man with very little personal warmth, a person with a high regard for efficiency, for authority, but susceptible to flattery, venal, and capable of almost childish displays of vindictiveness. Naturally a devious person, he enjoyed the techniques of engineering a good deception in his profession. He was brilliant as an elicitor of information, an excellent listener and an Operations officer of such generally recognized capability that from time to time he was given special "vest-pocket" operations to manage for the chief of his German service. Infinitely cool and brazen in the face of danger, thoroughly aware at all times of what he was doing, Felfe was the "ice-cold calculator" as he once so admiringly described his favorite agent. The only lively emotion detectable in him is his hatred, which, with his great admiration for Soviet power and efficiency, and his undeniable enjoyment of the game, seems to have sustained him throughout his career and imprisonment. His attachment to his wife and two children seems to have been relatively perfunctory. As for his colleague in espionage for ten years - and friend in adversity of even longer standing, Hans Clemens, Felfe found him in the end merely a convenient scapegoat. As a British POW Felfe was interned at Blauw Kappel, an interrogation center near Utrecht which specialized SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET in the interrogation of former German intelligence personnel. It is possible that even here his name first came to Soviet attention through an agent among the Dutch interrogators. One of Felfe's fellow- prisoners, Helmut Proebsting, reported to Dutch authorities in 1946 that he and Felfe had been approached by one of the interrogators to work for the Soviets, but Felfe denied that any such incident had occurred when confronted with this information after his arrest. (1) Felfe returned from the war in November 1946 with the determination to settle in the Western zone of Germany, although his home had consistently been in Dresden. His wife and child joined him at the end of the year. Seven difficult months followed until he finally found work for a British military intelligence unit (Sixth Area Intelligence Office, BAOR). His job was to develop information on commu- nist student groups at the University of Bonn and under British instruction he settled himself in the Bonn area, registered in the Faculty of Law and joined the KPD. In the course of his work he made several trips to East Berlin and to East Germany to observe student .rallies, from which he took off on his own initiative to visit his mother in Dresden. Here again the possibility of Soviet targetiRF,5-exists. ken one of these trips)in 19481fe says4,his mother warned him that someone in the town had recognized him and reported him as a former SS officer. On another occasion he says he was arrested by the VoPo, but quickly released at the intervention of his host, an official of the East German Ministry of Public Education. The British finally dropped Felfe in April 1950 for serious operational and personal security reasons, (1) An-account-of-t-Ef-1--iici4ent-i-s-y.Lven in -Annex 1 because it is impOrtant as an item in the chain ;t/A .i14-1-1" of suspicious events which should have uncovere1 Felfe as a Soviet agent long before his actual arrest. f--,-/-6/16 76-' SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SEaRET none of which, unfortunately, came to the attention of the Gehlen Organization in any very detailed or forceful form until long after Felfe was entrenched in it. British files received by the BND in 1961 and V by. CIA in 1962 show that their early complaints against Felfe included attempts to sell information, collected for the British, to several other intelligence agencies, two nest German news services and to the SED.)'- It also contained an account of Felfe's attempt to involve the British in a double-agent gperation with _the Srmiets, as well as various agent reports showing that he had blown himself as a British agent to all and sundry, including the KPD, and that he was guilty in general of "sharp practice" and "varnishing of the truth". As specific grounds for dismissal the British told Felfe that his refusal to give up undesirable contacts with former SS personnel could no longer be tolerated. Specifically they named Helmut Proebsting and Hans Clemens, the latter a former RSHA VI colleague and old Dresden friend, who was shortly to lead Felfe into t1 service of the MVD. After leaving the British Felfe continued to work against the KPD for the Land security office (LfV Informationsstelle Nordrhein-Westfallen) to which he had already been reporting on the side while a British military intelligence agent. He incurred the wrath of this organization on at least two serious counts: once for having sent a report on it to his contact in the SED and later for trying to peddle the plans for the BfV constitution, which he had somehow acquired from someone in the Finance Ministry, to a West German newsman. From the Informationsstelle Felfe went to the Ministry for All-German Affairs (Kaiser Ministerium) where he worked as an interrogator specializing in refugees knowledgeable on the VoPo. He remained at this job, eventually writing a study of the VoPo for the Kaiser Ministerium, until his recruitment into the Gehlen Organization in 1951. SECRET Os' Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SEC} ET of war criminals accused of killing hostages in Dresden and there is some suggestion that Clemens was similarly listed. As was soon to become evi- dent, Gerda Clemens was working as a Soviet agent at least by December 1949, and probably since the end of the war, as Felfe later told his British case officer. Her cover name.was "Erika". She reported to an MGB Colonel called Max in an office in the Soviet Command, Dresden, which, according to Clemens, was concerned with tracking down former police and intelligence officers from the Dresden area who were liable for war crimes. As a person Clemens was every bit as much of a Nazi as Felfe had been, with the difference that he declared himself more frankly. Essentially a less complicated kind of person, coarse and probably brutal, Clemens' human attachments were more real and meaningful than Felfe's. Where one has the impression that Felfe never made a move without a � reason or recompense, one can imagine Clemens making a gratuitous or spontaneous gesture of loyalty or friendship. Felfe considered Clemens his cultural and intellectual inferior, which is correct in a certain sense, but after his arrest he pretended that the alder man - Clemens is 16 years Felfe's senior - had exercised a dominating and pernicious influence over him by drawing him into the Soviet service and making him stay there. Throughout their Gehlen careers, however, they remained good friends, and Clemens in his post-arrest statement claimed that there had never been any friction or rivalry between them in their Soviet work. Within a remarkably short time after Clemens' return to Germany - about two months - Max sent Gerda Clemens to West Germany with a recruitment proposal. This occurred just at the end of 1949 or / possibly in early January 1950. Clemens and Tiebel admit that the situation was perfectly clear to them: comply or face charges. Moreover Clemens had no steady job, he needed money and was intrigued by the idea of a secret contact. He discussed the situation with both Felfe and Tiebel, and while none of them seems to have opposed outright the idea of accepting SECRET .v7( #,LI er144-t� }ilk to- ULA/04' Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET the Soviet approach, they did entertain the notion of trying to offer Clemens to someone as a double- agent. Clemens actually talked to an official in the Ministry of Interior. Unfortunately the latter brushed him off without giving him any concrete advice. Felfe may have offered Clemens to the LfV- Informationsstelle; British files show that he told his British case officer in early 1950 that he in- tended to do so. Felfe had already tried unsuccess- fVlly in November 1949, upon Clemens' arrival, to sell him to the British as an agent. (He also tried to persuade them to recruit Tiebel.) This effort had merely earned him the admonition to stay away from his old SS friends, who were bad medicine for some- one supposed to penetrate the KPD. In January 1950 Felfe tried again, this time offering Clemens as a British-Soviet double-agent. A letter dated 25 Jan- uary 1950 from Tiebel to Felfe states that Clemens had already agreed in principle to cooperate with the Soviets in Dresden. The British files contain a memo of a visit by Felfe to his case officer on 29 January 1950 during which he reported that Gerda Clemens had arrived two days earlier and was planning to. return shortly to Dresden with her husband in ordee to put him in touch with the MGB. The British lingered only briefly over the decision of whether to play Clemens as a double-agent. Shortly after Felfe's proposal, evidence of his double-dealing with the LfV Informa- tionsstelle became evident and he confessed to having sent a report on it to an SED contact in East Berlin. When Frau Clemens appeared in Germany again in early April and Felfe tried once more to persuade his em- ployers to undertake an operation the British case officers came to the decision that they should drop Felfe and list Clemens as a,"security risk". By this time of course Clemens was no longer just a security risk; he had already gone to Dresden and become a Soviet agent. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET II. (c) . Clemens' Recruitment by the MGB vra2(//y//9(-) Dresden Clemens was met by his wife, who led him to Colonel Max in the Soviet "olaidschloesschen" Compound.. Here Max debriefed Clemens on his life history and present contacts, lectured him on his culpability as an SD criminal, probed his feelings of confusion and resentment, listened constructively while Clemens delivered himself of a long pent-up statement of his hatred for the Americans. (They had been twice the cause of German defeat, etc., had Smashed his home town and caused the death of at least five of his relatives.) Max at this point took Clemens on a tour of bombed-out Dresden and at the tide of Clemens' emotional reaction offered him an opportunity of revenge against the Americans. The proposal was clear cut and precise: as a Soviet agent Clemens was to return to the Western zones, seek out old Stapo and SD contacts and through them try to penetrate the Gehlen Organization. The Gehlen Organization was an "Amiladen" (an American shop) and any blow aimed at it was a blow at the Americans. Clemens agreed: for money, for a personal cause, and to be on the side of power, but not, he insisted, because'of any special sympathy toward the Russians. (Here, as in many other cases, are strains of the old Nazi theme of German superiority to Russians.) He signed himself on as a Soviet agent with the cover name Peter; later he used German girls' names. At this first meeting Clemens provided Max with a list of potential recruits in which he included the names of both Felfe and Tiebel. Clemens says he was very impressed by Max and by his psychological adroitness: Max was civil, sober, authoritative, knowledgeable, but most important - as both Clemens and Felfe have stressed 'many times - he never pushed or threatened directly. His watchwords were to proceed slowly and naturally. When Clemens returned to West Germany he told Tiebel and Felfe the whole story and was able without much difficulty to recruit them in turn for Max. (Clemens claims it was perfectly clear to his friends that Max's target was the Gehlen Organization. Felfe SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET claims that he did not understand that this was the case until much later.) Tiebel paid his first visit to Dresden some months later in 1950 where he received much the same treatment as had Clemens, with perhaps greater emphasis on the threat of war crimes indict- ment. He received the covet name "Erich", which he kept throughout his agent career. Felfe, who by this time was working as a refugee interrogator in the Kaiser Ministry, .esisted_ making the trip east for another year. He did, however, submit reports to Clemens. Tiebel was later to be used as a courier. Clemens was able to carry out his assignment for 1 Max with amazing rapidity. In March 1950 he came 0 across an old acquaintance from the Dresden police \.J �eCnamed Krichbaum who was now employed in a A 'sub -unit of Gehien-4-s-CE/CI-)ase. (1) Through him . Clemens was able to join The Gehlen Organization in June of 1950 as a registry clerk and courier for the same 4ild unit. (Clemens' Gehlen Organization alias was Cramer.) Krichbaum himself was later to become highly suspect as an early MGB/Dresden penetration of the Gehlen Organization, but there exists no evidence pro or con - that he wittingly maneuvered Clemens or Felfe in the Organization for the Soviets. Clemens remained in Krichbaum's unit in Bavaria for two years during which time he reported on its organization and personnel and that of the parent base, GV"L", and on anything else that came his way. His reports were typed on thin paper and hidden in cans of powdered milk which he sent periodically to his wife in Dresden. (1) See Annex 4 comment on Krichbaum. Actually Clemens found Krichbaum in 1950 through another old acquaintance and Gehlen employee named Franz Groschek. Both Groschek and Krichbaum at this time were in contact with Kurt Ponger (well-known principal, with his brother-in-law Verber, in the CIC operation "TOPHOLE") who was eliciting infor- mation on the Gehlen Organization from them for the MGB in Vienna. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 /3 SECRET He collected reports from Felfe whenever they had the opportunity to meet and sent them on in the same way. (Since Felfe is reported, in British files, as having made a trip to Southern Germany within a few days of trying to sell the BfV plans tci a news service it is a good guess that these too might have found their way into one of Clemens' milk cans.) There was relatively little communication from Max; what there was was handled by Gerda Clemens, who served as courier and mail drop. olhen Felfe's work for the Kaiser Ministry drew to a close in September 1951, he agreed to make his first visit to Max in Dresden. At about the same time Clemens recommended him to Krichbaum as a reliable and experienced intelligence officer and Krichbaum arranged for his employment by the Gehlen Organization. Although Felfe will not admit it, it seems likely that there was a definite cause and effect relationship between the timing of his availability for work in the Gehlen Organization and his trip to Dresden. Max was primarily interested in the Gehlen Organization as a target and presumably it was at the point when Felfe was actually able to penetrate his target that Felfe became of im- portance. There is some suggestion in our records - no evidence - that Felfe might really have been re- cruited earlier, but even if this is so his serious Soviet work did not begin until he was a properly accredited West German intelligence officer. (1) (1) See Annex 3 comment on "Recruitment" for a description of interesting testing and compart- mentation techniques. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 \\(' S.ECRET II. (d). Felfe'Formal Recruitment by the MGB Around the first of September 1951 Felfe flew to West Berlin where he was met by Gerda Clemens who conducted him to Max in the East Sektor. Max drove him to the Soviet Compound in Karlshorst where he questioned Felfe on his background - Felfe said he appeared to be very well informed about him already and. gave him the general lecture on guilt. Felfe ,admits that he wrote a declaration of willingness "to work for peace", but claims he did not sign a pledge to work for Soviet Intelligence as such. He received the cover name "Paul". He tells us very little about this first visit; he says he was well wined and dined in the Karlshorst safehouse where he spent the night and that Max made a great effort to establish a friendly, sociable atmosphere. He says Max gave him no instructions at this meeting. whether this is true or not, subsequent events played themselves out exactly to Max's wishes in any case. On the 26th of October Felfe was called to Karlsruhe for a personal interview with the chief of GV"L". He made a good impression, was hired as an assistant to-. GV"L" chief for Soviet CE opera- tions, Oscar eil , and requested to begin work on 15 November. elfe's Gehlen Organization alias was Friesen.) Felfe and Clemens celebrated the event that night with:a good dinner. Sometime shortly ter..- this and loefore he actually began work, Felfe paid his second visit to Max. This time Max went more deeply into questions of motivation and access. He took Felfe pri the tour of Dresden and discussed at some length the need for Soviet-West German understanding He stressed the theme of criminality of SS membership and the fact that Felfe would need Soviet protecition to keep his new job and to keep his record h dden. Having seen one more agent into the Organiza ion, Max was now concerned to maneuver him to the m at desirable spot. Significantly he asked Felfe o try to get himself posted to the Gehlen headq arters. Again, he stressed the need Felfe would have for Soviet protection, warning him SECRET " Apt, /v''rvrt ot- � /Y�frr Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET that even if his SS membership were not discovered he would always run the risk of losing his job in the intelligence service because of some flap or other Which might not even be his fault. These words were. somewhat more than prophetic,- for even then were. brewing in variglus parts of the Gehlen Organization, and particularly in GV"L" and its sub-units, the first in a series of scandalous "defections", "kidnappings" and security "incidents" which were engineered wholly or in part by the Soviets as part of a campaign to discredit and disorient the Organization. While several of these scandals were to erupt in Felfe's vicinity, none was to endanger him as long as he was in GV"L". Felfe remained at GV"L" for the next 21 months, November 1951 to August 1953, first as assistant to Reile and later, after Reile's transfer to head- quarters in July 1952, as the main Soviet CE refer- ent. Reile became very impressed with the younger manes energy and ability and when he moved to the headquarters CE Staff to work on Soviet targets he opened the door for Felfe's future career as a Soviet CE expert. (Here again, as in the case of KrichbaumA stands a question mark: there is considerable con- jecture and a certain amount of evidence that Reile too was working on the Soviet side.) (1) The late fall meetings of 1951 in Karlshorst and Dresden were Max's last appearance. At this time Felfe was introduced to Max's assistant, Alfred and to another Soviet whom Felfe and Clemens nick- named "Big Alfred", for want of any other name. In '4) (1) See Annex 5 note on Reile. Information from both KGB and UB defectors seems to fit Reile and to indicate that he has been a Soviet agent at some time, but it is not conclusive and an investigation of Reile after Felfe's arrest pro- duced no legally acceptable evidence of treason- able connections. SECRET A4, Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET 1952 Alfred took over the handling of Felfe, Clemens and Tiebel and ran them as a team for the next nine years. To judge from the composite reports of his three agents, Alfred was an astonishingly young man when he took over the job of case offic4t - about 26. He spoke excellent German, also English, and had a thorough knowledge of his subject matter: the GIS, both postwar and wartime. He seems to have impressed the older men by his general civility as well as his intelligence. Where they possibly expected to find the cliche Russian bear, they found instead politeness and a greater degree of refinement than they had thought possible. They have all remarked repeatedly that Max and Alfred treated them in the right way psychologically and that this treatment went a long way in influencing them to serve the Soviet State Security Service. The first problem which Alfred had to tackle as case officer for Felfe and Clemens was to perfect the very shaky and dangerous communications system with his agents. At the moment it depended on Gerda Clemens, an East Zone resident. Clemens had not reported to the Gehlen Organization that he was still in contact with his wife. On the contrary he went out of his way to give-the impression that he loathed her and had nothing to do with her. Most people had the impression that he was divorced. Actually he was not; the Soviets would not allow him, or help him, to get a divorce since it provided them with a control in that his two children still lived with their mother. This con- stituted a shaky point in the security of the opera- tion, since technically at least it could have caused suspicion about Clemens on the part of the BND if his secret communications with his wife became known. Unfortunately, however, it is just one of several potentially suspicious items about Felfe and Clemens which did not come to official notice until too late. While Tiebel had been recruited as a courier, he was to be used only occasionally, since as a lawyer in a small town he had only very rare excuses to go to Berlin. (He had relatives in East Germany whom he managed to meet occasionally in West Berlin and SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 /7 SECRET Clemens twice managed to hire- him for the Gehlen Organization for brief periods as a source on various general East German targets, using the East Zone relatives as sub-sources.) Gehlen employees were in an even more difficult position: no Gehlen em- ployee could travel to Berlin without special per- mission- - in effect without an official reason. The simplest answer then was to provide the agents with a good official reason for coming to Berlin on a fairly regular basis. What was needed was a case which would be seriously entertained by the Gehlen Organization and which would specifically require the presence of Clemens in Berlin from time to time as the Gehlen handler. Such a case was the "Balthasar Case" (Gehlen cryptonym), a case engineered entirely by the Soviets for the sole purpose of providing mobility to their agent and cover for the transmission and fulfillment . of EEI. It is a brilliant device which recurs with varying degrees of refinement throughout this story. "Balthasar" was Fritz Baltrusch, a Russian speak- ing Bait who at one time had been Clemens' superior in the Dresden SD. As of mid-1952 he was a doorman- receptionist at a Soviet run uranium plant in Dresden and an agent for the Soviet State Security - by then, MVD. At MVD instruction he wrote to Clemens asking for a_meeting_in West Berlin. Alfred did notief Clemens in advance that this would happen, neither did he tell Baltrusch that Clemens was also a Soviet agent. Clemens rose satisfactorily to the occasion and on his own initiative seized this chance to work up a case which would provide him with opportunities to meet Alfred. In doing so he also showed his good faith to the Soviets. Clemens took a proposal to GV"L" headquarters (very likely to Oscar Reile) that he be allowed to go to Berlin to find out what Baltrush wanted and to see what he might have to offer for the Gehlen Organization. (1) The convenient result was (1) The Gehlen Organization had a report dated in May 1952 that Baltrusch was working for MVD Dresden as an informant on former SD members living in the area. (MUNI-6079, 9 June 1961). Whether this report went unnoticed or unheeded, we do not know. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET that Clemens was ordered officially to Berlin to see Baltrusch. Baltrusch of course appeared to have excellent possibilities as a source on the uranium Processing plant. At a second meeting a short time later, Clemens was able to recruit him for the Gehlen Organization. From something in Baltrusch's manner, however, Clemens suspected a Soviet presence. He told Alfred about the case for the first time after recruiting Baltrusch and learned that Alfred had indeed engineered the contact especially for Clemens. He admonished Clemens never to let Baltrusch guess that he, Clemens, was a Soviet agent. Baltrusch only knew that Clemens worked for Gehlen. In addition, Clemens was to be very careful in his correspondence with Baltrusch as the Gehlen case officer; he must always let Baltrusch take the initiative in setting meeting times, so that no one at the uranium plant would have cause to suspect Baltrusch' intelligence connections. By the same token, any information produced by Baltrusch for the .Gehlen Organization would be good and he would reply to any EEI to which he had logical access. (Clemens was very impressed when Baltrusch was allowed to deliver to the Gehlen Organization in fulfillment of a requirement a piece of uranium in the state in which uranium was regularly shipped to the USSR for final processing. (1) Alfred said that Clemens would not need to report to Alfred about his contacts with Baltrusch; Alfred would get this information from Baltrusch. Clemens would thus be absolved after a while from communicating directly with his wife since Alfred would learn of Clemens' plans to come to Berlin through Baltrusch and would automatically expect to see Clemens immediately after the meeting with Baltrusch. (1) Obviously this was also an ideal deception channel. It is noteworthy that of all possible varieties of,2peration which the IEW,39Elliave chosen atie-tc-r-rw-f4.. Pyieiticle for Clemens' they picked one which produced information on a target of number one importance to the West for positive intelligence collection; to the East for security protection. