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Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM KGB EXPLOITATION OF HEINZ FtLFE Successful KGB Penetration of a Western Intelligence Service SECRET NO FOREIGN OISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM TABLE OF CONTENTS Page I. Introduction and Summary 1 Ir. Soviet Operations Against Gehlen Organization In the Early Post-War Years 15 a. Background Information on Felfe 17 b. Background Information on Clemens 20 c. Soviet Recruitment of Felfe and Clemens 21 . Alternate Versions of Recruitment by KGB and Hiring by Gehlen Organization e. Early Stages of KGB Operation -- the BALTHASAR Deception 26 29 III. Operations of the Early 1950s 32 a. Efforts to Discredit the Gehlen Organization 33 b. Felfe Settles In the LENA Deception 42 .IV. KGB Work in West Germany as a Sovereign Country: 1956-61 50 a. Targeting of CIA. Provocation; Tactical Deception b. Support of Soviet Policy and Political Deception Methods of Communication d. New Directions? V. Investigation'and ArreSt VI. The Aftermath . The HACKE Story B. LILLI MARLEN Case C. The Sokolov Case D. ZUVERSICHT Case E. MERKATOR Case F. Glossary of German Words and Abbreviations -1- SECRET NO FOREIGN DISSEM 53 62 65 68 80 89 92 96 101 112 116 117 Approved for Release: 2019/02/21 002606321 Approved for Release: 2019/02/21 CO2606321 BE= NO =MON =SEM L4/.. Introduction and $umnary Whet happens the EG13* has a hi do level penetration or a Western illtA3.lig0D,Ce services Roy does the NOB exploit the voluminous information received on enemy operations, while at the acme time protecting the security of its source? More importantly, does the En handling of such an :went leave telletale signs which ou14 permit en alert and knotledseable Western counter- intelligence �Meer to surmise the e:cistence of such a penetration? It would be presumptuous to generalize on the basis of one ease but study of the EGB handling of Nein:: Fare may help provide answers to these questions. Of the identified KGB penetrations of Western intelligence and. security services, Heinz Felfe was certainly one of the most successful. Felfe was an officer:of the West German ioreige Intelligence Agervice (BND)** for ten years, six of them as deputy chief of the section responsible among' other things for countering Soviet espionage. Re was a dedicated Soviet agent throughout this period, and remained. loyal to the Soviets even after his arrest in November 1961. Re was detected. as a result of a lead provided. by a CIA-run penetration of the Polish Intelligence Service (UB). Felfe was more than a simple penetration agent; he become: in effect, a consultant to the NOD on many of its operations in West Germany. strough Felfe, the Soviets pursued three objectives: a. To protect the security of Soviet inetallations and. personnel * For convenience, the term NGB will be used throughout this paper, even thouee: during part of the period covered the proper terminology for the State Security Service Was KGB or MVD. ** From 194-7 to 1956, When it had, no lessl, status, thin was known as the Gehlen Organization. In 1956, after West Germany had maned. its sovereignty, it became the BIZ, which is the German abbreviation For Federal Intelligence Se � cc. For con- venience and simplicity it is frequently referred. to as the IIND ever: the earlier period, is meant. tecnor NO PORECON DIME)! Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 0 hU h E T NO FOIWICN Df.S:STO4 Lb C.4-ex1any and. in 1.4.1..s; Cornany� azid to deteet Vostern 011.0ns inside the SoviLtt Union. To this end� the KGB tion operations doloilgaed to e:smand Fatale naceas -Lo iOrLIatLOu not only from hie ova service, but also fror4 other West German and Alli)d services including CIA. J. To confuae, disorient and discredit the West German foreign intelligence service. The aim was not only to penetrate the service, but to manieulate it to serve Govi t :11tere3ts. To collect Political latelligence on West Germany. �thisgoal, and the equally inportant objective of political raation, assumad increasing importance as the case riamgressed and .may have ultimately become the most important in Uoviet eyes, as a support to Soviet foreign policy jectives. Yhe reader will not find heraaccmplete history of the Felfe ease; that would require a much larer volume. The brood lines a the story are here, and one chapter in particular iu devoted mireily to background information, presenting the dramatis _)arsonae. It describes how the HOI3 recruited first Hans Clemens, and then, tam Clemens, Felfe. They had been colleagues in Nazi intelligence during the war, motivated after the yea' by :Levenge against the Americans, moey, and a desire to be on 'what tney considered the most powerful side. But this is essentinlly u 0elective and interpretive account, for the purpose 00 illustrating F.GB methods of benallng end supporting a well-placestaff penetration of a Western service. The lessons to be learned lie in the various deception and diversionary operations run by the KGB to build up Velfels reputation in the END, expandhis access, protect his security, end create an illusion that the Germ service uns effectively fulfilling its CE mission, while the Soviets were generally ineffective. There axe many ways byvhich Ll'elfe might have been unmasked cariier than he was. Evan a thor0101 namacheek might have done vet,-;11t the trick. He could also have beea osupht earlier if more ggyf had Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 NO FOREIGN D1441 been given to analytical evidence etich clearly indicated something was amios, rather than vatting to be spurred to action by a report from CAW own sensitive penetration source. Indications of Soviet penetration of the MID yore to be found In the deception and diversionary operations run by the KGB for the express purpose of supporting or protecting Rafe. 'Although support and protection of penetration agents in Western services is not the only reason .the Soviets run deceptUn and divereionary operations, it is clearly one or the principal reasons for such operations. Study of the relfe case suggests that efeen a number of Soviet deception and. diversionary operations are concentrated in one area, or 0474nst one service, these operations need to be carefully analyzed to determine vhcrther they indicate Soviet penetration( in the area or that service.