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET For the next two and a half years this case was used as a cover forClemens;, ' - rips -bovovn West Germany g'44 BerrInA elive ed both his own and Felfe's reports on these trips and brought back instructions and money (often concealed in the lid of a candy-box). Clemens met Alfred about every two months in a Karlshorst safehouse where their dis- cussions were regularly recorded on tape. For the most part their reports were delivered in clear text or orally by Clemens. Not until later were more elaborate and technical methods of communication introduced. The Baltrusch case provided the main method of communication until the fall of 1955)when it collapsed because of one of those unhappy flaps of which Max had spoken so prophetically to Felfe. (Copies of Baltrusch's reports to Clemens were found in the home of a Gehlen employee who had been accused of working for the Eastiand the case therefore was de- dared "blown to the opposition".) While the insecure link via Gerda Clemens had been eliminated, the Bal- trusch channel was slow and unwieldy. There were two accommodation addresses to bolster it and there was Tiebel with his automobile for emergency use, but neither of these methods was safe or satisfactory for regular communication. During 1952 and 1953 Felfe and Clemens reported extensively on GV"L" and those of its field sub-bases which they knew. For a time they worked together in organizing a sub-base for the Rhineland in Duesseldorf, but for the most part their assignments kept them physically separated - Felfe in Karlsruhe and later headquarters (Munich) and Clemens in Stuttgart and later Cologne. The difficulties in local communica- tion between Clemens and Felfe remained throughout their careers a weak part of the Soviet operation, since Gehlen regulations officially discourage social contact between fellow-workers. Thus, their frequent correspondence, long-distance telephone calls and visits were somewhat outstanding. For a while in the fall of 1952 Felfe had a case (Dolezalek) which allowed him trips to Berlin, but this folded for some vaguely defined security reason. In December 1952 SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET Alfred provided Felfe with a cover address and a carbon S/W system, also with an MVD office telephone number in Karlshorst for emergency use, thus giving him some measure of independence from Clemens. Never- theless Alfred's cardinal operating tenet was that his agents must do nothing outside of their ordinary working schedule; at all costs contact with the Soviets must occur within the framework of officially sanctioned Gehlen business. In August 1 53 elfe was able to transfer to the . headquarters CE with the help of Oscar Reile. He was now definitely the more promising of Alfred's agents. He represents the positive type of penetration operation: designed to last, to produce information, even to affect policy, but run side by side with a destructive type of penetration, of which one can see nulwrifeinEgaescLa,the early 1950's in Germany, which iella6KE Ato confiTse, disorient, discredit. For one Felfe)there were any number of throw-awayA:d'r n thi4.�. period of Soviet operational history. The 4ruere W3 operatigrwere just as necessary for Soviet purposes as the-tblitrapA46. ones, out from time to time the one threatened the longevity of the other. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET III. MVD Work of The Early 1950's: Increased Emphasis on Aggressive Penetration During the period 1952 to 1955 the major theme on which Soviet CE operational planning in Germany revolved was the question of the Gehlen Organization's legalization as the official West German Intelligence Service, and - equally important - of Reinhard Gehlen's personal tenure as Chief of that Organiza- tion. 1952 marks the beginning of talk about a =- future bilateral agreement among the Western oCcupa- tion powers and West Germany. And, despite recurrent threats to Gehlen's tenure and powers, the Soviet Intelligence Service had decided by the middle of the year that the Gehlen Organization was probably there to stay. As the creature of the strongest occupation power, it probably,wo 1 o ecome the responsible German servig: A t naid 1oger simply a vehicle to harrass and penetrate U.S. oper- ations, but another place to seek a toehold in the future West German government. 1952 also saw the beginning of a serious aggressive build-up in Soviet work against the West German target. In the early part of the year an extensive recruitment campaign was Mounted in the USSR (among POs) and in East Germany for.agents who could be resettled in West Germany. In the latter part of the year a general reorganization of the State Security Service (now called MVD) brought to East Germany a new, tougher, more tightly organized group of counterespionage officers. (1) This was a period too of intense in-fighting among the nascent West German Security and Intelligence Services (the BfV, the END, and in the Defense Ministry, the future MAD). They vied with each other for the supremacy of their ser- vice and they all vied with Gehlen, both from within and without the Gehlen Organization, for his job. The TT.T413Zr. S. Deryabin. A SECRET � ; J Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 cg SECRET obvious Soviet goals, sometimes complementing each other, sometimes contradictin each other, were to control Gehlen - by solid ' plan , by trying to sub- stitute a Soviet agent in is stead and alternatively to weaken and discredit his Organization by exposing it as riddled with Soviet agents. The chief of the KGB Counterintelligence Directorate is quoted reliably as having made the statement that between 1953 and 1955 the Soviet services deliberately exposed over 100 of its agents in this effort. The Soviets, he said, had two agents at that time in the Gehlen Organization leadership. One of them was foreseen as a successor to Gehlen, but the exposes and scandals failed to cause Gehlen's ouster, and the Soviet plan did not succeed. (1) While Alfred was carefully devising a new and complicated modus operandi for Felfe, the destructive scandals were already taking shape in various of Gehlen's field bases. At least one of them was seriously to endanger Felfe. In February of 1953 a section chief in Berlin, Wolfgang Hoeher, was appar- ently kidnapped and spirited into East Berlin. -qt. _aater-became apparent that this was a case of a long- time agent being recalled and that the kidnapping scene had been contrived both for cover and dramatic effect. (Felfe was detailed to investigate Hoeher's disappearance since he and Hoeher had been friends. He reported on the investigation to Alfred; maintained consistently to the Gehlen Organization that Hoeher had been truly kidnapped and was not a Soviet agent as of the time of his disappearance. Hoeher was sub- sequently turned over to the East German Intelligence Service for whom he ran operations against Gehlen for several years.) In October of the same year another penetration of a Gehlen field base in Berlin, Hans Geier, was recalled to East Germany under the cover (1) BEVISION from Oleg Mikhailovich Gribanov (201- 266338), Chief, Second Chief Directorate, KGB. (April 1958) SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 0 3 SECRET of an ostensible arrest by the Soviets in East Berlin. In November a third disappearance or defection took place - again a Berlin based officer - Werner Haase. The East German radio announced a massive roll-up of Gehlen agents in the East Zone following Geier's recall in October, and in December the East German press launched an expose of the Gehlen Organization. The main substance of the East German material appeared to be on Gehlen's field bases, rather than the head- quarters, with a strong emphasis on GV"L" and its dependencies. Felfe recognized some of his own re- porting and was somewhat uneasy. Analysts in the Gehlen Organization also found considerable portions of it attributable to Hoeher and Geier. The most immediate effect of all of this was to produce a re- organization of the CE/CI office. GV"L" was now re- designated, reorganized and moved to another location. Cautious analysts assumed, however, that so destructive an expose would not be deliberately undertaken unless some penetration asset remained safely behind to report on the Organization. These scandals complemented the thrust to unseat Gehlen by discrediting him. There has been much specu- lation as to who the Moscow candidate for Gehlen's position might have been. (It is very difficult now to determine who might really have been seriously con- sidered at any one time - by either the Soviets or by Gehlen - as a possible successor to Gehlendand who was merely blowing his own trumpet.) There-were several men both inside and out of the Gehlen Organization during this period whose ambitions were well known. One of the most vociferous and best known was the chief, from November 1950 to October 1953, of the Intelligence Section of the Office of Defense Planning (Blankamt, later the Ministry of Defense), Friedrich-Wilhelm Heinz.- Heinz was an old Abwehr officer, an ex-Stahlhelm and Freikorps member, Who had been arrested in connec- tion with the 20th of July 1944 plot against Hitler. He had been in touch with Soviet Intelligence in the 1930's and possibly again after the war when he was made mayor of a small town in East Germany. When he moved to West Germany he apparently lost contact, since as of 1952 and early 1953 the old file on him was being SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET passed around among German section officers at MVD headquarters in Moscow for the purpose of working up a new case for him. (1) Heinz had already become notorious in the West through his bid to become chief of the future BfV. His candidacy was *opposed by the British. who considered him too unsavory. Next, after having formed with two other colleague the Defense Office intelligence section, he had become a noisy and bitter adversary of Gehlen. All through the early 1950's he strove either to assimilate Gehlen's functions to those of his own office or else to see himself made chief of the Gehlen Organization. Gehlen retaliated with equally bitter statements, including the accusation that Heinz was a Soviet agent. In early 1953 Heinz was involved in a court case during the course of which he perjured himself. This, plus the increasing unpleasantness betaeen his and Gehlen's Organization, prompted the Defense Office to suspend him in an effort to clear the political air. Thus set aside from any proper bureaucratic avenue to high places, Heinz could not at the moment be considered by the Soviets as a likely candidate for Gehlen's job or anyone else's. Two subsequent KGB operational gestures appear to have had the purpose of trying to whitewash Heinz (through the use of a throw-away agent) and, when that failed, of trying to recall him in a manner which would have dramatic propaganda value. This tactic also failed and Heinz was eventually tried by the Federal Republic of Germany for treason. We summarize the various KGB operations involving Heinz in Annex 6 since, even though there is much that remains confused and mysterious about them, they serve in general outline as a good illustration of the type of operational plan described above by the KGB counterintelligence chief. By the time the KGB Heinz operation was a certified failure, the legaliza- tion of the Gehlen Organization as the official West German service was only six months away and the chances (1) Deryabin. Heinz' MVD case file had the cryptonym "Khlyust". SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET for inserting another KGB candidate into the political arena were probably lost. It is interesting to note that some of the Soviet case officers who were working against the Gehlen Organization, if not directly on the Felfe case, were also working on the-Heinz case. While many of these scandals were demonstrably MVD/KGB organized, many were quite naturally self- generated. The situation was over-ripe in the atmos- phere of intense recrimination, suspicion and character assassination which accompanied the West German politi- cal rivalries at this time. Contributing heavily were some of Gehlen's own security operations. The CI branch of GV"L", and in particular the CI operations of the deputy chief for CI, Ludwig Albert, added enormously to local political tensions, inside and outside the Organization. The CI branch was responsible for the security of other West German agencies and in the early 1950's one of its most immediate purposes was to search out rightist elements. For this section Albert ran a number of "special connections" or high- level informants in nearly every Land and Federal security agency and from time to time these special connections became known with obviously scandalous results. While Gehlen was honestly worrying on the one hand about Nazi remnants and Communist infiltra- tors, his security operations, on the other hand, did give the impression of a widespread infiltration of police power, sometimes of ex-Nazi police power, throughout the West German government. Indeed some of the investigators looked as fearsome as the things they said they were investigating. There was alarm on many fronts, not the least among American occupa- tion agencies. In fear of its unwieldy offspring, EUCOM had asked CIC in 1949 to mount a similar security penetration of the West German government in order to test for rightist influences. The CIC effort was known as "Operation CAMPUS' and lasted until 1953 by which time it had become politically embarrassing and had to be closed down. CAMPUS worked through two German principal agents, Heinrich Schmitz and Richard Schweizer, who in turn had their own "special connec- tions" throughout the various Federal and Land security agencies. Schmitz also reported to Albert on his work SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET for CIC and both of them Shared many of the same informants. The operational situation was vastly complicated: it was never possible to plumb the total muddiness, but it became clear enough that in penetrating each other's offices, the Western investigators had allowed themselves to give a piggy- back ride to the Eastern investigators. while the Gehlen Organization was never officially listed as a target in CAMPUS' operational plan, it did become one as the by-product of the personal friendship - between Schmitz and Albert. Albert had hired Schmitz in early 1952 to report on CIC; he was later ordered - to drop Schmitz because his reports were not considered of value, but didn't because they were friends. When CAMPUS was closed out, Schmitz was loath to lose a \good job and kept pestering CIC for more work or more compensation. In the course of the post-CAMPUS connec- tion, Schmitz began to deliver reports on the Gehlen 'Organization to CIC from Albert. From the fall of 1953 and all through 1954 Albert had been voicing even more vehemently his dissatis- faction with certain of Gehlen's personnel policies. Part of this dissatisfaction was undoubtedly justified; part surely stemmed from an old rivalry between the CE/Cf base and the headquarters CE Staff. Albert and his chief at. GV"L" had a long standing feud with the then headquarters CE chief, Dr. Kohler, and when GV"L" members like Reile and Felfe "defected" to Dr. Kohler's staff, they too became personal targets. But even apart from the influence of the rivalry with Dr. Kohler, there had been numerous instances when Felfe's behavior, operational and personal, had incurred Alb is. rtic- ular wrath and even suspicion. Albert's o ctions were to the closeness of Felfe, Reile and certain of their friends in what he termed an "SD clique". He considered them "politically unreliable" and possibly dangerous, but his complaints fell on deaf ears with only few exceptions. In September 1954 Albert began to share his grievances with CIC via Schmitz, and over a period of about six months he spelled out in very precise terms his suspicions that Felfe, among others, was an "enemy". He told CIC that he considered Felfe responsible for the betrayal of one of his sources who was named in the December 1953 press expose on the SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 cV9 SECRET Gehlen Organization; he thought Felfe's behavior in investigating some of the recent flaps was "sus- pect" (presumably he had the Hoeher case in mind); he described in detail several incidents in which Felfe behaved with suspicious curiosity in matters of no concern.to him and he elaborated repeatedly on the extent to which the headquarters CE staff seemed to be an SD preserve with Felfe one of the ring leaders. Quoting Albert, Schmitz wrote: "With all due respect to General Gehlen, there is not enough resoluteness in taking the necessary security measures all of the suspicions against these people are known to head- quarters, but a removal of these people is only possible when proof can be presented which could stand up in court. Such a situation is impossible in an intelli- gence organization." If pent up animosity and frustration over Gehlen security practices were motives for Albert to begin reporting to Schmitz in September 1954, there was probably also a good operational reason for doing so. In June the KGB had successfully (for the moment) carried out another wrecking maneuver which had shown the Gehlen Organization that the whole CE/CI base: organization, personnel and some operations, had been revealed to them, and probably by an agent at the top of the CE roster (or at least by enough varied penetra- tions to produce a composite report of equally high- level appearance). Under a certain lamppost in the town of Ludwigsburg the KGB had caused the local police to discover a cache containing a microfilmed report on GV"L". This was dubbed the "Lilli Marlen case". The report was signed with the name "Artur" and clearly suggested that Artur was in GV"L". Gehlen analysts felt that only the chief of GV"L" or his deputy could have such a comprehensive view as was indicated in the report, yet the style in which it was written and certain incorrect nomenclature suggested that it might have been prepared by an outsider. Subsequent investi- gation showed this indeed to be the case. While one set of KGB agents had been dispatched to set up the SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET the cache and then to its discovery, another agent was being set up as a scapegoat. (1) Just a few days after the Lilli Marlen papers were discovered, one of Albert's agents, whose first name was Artur, was approached by a Soviet, agent. The Soviet agent tried to provoke Artur into coming to the East or, faili9pthat, to calling the local police and having him, the Soviet agent, arrested. Artur refused to rise to either provocation and thus spared the Gehlen Organization further scandal without the propaganda benefit which have hoped for in this operation, t reaping a substantial harvest of c within the Gehlen Organization. had to be dismantled and reorg the deputy chief of the new o was clear that the Lilli Ma deliberate Soviet expose was not necessarily the was equally clear that tial information fro base. Furthermore t e KGB might KGB succeeded in nfusion and distrust he whole CE/CI base ized. (Albert became ganization.) While it en operation had been a d that Albert's agent, Artur, oviet agent in this case, it. he KGB really did have substan- a source, or sources, on the CE/CI wished the Gehlen Organization to believe that the ource was in the base or closely connected with it. Why? The major question remained for a .long time. Undoubtedly this Was another maneuver in the 1,p�t of operations designed to discredit Gehlen. But, would the KGB deliberately provoke ) (2) But, even See Annex 7 note on Lilli Marlen for an excellent example of the spotting and development of a throw- away agent. One Soviet agent had placed the report in the deaddrop, another had been instructed to tell the Ludwigsburg police that he had accidently dis- covered it and a third had been sent, unwittingly, as a sacrifice to walk into the police stake-out and to be arrested while attempting to empty the dead drop. See Annex 8 note on Artur Weber. connection" report Defense Minis prior to a dou De in-law, L Gehlen to Ludwig Alb r on the Intelligence tion. Some years e Lilli Marl -Operation, Weber ha_d_been e agent, re ing on MGB targeting-6f the nse Minis - and it is believe - of his brother-- Col. Gerhard Wessel, en a higIll}ev-e---1 _Je Ministry. Weber y the Soviet in 1952. al NO SECRET Approved for Release: 2019/02/21 CO260632n Approved for Release: 2019/02/21 CO2606320 SECRET the reorganization of a major Gehlen base unless it had a "stay-behind" agent to report on the new organ- ization? Who were the KGB agents in GV"L" and its successor base? Would the KGB cause so much attention to be focused on that organization if it really did have good agents there? Might the KGB have had the intention (foiled for the moment) of trying to burn an old recalcitrant agent who was causing trouble (perhaps Albert)? Or, might this operation have been an attempt to deflect attention from a valuable agent who had moved elsewhere (perhaps Felfe)? Felfe was among those assigned to work on the investigation of the "Lilli Marlen case". Albert complained about this too. Schmitz told CIC that Albert thought "Felfe had something to do with the Ludwigsburg affair", but unfortunately he did not describe his suspicions. One of the Gehlen Organiza- tion security officials (Bernhardt) complained once in veiled terms to his CIA liaison contact that he found ,Felfe's behavior during those investigations frustrating and curiously obstructive. On the night of 13 July Albertis interrogators Jo thought they saw signs that he was ready to talk about something and warned the jailers to watch him carefully. Towat44Fning when their attention wandered, Albert himself - an action as baffling still for many people as on the day it happened. This suicide was taken by many others, however, as a confession of guilt. If Albert had been an SfS agent, that would explain many leaks in GV"L" and in particular satisfy the question about a highly placed GV"L" source for the Lilli Marlen papers. Clemens was worried that the case might lead to further exposes and endanger him. He asked Alfred if it was a Soviet operation. Alfred couldn't give him an immediate answer, but the next time he saw Clemens he told him that Albert had been neither a Soviet nor an East German agent. He suggested in an off-hand way that perhaps he had been a Polish agent. Felfe, who along with his chief Reile, had been detailed to do some of the cleaning up investigations of Albert's cases, also asked Alfred. Felfe says Alfred reacted in a non- committal way to his question which left him with the SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET impression that Albert had indeed been a Soviet agent. This still leaves us with a conundrum. As to the "single agent" upon whose word so many arrests had been made, Weinmann was released from prison after serving a somewhat reduced sentence for black marketeer- ing. He continued for another year to provide informa- tion on the SfS: some good, some obviously fabricated. Shortly after his release in November 1955 he was the object of some East German attention which looked very much like an attempt to confirm WeinMann's "bona fides": a very, much blown double agent allowed the Gehlen Organ- ization to come into possession of a letter addressed to Weinmann by Weinmann's SfS case officer. In it the SfS case officer expressed surprise that Weinmann had been released from prison po soon and concluded that he must have "conducted" himself well. A few months later Weinmann was contacted again, but this time it seemed to be a more securely managed contact and it was not clear whether the contact was meant to come to Western attention or not. At this time Weinmann was given instructions to "continue" giving infomation in the way he had been giving it, with a few specified exceptions. That Weinmann was a bona-fide SfS agent, there was no doubt, but whether the inspiration to finger certain bona fide SfS agents-and to name among their number Ludwig Albert was his own or the KGB's inspiration remains a question. Adhering to the latter theory are a number of people, who were members of CIC, CIA and the Gehlen Organization at the time) who felt strongly that Albert was framed; these in turn separate into those who believe he had not been a Soviet agent at all and those who believe he was. Unfortunately, the evidence that he was framed, or moreover that he was framed by the KGB in order to protect Felfe, or anyone else in Felfe's coterie, remains mostly circum- stantial. The possibility is certainly suggested by the events. As Albert had rightly predicted to Schmitz, bureau- cratic sloth and an absence of any form of documentary incrimination, saved Felfe. Felfe understood this too and was not panicked when, in belated consequence of Albert's accusations, he was subjected to a security review on charges of "SD and Eastern connections", In February 1956 Felfe was asked formally, "officer to SECRET Approved for Release: 2019/02/21 CO2606320 � Approved for Release: 2019/02/21 CO2606320 SECRET officer", to make a statement for the BND about his SD connections, and was severely reprimanded for having concealed them when he was first hired. Felfe still refused formally to admit SD membership and the results of the BND investigation remained "incoRclusive". Al- though the security file was to be kept up on him in a desultory fashion for the rest of his career, nothing 'much was to come from it alone. From time to time it bothered him. In March 1956 he indirectly probed one of his CIA liaison contacts, saying that he had heard �that Albert had asked Schmitz to investigate him. He said that while he had received a vote of confidence from Gehlen, he hoped that there wasn't anything derog- atory about him hidden away in some American file. (1) But, by the time the notion of starting a security investigation of him had really taken hold, he was already well on the way to becoming one of the more energetic and ',productive CE experts in the Gehlen Organization: his professional reputation was growing and'Felfe's corner was a disheartening place in which � to look for more treachery. (1) Alfred C. Pincock contact report, March 1956. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 3? SECRET III. (a) Felfe Settles In While all these storms were breaking, Felfe was carefully settling in to.:his,new_job. He had his first meeting with Alfred as a headquarters officer in the fall of 1954 - almost a year after his trans- fer. He reveals only very generally what they dis- cussed at this meeting: problems of access, his and Clemens'; and questions of how to hinder the legali- zation of the Gehlen Organization. He gives no further detail, but under these headings one assumes that the basic modus operandi and a certain number of specific cases must have been discussed. The basic operating plan was that Felfe should have one general meeting with his Soviet case officers each year. Communica- tions from him would be via Clemens as courier and via S/W letters to an East Berlin accommodation address. Communication from Alfred would be via Clemens or directly to Felfe via microdot. (Felfe and Clemens disagree in their testimony as to who was to receive and develop microdot. Clemens' statements seem more plausible, namely that it was Felfe who handled the microdot communications, retrieving and developing the film and sending to Clemens only those EEI which strictly pertained to him.) Training in the various techniques: S/W and microdot was given to Felfe in 1954 and in addition he was presented with a Minox. These technical innovations in the operation provided yet greater compartmentation between Felfe and Clemens and reflected the fact that Felfe was now seen as the senior of the two agents. From the fall of 1954 on Felfe photographed Gehlen registry cards on a regular basis for Alfred; also performed specific 'name checks for the KGB. Other file material he photographed on a more selective basis. As an example of his enormous sangfroid (or perhaps of the ease with which a spy can operate even in a highly com- partmented agency), Felfe says that he used to photo- graph file material for Alfred in his office, with a tripod, during the twenty minute interval between the official closing time of 5:00 p.m. and the beginning of overtime when special registration of one's presence in the building was required. He says he never photo- graphed after this hour, even if he worked late officially, SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET for fear of being controlled when leaving the building. When leaving the building he hid the film under his clothing next to his skin. Sometimes he handed the film directly to Clemens, sometimes he sent it to him by registered Mail. On other occasions he checked files out officially and took them with him when he had official business in Clemens' vicinity. Then he would photograph the material in Clemens' apartment, to which he had his own key. He was a keen amateur photographer (and in general a lover of gadgets) and later on built himself a darkroom in his weekend cottage where he could do some of his KGB work. What Felfe does not tell us about this 1954 meet- ing with Alfred was, however, probably infinitely more important. Within a very short time after his arrival in headquarters Felfe had been put in charge of a double agent through whom he was soon to make a reputation for himself as an authority on Soviet CE matters. This al.rtm was called the "LENA case" and was incontrovertibly the most important single contribution to Felfe's career as an intelligence officer. Felfe claims he never dis- cussed this case with Alfred, that it. was a "clean" BND operation. While he may, technically speaking, not have discussed it, there is very little doubt in anyone's mind-that it was anything but a Soviet Controlled opera- tion. This case gave Felfe maneuverability as a Soviet agent and status as a BND officer; it provided him with a channel to receive and to fulfill EEI; it broadened considerably his access both to collect and sometimes to disseminate information (misinformation). It fits the basic formula of the Balthasar case only with a much grander conception and much greater complexity. For the years 1954 to 1958 it moves like the shadow play of Felfe's real Soviet,career. LENA is the BND cover name for Guenther Hofe, an East German political functionary and publisher. Hofe was a member of the Central Committee of the NDPD (National Democratic Party of Germany - an ostensibly independent political party), director of its publishing house, "Verlag der Nation" and editor of the party organ, Nationale Zeitunq. He had a minor reputation as a politi- cal analyst, traveled frequently to West Germany and was SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET well received in certain West German socialist circles as an apparently independent, outspoken East German. Hofe's story to the END was that he had joined various Communist front groups in order to "bore from within"; that very soon after the war he decided for ideological reasons to volunteer his services to a Western intelli- gence service. Through an old Luftwaffe comrade in West Berlin he came into contact with the SDECE in 1948. The French ran him for several years as a political source and were apparently highly satisfied with him. By early 1953 it had become apparent that the ex-Luftwaffe comrade was sharing his services as a principal agent between the SDECE and the Gehlen Organization, and for a year . or so Hofe was in effect run jointly. In mid-1954 the case was officially transferred to the Gehlen Organiza- tion. Somewhat prior to the turnover, the Gehlen Organ- ization asked CIA to evaluate some of Hofe's intelligence product for them. Without naming the sol.irce. they pre- sented us with a copy of a study of the(FDP12>ritten by Hofe. CIA's branch for the study of international communism wrote an evaluation which said in part: "This study is a biased ol ection of overt and semi-overt knowledge of the NDP missing several essential points pertaining to the rganization, purpose and utilization of the Party by the.Soviets in Eastern Germany. ..the extensive use of members by the Soviet Intelligence for missions in west Germany is not mentioned," - a prophetic note, but easier to read with hindsight. (1) Despite this one negative evaluation, Hofe became highly regarded by the Gehlen Organization as a political source. Within five months of Felfe's transfer to headquarters, however, he abruptly became a CE case. Through the daltk Party Chairman he had been introduced in January 1954 to a Soviet Intelligence officer. After a flurry of meetings he was formally recruited in early March and immediately assigned the task of creating a net of agents to produce information on the West German Foreign Office, the Chancellor's Office and the Federal ( 1) STC/ICB memo transmitted to Pullach in EGL4 750, 9 April 1954. Sea. in ..i_ta,-Ann=tscff=> SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET Press Office. The plan was grandiose: Hofe was to be the "German net director", to recruit two principal agents and a sort of general political advisor and spotter, several support agents and to provide names of potential penetration agents. As a double-agent in contact with the Soviets, Whose activities were directly to affect West German official secur'tv, the LENA case now properly belonged to the CE of the Gehlen Organization. Felfe was made the headquarters case officer. He directed Hofe through a field case officer Whom he met regularly each time the field handler saw Hofe-. Felfe met Hofe officially only two or three times. There is no evidence that the field handler or any other Gehlen personnel besides Felfe who were connected with the LENA case were Soviet agents, although, since all analysis of this case insists that it was a KGB "set-up" from the beginning, one is strongly tempted to assume the presence of a helping hand in the Gehlen headquarters -GE�s-eG-t----i-ei . to ensure that Felfe would be made the responsible case officer. The highly suspect Reile was Felfe's immediate superior at this time; per- haps he helped steer the case - perhaps Felfe was simply told to go after it. Hofe was cast as the perfect agent: intelligent, cool, a daemonic worker ("needs only four hours, of sleep a night") with a phenomenal memory (he claimed to find it relaxing to memorize the license numbers and makes of the Soviet automobiles he saw in Karlshorst!). Felfe took great pains to point out Hofe's excellent personal qualities and to emphasize the indications in his re- porting that the Soviets also had a very high respect for him. In contrast to Hofe, however, the Soviet handlers seemed somewhat naive. Indeed all his Soviet case officers in succession had the shocking fault of being chatterboxes and through them Hofe was ostensibly able to pick up a great variety of information about other Soviet agents and operations in West Germany Which were unrelated to him. Furthermore, the KGB officers enjoyed talking politics to such an intelligent man and from these long conversations the END was now and then given an apparent glimpse into Soviet policy. (Certain deception themes will be pointed out later in this narrative.) Much of the information Hofe delivered to SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET the Gehlen Organization, which he supposedly picked up outside the framework of this Foreign Office pene- tration operation, was excellent. 5evera1 -bon-a fide �-Mg and MfS agents were identified for the BND in this manner; the KGB apparently had little compunction about throwing away the assets of its sister-services, although it did give away some of its own assets too. The license plate numbers, telephone numbers and addresses of KGB safehouses were all accurate; that is, there were traces from other cases on them. Un-. fortunately it was not completely clear in 1954 and 1955 that these other cases were blown cases of the KGB/CE section working against the Gehlen Organization and the other German seouritv services. Looking back on this fact one can say that it should have been dis- concerting to find so many traces from blown CE cases in a case which the KGB pretended was a political intelligence collection operation. Similarly dis- concerting was the fact that one of Hofe's case officers, Vladimir Shchukin, had been described to us in early - 1954 by Petr Deryabin as a former colleague working on West German security and intelligence agencies. Shchukin had in fact been one of the case officers in the Heinz - "Khlyust" - case. Deryabin described him as incompetent, one fact at least which seemed to be corroborated by Hofe.- In addition to their talkativeness, Shchukin and his colleagues were unusual and puzzling in another respect: they dealt with their agent under their full, true names. (1) They were thus readily checkable. /LA-173'11 (1) Note by way of co arison that neither Heinz Felfe nor George Blake 44,1p-..e ever given full names or true names of their Karlshorst KGB handlers. Blake knew the full names of his London-based handlers, however, so that he could check MI-6 records on them. Al- though in Germany the KGB case officers were opera- ting from protected territory, we cannot assume that they were disinterested in knowing what traces exist- ed on them in enemy files. Through Felfe they could of course feed names buried in lists to be traced through Gehlen and CIA files. The LENA case provided one very good means of running controlled and re- peated traces on certain Soviets without necessarily even le-qing Felfe know who was who, but presumably he coulOave been given lists directly for tracing, SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019762/21 CO2606320 SECRET Technical discrepancies a unded too: for ex'thnple the KGB gave Hofe a fal�West German identity docu- ment in August 1954 of that the said they were obliged to apologize and that un ortunate y were unable to produce anything better! On the surface Hofe's Soviet operation to penetrate Bonn seemed less spectacular than his BND operation to penetrate Karlshorst. The leads he gathered for the Soviets were numerous,but they often petered out. Many potential recruits were reported ' to the Soviets (the Gehlen Organization standing by to make a double recruitment in case the Soviets followed up), but only one real penetration was actually recruited, an ailing and incompetent gentle- man in the Press Office who contented himself with the product of waste baskets for his source material. It seemed incredible at the time that the KGB should go through so many motions just for this. And, indeed they did not. The KGB wat,497fact very interested in information on the ForeigAWal Chancellor's Offices: personnel rosters, table of organization, internal directories and other memoranda, compromising infor- mation on leading officials, but not through Hofe's .feeble net alone. These EEI were all given directly to Felfe by Alfred. He admits that at his 1955 and 1956 meetings with the KGB officer they discussed these targets. In addition Alfred asked him to iden- tify Gehlen informant's within the other government departments. Felfe denies that he was able to ful- fill Alfred's requirements; he claims he told Alfred he had no access to such information, but the fact is that the LENA case did his work for him - whether he "knew" it or not. (1) The singular and especial importance of Hofe's net was that it forced the Gehlen Organization to produce "build-up" material on the target agencies on (1) Felfe's insistent over-evaluation of Hofe's product to BND superiors, amounting sometimes to a distortion of the facts, plus his energetic work in collecting build-up material for the case suggest strongly that he did know what it was all about. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 x4role SECRET a systematic basis and ever been done before. duced to Soviet questi giving the impression the comprehensive nature of Hofe's targets and because of his detailed reporting (described by CIA officers as "more than necessary"), Hofe quickly became tagged as Gehlen's most important CE case.. Felfe begged for permission to pass appropriate build-up material to keep Hofe's faltering net alive: the theory was that one had to please the Soviets so that a source of importance both for West German security and possibly' for an eventual penetration of the KGB might remain viable. Felfe's principle problem was that at this time there was no provision for clearing build-up material in the German government. Felfe first tried to a great It caused s, while Soviets r extent than had answers to be pro- t the same time Because of to persuade various security officials in Bonn, then he went to a CIA liaison officer hoping that we would intervene in some way. Then he went to the Federal Attorney General and obtained a statement from him to' the effect that any material already demonstrably known to the opposition was automatically no longer secret. By extension, that which was no longer secret could be passed to the opposition as build-up material. Finally, Gehlen himself briefed Adenauer and the State Secretary of the Federal Chancellery, Dr. Hans Globke, on the case and obtained Globke's agreement in the matter: specifically in the first instance to pass personnel information on the Foreign Office to the Soviets. (1) Thus armed, Felfe was able to maneuver (1) PULL-7867, 29 April 1954. Here is a quote from remarks about Felfe's technique written by the CIA liaison officer for sectirity matters to the Gehlen OrgliWtion: Felfe "very cleverly played the Obe sanwalt (Federal Attorney General) against his own superiors. He obtained access to the Chancellor's office through Gehlen's own access. Then he used /the Chancellery/ approval of his wishes to insure the approval of Gehlen. Along the way he made references to the uncooperative attitude of various other officials, including the BfV and security officers in the Foreign Office. All in all, he made fools out of everybody in the name of the security of the Federal Republic, when the entire case was obviously designed to gain access to all appropriate offices for Felfe and to build him up...". (EGMA-58737, 10 May'1962.) SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET an an amazing variety of information "legally" into Soviet hands. All that Hofe's Soviet case officer had to do was to declare that certain areas of infor- mation were already known or already "covered" by them, and then Felfe could argue the v4tue of pro- viding that information to Hofe as build-up or to satisfy presumed KGB cross-checking on Hofe or as a way of trying to smoke out the presumed Soviet source. Any number of Soviet targets could be traced in Bonn and in BND files simply by working them into Hofe's EEI in some way. There are many examples in Hofe's reporting of persons or subjects of Soviet interest who flash into the limelight for a moment - perhaps long enough to be checked out in Western files? - and then disappear from the LENA case with the Soviet case officer's remark that he is no longer interested. (1) To make this exercise more thorough ,Felfe even- tually managed to get permission t examine he per- sonnel known to be under study by the oviets, who were seeking information on vulnerabilities for re- cruitment attempts. Even more brash is the incident when Felfe asked a CIA liaison officer if1CIA could provide leads2 from lists of dropped agentUX6inight be employed at aQrelatively high level in different Bonn ministrierillahom he could then recruit and "feed" to the KGB via Hofel Felfe discovered during the course of the LENA operation that CIA could be useful ,411.0,;7 ? (1) An interesting maneuver which permitted Felfe to check Hofe was made possible when Hofe expressed concern to his Soviet case officer about operating in the Federal Republic as a Soviet agent and about the danger that the BfV might get on his trail. The Soviet case officer told Hofe to have no fear; the BfV had only two files on him and they contained only routine information on Hofe's party activities. When Felfe got this information from Hofe he checked the BfV on an appropriate pretext and found that their files were exactly as described by the Soviet case officer. This was proof, Felfe said, that the BfV was penetrated. This event was cited rather widely by Gehlen, Felfe and other BND officers to their American colleagues and presumably to other elements of the German government, which exacerbated the already existing friction between the BfV and the BND. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET to him in more than one way. In this operation as in many subsequent ones, it was of enormous value as a kind of super-liaison, since the various German services would sometimes tell their foreign confidante more than they would tell each other. 40-len Hofe's KGB officer wanted him to recruit a laborer working on the new Chancellery office building in 1955 so that a transmitter might be buried in it, Felfe came to CIA with the complaint that there were at least, seven different German agencies to which a workman might report a recruitment approach and that his Organization could be sure of hearing automatically from only two of them. He feared that if he did not have timely warning of such an approach he might lose the opportunity to double the worker securely: would we please monitor the situation for him? Typically for the LENA cases nothing came of this plan to recruit a workman and to plant an audio device (a communications operation makes a poor subject for doubling). Possibly we were supposed to believe that the Soviets had not - yet succeeded in penetrating the Chancel ery a cally. .441 P7Much a case, while dazzling for a while, produced many questions and suspicions in the minds of analysts in both the Gehlen Organization and CIA. The unnatural talkativeness. of the KGB case officers, the endless and inconclusive backing and filling in the setting up of his net, the lack of Gehlen control (Hofe came and went at his own initiative, and always in a hurry, to the West Berlin home of his old Luftwaffe friend where he simply recorded what he wanted to say on tape and left); all these features were puzzling even while the case was new. One colleague of Felfe's, Dr. (alias) Herder, was puzzled enough to write a review of the case in late 1955. He decided it was a fraud, but he was not yet quite certain why. Felfe's CIA contact felt the same way: there seemed to exist the possi- bility of a deception, but the obvious take for the Soviets did not appear to pay for output in terms of good leads given to the West. There was no internal logic to the case. This of course was the correct conclusion. There was no internal reason for running the case as a deception, but there was a very good SECRE'T Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET "externaluone: Felfe, whose benefits far outweighed the loss of any information to the West from the LENA operation. These stirrings of suspicion about the LENA case consitutedthe second obvious major danger signal - after Albert's denunciations to Felfe. The LENA case would have to alter its course. Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET IV. KGB Work in West Germany as a Sovereign Country: Felfe Broadens His Scope. The year 1955 marks a major change in KGB opera- tional policy in West Germany. The post-war period was over and West Germany had become a sovereign nation. On 12 July 1955 the Gehlen Organization became the Federal Intelligence Service (Bundesnachrichtendienst - END), a dependency of the Chancellor's Office, the legal foreign intelligence collection agency of the Federal. RepubliC of. Germany. Formal CIA trusteeship ended six months later; the END was considerably reorganized and CIA left in the dark to be a "normal" liaison partner. n September 1955 formal diplomatic relations were established with the USSR; a Soviet Embassy and Trade Delegation were opened in Bonn. To meet the new situa- tion new un,its,were created in the END and BfV for the penetration of the Soviet installations. CIA 'bases in Frankfurt and Bonn also turned their efforts on these targets and in doing so found the need, and the obliga- tion, to operate closely - but as liaison equals - with the newly independent German agencies. In Berlin, CIA's operations base redoubled its efforts against the Soviet "extra-territorial" headquarters - Embassy, Trade Dele- gation, KGB and GRU - in East Berlin, producing in the process a farly comprehensive body of documentary and biographic material, which, along with the CIA German Station's library of CE case histories, became widely used for crosschecking new information as well as for trading purposes in the new liaison relationships. For the KGB, the END was no longer a target for possible destruction; far more,now,it was an object to be manipulated. The opportunity to replace Gehlen had been lost, but he could still be embarrassed. It was no longer possible to make use of his complicated jockeying with political rivals, but he et+++-4,ad certain political dreams which could be played upon. The fundamental theme of Soviet policy in Germany, now stronger than ever, was neutralization, and as West Germany's economic and military status increased the KGB moved correspondingly to support its own govern- ment not simply with the collection of information or SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 broaden his access. Alfred's factual EEI for the 4,40-4 period 1956-59 reflect the need for detailed organiza- U tional and personnel information on the BND and its liaison partners: the internal security service, BfV, the military security service, MAD, the Foreign Ministry, Chancellor's Office and, primarily among the Americans, CIA. Alfred's purpose was primarily protective: of ' Soviet installations in Bonn and East Berlin and of the operations run from them. USSR internal security require- ments were reflected too in requests for Felfe to develop infoi-mation on the END section running penetrations into the Soviet Union and to outline Foreign Office security procedures for the German Embassy in Moscow. In general Pelfe and Clemens were expected to warn the Soviets of any projected operation against them; they were also given specific names to check and on occasion asked to try to recruit certain people. (Both men deny having carried Out any recruiLwent attempts and both say that they withheld from Alfred a certain number of their own cases on the theory that they would be able to behave more naturally in running them and also in the event of a flap.) with a better bureaucratic position and the allure Of being an "expert" Felfe had considerably more maneuver- ability in his own right after 1956. In addition he was enterprising and his talent for elicitation was phenomenal. He made a practice of winning a personal contact in every important Federal and Land Security Office: more than one security official has ruefully admitted that he used to brief Felfe regularly and informally on his cases in order to get the expert's opinion. And where he could SECRET SECRET the parrying of its enemy's operations but by mounting a number of "influence" or "inspirational" operations, some of which filtered through Felfe's fingers. With the help of the LENA case - and in spite of its potential dangers and the distrust of Dr. @ Herder Felfe had established himself in the headquarters organi- zation fairly solidly by 1955 as the most energetic, aggressive case officer working on the Soviet intelli- gence target. In late 1956 or early 1957 he succeeded / Rene as deputN,ch.ef (in practice the real chief) of / l/s the Soviet CE jand his work for the next few / years on behalf of the Soviets was essentially to ) Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET not develop an already existing contact he would try to insert one in the guise of a "special connection". (1) Whenever Felfe had to visit another government agency on BND business he would look up other contacts in the area just to keep Up with what was going-on. After a while he devised the practice of taking along a tape recorder so that he could cover more ground efficiently. Soon BND colleagues found this a handy way of having him take care of some of their liaison for them and he was eventually relaying questions and answers on various matters concerning Soviet, Satellite and KPD operations of the END and BfV which otherwise were not of official concern to him. From the END's own damage assessment we have the characterization of Felfe during this period as "shamelessly curious". Clemens in the meantime had been transferred to Cologne to work in one of the new units targeted against (1) An interesting example of this kind of maneuver by Felfe involves a man named Max Klemm, a former SS officer and late returner from Soviet PW camp. Felfe was instrumental in having Klemm taken on as an agent by-the BND and in having him get a job in the Office of the Federal Chancellor. Felfe argued that such a person as Klemm on the Chancellor's payroll would probably attract a Soviet recruitment attempt. The BND (Felfe) could then monitor the operation for "security purposes"! Somehow Felfe succeeded in selling this idea to his superiors, but there was never any sign of a Soviet approach. (Whether this reflects a failure of detection on our part or a failure to act on the part of the KGB is an interest- ing speculation.) In any case Felfe succeeded in achieving for a while a personal penetration in the Office of the Federal Chancellor. Later Klemm be- came the I3ND liaison officer to the Security Group (SG), the unit responsible for security of high governmental officials and the executive action arm of the Office of the Federal Chancellor. (EGMA-55905, 21 August 1961.) SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET the Soviets in Bonn. His unit was designed to pene- trate (primarily by audio installation) the Soviet Trade Delegation and worked in tandem with a corres- ponding unit directed by the BfV against the Soviet Embassy, Felfe was later - in 1959 - to be assigned to the headquarters supervision of these penetration programs, but in the interim he could learn much from Clemens, and in any case as a CE staff officer had the right to review certain relevant cases from time to time. The END has commented that during the period 1956-59 the unit working against the Soviet Trade Delegation uncovered no genuine intelligence activity on the part of a Soviet in the Trade Delegation which would have allowed the BND to work up a pr-I-e-tration operation, something which the corresponding BfV unit was able to__accomplish many_times.m As usual the LENA case had sOmething to offer on this subject. iri_niDc- ember 1955 Felfe reported to CIA officers that Kole.