* Many eacesoles of deception and diversionary operations are discussed in detail in this study; the most important are summarized in the following Vag. The first K.GB deception operation in support of Felfe was the "BALTHASAR" case. As far as the BED knev at the time, BAILMASAlt was one of its better positive intelligence operations, producing infor- mation on Soviet raining of uranium in East German and its shipment to the IISSR� The agent BATZKASAR was a wartime friend of Clemens who had re-initiated contact with him and then allowed himoelf � to be =crated by Clemens for the Bo. Actually, BAIMIleklivas a KGB agent from the beginning. The KZB initiated the operation to provide relfets co-conspirator, Clemens, with an official reason for repeated trips to West Berlin (to meet BAIMIASAR), from *Mere he could easily cross to East BerLin to meet with his and Pelfeis MB case officer. Another deception operation, the so-called "LW" case 'vars the most important single contribution to Felfe4s career as a West German intelligence officer, and, probably also to his career as a Soviet agent. It gave him status earl stature within the BM, and maneuverability as a Soviet agent. It was the vehicle for many gembite to broaden Folfeis access to collect inforaation, especially political information, and sometimes to disseminate disinformation. *The converse is not necessarily true, i.e. the absence of deception and diversionary operations does not necessarily indicate an.absence of penetration. Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM LENA was the BND cryptonym for an East German political functionary and publisher. He'travelled frequently to West Germany, where he was well received in certain West German socialist circles as an apparently independent, outspoken East German. His role as a BNB agent, doubled by the KGB, goes back to the early fifties. But in January 1954; shortly after Felfe's assignment to the BNB Headquarters CE Group, LENA suddenly turned from what had been (from the German point of view) a positive intelligence operation into a CE case. LENA reported to the BUD that he had been introduced to a KGB officer, and that after a flurry of meetings he had been formally recruited by the Soviets and immediately assigned the task of creating a net of agents to produce information on the - West German Foreign Office and the Chancellor's Office-. The Soviet plan, as related by LENA, was highly ambitious. LENA was to be the "German net director," .to recruit two principal agents, a political advisor and spotter, several support agents, and to provide names of potential penetration agents. As a developing CE case, handling of . LENA was then transferred to the CE Group, where the newly arrived Felfe became the Headquarters case officer. His assignment to this case was probably not accidental; Felfe's immediate superior at the time was almost certainly another KGB penetration of the BUD. With KGB assistance, LENA developed rapidly into the BND's most Important CE case, and it made Felfe's reputation as an authority on Soviet counterespionage. LENA's talkative KGB case officers revealed information on other Soviet operations in. West Germatiy, compromising several bona fide Soviet and East German agents in the process. LENA was "such an intelligent man" that his KGB case officers ostensibly enjoyed talking Polities with him, and these long conversations revealed occasional glimpses of the "true" Soviet policy on Germany. On the surface, LENA's operation to penetrate the KGB SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 002606321 7Approved for, Release: 201.9/7/1211187:06321 � 21-0 ZOI:tarG � on behalf of the BNB vas -far. more successful that the Soviet operation using =Lk to penetrate the Bonn Government. Although LEU %tad many potential rears.Lits to the KGB; the only oczl' penetration actually recruited was an ailing ea tncoriijotot gentleman in the Press Offices, who contented. himself with the ZGB i cornDetence, and. NOB '`failure to Obtain dortart nforma'tion from West Gelman government officeS. At the 'verge time; LENA vris, passing the BlE0 detailed and 4�41;4.4ns-iv!) information on Tersonnol and. installations at the East qerfaan iarters in could be painied to the opposition et build-Alp materie.3., "Thus en a case officer told. LEM- or any other double agent. 'rePo to ,the BlID; .that certain, areas of information Wore )y the KGB; Polfo Coiad area* the Virtue of " the West German government of 42hat cOuld and could. not 1)0) cleared for passage in response to Soviet Zsviirements greatly broadened Irelfets access to positive intelligence otherwise inaccessible to him; informationwhich could not be cleared for pao0,10 aa build-up material vas passed, cland.estinely-. by Pelf*. k metioti for i.nvestigating West Gen personalities " HOB, ", The' 1211i case offic&mild instruct to try to certain information concerning a Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM German official. LENA reported this to the BND, and the reported Soviet interest then provided Felfe with cover for namechecking the official In West German and Allied files. The results went to the KGB directly, through Felfe's own clandestine communications channels, and at a later meeting LENA would report that his KGB case officer was no longer interested. To make this exercise more thorough, Felfe eventually arranged permission not just to namecheck the West German targets of Interest to LENA's KGB handler, but to conduct his own detailed investi- gation of them. Felfe argued that if the KGB was interested in certain West German officials and was seeking vulnerability data on them, then it was necessary in order to protect West German security for the BND to conduct its own investigation of these persons to determine if they were in fact vulnerable to Soviet recruitment. This was done, with the results of investigation passed by Felfe to the KGB. The LENA operation also helped Felfe break ground for liaison between the BND and CIA Berlin Base concerning operations against Soviet instal- lations in East Berlin. ONO information on these installations had been checked in Berlin Base files since 1954, but in 1958 Felfe began a concerted campaign to collect detailed information from CIA on'its .operational program to penetrate KGB Headquarters in Karlshorst. The urgency of KGB attention to'Berlin Base as a CI target was heightened by the arrest in late 1958 of a CIA penetration of Soviet military intelli- gence in East Germany (Lt. Col. Popov) run at the time from Berlin Base. eeeee - Two-years earlier, CIA's Berlin tunnel operation had been detected, as well as an apparently successful CIA attempt to recruit a member of an * RU god intelligence point in East Berlin. It was clear to the KGB that CIA's Berlin Base represented a major threat to its security.: LENA provided the BND with sizeable amounts of information on KGB offices, *An RU is a Soviet tactical military intelligence unit. In this case, it was the RU subordinate to the Group of Soviet Forces In Germany (GSFG). The RUs are distinct from the RRU, which is on the 0 General Staff level and ix concentrates on strategic intelligence. SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SLUM NO FOREIGN DISSEM safe houses, and license and telephone numbers in the Karlshorst Headquarters compound. This information was then checked against information available to CIA Berlin Base, with the results going back to Felfe -- and to the KGB. LENA also met a number of KGB officers under their full true name, and these too were nametraced by Felfe with friendly services, providing the KGB with a mechanism for name- tracing some of their personnel in CIA files. In addition to LENA, the KGB created other operations producing information on Karlshorst Headquarters, and arranged for these operations to fall under Felfe's � jurisdiction. Through manipulation of these operations, and his personal role in engineering a number of crises in CIA-BND relationships) Felfe was able to force a reluctant Berlin Base to give him a general briefing on the status of CIA operations against Karlshorst. Over a period of several years, Felfe,, with the assistance of KGB operations, was able to achieve ever-closer BND-CIA cooperation in operations against Karlshorst. In one case when hee- or the KGB - suspected CIA had an agent in an East Berlin housing office, Felfe, with KGB assistance, boldly provoked confirmation of this fact by trying to recruit one of our agent's colleagues. He placed an ad in a West Berlin newspaper designed to attract secretarial help from the East Sector. Our agent's secretary answered the ad (at KGB behest), and Felfe informed us that he intended to recruit her as a source. We then told him that we already employed her chief and asked him to stop his approach since it might endanger our agent.. As a result of such activity by Felfe and the KGB, the hitherto unilateral Berlin Base program against Karlshorst was compromised. There mu were also other cases of provocation to identify CIA agents. One involved mai a West German businessman, recruited by Berlin Base to report on Soviet trade contacts, then approached by the KGB and targeted against the West German and U.S. Embassies in Moscow. He was suspected by the KGB of Western intelligence contacts. Therefore, the KGB closed out all the agent's KGB requirements except one, namely to spot, recruit and maneuver into place a West German girl suitable to be a German Embassy secretary. By introducing a CE factor urgently affecting German security, the KGB succeeded not only in forcing revelation of the case to the CND, - but an actual turnover of the case to the CND. SECRET NA VciartdN ntt4em Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 4 in %.0, Li 11.1 a NO FORETCN DISStM With Felfe booming the Blet Beadviartera ease offieer. In another case, a Vest German woman run by CIA,relfe rrovoked revelation of our interest by sending us reports accusang her of seriously Insecure behavior *tile in Macey. Subsequezatly, she became the object of a Kaa ntinnEla" oPez'ation a Soviet lover, whom the KGB introduced sad made appear potentially reeruitable. Another ittegral part of the Yelfe case is the"14711 MABLBr operation, which, occurred. In 1954, end the related. ease of Ludwig ,Albert the following year. VITT�MABLES is the German cryptonym if for a Soviet operation which involved the intentional compromise by the ZGB of the fact that it had a source in the BNB field base for CS operations.* To carry cut this operation, the VISB prepared a CO2102reasensive report on the personnel, organization and some of the operations of the I= field base. In June 19514 a MB agent vas sent to pleats this report in a deaddrop in West Germany. A second KGB agent was then sent to marina that the drop vas in place, than go to the -local police' and recite a pre-aloranged stox�y of obeerving a man hide something at this spot. Ohio agent was subsequently arrested and. confessed his role in the deception.) Three days later, a third KGB agentv4 dispatched on a 111681�12 to "receive the drop, with the intention that he unwittingly walk Into a pollee stakeout and be arrested.. The KGB ,judged (correctly.). that this particular smut vould quickly confess to being dispatched, by the KGB, thus confirming KGB control of the "penetration." Through suettte police 'work, the operation was unmasked. as a Soviet deception, but the fact remainel that the Soviets did her a complete end accurate rundoni on the activities of this field. base and. must therefore have actually had a penetration reporting this information. Subsequent investigation, in which Telt* played an impartinit role, centered on identification of this !agent. Tile report itself provided. slavers:4141ms and.AZOB provocation Mounted a week after the report was found. may have been designed to *wilds additional clues pointing to Lutgrig Albert, a senior officer o'thin base, but the provocation vas ineffective. A year later, confeesed Bast 0021:464 agent fingered. Albert, among others, as an , - * The German desimation for this base vas GM" Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 DI5't" East Germ,/Soviet egent. Xt ce=ot be proven that this "con /ionise vas Soviet inspired, but airman. tantial evidence suggests this im the case. Albert was arrested and later committed suicide; evidence found in his betas confirmed the allegation age.inst him. Altboueir there are inaps isixtr knowledge and hard evidence is lacking, the NO pupas* in the ix= umaxa and Mart cases appears to have been three-foldi First, initial, impetus for LILLI MUM suky have cane from the defection of MD officer Petr Deryablu. Deryabin had served is the Gomm CB branch in KG3 headquarters alai was partially knowledgeable of 113:13 operations against the SliD.