-g Soviet case officer had claimed that there would be no intelligence officers among the first 45 Soviets assigned to the new Embassy in Bonn because there had already been too many Soviet Intelligence em- barrassments. Felfe said he thought this remark indicated that the SoViets were waiting to see what the Western security services were going to do. Actually, independent traces showed that there were indeed Soviet Intelligence officers in the first Embassy contingent to Bonn. The LENA case was also helping to break ground on liaison with the Americans for operations against Soviet installations in East Berlin. The Berlin Operations Base, which handled these operations, still enjoyed the possibility of working unilaterally. The BND naturally wanted badly to have its share of sources in Karlshorst, the seat of KGB headquarters in Germany, and Felfe strove with a variety of ploys to further both the END's and the KGB's cause. In September 1956 Felfe and Reile visited the United States, and CIA Headquarters, as members of a END CE orientation group. During this visit Felfe gave a talk on the LENA case describing it as clean, one of the best operations the BND had and practically a penetration of the KGB itself. The LENA case had at this time begun to produce SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 S 1-;; C R sizeable amounts of information on KGB real estate in Karlshorst - safe house addresses, license-plate numbers, telephone numbers, etc. - and. in June 1956 the BOB Soviet operations chief had discussed the case with Felfe offering full support in evaluating and checking out LENAls information. Felfe agreed to supply ,the positive operational detail ob- tained by R-IgqZ through normal 3ND-CIA channels and he also offered off-the-record to pass whatever sensitive information he received affecting West German security if we would agree to be very discreet. We responded with alacrity, Not only did we wish to keep our foot in the door now that the newly legalized BND was so often eager to dispense with us, we hoped that through this case we could try to defect the apparently clumsy and unprofessional case officer, Shchukin. Even more important was the necessity to have as many sources as possible within Soviet con- trolled territory such as Karlshorst who could give us "early warning" information on any major Soviet retreat or redispositlon in East Germany. (The Soviets �q1q1cd their goodwill in this respect by letting n'..0.E.p give us a whoie twenty-four hour adver- tisement of the East German-USSR Troop Agreements, and again by giving as some spurious indications of alleged Soviet withdrawals from the Karlshorst Com- pound in 1957.) The by-product of this cooperation was to indicate more or less unavoidably that CIA had a certain coverage of the Karlshorst Compound. A similar process was repeated In another operation which had been run by the 3ND against the Soviet Trade Delegation Polyclinic in Karlshorst and which produced an enormous quantity of personality infor- mation on the Trade Delegation and on some intelli- gence officers under Trade cover. In later 1956 BOB offered full support to this operation, which was eventually to follow- the almost classic pattern of suddenly turning into a CE case and being put into Felfels hands. (1) In 1958 Felfe began a concerted campaign to collect detailed information from CIA on its Karls- horst penetration program. To this end he engineered a series of crises in CIA-BND relationships which (1) UJDRILY. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SE C RET resulted in his being briefed by CIA on the status of its effort. The first of these briefings occured in May 1958. In October 1958 Felfe tried unofficially to get another with the chief of BOB without END approval but was turned down. A second official briefing followed in February 1959 and a third in July 1959. At this point a mechanism was created for close, continued official END-CIA cooperation against Karlshorst A END case officer was placed in the Berlin Compound and worked closely with BOB liaison officers. This was an important and delicate step since the END representative had to be documented as a U.S. Berlin Command employee, supplied with an automoblle with U.S. Forces license plates and other American Army support facilities. Felfe in turn be- came the END headquarters' supervisor for the now official END Karlshorst penetration program and the immediate supervisor of the END case officer in the Berlin Command compound. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET IV. (a) Source Protection and Tactical Deception By late 1959 Felfe was officially responsible for the headquarters supervision of nearly all END opera- tions against the Soviets in Germany. The KGB could well congratulate itself. At the same time it had to be willing and nimble enough to counter the Western efforts on a broad scale without endangering its source. At a meeting with Alfred in Berlin in Decem- ber 1959, Felfe discussed the CIA operations against Karlshorst. He said he had been making some headway in discovering what the Americans were up to, but as yet they were not revealing their sources to him. Alfred proposed that he "help" the Americans by sending some sources for them to recruit, but Felfe claims he tried to discourage this. Some cases of planted recruits were of course uncovered by CIA, but not through Felfe's admissions, so we are unable to offer proof that they were manipulated in direct support of Felfe. (1) In mid-1957 Felfe had discovered through traces on some of the KGB safehouses in the LENA case, that BOB had an excellent source in the Karlshorst Housing Administration. (A source in this spot was able to provide con- siderable "order of battle" information on a variety of Soviet agencies, including the intelli- gence services, through regular monthly reporting on Soviet billeting assignments.) This source had been one of BOB's major Karlshorst assets for some years. In 1959 after the BND-CIA cooperation against Karlshorst was institution- alized, one of Felfe's colleagues succeeded in recruiting this source's-co-worker in the Housing Administration., Her name had of course become evident to the BND in the process. After this, we began to note that our source's access to information was slowly diminishing. What had happened - w presume - was that she had been identified d the KGB, but the latter, had deter- mined. to 1 ave her alone in order to protect their souree (F lfe) and to allow the END equity in SECRET Approved for Release: 2019/02/21 002606320 Approved for Release: 2019/02/21 CO2606320 eig SECRET Karlshorst to grow. Her activities were closely monitored, however; MfS surveillants watched her come to West Berlin for meetings with her CIA case officers4 although she was eventually allowed to rfuee to West Germany. Shortly after she refugeed, her colleague, the BND recruit, received an anonymous warning letter and fled to West Berlin. Thus the Housing Administration was purged. (2) In other cases we have been able to determine that within a certain period of time ranging from two to nine months after an agent or prospective recruit had been identified to Felfe, the agent was either arrested, or simply disappeared from sight, or lost access to our target. In one case Where CIA penetration of another East Berlin housing unit was obviously suspected by the KGB, Felfe very boldly provoked the revelation of our agent by trying to recruit one of his colleagues. He placed an ad Pi( in the Nest Berlin newspapers designed to attract secretarial help from the East Sector. Our agent's secretary answered it (at KGB behest) and Felfe announced to us that he intended to recruit her as a BND Karlshorst source. We were then forced to tell him that we already employed her chief and begged him to stop his approach since it might endanger our agent - who already covered the target in any case. Shortly after this the Wall of 13 August 1961 put a stop to many of these operations, and those of our agents who were able to remain in correspondence with us (including the one Whose secretary Felfe targeted) soon showed definite signs of hostile control. While the Wall made KGB CI work in Berlin consider- ably easier, it did nothing for the Soviet diplomatic and trade installations in West Germany. In the West the problems of negating German and American CE work without revealing the existence of a major leak were more difficult. Paradoxicallyi Felfe himself had been largely responsible for promoting an operation SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET to tap Soviet Embassy telephones in Bonn. The KGB regarded this situation in a fairly relaxed manner, however. Felfe kept them supplied with information from the transcripts and the operation was allowed to continue for several years. (1) Presumably it gave the KGB a good security check on the Embassy employees as well as a convenient deception channel; and, of course, they knew precisely Which Soviet offices were not tapped and, therefore, safe. The Kirpichev case, described below, contains examples of the deliberate use, as well as of the careful avoidance, of tapped wires for operational purposes. For different, and obvious reasons, the KGB was also quite sanguine about the joint END-CIA audio opera- tion against the New- China News Agency. Felfe re- potted to the KGB on this operation and it remained moderately successful from our point of view. But, while the KGB seems to have been willing to allow us a passive coverage of their official installations through telephone taps, they were somewhat more energetic in trying to counter audio operations against individuals and in frustrating Western agent operations mounted on the basis of the audio product. By procrastinating bureaucratically Felfe could foil many a plan. If not, then the audio equipment would often fail technically for some unexplained reason, although in no given case could the failure be positively ascribed to anything but accident. In other cases the target of the audio operation would suddenly be moved to .another billet at the last minute after the audio installation had been com- pleted and an employee of no great interest to us would be assigned to the wired apartment in his stead. In some cases, however, the defensive ploys had to be more complicated and sometimes they did not always succeed. Two of the best known examples concerned the Soviet �Intelligence officers, Kirpichev and Pripoltsev. (1) AELADLE reports that he learned in 1959 or 1960 that the KGB had many reports on the monitoring of Soviet conversations in Soviet installations in West Germany. He conjectured at the time that these must have come from a KGB agent connected with END audio operations. (LZ 63, 19 March 1962.) SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 57 SECRET Dmitriy ivanovich Kirpichev was a KGB/Emigre operations officer assigned to west Germany under cover of the Soviet Freight and Transport Office (SOVAG) in Hamburg. Kirpichev had been in contact with a Soviet emigre residing in West Germany, who in turn was reporting on his contact to the BfV. Kirpichev had been under surveillance by the BfV in an effort to establish some legally incriminating material which might serve as the basis for an arrest. Felfe says he learned of this case and of a plan to arrest Kirpichev at a routine BND-BfV conference sometime in the first half of February 1961. On 11 February he had a meeting with Alfred in Berlin at which time he informed the KGB about the Kirpichev case. Alfred then asked Felfe (according to Felfe) if he thought it would endanger Felfe if the Soviets "undertook something" to protect Kirpichev. Felfe says he replied in the negative, aslong as the Soviet counter-operation were carried out "with the necessary finesse. He even suggested the idea of having Kirpichev pretend to fall sick while on a trip to Berlin. Immediately after this, on 16 February, Felfe had a conference with the BfV referent for work on the Soviet Embassy. From him he learned the details of Kirpichev's emig-e operation including the emigre's KGB covername, Kritik. Subsequently Felfe reported to Alfred in secret writing that the arrest was to take place soon. At the moment he knew definitely that the SG planned to interrogate Kritik formally on 21 February for the purpose of preparing the legal basis for the subsequent arrest of Kirpichev in Hamburg. He may or may not have been aware that the arrest was definitely planned for the 23rd. On the afternoon of 21 February Kirpichev left Hamburg and traveled to Bonn where he spent the night in a hotel near the Soviet Embassy. Meanwhile official telephone conversations conducted among various Soviet offices indicated that Kirpichev was about to depart on a business trip to Berlin, but would return to Hamburg on the 23rd of February. The END tappi-a operation on the Trade Mission pro- duced this information, as the KGB knew it would,- and SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET Felfe sent it on to the BfV. Kirpichev proceeded to Berlin on the 22nd. The 23rd came and went with no arrest. A few days later Kirpichev's wife in Hamburg made some explanatory remarks on the SOVAG premises where a BND agent was employed. Presumably this agent was known to the KGB; in any case Kirpi- cheva took care that he overheard her saying that her husband was severely ill in Berlin. Two more days passed and the BND agent in SOVAG was able to report the receipt by that agency of an official announcement from Berlin that Kirpichev had been stricken by an inflamed appendix and confined to a Berlin 'hospital. Felfe sent this report to the BfV in a routine manner. On the 16th of March this report was "confirmed" in a telephone call between the Soviet Embassy in East Berlin and the Soviet Trade Mission in Cologne. Now all that remained for the KGB to do was to give the BfV and the BND a specific reason on which to pin the failure of the Kirpichev operation which at the same time might head off any potentially dangerous general inquiry. Kirpichevalet the BND source in SOVAG hear her remark that she had been under surveillance in Hamburg by an unknown person. Meanwhile the BfV's double-agent, Kritik, received a conspiratorial message from Kirpichev warning him that they had been under surveillance during their last meeting and that Kirpichev had fled. otest Germany for security reasons. Felfe informed the BfV of the SOVAG penetration agent's report; the BfV sent him the item about. Kirpichev's message to Kritik and it seemed as though the operators had only themselves to blame for everything. Although Felfe tried to give the impression that he did not give this operation away in the first place, he was obviously interested in seeing it work out well for the KGB. According to Clemens, Felfe asked him some time in 1961 to ask Alfred "if everything worked out and Kirpichev got out alright." Clemens said Alfred answered in the affirmative. An interesting side light on the modus operandi in this case is that in its earlier stages (before Felfe had reported to the KGB that Kritik was a double-agent), the KGB provided Kritik with an SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET emergency contact in the Press Section of the Soviet Embassy. The significance of this is that the Press Section was housed in a separate building from the rest of the Embassy and the KGB knew, through Felfe, that it was not tapped, unlike the offices of Kritik's regular case officer Not so successful was the Pripoltsev case. Valentin Aleksandrovich Pripoltsev was an engineer assigned to the Soviet Trade Mission in Cologne. The BfV had uncovered Pripoltsev's role as case officer in three cases which they were monitoring. Felfe learned of this first in May 1961 at a routine interagency conference. In July at a second con- ference he learned that the BfV was thinking of making an arrest. The date of the planned arrest was, however, a closely guarded secret. Felfe learned it on 24 August, only two days in advance of .the arrest date. The result was that he was unable to warn Alfred in time. Pripoltsev was arrested and sentenced to four years in prison on charges of espionage. Felfe in turn received a reprimand from the KGB. (This event became another cause for the KGB's subsequent insistence on a faster communications system through the use of an Illegal.) Felfe made some sort of effort, how- ever. As soon as he heard of the date for the arrest he sent a telex to the Cologne office of the END suggesting, on his own initiative, that they have a Russian linguist standing by. In doing this he used a cryptographic reference in a strange way which revealed the name of the Soviet to be arrested. The END subsequently surmised that Felfe could have done this to alert Clemens or simply to extend the range of knowledge of the planned arrest in order to cover himself in the event that Pripolt- sev disappeared before his arrest. Other variations on the successful rescue are illustrated in the Kropotov case. Oleg Sergeyevich Kropotov was a member of the Soviet Trade Mission in Cologne. Through intercepts the BND had decided that a 4est German who: was in contact with him was conclusively guilty of treason and in early 1961 had turned the case over to the BfV. In July 1961 Felfe SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 ECRET reported to his headquarters that he had heard that the BfV had changed their minds about Kropotov's contact: they had investigated him, had decided he was loyal and that Kropotov in fact was "destern oriented". Felfe now proposed that the BND should control the case after all, and that they should consider the possibility of defecting Kropotov. By this sleight of hand Felfe. got the case turned back to the END, while in actuality the BfV had been planning to force Kropotov's departure from the Federal Republic. Another operation, known as the Sokolov case, demonstrates Felfe's usefulness in matters of Soviet internal security. During 1959 and 1960, in the course of investigating an insecure RU officer, Felfe and Alfred managed to direct a series of provocations in such a manner as to involve nearly every German and American Intelligence Service in West Germany together in one anti-Soviet case, thus giving the KGB a remarkable insight into the liaison practices of the Western agencies. This case is treated in some detail in, Annex 9i because it is another excellent example of operational deception very intricate, well timed deception complete with apparent confirmations and cross-checks of informa- tion and real sacrifices of agents and equipment. The. primary goal of the KGB in this affair was to investigate and entrap Sokolov, an insecure and possibly treasonous RU officer who had been operat- ing for some years against U.S. air bases in West Germany. In this respect the case can also be read for an illustration Of the KGB mission to investigate the operational security of its military intelligence colleagues. By creating, or elaborating upon, various double agent operations involving Sokolov the KGB was instrumental in provoking operational interest in him and his West German agent net on the part of thc2, EfV, two LfV's, the END and CIA (on its own and in7Capacity as liaison representative for CIC and OS Y interests). By inserting into BND spotting channels an agent who claimed to be Sokolov's mistress as well as his agent and who hinted that he might be defectable, the KGB put the BND in a position to inspire the creation of, and then to monitor, a joint SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET task force consisting-of representatives of all the interested services. For six months the German and American representatives operated in close, daily liaison to prepare the hoped-for defection of Sokolov and capture of his West German agents. This consti- tuted a bureaucratic tour de force which put Felfe �at the center of what was virtually a sort of central clearance mechanism for the handling of ets case. (To judge from the general- satisfaction reflected in the files about the success of this coordination, one cannot exclude the possibility that it might have set a precedent-. To speculate that it would have, or that the KGB's planning in this case incorporated this hope is useless; however, there is no doubt that a continuing allied system of this sort for anti- Soviet double agent cases - with Felfe in a monitor- ing position - would have satisfied the KGB enormously. In this respect it might also be borne in mind that General Gribanov had been stressing the need, in his briefing of Soviet and Satellite CI personnel in late 1958 and early 1959, to emphasize the collection of information and documentation on "coordination" among the Western services which could be exploited propagandistically against them. (1) In the course of the Sokolov operation each participant had considerable opportunity to learn about the other's bureaucratic and operational methods, and considerable amounts of background information were exchanged. CIA as usual was the most prolific with traces and organizational information on the Soviet Intelligence Services. Felfe's role through- out was unusually passive (his colleagues remarked later on his atypical behavior), although he did try during a certain period to persuade his colleagues to try to "recruit" Sokolov rather than to defect him. Indeed, as the BND significantly remarked after his arrest, his principle role was just to sit back and let himself be briefed by all sides. When it came time to begin the executive action phase of the operationjthe roll up of Sokolov's net went very (1) BEVISION, 5 April 1959. Comments on "Aktion". SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 'SECRET well: five agents were arrested, many more suspects identified, considerable espionage gear including one of the newest Soviet W/T sets was captured. Not so successful, however, were the efforts to defect Sokolov. This was not in the KGB interest and each time we tried to move closer to him he would be "in the hospital" or otherwise out of reach. The KGB had completed its basic requirement when it allowed the west Germans to arrest, along with Sokolov's other agents, the woman who purported to be his mis- tress. (Despite her willingness in helping her Western handlers to try to defect Sokolov, she failed ultimately to convince them of her bona fides.) Her testimony described Sokolov's insecure behavior and his "Western tendencies". Felfe states that he sent a copy of her testimony (or excerpts therefrom) to Alfred and one assumes that from there it found its way to the Soviet military prosecutor. Clemens - always a little slower than Felfe - was shocked that Alfred had let this agent be arrested by the West Germans, indeed had deliberately let her .walk into a trap. Alfred's reply to him was to shrug and say "this had nothing to do with my office" and "Sokolov will certainly be arrested." Felfe admitted that he had observed this case with some glee and was amused to deliver derogatory information to the KGB about the RU officer. He received a bonus from the KGB of 140w00 DM for his efforts. His nest German prosecutors Thought it was strange that he should receive a bonus in a case which had actually been a "failure" for the Soviets, e.g. five RU agents arrested. Felfe may have found this amusing too since he merely replied that he had been compensated for hard work despite the "losses" suffered. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET IV. (b) Su_pport of Soviet Policy and Political Deception ghile Felfe could serve admirably as watchdog for KGB assets in Germany, Soviet needs on a somewhat broader level after 1955 had also created for him a private role on the political scene, which in some ways might have provided Felfe an even greater sense of excitement and importance than did his bureaucratic omniscience. LENA - as ever - provides a clue. During the period of legalization and reorganization in the BND, the LENA case had been dormant, possibly sleeping off Dr. @ Herder's probing criticisms. In mid-1956 it suddenly awoke, but this tim the guise of a political case. Shchukin told to forget tempor- arily about his net to penetrate the Foreign Office and to concentrate on investigating the existence of a possible neutralist faction in vest Germany. Shchukin said that the Soviets were doing everything in their power to establish a. neutralist party which would make some dent in the 1957 vote for Adenauer. (when election time came, however, he admitted that the Soviets did not have this capability: he said they had no assets for starting a political party!) Soviet interest in Hofe's task waxed and waned several times during the year between the summer of 1956 and the summer of 1957, but as tension began to grow in the Kest about the imminent unveiling of a Soviet ICBM and o4ver the 4c0� recent East German troop agreements, t,wm-p's case officer spoke more urgently of the neutralist assign- ment. In the summer of 1957 Wfe came to a CIA officer with a report from Ii4f4 which he sail, e con- sidered very significant: the KGB wanted 1Za4.e to find out if there did indeed exist in the west German govern- ment a faction advocating closer rapport with the East German government and with the USSR. Nothing very much came of this item of "intelligence". It was not treated significantly for a variety of reasons, not the least of which had to do with CIA's increasing bafflement with the LENA case as a whole and increasing speculation that it might be a deception. As an indication of KGB operationaj,lintent, however, it is interesting. After this, f-4! returned briefly to work on the Bonn SECRET Approved for Release: 2019/02/21 002606320 Approved for Release: 2019/02/21 CO2606320 S E C R. E T penetration project, but in early 1958 was told definitely by the KGB to ease out of it and to devote himself entirely to political reporting. Simultaneously Felfe was involved in another KGB attempt to support its government's policy. The Rapacki proposals for a nuclear free Central Europe had come to naught with the successful passage by the Bundestag in March 1958 of a resolution favor- ing nuclear armaments in Nest Germany. Nevertheless, Soviet clandestine feelers for some kind of rapproche- ment were still out. 4e can see a small example in one of Felfe's operations. Ever since the early 1950's the Soviets had been interested in ex-4ehrmacht officer, former chief of the military planning section of the Military Security Office (Blankamt), Boguslav von Bonin. Von Bonin was a well-spoken, and out-spoken, neutralist, with excellent social connections, strong idealism and rather little political acumen. In 1955 von Bonin was dismissed from the Defense Ministry for publicly propounding his views. At the same time the KGB, through Colonel-General Aleksandr Pavlovich Tarasov, Chief of Staff of the Soviet Forces in Germany, invited him to discuss the German problem in East Berlin. He went, was delighted with General Tarasov, left him his notes on his thoughts, but violently repudiated a direct recruitment pitch from a KGB representative Gehlen, who had been in touch with von Bonin on and off for several years, backed him in his trip to Berlin. Allhough he realized von Bonin's basic political naivety, he had hoped to use him in some way to further an old personal dream; that he could somehow be instrumental in bringing about a rapprochement if not a reunification of his country through a personal channel to the other side. Felfe was Gehlen's personal representative with von Bonin (1) (1) Felfe stated to his American interrogators that he thought the von Bonin case was a good example of a Soviet "political operation run by CE methods." He added his opinion that the Soviets in running this type of operation against the 2ND were under the impression that the BND played quite a different role in the German political scene than it actually does play. S E C iF E T Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 69' SECRET In the fall of 1958. the von Bonin case was raised again from the Soviet side. In that year Felfe had three important meetings with the KGB. The first in Berlin was with Alfred and wad' designed primarily to introduce a faster communication system by means of OgVL. Through the new radio system Felfe was summoned to Vienna in September 1958 to meet a new and imposing person introduced simply as "the director". The following month he met the director again in 'Berlin. Felfe will not tell us in detail or in any kind of organized fashion about these meetings, but he does convey that the basic opera- tional reason for them was to discuss von Bonin. Felfe says the director asked his advice about what to do with this case; if Felfe thought it would be advisable for the Soviets to extend another invita- tion for talks to von Bonin. These meetings seem to have made a great impression on Felfe. He speaks of the director almost with reverence. Certainly this man appealed to Felfe intellectually, and he obviously cultivated Felfe's not insignificant ego. Felfe told. Clemens when he returned from the Berlin meeting that he and the director had talked at length of many "deep and important" things. To his interro- gators, Felfe presented the topic of the director's talk as though it were a kind of situation or policy statement. Actually we ought also under the circum- stances to consider it in terms of a kind of propa- ganda outline. The director began with a discussion of historical Russian respect for Germany. He said that Soviets realized the impossibility of making 4est Germany into a communist country, but that this was all the more reason why everyone should try to see agreement, to find some\ guarantee of peace. The Soviets were disappointed, he said, that the contacts started by Adenauer on his trip to the USSR in 1955 had not been followed up. There now seemed little likelihood of success on the official diplomatic level. Now the Soviets must try to seek unofficial contacts. Enemy intelligence chiefs should maintain satisfactory contact with each other. There were distinct possibilities in this direction and "the doors were always open." This is all Felfe tells us, but in the context of the von Bonin operation it s ggests much. It looks as though information in the one case, LA, namely that the SECR T Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 66 SECRET Soviets were sincerely interested in a peaceful solution in Germany, was produced to confirm the rightness of Gehlen's intentions in the other case, von Bonin. These are but small details - one would expect to find many more - of the peace message which has often been played against the louder themes of more warlike Soviet statements. (About three weeks after the director's meeting with Felfe on the von Bonin case, the Soviet govern- ment made its first threatening statement of the Berlin crisis - Khrushchev's statement of 10 Nov- ember 1958.) Felfe says that the director went on to urge him to develop his political reporting - even to join the Foreign Office (although this last comment might be one of Felfe's own embellishments rather than a real KGB idea). The director urged Felfe to speed up his political reporting, particularly the transmittal of BND and BfV weekly situation reports which he had begun to send regularly in about March 1958. He also asked for information on the BND offices concerned with political intelli- gence collection on areas other than the Soviet Union. Apart from these substantive concerns, the 1958 meetings with the KGB officers brought about an important change in Felfe's and Clemens' techni- cal modus operandi. After Clemens lost the Balt- hasar case as an excuse to travel to Berlin, Erwin Tiebel, who had been more or less in reserve since his recruitment, took over as .courier. He collected Felfe's and Clemens' reports concealed them in a suitcase with ape paneljtwhich Alfred had sup- plied his agentsAwith Nest German identity documents in other names. (Completely valid documents, unlike the product of the_LENA case!) On these occasions Alfred would meet(theM)at a predesignated kilometer marker (Km Stone 107) inside East Germany on the Helmstedt-Berlin Autobahn and relieve them of the incriminating material. TheOest German could then proceed normally into gest-Berl' and meet Alfred later in Karlshorst. Clemens at this time (1956) had also been given an S/4 system and a code SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 (o/ SECRET system for using one-time pads. This procedure was fairly satisfactory, but Clemens had increas- ingly less chance of lengthy oral reporting to Alfred, while at the same time the volume of re- porting increased. Felfe had begun to rely more and more on the tape recorder (he was apparently very lazy about composing written reports - several instances of Alfred's impatience with him in this respect are documented)) and his reporting consisted primarily of a handful of Minox negatives and several spools of tape on which (according to Clemens) he recorded situation reports and the latest changes in BND personnel and T/0. Some- times he would visit Clemens in Cologne where he would dictate a report in cipher which Clemens would then transpose into S/N. This worked well enough until March 1958 when Clemens was unexpectedly relieved of 7l1s post in the Cologne penetration unit and demoted to a surveillance team. Clemens' superiors in BND headquarters had apparently been dissatisfied with his work for some time. Now his usefulness to Felfe and to the KGB was sharply cur- tailed. He claims that Alfred was uninterested in the information he was able to develop from most of his surveillance activities (primarily against FLN members in Germany). At this point OWL was intro- duced. Clemens acted as the receiver and decoder. Communications were made once a week, with one alternate per week as well. After a while a "burst" transmission method was introduced for which Clemens had to use a tape recorder hooked to his radio. After recording the high-speed trans- mission he would play the tape at slow-speed and thus be able to decipher the message. At one time Alfred wanted to introduce a system of rubbing metal shavings onto the tape so that the impressions would become visible, but Clemens and Felfe found this method too messy and too unreliable and refused to use it. Clemens says that from 1958 on he received very few personal instructions from Alfred and that the majority of the messages were for Felfe. In short, he had become largely a support agent for Felfe. When he did go to Berlin after this date it was unofficially (until 1960 when Felfe was able to SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 !.; C' R i bring him back briefly to an operational role in a double agent case). Alfred tightened up the security by refusing to let Clemens come to the East Sector any longer. All their meetings were merely brush meetings on the street, useful only for exchanging material, but not for discussion. Felfe tried repeatedly - with only occasional success - to bring Clemens into a case in order to give him legal excuses to go to Berlin, but the problem of quick, secure communication re- mained a serious one. It was as much to this problem - as to political matters - that the director addressed himself in his September and October 1958 encounters with Felfe. He announced that he wished Felfe and Clemens to sever personal contact with Alfred and the East Berlin Rezidentura and to work from now on solely through an Illegal Rezident in gest Germany. They would be introduced to the Illegal, but their pri- mary communication with him would be via dead drops. Each man would have his own set of dead drops and it would no longer be necessary for Felfe to commu- nicate laterally so often with Clemens on KGB busi- ness. The director said that any communication via this system would reach Karlshorst within 24 hours. The immediate reaction of Clemens and Felfe was dismay. Their refusal to comply with such a pro- posal was adamant. They claimed that the introduc- tion of an unknown intermediary between them and Alfred would merely provide more risk of exposure or accident over which they would have no control. The director and Alfred tried to reassure them, saying that the Illegal Rezident was an absolutely reliable person, a Soviet citizen, but the two agents continued to refuse. For the next few years the Soviets allowed them to have their own way. (1) (1) The KGB idea of using an Illegal Rezident in support of gest German CE operations goes back a long way. Petr Deryabin told us in 1954 that while he was on the German Desk in Moscow in 1952-53 there were plans afoot to set up two such rezidents, one in ,Duesseldorf and the other in Munich. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 ECRET Sometime in 1959 Felfe received a new KGB cover name: Kurt. Clemens became Hanni and along with liebel was referred to in KGB files as part of "Kurt's Team" or of "Operation Kurt". (1) In 1960 during one of his rare visits to Berlin Clemens was presented with a citation by the KGB in honor of his ten years of service: a letter from the then KGB Chairman Shelepin and a bonus of 2,000 DM. Felfe also received a letter from Shelepin, and we presume also a bonus, although he did not confess to this. A BND comment on this subject conjures up a humorous scene in which Clemens "in the purest Saxon dialect" innocently asked his KG3 case officer "who this Shelepin might be". Alfred apparently was really shocked, and Felfe claimed to be annoyed with Alfred for not orienting Clemens better. (1) AELADLE. Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET IV. (c) New Directions? We have seen how Felfe as chief Soviet counter- espionage referent was able in the last years of his career to cover Soviet requirements on a variety of levels and a variety of topics: positive, protective and political. By rigging an operation especially for Felfe, Alfred could force answers from almost any element of the West German government in the guise of "build-up" material; by creating certain opera- tional situations or complexities, Alfred could help Felfe in his bureaucratic manipulations; indeed even promote the formulation of helpful bureaucratic regulations or precedents. By introducing a Soviet CE factor into any END case anywhere, the KGB could cause the case to be transferred to the protective custody of Felfe. By introducing a Soviet CE factor urgently affecting German security into the operation of any other agency, German or foreign, the KGB could hope to bring many another case under Felfe's scrutiny. (For example, Felfe was able to help the internal CI directorate of the KGB. In one case a double agent run by CIA for the collection of economic information on the USSR and by the KGB for CI information on the West German and U.S. Embassies in Moscow, was apparently already suspected of Western intelligence connections by the KGB. By closinc out all the agent's targets except one, namely to spot, recruit and maneuver into place a West German girl suitable to be a German Em- bassy secretary, the KGB succeeded iforcing the case out of CIA hands and completely intoABND, where Felfe was the headquarters case officer. In another case, a West German woman run by CIA, Felfe provoked revelation of our interest by sending us reports accusing her of serious insecure behavior while in Moscow. Subsequently she became the object of a "dangle" operation - a Soviet lover who appeared always potentialiy, but never, really recruitable. In both cases the significant feature was that the change of handling after the Western side of the case had been reported to the KGB had the purpose of revealinc Western assets in the USSR.) Finally, Felfe, because of his own personal qualities - brashness, inquisitiveness, aggressiveness - was able to broaden his access to information in areas for which there was no official excuse for him to be at all. (In this respect he is reported by one of the BND security investigations as having tried to meddle in a BND operation involving a West German nuclear scientist probably in response to a specific request from Alfred.) In the end Felfe had become much more than just a simple servant of the KGB. (Its doubtful if SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECR.T.i T he had ever thought of himself as such.) Evi- dence from intercepted OWVL broadcasts - as well, of course, as Felfe's own statements - shows that Alfred often asked Felfe for advice about the Soviet handling of certain operations, both as to the tech- nical aspects of handling BND-KGB double agents as well as the timing and tenor of KGB propaganda operations. Felfe had become in many ways some- thing of a consultant to the KGB on the BNDias well as an agent. In spite of the fact that in many ways Felfe had an almost ideal position, there is evidence that in 1960 he was instructed by the KGB to move on to a new job. This was the post of security officer for the END Communications Unit. At this time discussions were underwayLicthe establish- ment of the END as GermanC gns intelligence authority. Felfe knew that the post of communica- tions security chief was shortly to become vacant, through the retirement of its incumbent, and he probably guessed thatLT job would assume greater importance once the ,Vicant agreement was signed. He submitted his application for the post early and worked hard to sell himself as the next candi- date. In many respects, however, this is a job which might not have interested him as much as his old one, and it is curious that he tried so hard to get it. In his post-arrest statements he went to great pains to claim that the KGB was definitely against having him transfer, but there is sufficient evidence (including intercepted telephone comments between'Felfe and Clemens) to suggest that the opposite is true. If so then the obvious corrollary springs out: the KGB could not conceivably have asked an agent who was de facto chief of the END Soviet CE Section to give up this job unless they had a replacement with equal or better access. This raises the difficult problem of "other penetrations" which is suggested all through Felfe's history, and of whose existence if not identity, we have been informed by various defectors. Felfe, of course, denies that he ever recruited another SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET source. Possibly he did not, but in BEVISION's words, it is impossible that Feife could have worked for the Soviets for ten years without having tipped another source in the END to them, and it is very likely that Felfe has an idea of who among his leads became a recruited source. One of Felfe's last operations lends itself to the interpretation that it might have been intended in some respects as a support operation for another CE section pene- tration. (See the Busch case described below.) There are also disturbing and mysterious indications in ORVL traffic and in the notebook which Felfe kept so meticulously on his KGB and END operations.(1) In addition there are a variety of names ofpossible suspects which have been suggested to us through other operations and other sources, particularly those among Felfe's and Clemens' coterie of ex-SS officers. Finally, there is a general and simplified quality about Alfred's last EEI to Felfe which sug- gests that they might have been, in part at least, comprehensive instructions for someone else, but here, admittedly, we are allowing ourselves pure speculation. (1) OWL traffic to Clemens contained references to someone called Manfred. Manfred appeared to be a cover name. Neither Felfe nor Clemens ever volunteered this as one of their three or four cover names. Clemens simply did not know the name. ghen Felfe was asked who Manfred was, he reacted violently and strangely. He seemed upset and tried to pretend he didn't know the name, then he somewhat clumsily accepted the interrogator's suggestion that it mignt one of his own cover names. Another strange incident shows Felfe at his coolest and most brazen. In the presence of interrogators who were reviewing his notebook with him, he snatched4 up a pen and scratched out a name in a sentence reading "According to , Schumacher is a Karlshorst source." He refused to divulge the name on the grounds that it was "incriminat- ing"i various hypotheses as to the name have been made; possibly the closest so far is Reile, since Schumacher (201-4176) did at one time work closely with him. (Interpretationof former- CIA-BND liaison officer for security. EGMK-11493, 9 February 1962.) SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 $ECRET Alfred held his last meeting with Felfe and Clemens in Vienna in September 1961. At this time he informed his old agents that at the end of the year he would leave Germany for good. This time there was to be no question of whether or not they would work with an Illegal Rezident. Alfred in- formed Felfe and Clemens that at their next Meet- ing later in the fall they would meet the rezident and that after this they would work through dead drops. Each man was to select and set up drops for himself: Felfe in the Munich area, Clemens in the Cologne area. From time to time they would have personal meetings with a KGB case officer in a third country, and if they should ever feel themselves in danger they could go to the Soviet Military Attache in some western European country other than Germany. After giving the new instruc- tions Alfred went on to discuss the professional situations of Felfe and Clemens. (In this context Felfe elaborated to his interrogators that Alfred wanted him to stay in his old job, which probably signifies just the opposite!) Alfred listed a number of specific questions or themes for Felfe to work on for their next meeting. He gave Felfe a typewritten reminder which listed: steps taken by the END after August 13th as a result of the changed Berlin situation; explanation of certain END operational moves against various Soviet officials in West Germany; further development of the Busch case. Finally, in a rather strange repetition of the obvious EEI which Felfe had already been covering as a matter of course for some time, Alfred listed instructions to report on all END agents; to report the contents of all cases run by the END against Soviet installations, to find out more about END liaison with the Laenderi with NATO, more about END work against the USSR, and to report new recruitment leads among END headquarters members (specifically Alfred had been for some time interested in the END officer who controlled the agent card files). One would assume that after several years of being instructed to report on these targets Felfe would not need a written reminder of them. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 Having noted Felfe's effort to get the job of COMINT security chief and having described the KGB operational position with Felfe at the same time, we will proceed to a description of the Busch case. This was another complicated opera- tional chess match, somewhat on the order of the LENA case, possibly replacing it to some extent as an operational vehicle. The Busch case had as its imMediate purpose to deceive the END about its own security. Read side by side with a des- cription of Felfe's effort to be transferred to a new job and with Alfred's instructions of Sep- tember 1961, one is left wondering, at least, if the case -c:Iight also have been destined as a support in some way for another Soviet CE section penetration. The Busch case is actually two cases, one superimposed on the other. It is a fascinating example of multiple deception - the more so since it was not entirely successful. On one level it involved a KGB/CE officer (call- ing himself "Heinz") running a deception opera- tion against the END. He had begun with a straight penetration attempt, discovered it to be controlled by the END and then tried to salvage what he could by using the connection to pass deception about the state of KGB information on the BND. At the other end of the operation was a END field case officer named Friedrich Busch who worked under the direction of various 3ND Soviet CE section officers to counter the KGB operation with decep- tion material on the END. At a certain point in the operation, when both the END and the KGB seemed to think it unworthy of further attention, Felfe and Alfred entered - behind the scenes - to direct it in ways which suited their own purpose. On the BND side Busch was of course unwitting of Felfe's inimical role. On the KGE side the KGB case officer "Heinz" was allegedly unwitting of Alfred's role. Felfe quotes Alfred as saying, "Busch's case officer has no idea of the real situation", and did not even know Alfred person- ally. This was a had situation in some ways: Alfred's marionette did not always dance the way Alfred wanted him to. Consequently Alfred had to Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 9 SECRET ask Felfe to make his BND puppet Busch provoke the desired responses from the other KGB officer. Felfe was forced at the same time to the very crude and dangerous business of having to make fabrications to his superiors about Busch's operation. This was Felfe's last great plot: he was arrested in the middle of it and we have no way of knowing exactly where it was supposed to take him. The essential purpose as stated4'37a-agN was to set up a BND staff officer for KGB re- cruitment as a BND deception against the KGB. We conjecture that it had to do in some way, however, with getting another real KGB staff penetration. A macabre touch of humor in the files is a remark from a BND security officer, before Felfe's arrest, to the effect that Felfe's handling of the Busch operation was so strange it wouldn't even be surprising if Felfe were to suggest himself as the target for KGB recruitment! (1) We would like to describe this operation in detail because at nearly each stage of its development it was replete with signs of danger, which should have been heeded by an alert Western service. Unfortunately, the use of multiple cryptonyms to disguise sources and agents and the fierce compartmentation in the BND in this, as in the LENA case and many others, prevented anyone from putting two and two together for a long time. To make sure that no one could arrive at the proper conclusions in this case, Felfe charged out all the pertinent file material to himself and no one else had access to it. Friedrich Busch was another old Gestapo friend of Clemens from wartime days in Italy. He was also an old acquaintance of Oscar Reile and the protege of Carl Schuetz - Clemens' former chief in Cologne. Clemens recruited Busch for the Gehlen Organization in 1951 as he had Schuetz - and subsequently Busch worked for a time in GV"L" (1) @Fleming to CIA Liaison Officer. (EGMA-56011, 5 September 1961.) SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 C T with aeile and Felfe. His professional history is cloudy at best: while a GV"L" case officer he appears to have tried to run a Soviet double agent case without informing his BND superiors. (1) When the deception was uncovered he gave a rather lame excuse and was transferred to a non-sensitive job in a field debriefing office. He is described as a weak man who cries under pressure and not partic- ularly "quick on his feet". Our files contain a note that Felfe tried at some point to get him a staff position in Headquarters, but was unsuccess- ful. In early 1956 Oscar aeile brought Busch into an extensive la,11 deception operation known by the BND cryptonym, '2ANCPTIKUN.. The first player to fill the lead role in 17,ANOPTIKUM was General Friedrich Panzinger, former deputy chief of aSHA IVa. He had been in charge of Rote Kapelle investigations for a while, later Chief of SD Ostland (Baltic States and Belorussia). In 1947 he had been captured by (1) Busch,s double agent operation was called UJDROLL_JRY-15, a typical Soviet operation for the period and possibly significant for the early history of this case: the brother-in- law of a Gehlen employee