* The MIA MA= operation, thigh came just four months after Deryabin's defection, mei well have been designed to divert Western investigation of his information. By' creating ciremnstances and. feeling information *dell eventually led to the arrest of Meat, the KGB apparent2,y hoped to shield a more important or more reliable agent, Polfe, from investigation. A second purpose was probably oklielnatioi of Albert whojelthougb, an actual Soviet agentibad api2arently become dispensable to the KGB. There are several possible emTlenetions for this. One of them relates to the fact that Albert had become a bitter enemy of Felfe and had accused Fate of being a Soviet agent; perhaps t.be13 as no longer certain of Albert's total loyalty. Ami a third. ob3ecti wee to further the NOB's overall proven of demorell ales and discrediting the D. Albert was by no means the first KGB agent in the BUD who had been deliberately exposed for this purpose As the years passed and the 1213 developed greater ersporience with its penetration sources, the deception operations became� inereasing17 caulez. The =MAUR operation was followed by the increasingly complicated MIA and 12= WM= cases, die. cussed above._ The final deception was the�BtraCh case, which aborted in mid-plot. as a result of Felfela arrest in 1961. This was a convoluted triple-think, a plot within a plot, which is far too complinated to smarize here. Xt is discussed in detail Dariabin Icaew the KO orypt)nytms ("Peter" and "Pawl") for both Felfe and his, Clemens IcaTtlui wee unable to provide details thich would 'Leap estgb ttultildentities. 110, 1�11 Approved for Release: 2019/02/21 002606321 - Approved for Release: 2019/02/21 CO2606321 NO,FORMISSEM In Chapter /V; Its purpose may have been to facilitate communications with Felfe or some other agent within the BNO, or to deceive the BID about its own security, but since the operation ended prematurely the KGB rationale and specific objectives are by no means clear. Felfe exposed himself. to many risks to get the operation started, so it must have been destined for an important role. BALTHASAR LEU11 LILLI MARLEN Kind.BUSCH are all cases run on Soviet Initiative for theli)urpose of improving communications, increasing the access of Felfe and/or other penetration, or otherwise deceiving the BNB. There is also an different category of cases which merits study. These are apparently clean operations primarily double agent , operations Initiated by some West Germen service, which took curious turns after their compromise by Felfe. Two of these 7UVERSICHT and MERKATOR, are described in annexes to this paper. ZUVERSICHT was an , . RU GSFG operation and MERKATOR an East German foreign intelligence (MfS/HVA) operation, both initially' doubled by the BfV.* They are selected from among many such cases because in these two instances we have confirmation from Lt. Col. Popov and an East German MfS/HVA defector Max Heim) that the KGB informed the handling services that their agents had been doubled by the West Germans. The KGB specifically asked the RU and HVA to neither drop now�re-double these agents but to continue running them for source protection or deception purposes. We know the date this happened and can trace the change in handling which occurred after this date. In the case Of 7UVERSICHT, the RU continued running the case for four more years, but devoted minimum effort to carrying . out the KGB' instruction to keep the case alive. Because of this minimum effort, RU communications with ZUVERSICHT became more and more "insecure," from the agent's point of view.. Felfe used this case to help create the *BfV is the German abbreviation for the Office for the protection � f the Constitution, the principal West German internal security service. 10' - ,.-, SECRET 0 FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 � SECRET � NO FOREIGN DISSEM impression within the BND that the RU GSFG is generally an incompetent organization. The MERKATOR case, however, illustrates more imaginative use of an agent known to be controlled by the opposition. When the KGB advised the HVA that MERKATOR was a double agent, responsibility for the case within MfS/HVA Headquarters was transferred to a CI component which apparently also handled other cases known to be controlled by Western services. Thenceforth, the objective of East German handling became to disseminate political disinformation, to observe West German CE handling of a double agent, and to divert West German counter- intelligence by creating suspicion of an official in a West German political party who had heretofore been politically irreproachable. A fascinating example of KGB exploitation of such an opposition-controlled double agent is the Sokolov case. This started as a U. S. Army Cie double agent operation: The case officer on the Soviet .end of the operation was an RU GSFG Major (who used the alias Sokolov) in East Germany. In 1969� after several uneventful years, UC turned the case over to the BfV. BfV study of the case revealed that Sokolov was a drunkard, an Insecure talker, and a flamboyant and promiscuous type. Further investigation revealed he was known to various Western services under various aliases. At this point the operation apparently became known to the KGB, whether through"Felfe or some other penetration is not known, and it took an interest in exploiting the case. The purpose was probably primarily investigation of an insecure, and possibly treasonous RU officer (Sokolov), but in the course of its investigation the KGB pursued a secondary objective. This was to promote, and then to monitor -- with'Felfe in the middle a tour de force of interservice liaison. The method used by the KGB was to create or elaborate upon existing double agent operations involving Sokolov, so as to provoke operational interest in him and in his agent networks in West Germany on the part of the BfV, two LfV's,*.the BND and CIA (on its own and in its capacity as liaison representative for CIC and OSI interests). From *An LfV is the security service of a'Land or province. It is subordinate to the Land administration and�Wile not directly subordinate to the BfV, cooperates closely with the latter. -11 SERET NO FOREIll DiSSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 'SECRET NO FOREIGN DISSEti the Western point of view, the case eventually came to involve several interrelated double agent operations which resulted in investigation of roughly 200 security suspectsca seemingly excellent operational lead to an RU Major. (Sokolov) in East Germany, and the participation of nearly every German and Ameriean intelligence and � in West Germany. By inserting into BNO spotting channels an agent who claimed to be Sokolov's mistress as well as his agent, and who hinted that he might be recruitable, the KGB maneuvered BUD (and'Felfe) intc(a Controlling position in the operation. The BUD inspired an'interservice task force to work on this case; a CIA liaison exclusively on this case. security service he officer worked full time,, for six monthSe CIA provided traces guidance, and information on RIS modus operandi and : organization. Felfe's behavior on the task, force was uncharacteristically passive -- the case was pursued in the direction he (and the KGB) desired without his customary railing at the incompetence of his colleagues, although during one period lie did try to persuade the task force to try to recruit Sokolov in place rather than defect him. But most of the time, Felfe simply sat back and allowed himself to be briefed by all participants. The executive action phase of the operation proceeded smoothly: five RU agents arrested, many more suspects identified considerable espionage equipment, including . �. . one of the newest Soviet W/T sets, captured. The West German services were very pleased With their "success. " CIA was impressed by the proof that close operational _liaison with the German services could be effective and amicable. But the KGB was also Very pleased; and Felfe ca even received a.rare.eash bonus for his Work, ::The KGB:aehieved:the probable arrest of -Sokolov and.O0tainetta wealth of information on the Operational and liaison=procedures-of.Westernservicet. Only the RU. was left out in the cold. Felfess, coconspirator, Clemens, who was slower and less sophisticated than relfe', was shocked thitthe-KGB deliberately allowed RU-Agent'frOM Eiiit:Germanyto Wilklnio-a.West German trap and be arrested. Felfe Was merely amused. In Summarythe'Sovidtstachievedlthrough:theirvarious deception operations � , a far broederexploitation'of Felfe than would normally be considered possible. By rigging an operation esleciallyfor felfe the KGB could force answer, from almost any element of. the Vest German government in the guise of build-up material. 12 - , SEBRETfiN8 PREP:0i hIgr,Y Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 � bECRET `j rCIREICR DI8SEM bureaucratic amnipulations, Weed even promote the formulation of helpful. bureecieratie regulations or preeedfents,: By introducing a Soviet CB 'fituctor into easy BKD case anywhere, the MB could =se , e case to be transferred to the 'protecti'custody of reife. By introducing a Soviet CB isOtor urgettlY affecting Germtei security into the operation or any, other agency, &oven or foreign, the � EJ3B coul4 lois to bring many another case under reltis sratinr. efeciion 44 KGB' officer' able te report on KW penetration iff WIW the IgiD, the KGB protect Telfe's security by mounting cvtion operation vhdch confirmed the existence of penetration Arid. Iihich vas probably intended to divert' the investigation to There trce certain common denosainators Vetch nm throuen the major deception operations discussed in this study. These axe ete. follows: a� lh pursuit of the above objectives, the KGB vas willing to sacrifice agents (their' own as well as OW, UU and Best COVICata agents), case officer time, money, pod information, and avearently new equipment and procedures. b. The KGB had a we3,3.v3Aced penetration, Pelfe� in a position to monitor the target service's reaction to and )tenaling of each deception. Iregieeutly, this penetration benefited from the deception. c. Ma operations were aggressive, imaginative and at times grandiose in their coneeption and planning, but their execution was frequently inept by comparison. They wawa. only because of the naivett: of many BKD officers and kite rigid compertmentation within the PVD, ithich in this case was a disadvantage as it prerentel pieces of the puzzle from coming together in ore place. Olite a few CU officers # in liaison with the BUD fiat at the Um that these operations ereslleculistr.* fy,siRtetacon officer responsible for Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 V V V 40 NQ rOREIGN DISSEia PED security during part of the period in vestion frankly thought they "avelled" and ware indicative of penetration* Particularly in the light of currakt knowledge of KGB modes operandi (gmauling this study of the "cafe case)* it is suite possible itr au exert CZ officer to dot** mit deception And diversionary operations* � The source material for this paper is voinninoue end varied* Even thou g# rare never confessed to szything' mare than could be demonstrably proved against UM* some of his statements have been helpful* eImo supported his agent career by two other agents :tiro have been more fxsok and id2Oee testimony hes been Zona generally reliable* Mose ascots were less importaat and less knowledgeable tban Fats, but their inforiaation has been useful in reconstavoting the case* C/A hat intimate liaison vitt the BM and Bff macerating the operations discussed in this paper end we are3t1.7 involved in several. of than* Additional insight into BED hen /134% of these cases vas received unofficially through close �personal contacts with several-of the BM officers* This includes intonation on 41rnagreaxats within the MID eeneereieE the interpretation and handling of these operations, end the exact role played by /elf* in the intramservice amemarvering* In several. insteoces we know the feats from defectors or from a CIA-controlled penetration source* CIA was also intimately involved inthe investigation of Telt* both before Shd after his arrest* Thus, while there ere acme gyps in our information, our knowledge of this period of latelligence history in Germany is probably Almost as comp3ste as it ever could be without a full confession 17 relfe or a first-hand account fxsm his )41111 case Officer. Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 21. Soviet Operations -Against the Gehlen Orjmnization _EarePos The history of the retie penetration has its betinning in the early 3?ost-var years. The spottbig of people like Bairns reire by the Soviet intelligence services vs* not accidental, but the result of a well-tergeted, well.developed recruitment � � caepaica directed against former aud intelligence officers of the Nazi Reich* The theatts is simples o34 intelligence hands will flock together, will seek to return to the se* they know best. Some *Mese people might be susceptible to a Soviet .poach because of their gleneral sympathies* Others, such as former farms Elite Guard (88)* and Security Service ( ) menibers, many of wheal vers(nov vex criminals able to make their way only by hint% a past which had once pit them among the ',e3.ite-,4 would be vulnerable to blackmail* ' The Soviet spotters vire to be found almost even/141cm in Europe 4. East end West 4. in the POW campa, 1 in the war cristee screening coranissions, in the courtrooms� The future West Genova intelligence and security servIces could be penetrated almott even boil; they were created. Ma the closing days of the var, General of the rreeski eere Ost (1710)** had brought the remain files and perconnel to 0-2, U.S. Argy, for whom he pre valuelder end relatively undeae source of intonation on order-of-battle* Undoes adva *As his group burgeoned until by 1949 it had 'become recognised as the primary Western agency for the collection of Soviet OB and Bveatually� of CX information \ In the Soviet occupied zone of Gersamye It was a loosely knit orgairation made up predomirantly of former military intelligence (Absehr) end Ma officers wbo were hel4 together by the officer's code of honor and Individual bonds of friendship. From an institutional point of 'dem, however, the prob3.eass of control, responsibility and security were serialise Xn Jay on394,9 6.42 sakes en to assume the responsibility for the organization and thus tinier- take a trusteeship Which was to last for seven years. *Bee AnnexP for a glossary of German terns used inthis paper. ** IMO - General Staff section deaLing vith infestation concern.. ins armies of countries to the East of Germanyel SECRET NO Voinqba arrGar Approved for Release: 2019/02/21 CO2606321 �, Approved for Release: 2019/02/21 CO2606321 � -,;01 f Y k � � NO FOrgEID'ISStM To the outsider and to its enemies, the Gehlen Organization looked much more like an American puppet than it actually was. In 1948, the KGB in East Germany achieved an important cop') against the Gehlen Organieation, Gehlen's chief of operations for northeastern Germany was arrested (or defected) in East Berlin and, on the basis of Information provided by him the Soviets were able to expand and intensify their penetration efforts. By mid-1952 the work against various of Gehlen's field bases had been successful, but an agent working on Soviet operations Inside the headquarters organization in Pullach was reportedly still lacking.* 'Particularly successful had been the KGB work against Gehlen's field base for CE and CI operations which was located in Karlsruhe. Within the Gehlen Organization this base was designated as GV"L".** and it will be referred to by that designation throughout this paper. GV"L" was especially attractive to the KGB, The major part of its work involved the recruitment and handling of informants in other German agencies for the ostensible purpose of protecting the security of'these agencies. The same base was also responsible for running double agent operations .against the Soviets, a function which brought its personnel into direct contact with Soviet controlled agents. 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 Erkorma to conceal their background, and who sti.11 suffered to some extent from old social and professional caste rivalries which kept the former Abwehr and FHO officers in asdendency. In reaction to this situation there had gradually or *Primary source of informationAearly KGB work in Germany is Petr Deryabin, who was assigned to the State Security headquarters desk responsible for CE work in Germany from May 1952 to September 1953 He read the Headquarters file on the Gehlen Organization in July 1952 and has stated that as of that date 'there were Soviet agents in the field bases. but no evidence of a Soviet agent In the Gehlen headquarters; however, we cannot rule out the possibility that there may have existed restricted files to which he had no access. Ernst WORM, a Gehlen Headquarters officer working on Czech operations, came under very Strong suspicion of being an agent for some Eastern service in the Fall of 1952. �The .Gy. stamds fpr General Verwaltung a- General Administration. The "L". is an arbitrary designation. - 16 - SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM developed within GI.1"L" a sort of mutual aid society of ex-SS and SD personnel for self-protection and professional advancement. This group was particularly susceptible both to simple blackmail and to the somewhat more complicated appeals of revenge or vindication.* It was through this base, GV"L", that one of the most able and tenacious staff penetrations of the Gehlen Organization was launched. a. g_BackroundInfornationonFelfe Heinz Felfe was born in Dresden in 1918 the son of criminal police Inspector.' - He started his am police career at the age of 13 as a volunteer in a border unit: In 1938 he was inducted into an $S reserve unit, and from then on his schooling legal training, and subsequent assign- ment to a lob in the Criminal Police was guided and fostered by the SS. In 1943 he went into the foreign intelligence section of the Reich Central Security Office (RSHA), where he worked first in the Swiss section at headquarters, then in HollandI- for a while under Schreieder of "Nordpoln fame. He finished the war as a 1st Lt. (Obersturmfuehrer) in the militarized branch of the Nazi Elite Guard (Waffen SS) and as a prisoner of the British. He was an average looking individual with no distinguishing* physical characteristics. Of the many recorded impressions of him from various stages of his career, certain personality traits dominate: a highly intelligent man with very little personal warmth; a, person with a high regard for efficiency, and 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 *A variety of formal and informal secret Nazi organizations have existed since the end of the Second World War. The KGB has had much -success in penetrating and controlling these groups from their inception, and using them as recruitment pools and as propaganda weapons. One of the most interesting reports on this subject was provided by the senior Polish Intelligence (UB) officer Michel Goleniewski, and concerns an organization which he called HACKE. Information on MACKE is in Annex A. It shows how early and how thoroughly the KGB penetrated and manipulated hard-core Nazi groups, especially the former intelligence and security officers. These operations were the logical outgrowth of the KGB's wartime operations and began even before the war was over. They still have ramifications in many areas of the world where former Nazi settled. set � , . Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM 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"'c;perations 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, Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 NO FOREIGN DISSEii Felfe was the Wiaa-cold calettlators se he ones admiringly described favorite agent. The only lively emotions detectable in hiss are his intelligences, en3o3mart of the game and his disdain for his fellow man. These, together with his great admiration for Soviet rower and 4effielency, sees to have sustained him throudrout his oareer and imprisomment. Its attachment to his wife and two children SOWS to have been relatively perfunctory. As for his colleagne in espionage for ten years � and friend in adversity of even longer Standing, lens Oimesns rats found him in the *Ad merely a oconvenient scapeg4t. � As & British POW, Felt* was interned at Blatt ICappel, an interrogation center near Utreeht, *lel specialised in the interrogation of former Genial intelligence personnel. It is possible that his name came to Soviet attention throudb an agent among the Dutch interrogators. One of Felfe,a fellow-prisoners, a former SD officer' named Salyut Proebsting, reported to Dutch authorities in 1946 that he and Felt* had been approached by Max Weseeriff the interrogators, to work for the Soviets. But Felts denied that ikny such incident bad occurred, when confronted with tbia information after his arrest. This is one of & number of suspicious points in Felfets background which could have been uncovered by an aggressive investigation long before his arrest. Felt* returned, from the war in Nosember 106 with the deter- mination to -settle in the Western sane of Germany, although his home hal condistmitly been in Dresden, which is the Soviet occupied zone. His wife and 'child joined him at to end of the year. Seven difficult months foLlovecl until he finaLty found work at I an *dent for a British military intelligence unit (Sixth Area Intelligence as, MOO. Its task was to develop Information on Comarunist student groups at the University of Bonn. Under British instruction he settlicihimself in the Bonn area, registered in the Faculty of taw Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM one of these trips, in 1948, 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 police, 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, 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 on Felfe were received by the BNB in 1961 and by CIA in 1962: These revealed that early complaints against Felfe included attempts to sell information collected for the British to several other intelligence agencies, two West German hews services and to the East German Socialist Unity (i.e., Communist) Party (SEE)). They also contained an account of Felfe's attempt to involve the British in a , double agent operation with the Soviets, as well as various agent reports showing that he had blown himself as a-British agent to all and sundry, including the West German Communist Party he was supposed to be penetrating, 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.givelip undesirable contacts with former SS personnel could no longer be tolerated. Specifically, they named Helmut Proebsting and Hans Clemens. Clemens was an old Dresden friend and former colleague from the foreign intelligence arm of the RSHA. After leaving the British, Felfe continued to work against the ,West German Communist Party for the Land security office (UV) in 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: for having sent a report on it to a contact in East Germany: and for having tried to peddle the plans for the 8fV charter, which he had ,somehow acquired from someone in the Finance Ministry, to a West 19 NO FORM:ETDISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM German newsman. From the LfV Felfe went to the Ministry for All-German Affairs,* where he worked as an interrogator specializing in refugees knowledgeable on the East German People's Police (MO). He remained at this job, eventually writing a study of the VOPO for the Ministry until his recruitment into the Gehlen Organization in '1951. b. Itmcli_rour_oldInforLtimmens Anyone who has tried to understand Germany knows that bonds of common local origin are often far stronger than the larger national concept. The fellowship of former Dresdeners is a thread which runs very heavily throughout this story. Both Hans Clemens and Felfe were from Dresden, and their recruitment by Soviet intelligence was directed by the KGB office in Dresden. Clemens had been chief of an SD field office in Dresden in the late thirties, when he had worked against the German Communist Party (KPD). Later he was posted to RSHA Amt VI (foreign intelligence), where he learned to know Felfe well, and subsequently he went ta the SD command in Rome. At the end of the war he was cantured by Italian partisans and interned in various British and U.S. POW camps. In 1948 he was indicted, and acquitted, during the well-publicized trial of his chief. the Nazi Police Attache Herbert Kappler, notorious for the murder of Italian hostages in the Ardedtine Caves. At some point during his captivity he learned that his wife Garda, in Dresden, with whom he had been corresponding, had been sleeping with Soviet officers. He claimed that this knowledge severed his already weakened affections for her and decided him in favor of resettling in West rather than East Germany after his release from POW camp. He settled in West October 1949, but continued to remain in loose correspondence with his wife, through whom he had learned the whereabouts of some of his old friends. One of these was *At the time, this organization was known as the Kaiser Ministerium. It became the Ministry for All-German Affairs when Germany regained its sovereignty in 1956. The latter name is used here for simplicity and clarity. - 20 - SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEJW Erwin Tiebel. a fellow-Dresdener then practising law quietly in a small town in the Rhineland. Tiebel had at one time been a confidential informant for Clemens in the Dresden SD. Later1 he had been assigned to the Swiss Desk of RSHA VI, where he had also known Felfe. He was to become a support agent for Clemens and Felfe in their work for the Soviets. Felfe had already looked up Tiebel in 1947. Clemen Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 S,E2c PORZIGH DI)cr , POW ear* in 3948 or 1949 end arrangtd to met him atter his release. A letter from , Clc.roqint vitt dated Dresden, Mooch 3.9119, addressed to the Pelf* family end menticning Tieba, isut,6,-resta that these old threads were icrotte4 very noon after the vsr, rrobabdy with 3eit coamizance, Tiabel was on a list at war crtrenn3s accueed of killing hostage* in rolasdaniusi there is sore augosticca that Clemens was stwrflarly listed, Gorda Clement; vas working as 'a Soviet agent at leant by December 39749, and probably had been 01334.2 the end of the waroas Pelre later told his British case officer, � Her cover name vas "rriban. She reported to a SU Colonel pallid "Mx" in an office in the Soviet CO=Aladis DreedeAp Which, *wording to Clemens, was concerned with trackirs down former police sad intelligence officers from the Dresden area who were liable Zr var crimes, Clemens had been every bit as much of a Nazi as Felt*, with the difference that be declared himself more frankly. EssentlaDy a leas complicated. kind' of person, coarse and probably brutal, Clams* human attachments were more real and mesningrul than Pelfele� Ware one has the impression that Irelte never made a mows without a reason or recompense, one can twain* Clismens making a gratuitous or spontaneous gesture of loyalty or frienichip. Fell* considered. Clemens his cultural and in inferior Which in correct in a certain muse. Bat atter his arrest, he rwetenied that the older man Clemens is 15 years Payette senior had examined. a dominating and pernicious influent.