had run a sort of service in the immediate post-war years assist- ing former SD personnel to cover their tracks and to find gainful employment. The HGB in Vienna caught on to him and with this compro- mising knowledge managed to recruit the Gehlen employee. The Gehlen man wanted to report the Soviet recruitment and found himself with Busch as a case officer. Why Busch really tried to play him back without telling anyone is not in CIA records, nor is any description of the content of the play-back which lasted nearly two years. As of March 1955 a Gehlen Organiza- tion security officer was planning to investi- gate. (EGLA-13018, 11 March 1955.) T Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 I/ CaFT the Soviets in Vienna and imprisoned in. the Soviet Union on charges of war crimes committed against a Soviet officer. In 1956 he was released on the promise that he would work for the KGB "to pene- trate the BND and to report on political events in the Federal Republic." Upon his return .to Germany in early 1956 he went directly to an old friend, the President of the Bavarian LfV, who in turn passed 77dm on to the BND in the person of Reile. Reile's plan was to put Panzinger in con- tact with an ostensible BND net (real people, fab- ricated activity), about which he could then report to the KGB. When Panzinger happened to become re- acquainted with Busch, whom he had known before the war, Rene allowed Panzinger to mention this to the KGB. Panzinger did not know Busch was a BND man until the KGB wrote back telling him to be wary of Busch. Reile then made Busch Panzinger's BND case officer and a deliberate sitting duck for the KGB. The case was handled in a desultory fashion by Reile for a while, then by another colleague, until the fall of 1958 when it was given to Felfe. During this two year period nothing much happened. Indeed,Panzinger's KGB case officer, Heinz, exhibited all the reactions of a very suspicious man. Panzinger met him only once during the two years (in one of the li".NA case safehouses in Berlin!) and the whole pro- ceeding had come to a near standstill when Felfe moved in. At this point the case, picked up spectacularly. Felfe proposed to the CF section to make Panzinger more attractive to the ROB: he had Panzinger tell them that Busch had asked him to serve as a letter drop for the BND and also that Busch had been made chief of a special 3RD office handling Baltic and North Sea operations. In February 1959 he had Panzinger ask the KGB for a meeting. As reason for the meeting Panzinger was to discuss the war crimes charges which hung over his head. The Soviets had neleased Panzinger without giving him an amnesty and the old General lived in fear of arrest. Actually, sometime previously the 3RD had SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET arranged with the Bavarian LfV President to brief a high offictal of the Bavarian Justice Ministry so that no action would be taken against Panzinger without prior warning of the END. Unfortunately, only one such person in the Justice Ministry was briefed. The KGB apparently knew of it, however, since once before when Panzinger had discussed the charges with his KGB case officer, the latter had assured him that his case would never come up. Nevertheless, under Felfe's direction Panzinger asked the KGB case officer for a meeting to discuss this problem. He traveled to Berlin on 22 February 1959 where the KGB case officer told him he would see what he could do about the charges, but did not offer much hope for an amnesty. At the same time he said he thought Panzinger's case merited a more "secure" communications arrangement and instructed him in the methods of OWVL reception. (Felfe told his Western colleagues with great interest that this was the first END double agent to receive OWVL from t1r1 KGB; he added that he thought he might give' l to Hofe of the LENA operation in case the Berlin situation deteri- orated!) Now strange things began to happen in Panzinger's operation. In July he received a KGB instruction via OWVL to find out if the HVA defector Max Heim had been a END or a BfV agent prior to his defection. This was in many ways a very indiscreet question on the part of the KGB. The CIA liaison officer for security matters, who was already hot on Felfe's trail at this time, wrote the following comments in August 1959: "Unless Panzinger has grossly overstated his BND connections to the Soviets it is strange that the KGB seems to think he might have access to this information. If the KGB actually asked the question this could be an indication that the KGB knows Panzinger has been turned and calculates that the END will supply a true answer. On the other hand...consider the SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET possibility that (Felfe) has been asked this question ... It is also interesting why the KGB did not ask which American agency was running Heim, since the fact that the Americans are returning him to Berlin for re-interrog tion has probably not escaped KGB notice ..." (1) In the meantime Panzinger had innocently carried out his KGB case officer's instruction to ask Gehlen, whom he knew slightly, for a job in the END. He wrote a letter of application and after an appropriate interval Felfe drafted an answer for the signature of one of Gehlen's deputies. Felfe's draft was nothing short of a death blow to the Panzinger operation, and indeed there was speculation even at the time that it was in some way a deliberate blow. Felfe and his colleagues in the END and CIA had di cussed the type of answer which should be prepared gak Panzinger's letter of application and had decided together that a sort of non-committal reply suggesting "no present vacancies" but still holding out some hope would be the best. It appeared strange then when Felfe pro- duced the signed reply which stated that Gehlen could not employ Panzinger until the matter of war crimes charges was settled. The CIA liaison officer report- ing on this apisode wrote: "Considering the fact that the charge was a very painful thing to Panzinger - as time proved - it seems somewhat unusual and a bit grotesque that Felfe should have written a letter to Panzinger on such a literal basis. Felfe, a fellow alumnus of the RSHA along with Panzinger and Busch, could have prepared a less cold-blooded reply We can only (1) EGMW-8131, 3 August 1959. In his post-arrest interrogations Felfe claimed that he had criticized the KGB to Alfred for failing to amnesty Panzinger when they._weleased him from POW campiaA* thus prejudicekheir own case from the beginning! R E T Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 TV C speculate as to the reason for the change. At any rate it would seem that (the) other approach would have served to keep the KGB more hopeful and interested and at the same time would not have rubbed salt in old Panzinger wounds." Four months later a warrant of arrest for war crimes was served on Panzinger and as the police officers waited for him to collect his belongings he committed suicide by poisoning himself. This occurred on a day in early August 1959 when both Felfe and the one man in the Bavarian Justice Ministry who had been briefed to forestall an arrest were absent. Felfe's comments to a CIA liaison officer made shortly after this are inter- esting. He said he thought Panzinger had been - depressed for some time (this was true) and had shown signs of emotional instability. He had been clearly worried about the war crimes charges. As to the operation, Felfe thought that perhaps the KGB might not regret having him out of the way since in a sense, even though he had been the KGB channel to a BUD officer, he was also an obstacle between the KGB and the BUD officer and now the KGB could approach the latter more directly. The KGB would reason, said Felfe, that through Pan- zinger they had been able to gather enough evidence of Busch's "indiscretions" to enable them to make an approach - an approach which earlier they might not have believed possible. In fact, said Felfe, the KGB might now be expected to move against Busch and in doing so they might even go so far as to reveal their knowledge that Busch too was a war criminal. (This was the first time this information about Busch became known to thA- CIA) While making wise surmises about the KGB to his American colleagues, Felfe set about franti- cally in the BUD to cause the very contact with Busch which he had been predicting. Shortly after Panzinger's suicide Felfe and Alfred met in Vienna, where, Felfe admits, Alfred asked him how they S EC RET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET could keep the operation going and extend it to Busch. Felfe hit upon the effective and simple plan of having Panzinger's brother write to Pan- zinger's old KGB accommodation address saying he had found the name and address among Panzinger's effects and was infoLming them of Panzinger's death. The brother invited the addressee to write back either '.=c) him or to Panzinger's "closest friend during his last days", i.e. Busch. In this way Busch began corresponding directly with the KGB. A meeting was arranged to take place in Rome in August 1960 during the Olympic Games. An urgent OWITE, message from Alfred admonished Felfe to remem- ber that he was responsible for the safety of the KGB officer, who was coming from Moscow for this meeting. The KGB officer, "Heinz told Busch he had been sent from Moscow especially to recruit him, but Busch played the role of hard-to-get intelligence officer, challenged the KGB officer to provide bona fides and refused to accept recruit- ment by anyone but the "boss". They parted with an agreement to meet again in Geneva in early 1961. Felfe presented this turn of events to the BND as very remarkable and he immediately set about the creation of a deception unit on which Busch could report in the event of his recruitment. Some people found this a bit premature, but Felfe kept moving and during the next few months gave the impression of great activity surrounding the Busch case while he collected all the necessary approvals for Busch to accept a KGB recruitment, to nominate a (real) candidate for KGB recruitment in the headquarters and for the release of decep- tion material. He set. Busch up in Heidelberg in an office consisting of Busch, one colleague and a secretary. His theory was that Busch would report freely on this office thus giving the KGB the impression that they had reached their goal of penetrating the BND. Ae reasoned that in this way the BND could keep the KGB busy while fending them off with deception and at the same time monitor the extent of KGB knowledge about the BNDI The files show fairly universal feelings of incre- dulity at the time Felfe propounded his plan. T Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 S :ECRET Unfortunately the incredulity did not extend to Felfe's immediate supervisor, the 3ND CE chief. He was fairly well hoodwinked by Felfe in this case, and in several others, to his intense embarrassment later. Bach time the security section officers wanted to review the case, they found that the material was inaccessible; finally, in July 1961, one of them was able to get into Felfe's safe and discovered to his amazement that, contrary to all impressions, absolutely nothing had happened in the Busch case since the meeting in Rome. The KGB simply did not appear for the meeting with Busch in Geneva, and no word came from the case officer "Heinz", suggesting a new Meeting. At the same time Felfe knew from Alfred that there would be no meeting. Via ClemensAlfred sent the . 1 message in early 1961 that Busch's KGB case officer was having difficulty in obtaining documents for a trip to to Switzerland. The KGB "Heinz" was hard to I .0,,�A% � 8,-ul fi 7 push around, however. One surmizes that he was 14,54/4"- . cm. � already quite suspicious of Busch and prepared to 0-1 _Ari4 drop the case. He would have to be prodded from 4u0 the West. In May 1961, Busch wrote him a letter saying he was sorry they had missed each other and that if "Heinz" was still interested he should set a new meeting date. Busch stipulated that the place should be anywhere but France, since he was blacklisted in that country. Slightly more than two months went by before "Heinz" replied offering to meet Busch - in Paris! Now Busch had to write another letter. (A tap on Felfe's telephone, which was already operating by this time, reveals that Felfe informed Clemens about this time that the END would not give Busch permission to keep a KGB meeting in Paris. Since Clemens had absolutely no official reason to know this information, one assumes that he was supposed to pass it on to Alfred. The implication is that Felfe had to keep Alfred informed about the KGB side of the case as well as about the END side.) Another six weeks were used up in negoti- ation for a new meeting. Finally Busch and "Heinz" agreed to meet in Vienna on 11 September 1961. At a meeting in Berlin on 10 August, Felfe's own KGB Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 121 SECRET handlers informed him privately of the new meeting plan. They urged Felfe not to let the END counter- surveil Busc7a's meeting with "Heinz", since if "Heinz", "who doesn't know the real situation", were to spot the surveillance he would simply break contact. Nevertheless, the END were insistent about the sur- veillance, various sections for various reasons. The CE section wanted to identify "Heinz"; Felfe wanted an excuse to get Clemens (now in the surveillance unit) a chance to meet with Alfred and to counter- surveil Felfe's own meetings with Alfred, and the Security Section and CIA wanted to surveil Felfe! To this it must be added that the KGB "Heinz" had his own countersurveillance; the only man we do not know about is Alfred - possibly he would have done well to have had some surveillance of his own - if he didn't. When Busch arrived in Vienna, "Heinz" told him that he was the KGB "bosg,for this operation; that he had come again espicalrY from Moscow and was prepared to offer Busch $10,000 if he would work as a source on the END. (The money would be paid later into a Swiss bank account, for which :Busch should make his own arrangements.) Busch modestly replied that he doubted if he could be a very good source since he was not a headquarters case officer; had been in a debriefing unit (ignoring the previous fabrications about his work) for some years as a result of earlier difficulties, and actually knew no more about the END than that which had been pub- lished in the East Gelman and Soviet exposes of GV"L" at the time of the great flaps of the early 1950s. "Heinz" assured him (Felfe wrote in his report to the END" "swore to him") that incredible as it might seem the content of these old exposes was in fact the sum total of KGB knowledge about the END and they were hungering for .more. He said that Busch was a most important man for the Soviets and he gave Busch a list of requirements on the END: true names and pseudonyms of case officers, identi- fication of agents in the East; all information about the headquarters, about bus routes to the headquarters, END license plate numbers; political i]CRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 98' T and operational information about Berlin. In addition to these penetrating E2I, "Heinz" made several interesting political observations - much in the old LTA style; elfe wrote them up as follows: "It was said that the Soviets do not understand Adenauer; because he doubted the deteLmination of their demands respecting Berlin, and was not ready sooner to negotiate, since now after the 13th of August Adenauer's negotiating position is appreciably less favorable than before. "The Americans in Moscow were said to be of the same opinion. From them it became known to the Soviet intelligence service that they wanted to force the victory of Brandt in the Dundestag elections or in a general victory of the SPD. In this case the Soviets would then try to see that 3randt would not become so powerful as Adenauer. "Khrushchev reportedly will stand on his word: a peace treaty with the 'DDR' can still be signed this year and Berlin become a free city. Otherwise, one can reckon with further difficulties in Berlin." "Heinz" sent Busch home with an S/W system, some developer and a te:et to practice on, and the agreement to meet again in Vienna in April 1962. In the mean- time Felfe prepared his report on the case, assessing it as follows: "The continuing patience of the Soviets over the years and their careful procedure underline the repeated statements that everything had been stopped (referring to the hiatus between the Rome and Vienna meetings) for security reasons, since our agent was especially important to them. The S/W system given him and the money paid (500 DM) without receipt support this interpretation. The interest of the Soviets is undoubtedly in this case to penetrate head- quarters or at least to develop the possibilities S 'RET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 C R for doing so. For the future handling of this case it is decisive to determine if, ard to what extent build�up material on the BND, especially about the headquarters, can be passed and if it would be possible to find an ostensibly witting source in the headquarters for our agent, whom our agent could describe in at least a few details." (1) When Busch got home he tried out his new VW: practice text was in Russian, which he couldn't read and the code consisted of several number groups for which he had no key. His first communication then to the KGB was a rather stinging complaint. As of early November 1961 when Felfe was arrested there was no reply to Busch; indeed none came until well after it was clear that Felfe's operation was at an end. In January 1962 a routine letter for Busch arrived asking why nothing had been heard from him. This was the end of the PANOPTIKUM case. Busch was interro- gated by the nun just after Felfe's arrest) and the conclusion resulted that Busch had been operating honestly in respect to the BND. ( 1 ) Report dated 28 September 1961 by Friesen (Felfe) on the PANOPTIKUM case: "Bericht ueber Gegnertreff am 11.9.61 in Wien"., Attachment D to EGMA-56556, 23 October 1961. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 Fe) SECRET V. The End of Operation "Kurt" For almost every year of Felfe's post-war existence an item of derogatory information was entered in the files of some Western agency. Un- fortunately no one agency, much less the BND, had it all until shortly before his arrest. Both Clemens and Felfe have praised Soviet security practices as greatly superior to those of the END, and their account of the KGB handling shows a continuing concern with operational security. The weakness of the Soviet operation cannot be laid so much at Alfred's door as at Felfe's and Clemens'. The weakness, of course, was built in: the clannish- ness and susceptibility of the ex-SD officers which drew them to KGB attention in the first place also bore the seeds of an eventual breakdown. Felfe and Clemens refused the discipline of maintaining contact via an Illegal, insisted on keeping up their lateral communications and their trips East to meet the KGB officers after 1953. One can at least understand what psychology might have motivated the two agents in their refusal of the impersonal and mechanical communications system. Technically their stubborness was disastrous, and as time passed their operatttonal practices became more and more lax. Rhat saved them for so long was the fact - over Which they had little or no control - that no thorough investigation was ever made of either Felfe or Clemens by any one agency. The END, hamstrung between the requirements of "respectability" and the need for experienced personnel, did not (at the time Felfe and Clemens were recruited) perform background checks on new employees and did not routinely trace them with other agencies. Instead it tried to rely on rigid internal compartmentation as its primary security technique. As early as April 1950 ,British files contained sufficient sufficient derogatory information on Felfe to make anyone wary at the very least. Aside from such general and common post-war sins as the falsi- fication of Frageboaen, "insecure" talk and informa- tion peddling to several agencies at once, the British SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRT 4 file contained: (a) Felfe's report on Gerda Clemens' attempt to recruit her husband for the MGB Dresden; indication that Clemens might have accepted recruitment and Felfe's offer of Clemens to the British as a double agent; (b) Fel,fe's admission that he had sent a report on the LfV "I-Stelle" Nordrhein-Westfallen to a contact in the SED in East Berlin; (c) a report that Felfe had attempted to peddle to at least two West German news agencies the charter of the proposed BfV which was about to be presented to the Ministry of Finance for approval. The history of Felfe's possibly dangerous contacts with Max Wessel and Helmut Proebsting were also recorded in some detail, as well as indications of untrustworthiness, possible theft and general "varnishing of the truth". Some of this information was made available in general terms to the BND in Januart 1958 when the BND requested traces on Felfe in the course of their 1956-57 investigation of him. CIC had a certain amount of derogatory infor- mation on Felfe by the fall of 1954, mostly from Ludwig Albert, who had become aware of the existence of black marks against Felfe in the BfV and the Bundeskriminalamt through his own early CI work. CIC also had the report of Max Wessel's alleged two approaches to Felfe. By 1956 CIA had what CIC had, although in condensed form without source description. It had Deryabin's information in early 1954 which in- dicated the existence of two MVD agents in the Gehlen Organlzation with the cover names Peter and Paul (Clemens' and Felfe's cover names at the tim but unfortunately Deryabin was unable to provide- enough details to identify the agents. After 1957 when CIA officers began to Work more closely with Felfe the file of suspicious, or at least puzzling, items about him grew. also WiTo-fr _44 �rifts,' wifl-(< ,04e The BND had as of 1953 Ludwig Albert's denunci- wort ations of Felfe, but these went unheeded. Albert himself made a practice of denouncing many of his ip,itoft., ,P e colleagues who transferred from the GV"L" to the o'vk SECRET pv�Ac Alto cirrA 4vJuvv- cpg S)e Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET headquarters CE units and furthermore was not entirely above suspicion himself. The first con- certed investigation of Felfe of which de have record was begun by the BND in 1956 on the official grounds of "Suspected SD and Eastern Connections". when the END traced the British in the course of this investigation they received a memo on 21 January 1958 generally outlining Felfe's insecure and decep- tive practices as a British agent and specifically pointing out suspicious contact with Helmut Proebsting and "the RIS attempt to recruit Clemens". The memo did not contain an account of Felfe having offered Clemens to them as a double agent. In addition the British pointed out that as late as August 1957 Felfe had attempted to establish an unofficial connection to a British intelligence officer in Duesseldorf. None of this seems to have stirred. the END particu- larly. Felfe was "called on the carpet" and asked to explain his SD connections (a rather pro forma reprimand we suspect) and Felfe (equally pro forma) denied them, and here the "investigation" seems to have petered out. In the meantime, during 1956 or 1957, the CIA security liaison officer to the END had been making. a review of the horrendous GV"L" flaps of the early 1950's. He reasoned quite simply and accurately that if the KGB had deliberately sacrificed a number of agents in the GV"L" bases, they did not do so without leaving some penetrations in place to report on the subsecuent CE/CI organization of the END. To find the remaining penetrations one should look primarily in the headquarters CE section and in the Frankfurt-Cologne field base, which had absorbed a number of the old GV"L" officers after the dissolu- tion of that base. in a memo dated in early 1957 this officer suggested several candidates for in- vestigation among whom iere Felfe, Reile, Clemens and Schuetz. His conclusions were given to the END security section where they were added to the general suspicions of Felfe and his coterie, but again, unfortunately, did not succeed in sparking any sort of investigative action Which might have tested out the logical analysis. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET The security situation continued to fester quietly in this way until early 1959, when finally the emergence of a high-level "inside" source (BEVISION) shot. us into action. In March 1959 we received a report from him that the KGB had had two agents in the BND group which visited the U.S. in September 1956. The KGB also had an agent, BEVISION reported, who was in position to obtain information on a joint American-BND office running operations against the Soviet Embassy in Bonn and against the Soviets travelling in the West. The KGB had guidance papers used by this office and prepared by the Americans in 1956. The original source of this information was at the highest level of the KGB, the chief of the internal counter- intelligence department who had addressed the assembled satellite intelligence chiefs in 1958. On the basis of this information and of several other leads from BEVISION, all of which had a definite ring of truth, CIA- began a quiet, closer investigation of suspect KGB agents in the BND. (The BND was not immediately informed because of the extreme sensitivity of the source.) From the list of participants in the BND group visiting the U.S. in September 1956 Felfe and Reile emerged as the two most likely suspects. As to Felfe, the first step was to pull together file information on him and on the stranger of his operational activities the LENA case and PANOPTIKUM - and to try to restrict, if possible, his access to the most sensitive infor- mation - at least to monitor him to some extent. By early 1961 the circumstantial evidence against Felfe, the positive evaluation of BEVISION's information in gevrAland the fact that BEVISION had zIrrivcd safelyr'N.W ae nest, brought CIA to the point where it felt it must inform the BND. when General Gehlen was told in February 1961 of the specific report about two KGB agents in the group which visited the U.S. in 1956, he immediately nominated Felfe as his own major suspect! He set up a small special task force to investigate BEVISION's leads in the BND. Now, with the impetus of information from "the horse's mouth" the new investigation picked SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET up rapidly where it had left off six years previously. A tap was placed on Felfe's telephone in mid-March 1961 and from this point on the KGB's operation "Kurt" unraveled rapidly. The first lead came from a remark of Clemens who complained to Felfe about the high cost of his phone calls to Felfe: if these had been official calls there would have been no need to complain. The END then began te look at Clemens more closely and discovered that he was in correspondence with his daughter in Dresden via a third person (Tiebel) even though he went to great pains to give the public impression that he had no connection with his East German family. The END security team also discovered that Felfe had been falsifying his expense accounting: they noticed his relatively high standard of living, including a weekend house built, suspiciously it seemed, right on the Austrian border. In the summer of 1961 Felfe began dropping remarks about having re- ceived a large bequest from a recently deceased aunt in the U.S. CIA checked and found the aunt very much alive and that there was no record of her having made any foreign money transaction. Indeed, a few weeks later she applied for a passport to make a trip to Germany to visit Felfe and Felfe began mentioning a loan instead of a bequest. During the course of the spring and summer of 1961 telephone coverage on both Felfe and Clemens revealed that they were definitely in clandestine operational contact with each other on business matters which could not be identified with official Gehlen operations. They spoke quite openly - very "insecurely"- about Gehlen affairs on the telephone, but double talked certain other matters. It was also evident that they were corresponding with each other on operational matters of some kind although they had no official BND reason to do so. Mail coverage was placed on Felfe. By piecing together various scraps and shavings from the taps and from close observation of Felfe, the END security officer was able to establish a significant pattern of action on Felfe's part. It became clear that Felfe was always extra curious and aggressive just after his bimonthly trips to Cologne. (The investigator drew up an impressive analysis showing how Felfe pushed for information on a subject not normally of7iirect- concern to him - namely the whereabouts of an engine SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 recovered by the END from wreckage of a Czech owned IL-18 which had crashed in Bavaria - at a time when normal interest in the air crash had died down, but just after one of Felfe's trips to Cologne. Felfe later admitted that the whereabouts of the IL-18 engine had been an urgent EEI from Alfred.) The investigators reached the conclusion that Felfe was receiving his EEI in Cologne via Clemens, who served as a communications link to the East. In August three very damning telephone intercepts revealed that Clemens had been "called" and asked to find out from Felfe what had happened in the Pripoltsev affair. Felfe told Clemens that he had written something about it the previous day, which would be "over there" the following day. By early October it was clear to monitors that Clemens was receiving OWVL, and they were able to establish his frequencies and schedules (every Saturday at noon, alternate repeat on Mondays at 1700 hours). Several messages were subsequently broken when Clemens relinquished his OTPs. In addition to this form of observation,Felfe's more extraordinary operational behavior was being scrutinized as never before. In the LENA case a full scale security review was ordered - the reviewer unaware of the pressing reasons for it, however. Within two months after this order was given the slippery principal of the LENA case, Hofe, announced that the Soviet's had lost interest in him and turned him over to the MfS. In Felfe's safe evidence was found that he had falsified official Registry records on the LENA case. In the PANOPTIKUM case both CIA and END investigators watched nervously as Felfe and Clemens prepared to accompany Busch to the 9 September 1961 meeting with the KGB in Vienna. A successfully discreet surveillance of Felfe in Vienna by CIA re- vealed that he took extreme evasive tactics when leaving his hotel at a time when no activity was scheduled for Busch (e.g. to go to his own meeting with Alfred). By the end of October 1961 the evidence from telephone intercepts was convincing enough to prompt the END to seek the opinion of the Attorney General's SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 -6 � SECRET office as to the chances for taking executive action against Felfe. On 19 October the State Attorney advised that none of the tapping evidence was juridically useful so far, but he advised to con- tinue te investigation. On the 28th of October a series of very provocative telephone calls were recorded between Clemens and Felfe. From these calls it emerged that Clemens was having difficulty decipher- ing a "call from Alfred". Clemens said, "They must have called when I wasn't here", since "several pages seem to have been skipped". ghen Clemens was at last able to read Alfred's message, he reported to Felfe that Alfred wanted Felfe's advice for the continued direction of a press campaign currently being directed against the BND regarding the murder of the Ukrainian emigre leader, Stefan Bandera. (The cases of Stefan Liebholz and Bogdan Stashinskiy.) The KGB had already learned from Felfe about planned American and German publicity on this case, and on the basis of Felfe's information and with his guidance were preparing to steal the show with counter publicity of their own. Alfred also wanted Felfe's opinion about the further handling of Fritz Busch's operation. Most important for the investigators, however, was Felfe's news for Clemens that he had just made arrangements for Clemens to accompany Busch to Berlin in mid-November as a counter-surveillant for a meeting Busch was to have with a double agent. Clemens could, therefore, have an opportunity to see Alfred again. Felfe remarked that the double agent didn't know yet that there was to be a meeting, but that Felfe was about to write (to Alfred) to arrange a meeting on the 13th or 14th of November. At last it looked as though there would be an opportunity to catch one or the other of the agents with incriminating evidence on him. Further- more, it seemed certain that Felfe's request to the KGB to make a specific meeting arrangement, would produce a response from the KGB in the next scheduled 04VL broadcast. This was to be on Saturday noon, 4 November, or alternately on Monday afternoon at 1700 hours, d November. Furthermore it was likely that Clemens would be telephoning to Felfe immediately after the receipt of the OgVL message to report its contents. Perhaps at this point the much needed evidence would appear. SECRE T Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET All assumptions were accurate. The expected 04VL message was picked up on Saturday noon. During the afternoon Clemens made three telephone calls to Felfe the gist of which was that Alfred's message contained more about the press conference, nothing as yet about the new meeting in Berlin, in fact "nothing special", consequently Clemens would just send it along to Felfe by registered mail. Thus the weakest joint in the KGB's communications channel was presented to us. The opportunity was ideal. The following day, Sunday, saw hurried legal conferences between the BND security chief and the Federal Attorney's office and between CIA and the chief of the intercept service. The coordination and planning among these offices for Felfe's arrest was superb - not a simple matter since Felfe's own "special connections" had to be circumvented without arousing ire or suspicion. At 1030 on Monday morning, 6 November, Clemens' registered letter to Felfe was officially handed to the BND and the Federal Attorney. By 1130 the appro- priate police officers with BND escort were assembled at the BND headquarters building in Pullach; Felfe had been summoned to the office of a senior BND official on an unalarming pretext; the compound gates were locked, the telephone lines cut; all principles were armed and the BND doctor was standing by for any emergency. A few minutes later the arresting officers entered the office in which Felfe was con- ferring and served their warrant. Felfe's first reaction was to grab for his wallet and attempt to destroy a scrap of paper which was in it. There was a small scuffle; the officers retrieved the paper, subdued Felfe. By an enormous stroke of luck the captureknotes turned out to be Alfred's typewritten EEI which Felfe had received in Vienna in September. Felfe refused for several days to make any admissions. Clemens, whose arrest had been carried out in Cologne about eight minutes after Felfe's, began talking immediately and led his arrestors to the place where he had hidden his OTPs. Erin Tiebel was arrested the following day in his home town. Thus ended nearly ten years to the day Felfe's career as a Gehlen Organization officer. Agent Kurt had at least been rendered inoperative; but, unfortunately, this was not the end of the story of BND penetration. At 1700 hours on Monday, some five and a half hours SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET after the arrests and while knowledge of them was still very much restricted, the 04VL message of 4 November should normally have been repeated by the KGB. It was not. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET V. (a) Aftermath By 8 December 1961 news of the arrests was generally known throughout the West German govern- ment. By 12 December it was in the newspapers. The trials took place after lengthy (and from the counterintelligence officer's point of view, unsatis- factory) interrogations in July 1963. Felfe received a sentence of 14 years in prison; Clemens nine years in prison and Tiebel two years at hard labor. Through his mother in Dresden Felfe managed to reestablish contact with the KGB and limbo- continued to correspond with them7l'om his prison cell. (Ever resourceful, Felfe first prepared an SR system from the alum in his shaving kit - later he undoubtedly received a better system. From time to time he has "recruited" criminals about to be released to smuggle his letters out for him. Some of his letters have been inter- cepted, but not all, and it is apparent that Felfe lies asked the KGB to sendhim, suitably concealed in laundry, reading matter, chess set, etc., various paraphernalia for escape and for clandestine communi- cations. He has also obviously been giving the KGB a fairly comprehensive and self-exonerating damage report - blaming_ as much as possible on Clemens.) As of the last reporting, Felfe remains confident that he will eventually be pardoned, exchanged or will manage to escape. In Felfe's two major deception operations, LENA and PANOPTIKUM, the KGB endeavored to act as naturally as possible. Fritz Busch received a routine message in early 1962 asking why he hadn't corresponded lately with the KGB. Hofe of the LENA case went to elaborate lengths to misconstrue or simply to ignore the danger signals which the BND kept sending him and insisted on sending "political intelligence" back to his West German case officers. The KGB even went so far as to let him come to fiesermany on one of his regular business trips at which-0he was arrested and interro- gated on charges of espionage. He refused to admit KGB control; however, there were enough inconsis- tencies in his story to bolster the earlier analysis that he had been KGB directed from the beginning. After a brief period in prison, Hofe was returned. to East Germany in a prisoner exchange agreement. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET The manner in which the East Germans conducted these negotiations was evidence in itself that Hofe was regarded by the East as a person of special impor- tance, whose return was urgently desired. The von Bonin case was recently "burned" by the KGB in an ..appareRt effort to aO4te it for propaganda purposes. In a January 1966 interview with the Moscow correspondent of Der Spiegel, on . the subject of The Penkovskiy Pa.pfrs, a self-styled "retired Colonel of Soviet Intelligence" described the von Bonin case as an attempt on the part of General Gehlen to establish a connection with the KGB in order to explore possibilities for an East- Nest rapproachement. These efforts failed, said the Colonel, because of Gehlen's unwillingness to halt espionage activity against East Germany. He also said that von Bonin had offered to put the Soviets in touch with political representatives of Nest German splinter parties of the Socialist Party to discuss neutralism and reunification, but the Soviets claimed to have found von Bonin an unsuit- able mediator. (Der Spiegel, No. 3, 10 January 1966.) In 1960 an officer from the KGB Rezidentura in East Germany returned home to the USSR. At KGB headquarters in Moscow he told a colleague that double agent operations had become very much in favor in Germany in recent years because they gave great scope for influence. He said that there was really nothing much that the gestern intelligence services couldn't find out about the East German services. Consequently, the KGB disposed of a vast amount of expendable build-up or throw-away material from East Germany which could be used in support of its double agent operations. (1) ghile it is clear in.myriad ways that Felfe was not - is not - the only KGB agent of his level in the Kest German intelligence and security services, (1) AELADLE. Interview with BND, January 1963. SECRET JL Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET it is probably safe to say that his work as a Soviet agent contributed heavily to the develop- ment of KGB CE theory. One can see it take shape in the increasing elaboration of the deception cases, the piggy-back operations, which dot Felfe's career, from the relatively simple "Balthasar" to the absurdly convoluted "Panoptikum". If any single major point needs to be stressed in conclusion it is that a penetration of a CE office - the recruitment of an officer responsible for double agents - can be a useful tool for any type of operation against any type of target, to collect or disseminate. To this end, the KGB is demonstrably willing to support a good agent to the hilt and in the process deception plays an inextricable role. But, such excellent support, such tenacity and singlemindedness as we can see in Operation Kurt are impossible without: (1) A large working capital of agents at various levels, for the direct operational support or protection of the source, and more importantly as throw-aways for deceptions and diversions designed to protect the source or to further his operations; and (2) The ability to give away information on a great variety of subjects. This includes information on Soviet targets of interest to the West, information on Soviet and Satellite intelligence operations, personnel and equip- ment deliberately given to the West to further the source's operation. It also includes information which the Western enemy gathers through its own operations which the KGB can- not terminate without endangering its source. As corrollaries to these conditions we see that the KGB is willing to mount whole operations if necessary in order to maneuver a source or to protect him and that for any given step of deception, careful attention is paid to providing the Restern agencies with apparent SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 92 SECRE:T cross-checks and confirmations. The same is true in the KGB defensive tactics, where we can point out numerous cases of a creative use made out of a known rqestern penetration. This is particularly true of Arestern audio penetrations and of certain double agent operations which are used to feed back items of deception or otherwise to divert us from our course. It is obvious that Operation Kurt would never have survived as long as it did without maide_42-Lag ILJ,Dslsin the END and in other German agencies as well. dhat really saved it was that in the olest it took investigators so long to put reason to the test; that it took the fortuitous appearance of a defector, or source-in-place, to start the investigation which the extraord:tnarilycur9te,security analysis of 1957 had indlcatie4d-p�Aen -Ne detective work did begin it was a brilliant and tightly handled operation. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 73 SECRET � Annex Comment 1: Helmut Proebstinq (201-311447) SS Hauptsturmfuehrer in the Dresden SD prior to World War II, ran CE operations in Holland (BdS Niederlaende) during the war where he knew Felfe. Proebsting and Felfe were interned together in Blauw Kappel near Utrecht. Proebsting reported to Blauw Kappel camp authorities in 1946 that he and Felfe had been approached with the suggestion to work for the Soviets by one of the Dutch interrogators, Max Wessel. Both Felfe and Wessel later denied this, and Proebsting when questioned about Wessel several years later did not mention the approach. Proebsting escaped from Blauw Kappel in November 1947 and with the aid of Dutch friends (presumably former sources of his during the occupation) he assumed the identity of one Dirk Kruiff and managed to live illegally in Holland until his rearrest in February 1949. During this period, November 1947 to February 1949, Proeb- sting worked for the CVD as an informant, using, among others, Felfe as a sub-source. Felfe through his work for the British was able to provide Proeb- sting and the CVD with information on East Germany. Proebstina's contact in the CVD was said - according to British records - to have been one (fnu) Lagas. Traces on this name suggest that it might be one D. Lagas - SYMPATHIZER 45, who has appeared in our records once in connection with work on the Russian Orthodox Church and once as a security interrogator. While in touch with Lagas, Proebsting was also very much involved during 1948 with a Professor Coops, described as an old friend, who was organizing an anti-communist underground group to penetrate the CPN, spread Titoist and anti-Moscow propaganda and thereby divide and disrupt the party. Proebsting took an active part in this deviation work and obtained through Felfe a considerable amount of .ati-Soviet propaganda aerial on East Germany, primarily East one newspapers. The British gave us in 1962 copies of Proebsting's correspondence with Felfe during this period which contains many names, identification of SECRET 7 Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET targets and asks to be carried out in connection with Coops' organization. Coops is possibly identical with a well known professor of chemistry named Jan Coops (201-182724) who has occasionally been of interest to us and to SYNCHRONIZER. In addition to Lagas and Coops, Proebsting was also unofficially in contact with a Utrecht police official, (fnu) Decker, who was also working on the CPN. Proebsting remained in Dutch detention from February 1949 until 12 June 1950, when he was sent back to Germany. In December 1950 he was interviewed by British Military intelligence officers in Krefeld, to whom Proebsting gave information on his work for the Dutch, his acquaintance with Felfe and Wessel, but omitted the episode of Wessel's suggestion to work for the Soviets. The British memo of this interview concludes with the notation that Proeb- � sting would probably be willing to accept any assign- ment from the British. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET Annex Comment 2: Max Wessel Part Dutch, part Indonesian, born in the Nether- lands East Indies in 1921; employed as interrogator at Blauw Kappel interrogation center for German intel- ligence personnel from March 1945 to September 1946, when he was fired by the Dutch, presumably on security grounds. Proebsting reported Wessel's veiled recruit- ment attempt shortly before this, but Wessel had al- ready been the subject of a variety of unconfirmed accusations that he was a communist courier. Although no longer officially employed by the Dutch, Wessel continued to represent himself as a Dutch intelligence officer. In October 1948 he approached CIC-Wiesbaden claiming to be a Dutch IS officer interested in gather- ing information on former Nazi and Nazi "underground organizations' in Germany and wishing to "exchange information" with CIC. (Interestingly enough, in one of his first letters to Felfe in connection with Coops' intelligence organization, Proebsting asked this same question about Nazi underground organizations. This may be pure coincidence, but it is worth noting that this was a typical avenue of approach for MGB spotters during these years.) When CIC discovered that Wessel was not an officially accredited Dutch intelligence officer, they interrogated him. In the course of the interrogation Wessel denied having tried to recruit Proebsting or Felfe, but admitted that he had seen Felfe a few days previously on the street in Bonn and that they had discussed old times. The British files go a little further on this point and state that Wessel tried to recruit Felfe again at this meeting allegedly for a Dutch intelligence officer named Horstmann. When questioned on these contacts - Proebsting and Wessel - after his arrest in 1961 Felfe made significant efforts to avoid any comment. For references please see, in addition to the relevant 201 files, Volume XIV of U.-I-DROWSY Ops Chrono, British records sent under EGMA-58737, 10 May 1962. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET Annex Comment 3: Recruitment There is a great deal in Clemens' and Felfe's own admissions about their early post-war years which suggests that Felfe might have been recruited by the MGB in East Germany sometime in the '40's rather than the '50's. Interestingly enough when BEVISION read Felfe's testimony he came immediately to this con- clusion also. He said he thought Felfe had probably been recruited while working for the British and traveling to the East. Our best guess is that this would have been in 1948 when he was allegedly arrested by the VoPo and released by a benefactor in the Education Ministry. BEVISION surmised that it was probably Felfe who spotted Clemens to the MGD, which then assigned the "recruitment" of Felfe to Clemens as a test. Clemens was probably never the wiser. BEVISION stated that he thought the Soviets did not employ this technique of "concealed recruitment" (the writer's terminology) too often, but claimed to have seen it often enough to be completely familiar with the method. Certainly Clemens' account of his recruit ment of Felfe makes Felfe seem as though he had been waiting for it with open arms. To add to these speculations of BEVISION - and, indeed, several other observers - are certain curious parallels in an important deception case, the LENA case (see discussion in main text). LENA was a double agent ostensibly controlled by the BND, actually by the KGB. He was set up by the KGB primarily to provide Felfe with cover and mobility for carrying out KGB tasks within the Gehlen Organization. In very many res?ects this case was a sort of overt shadow play of Felfe's secret Soviet career. Many of the techniques and maneuvers used by the KGB with Felfe seem to have been tried out at some time or another with LENA. For this reason an example of the concealed recruitment method which appears fairly early in the LENA case is worth noting. LENA reported SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 7'2 SECRET to the BND in early 1954 that he had spotted a close business colleague of his for the KGB. He said that the KGB case officer told him he would recruit LENA's colleague and then instructed him to recruit LENA in turn as a subsource. LENA should pretend to accept the approach without admitting that he already was a Soviet agent and responsible for the other man's recruitment in the first place. In this way the KGB would have an excellent double check on the new agent and LENA himself would enjoy a slightly greater degree of security since he and the other man were very close professional colleagues. (Readers familiar with the LENA case will recognize here an episode involving Dr. Scurla of the Verlag der Nation.) More than just parallel are Felfe's and LENA's experiences with a KGB spotting mechanism in the East German Ministry of Education. ghen Felfe (as a British agent posing as a communist student) attended a KPD function in East Berlin in August 1948, he re- ceived an invitation from an official concerned with student affairs named Herbert Theuerkauf to stay on and attend a two-week interzonal KPD course at the University of Jena. It was at some point during this visit that Felfe says he was arrested by the VoPo and later rescued by Theuerkauf. Theuerkauf's chief in the Ministry of Education was one Rudolf Boehm, who during the early 1950's became notorious in the intelligence community in Germany as an HIS spotter and possible principal agent. He was even thus black- listed in a Gehlen Organization handbook of Soviet agents. He later became LENA's chief in the East German Office, for Literature and Publishing (Literatur und Verlagswesen), and when LENA became a KGB-Gehlen double agent in early 1954, he reported that it was Boehm who had put him in touch with the KGB. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 9"? SECRET Annex Comment 4: Wilhelm Krichbaum (201-24823) Schuetzpolizei member Dresden, 1933; Geheimefeld- polizei, Abwehr/II, RSHA/I and IV during World War II. Served as a witness at Nuremberg for twenty months in 1947-48, entered the Gehlen Organization in February 1950 as chief instructor of special training for CI officers, later head of field unit, BV/Sued of GV"L", July 1951. Became chief of BV/Bayern of GV"L" in February 1952; relieved in April for incompetence as result of Ponger-Verber case and assigned to innocuous CI jobs. Died in 1957. Krichbaum had some sort of contact to MGB/Dresden in 1946 according to BND security investigators. He was not-spected of Soviet agent activity by the BND until 190, however, when AELADLE provided a descrip- tion of a KGB agent whose background paralleled that of Krichbaum. Krichbaum was investigated by the END in 1953 as- a result of the revelation that Kurt Ponger had been Using him to collect information on the Gehlen Organization for the Soviets. Kurt Ponger and Krich- baum had been, acquainted since Nuremberg days and during 1952 Poilger had been using Krichbaum as a source. The/goal of Ponger's operation was apparently to place in/the Gehlen Organization someone (Willi Hoettl) whom the MGB hoped would be able to rise to a controlling position within it. Ponger hoped that Krichbaum could help in hiring Hoettl for the Gehlen Organization, although Krichbaum had no success as of the time of Ponger's arrest. Ponger said he had sus- pected Krichbaum of being a Soviet agent; Krichbaum said he had not suspected Ponger, however. The result was the conclusion that Krichbaum had been an innocent incompetent who had been used unwittingly by Ponger. It is interesting to note that in the Gehlen Organi- zation's report to CIA concerning Krichbaum during the Ponger-Verber investigations, there is the state- ment that Krichbaum had not reruited anyone for the Gehlen Organization. (Reference: PULL-5344, 2 April 1953.) SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 S CRET Annex Comment 5: Oscar Reile (201-10590) Along with Felfe, Reile has appeared as a prime suspect for KGB penetration described by both BE- VISION and AELADLE. He was the subject of a covert investigation by the BND but unfortunately no infor- mation was produced by it which qualified legally as evidence of treason. (Under German law this practi- cally means that the suspect has to be caught in frac:Tr-ante.) However, the END and CIA officers who were concerned with Reile's case are personally per- suaded by the circumstantial evidence available that Reile is a long-standing KGB agent. Reile was re- tired from the END in August 1963, but still remains very much a target of CIA/CE interest. Reile was born in West Prussia in 1896. After service in the Reichswehr in World War I and intern- ment in a British POW camp, he entered the Danzig Police force. In 1934 he joined the Abwehr, posted first to Kassel, then Trier. During World War II he was Commander of Abwehr in Paris (Leitstelle III West fuer Frontaufklaeruno) from which base he ran CE operations against the Allies in France, Spain and North Africa. A notation by, Reile on one of his personal history records states that he traveled to the USSR "as a soldier" sometime between 1939-44. Reile became a British POW for a second time in 1945; was released to the French in 1948. Reportedly, he obtained his release from the French by agreeing to work for the French intelligence service in 1949. He has maintained various explained and unexplained contacts with. the French until the present day - some of them probably "vest-pocket" operations of General Gehlen. In 1949 Reile was hired by GV"L" for which he worked first in Trier, then in Bad Mergentheim and for a while in Berlin on foreign counterespionage operations. He was Felfe's first Gehlen Organization supervisor. Reile's Gehien Organization pseudonym was Otto Rischke. In the summer of 1952 Reile transferred. from thc fiel6 -CCI base to the headquarters CE cction GV" L" SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 /o& SECRET of the Gehl( n Organization,pand there was responsible for helping Felfe along in his career. Of particular interest at this time would be the revelation of the true facts surrounding the transfer of the LENA case from the French to the END and within the END to Felfe. Several END and CIA analysts feel strongly, although proof is lacking, that the various adminis- trative and bureaucratic maneuverings of this very important deception operation were deliberately con- trolled by the Soviets, possibly with Reileis help. Reile remained in the CE section working on Soviet cases until about 1956, when he transferred to work on Arab, especially Egyptian targets. He also appears to have been involved in an operation to contact the OAS. In 1956 Reile traveled, with Felfe and six other END officers, to the United States in a CE orientation group. When BEVISION's lead that the KGB had two agents in this group was analyzed, Reile and Felfe were considered to be the most likely candidates. Also to be measured against BEVISION's information about Soviet agents who were candidates for leading positions in various West German security services, is the fact that Reile did indeed consider himself at one time as a possible successor to Gehlen (this was more a reflection of Reile's vanity apparently than of the true state of affairs). In early 1950 Reile had been more actively considered for the post of deputy chief of the BfV. His name was actually proposed, but one report states that it was vetoed by the French; another states that Reile refused to take the job because of his antipathy for Otto John (Chief, BfV), who had interrogated him While he was a British POW! In any case, Reile considered himself to be of some importance ,1-1d assumed that he was to a certain extent a protege of Adenauer, for whose son Reile had done some favor during the war. From AELADLE we have various other leads which seem to fit Reile. AELADLE believes he saw a file on Reile in. the KGB in the summer of 1951. This was among a group of files from which AELADLE remembers SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 aif SECRET that one of the Soviet agents was a former RSHA officer in France who had operated in Spain and North Africa. This topic was developed by BND interviewers and AELADLE during talks in January 1963. Finally, a much mor conjectural lead, but one of potentially great imp rtance, is the possibility that Reile's Danzig Krip history May tie him into one of the operations (Loellgen) which BEVISION has described under the code name "Hacke". .5J'HH� ra/( ;v11 SECRET \NO\ -Ac,e . sf viA Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 /a C E Annex Comment 6: Friedrich Wilhelm Heinz (201-66844) Heinz' story - or what we know of it - illustrates the Soviet program to unseat and replace General Gehlen in the early and mid-1950's. While their agent material, Heinz, was extremely shrewd, intelligent and capable, he was at the same time too ambitious and unscrupulous for anyone to work with. His own natural talent for making enemies eventually rendered him useless to the Soviets as a serious candidate for high-level office in West Germany, but the KGB did try to salvage their connection with him for the purpose of .creating a scandal. Heinz was born. in Frankfurt/Main in 1899. As a young man he had been a member of the "Stahlhelm" and of the "Freikorps" and at various times had written articles which ranged from the extremely nationalist- militarist to 'bolshevistic".- He entered the Gestapo in the 1930s; became a member of the Abwehr under Admiral Canaris in 1930. Sometime in 1934 he made the acquaintance of a Soviet cultural attache in Berlin named Alexander Hirschfeld whom he continued to visit regularly at the Soviet Embassy until the outbreak of hostilities between Germany and the USSR. This contact was documented in NKVD head%Ifters files under the cryptonym "Khlyust",.Hirschf d"was apparently co- opted at some pointcLbut--Nffether the association amounted to a formal recruitment or was merely a develop- mental operation is not clear. In any case the contact was lost until the early 1950's. Because of his early leftist sympathies Heinz was obviously always documented with the Soviets as a potential friend and aid. In July 1944 Heinz was arrested - held briefly and released - in connection with the plot against Hitler. After his release from arrest and dismissal from his job he went into hiding in the home of an old "Stahlhelm" acquaint- ance. At the end of the war he remained in East. Berlin and was given the job of mayor of a small town near Potsdam - in itself an indication of some measure of Soviet trust. In May 1946 Heinz and his family fled SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 /63 SECRET to West Boilin claiming that they were in danger because Helnz refused to join the SED and because the Soviet., had "found out" that he was a former Abwehr officer. In Berlin he went to work for various Western intelligence agencies: from some- time in 1947 to July 1948 he ran an 0/B collection chain for the CIA predecessor's Berlin Base. He was dropped when it was discovered that he was sharing the information collected with the French, 7 for whom he then went to run a more expanded collec- tion operation. It was suspected that he also had some contact with MI-6 and also with the Dutch. In 1949 Heinz moved to West Germany where he immediately set about reviving his old political contacts. He quickly entered the good graces of Ritter von hex whom he served for a while as un- Official intelligence-security advisor on plans for the BfV7 but the British and the French re- jected him as of "questionable character". Never- theless, he continued to work ex officio for von Lex and became, in addition, a secret agent under the direction of the TafV Nordrhein-Westfallen (at about the same time Felfe was attempting to do the same thing without British knowledge). During the same period, late 1949-1950,, Heinz attached himself to General Schwerin, then Adenauer's unofficial military adviser. For Schwerin, Heinz worked out the liaison system between the German security aPencies and the HICOG Intelligence Section. After General Schwerin's dismissal in late fall 1950, Heinz was provisionally appointed as operations chief for the Intelligence Section of the embryonic German Defense Ministry (Blankamt). In December 1950 this appointment became official. The Chief of the Defense Intelligence Section at this time was Achim Oster (who at the same time was reportedly one of Heinrich Schmitz' sources for Operation CAMPUS). During the next two years Heinz was in the vanguard of Blankamt-Gehlen Organization rivalry. It cul- minated in July 1952 in the preparation by the Gehlen Organization of a 22-page document for the Press and Propaganda Chief of the SPD which included the accusation that Heinz was a Soviet agent. The SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET politiking and backbiting had become so bad between the two organizations that in October 1953 Heinz was suspended from his job and asked to resign formally as of the 31st of March 1954. This was supposed to clear the air between the two agencies. In the meantime Heinz was also facing trial on charges of perjury. To what extent the MVD actually thought during 1951 and 1953 that Heinz had any chance of assuming a leading position in the Gehlen Organization we do not know. It was fairly widely rumored in Germany that Heinz was a candidate for the job, and it is interesting that the Soviets should mount two opera- tions involving him just at the point when he was being dismissed from the Blankamt. Petr Deryabin reported to us in early 1954 that as of September 1953 Heinz was not, to his knowledge, a recruited agent of the MVD, but he was a target. The old "Khlyast" file had been pulled out of the archives and had been circulating in the German section during the first part of 1953 to see what could be done with it. The confessions of Alfred Friedrich, who was arrested at the end of October 1953 after an un- successful attempt to recruit Heinz, illustrate, at least in part, to what use the former Hirschfeld con- tact was put. Friedrich himself is also another illustration of the usefulness of the thoroughly blown and thoroughly low-level agent. He had per- formed various low-level tasks for the MGB/MVD since his recruitment in 1949, but between February 1952 and February 1953 he had been left alone. In February 1953 Friedrich was recontacted and given the assignment to approach Heinz and to remind him of his former acquaintance with Alexander Hirschfeld. (Friedrich was to give Heinz a cigarette case which Heinz had once presented to Hirschfeld.) Friedrich was then to tell Heinz that the Soviets had infor- mation that the Gehlen Organization was in possession of evidence that Heinz had committed perjury (in connection with a criminal procedure in which Heinz had been involved) and that the Gehlen Organization intended to prove that Heinz had maintained a connec- tion with the Soviets. Friedrich should invite Heinz to come to the East Where he would be welcomed by the Russians. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 /0 C S 1;;CRET Nothing came of this first contact.. But, after Heinz'. suspension from duty on 1 October, Friedrich was sent back to him. On.29 October Friedrich visited Heinz and informed him that if he would remain in the West and work for the Soviets, that the Soviets in turn would see to it that he would be maneuvered into the position of Chief of the Gehlen Organization. The Soviets, Friedrich was told, were at that time arresting many Gehlen agents and were endeavoring to have the Gehlen Organization so discredited that it would be possible to steer Heinz into General Gehlen's position. As proof of Friedrich's story, Heinz should listen to the Deutschland Sender on the evening of 31 October. (This proved to be the date of the announcement of Hans Geier's "arrest" and of the rollup of Gehlen Organization agents in the Soviet Zone.) In return for Soviet help Heinz was asked to report on Blankamt agents. Heinz' reaction to Friedrich's approach was to call the police and have him arrested, and considering the extreme low calibre of Friedrich as an agent as well as the crude recruit- ment pitch and its inopportune timing we can conjecture at least that Heinz' action was just what the Soviets expected of him. The Gehlen Organization - perhaps not for the right reasons - immediately conjectured that the Friedrich approach was a whitewashing opera- tion to convince people that Heinz really was not a Soviet agent. Heinz was too "dirty" to be white- washed, however. The Gehlenites averred that Heinz must have rigged the operation himself, but that is probably not a serious hypothesis. The fact that the KGB was still targeting Heinz during 1954 shows at least that they still thought they were in his good graces. In September 1953, just shortly before Heinz' suspension, KGB agent "Siegfried" was given the mission to recruit the chief of the Berlin branch of the Blankamt Intelligence Section. This was Jacob Kolb, who had already recommended himself for agent work by serving as a PON informer while in Rumania in 1945 and 1947. "Siegfried", better known as Heinz Stoeckert, had been a State Security agent since 1949. He had worked side by side with Felfe for the Kaiser Ministry as a refugee debriefer both in Giessen SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 ,ECRET and in Berlin, and he apparently reported to the same case officers as did Alfred Friedrich. (At one point Felfe's KGB case officer urged him to try to get Stoeckert into the Gehlen Organization. Stoeckert had been begging Felfe to help him, but Felfe told the KGB that he couldn't stand Stoeckert personally and did not want to recommend him to the Gehlen Organization.) Stoeckert, alias "Siegfried", was unable to carry out his approach to Kolb immedi- ately, however, because Kolb was caught embezzling Blankamt funds and sent to prison. In early July 1954 after Kolb's release, Stoeckert was finally able to see him and invited him to meet Soviet intelligence officers in East Berlin. At this point, according to Stoeckert's later admissions, Kolb remarked that Heinz had "given his approval" for Kolb to accept a Soviet recruitment pitch! Obviously there is much that is left untold here, but the implication, along with Heinz' later strange behavior, is that Heinz was already, quite independ- ently of Friedrich, in touch with the KGB. Shortly after Stoeckert's visit, Kolb accompanied him to Karlshorst and was given the mission to "approach" Heinz and bring him to a meeting with the Soviets. This Kolb was able to do in September 1954. In mid-December, Heinz and Kolb received a summons to "defect", to come to the East and remain there. Stoeckert was similarly recalled the following week. Heinz explained, Stoeckert later reported, that these "defections" were part of a political action operation. Kolb and Stoeckert obeyed and remained in the East Zone for the next two years. Heinz stayed only one day and then returned to West Berlin with the fantastic story, which he promptly reported to the police, that he had been arrested by the Soviets in East Berlin, but had managed to "escape". (Kolb and Stoeckert reported years later that Heinz had simply walked out the front door of the Karls- horst safehouse with no difficulty. Heinz was later tried for treason in West Germany. Kolb and Stoeckert - the latter had been turned over to the MfS as a principal agent - turned themselves in to Western security authorities in 1957.) Obviously this account is very incomplete and full of question marks and mysteries. Nevertheless, SECRET Approved for Release: 2019/02/21 002606320 Approved for Release: 2019/02/21 CO2606320 ECR ET the events surrounding Heinz in the early 1950's form an important part of the Soviet work against the Gehlen Organization and an important, though as yet not understood, part of the history of the security problems of west German intelligence. Un- doubtedly there are still "live" ramifications of this case. Looking at these events in the context of our knowledge of overall Soviet operational policy during this period to unseat Gehlen and to denigrate his Organization, we offer one tentative, and ad- mittedly simplified, view of the Heinz case: that Heinz, with all the political distractions which he quite naturally created, was seen by the Soviets as a diversion and a decoy. The underlying thesis is relatively simple and we have met it often before (explicitly in historical accounts of the great Okhrana and OGPU deceptions, and implicitly cer- tainly in the LENA case, to take one example): advertise your plan or your target in such a manner as to give the impression that you have failed in your mission and that you are probably incapable of succeeding. Behind this screen of incompetence do your best. Here we may repeat the comments ascribed by 3EVISION to General Gribanov: During the period 1953-55 the KGB had two agents in the Gehlen Organization hierarchy. One was foreseen as a replacement for General Gehlen. The KGB threw away "over 100 agents" in an effort to bring about Gehlen's dismissal by discrediting him. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 /o6 SECRET Annex. Comment 7: The Liili Marlen Case This was one of the KGB's operations designed to discredit and demoralize the Gehlen Organization at a crucial period in its existence when it was striving to become legalized as the official German foreign intelligence service. Using information gathered (we believe) by several penetrations of Gehlen's CE branches, the KGB prepared a comprehensive document on the per- sonnel, organization and operations of GV"L" (the CE/CI field base). The document had the appearance of a report from an agent in place in GV"L" or near the chief of .G.V"L" and was signed with the name "Artur". The content was genuine and implied a real Soviet penetration or penetrations, but there were some discrepancies in the use of organizational terminology which suggested that the document itself might be a fabrication. The document was photo- graphed on microfilm and the microfilm placed in a dead drop at the base of a lamp post in the Nest German city of Ludwigsburg by an agent whom we have never identified_ The document was brought to the attention of West German police by two agents, one whoswas briefed to report to the police that he had accidentally dis- covered the dead drop and by another who was briefed simply to empty the dead drop and in doing so, un- wittingly, to walk into the police stake-out, be arrested and thus provide confirmation of the exist- ence of a Soviet operation in GV"L". The account of the recruitment, preparation and handling of these two agents (drawn largely from their confessions) provides some excellent examples of tactical decep- tion techniques. In general it should be noted that both agents were of very low calibre - too low to possibly be used in an intelligence operation; both had already been lown in one capacity or another SECRvE,T Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 /6q SECRET to various Western intelligence agencies. The KGB presumably used them in the Lilli Marlen operation not only in spite of their lbw agent quality but because of it! Their handling exhibits meticulous attention to problems of compartmentation. The Agents: "The Informer": Bodo Fromm, born in 1915, was a former Wehrmacht Lieutenant from the Dresden area. He joined the Fighting Group against Inhumanity in early 1951, was caught distributing leaflets in East Germany and recruited by MGB/Dresden. Fromm continued to work for the Dresden MGB/MVD as a penetration of the Fighting Group; staged a "flight" to West Berlin when the Soviets arrested his colleagues. Subsequently he tried, on Soviet instruction, but without success, to get agent work with the French, the British and the Americans in West Berlin. Later he was able to operate as a penetration of the Committee for Libera- tion from Totalitarianism, a group which was event- ually taken over by the Gehlen Organization. At this point Fromm was introduced to a new case officer in Berlin Who told him that his targets were the BfV and the Gehlen Organization. In the fall of 1953 all the West German agents Whom Fromm had been able to identify to the SovietsAarrested in the Soviet Zone (except one - so that Fromm might not be suspect)/ and Fromm was ordered to refugee to West Germany where he was to await further instructions. "The Throw-Away": Walter Kunde, born in 1908 in Berlin, a periodically unemployed salesman. In 1950 and 1951 Kunde worked for the British in Berlin, but was dropped on charges of being a swindler and a fabricator. While employed in a West Berlin depart- ment store in 1951 and 1952 Kunde made the acquaint- ance of an. East Berlin customer named Rolf Rhedin. Rhedin was an old KPD member from Dresden, a long time Soviet and MfS principal agent, spotter and recruiter. He was already documented in the files of various Western intelligence services. (Of par- ticular interest in connection with the Lilli Marlen case is the fact that Rhodin had also appeared in the case of Wolfgang Hoeher, a Soviet penetration of one of GV"L"'s sub-bases in Berlin who had re- turned to the East through a staged kidnapping in 1953 and who could very well have provided some of the information contained in the Lilli Marlen document SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET Kunde lost his job in mid-1952, was destitute for the next year and a half. In late November 1953 he accidentally met Rhodin on the street; told Rhodin his troubles and accepted Rhodin's offer of help in return for "favors", to be specified at a later date. Kunde thought at the time that Rhodin was referring to matters connected with East-West trading. Between November 1953 and mid-May 1954 Rhodin met Kunde fairly often without making any specific points, but was apparently assessing him closely. The Operation: As of spring 1954 both Fromm and Kunde were on call for the KGB/CE section. Fromm was a completely initiated Soviet agent and was in direct contact with KGB officers. Kunde knew only Rhodin and had no precise idea of whom or what Rhodin represented, Neither agent knew the other . In mid-May 1954 Fromm received a summons from the KGB to come from West Germany to Karlshorst for a meeting. Rhodin at the same time called on Kunde and told him to prepare himself to make a trip to West Germany. (Kunde had to apply for the appro- priate travel documents.) On 24 May Fromm met his case officer in Karlshorst and was told that in the near future he was to receive instructions to do something (not specified) within a 50 km radius of his home in Stuttgart. The case officer gave Fromm instructions in S/W, a cipher and open code signals to be used for making meeting arrangements. On the 10th of June 1954, Fromm received a telegram summoning him again to Karlshorst, but Fromm was unable to travel until the 17th. He let four days go by, however, before he informed the KGB of this fact_ In the meantime Rhodin had told Kunde to keep in very close touch with him since he was waiting daily for a telegram from West Germany which would give him some idea of when Kunde could make his trip. Kunde had his travel documents ready by the 11th of June. SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 /II SNCHET On 17 June 1954 Fromm arrived in Karlshorst for his meeting with the KGB case officers. They were annoyed that he had tot been able to come earlier and said that Fromm's task concerned a very important matter which had "already cost many thou- sands of marks". It was crucial that Fromm be in Ludwigsburg on 18 June at precisely 0700 hours. Fromm was then given his mission: he was to look for a minox box concealed at the base of a certain lamp post. If he found it he was to leave it there and go punctually at 0800 to the Chief of the Lud- wigsburg police and tell him the story of seeing a man put something near the base of the lamp post. He was to give a plausible excuse for being at that spot himself early in the morning and was to say that the man had acted suspiciously, making Fromm suspect some spying activity. The Soviets also gave Fromm a. physical description for the man, which they said was notional and which he could relay to the police. Fromm was to be sure to report only to the Chief of the Ludwigsburg Police since he was known to be very pro-American and would certainly inform American agencies and have the dead drop surveilled. The Soviet case officers further explained that another man would empty the dead drop, would be arrested and would confess that he worked for the Soviets in Karlshorst. (Here they relied on Rhodin's personal assessment of Kunde's character.) As soon as Fromm had completed this assignment he was to send a report to Rolf Rhodin. (This was the only time Fromm was to use Rhodin's address.) While Fromm was being thus briefed, Kunde was meeting with Rhodin. Rhodin explained that the matter of Kunde's trip to Kest Germany (task still unspecified) would become acute two days later, on the 19th of June. Rhodin would meet Kunde on the morning of the 19th and give him the exact details of his mission. On the 18th of June Fromm arrived in Ludwigs- burg, found the minox in its cache as predicted and reported to the Chief of Police at 0800 precisely as SECRET Approved for Release: 2019/02/21 CO2606320 Approved for Release: 2019/02/21 CO2606320 SECRET as instructed. Inter in the day he returned to Stutte