* over him by drawing him into the Soviet service aM making him stay there. Throughibut their 11111) careers, however, they remained good friends, and Clemons in his post.arrest statement claimed that there bad never been any friction or rivalry betuwen them in their Soviet work, c� Soviet Recruitlient of Clemens and Pere Within a remarkably abort time after Clemens* return to Germany about two maths � Mc sent Gorda Clemens' to West Germany with a recruit. tient proposal for her husband. This occurred just at the end of4:4,949 or possibly in early January 1950, Clemens claim that the situation was perfectly clear to him comply or face charges. Soreover, he had no steady jobi he needed money, and he vas also intrigued 14r the idea of secret contact, ha discussed the cliaation with both Pelf. and Tiebel� to bal oppoold outright the Idea of accepting Approved for Release: 2019/02/21 CO2606321 �Approved for Release: 2019/02/21 CO2606321 FOPSIGN DISSEM the Soviet approach, they did entertain the notion of trying to offer Clowns to someone as a double.agent. Clamene even talket to an official in the Ministry of interior. 17afortunata3y. the latter 'brindled him off 'without giving Ilia err concrete advice* Felts regie have offered Clemens to the XIV; British files show that he told his anti& case offieer in early 1950 that he intended tititio so* MOO bed already tried 1212SUCCOSS. f1,13.3$ in November 1949. upon Clemens' errival to sell bin to the British as an agent. (He also tele& to persuade then to recruit Tiebel.) This effort had. merely earned hint the admonition to stay any *tram his old SS friende, who were bad medicine for someone supposed to penetrate the CM11"1114 qt Party* ia /annoy 3950 Felt* tried age*. this tine offering Clemens at a British-Soviet double egant. A letter data 25 lamer: 2950 from Tiebel to Pelf* abates that Clemens had already agreed in principle to cooperate with the Soviets in Dresden. The British files contain a MOW of a visit by Fall* to his case officer an 29 3eastax7 2950. Awing which he reported that Gerd* Clem' bad arrived two days earlier and v as planning to return shortly to Dresden with her husband in order to put him in touch with the MB* Tile British lingered on3y briefly aver the decision of whether to pleY' Clemens as a double -agent* Shortly after Felten pro-posal, evidence or his double-dealing with the UV became evident, and he confessed to having sent a report on that organisatioa to an Zest Garman Communist /WV' contact in Bast Berlin* 'When Frau Claes= appeared in Germany again In early J4r11. end Felfe tried once more to persuade his employers to undertake an operation, the British case officers came to the decesion'that they shoat drop Felfe and list Clemens as a security rink", /V this time, of course, Mom was no longer just a security risk; he hact already gone to Dresden and 'become a Soviet agent. in February 2.950 Clemens rent to Dresden, where he was led by his wife to meet Colonel Mx in the Soviet "Waldschleeseebeten CanDollea. Here, 'Max debriefed I. on his life history and present contacte, lerctured him on his culpabilitzf as en SD 'criminal, probed his feelings of confusion and resentment, -Listened constructively while Clemens deliver. ed himself of a long pent' up statement of his hatred for the Americans � (They had been twiote the cause of Gerson defeat, eta., had smashed his home town and caused the death of at least five or his relatives.) lbw at this point took Clemens on ei tour of bombed-out Dresden and1 at the tide of Cleans* emotional reeetion, offered bin an opportunity of revenge against the Americans* The proposal vas clear cut and preciseS ,fSVC111111, weirlifigi PUNA Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM as a Soviet agent Clemens was to return to the Western zones, seek out old police and SD contacts and through them try to penetrate the Gehlen Organization. .1)0 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 been 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, "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 states it was perfectly clear to his friends that Max's target was the Gehlen Organization. Felfe claims that he did not understand that this was the case until much later.) When Tiebel paid his first visit to Dresden some months later, he received much the same treatment as had Clemens, with perhaps greater emphasis on the threat of war crimes indictment. He received the cover name "Erich," which he kept throughout his agent career. Felfe, who by thts, time was working as a refugee interrogator . : in the Ministry for All-German Affairs, resisted making the trip east for another year. He did,. however, submit reports to Clemons. Tiebel was later to be used as a courier. Clemens was able to carry out his assignment for Max with amazing rapidity. In March 1950 he came across an old acquaintance from the Dresden police named Wilhelm Krichbaum who was then employed in a sub-unit of GV"L" in Bavaria. Through him Clemens was able to join 23 - SECRET 00 FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM the Gehlen Organization In June of 1950 as a registry clerk and courier for the same unit.. _(Clemens' Gehlen Organization alias was "Cramer.") Krichbaym himself was later to become highly suspect as an earlx,MSB/Dresden penetration of the Gehlen Organization, but it is not known whether or not he wittingly maneuvered Clemens or Felfe in the organization for the Soviets. Clemens remained in Krichbaum't unit for two years, during which time he reported on the organization and personnel of both the Bavarian unit and its parent base, GV"1.", 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. 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 plans for the BfV charter to a news service, it is a good guess that these documents might also 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. When Felfe's work for the Ministry for All-German Affairs 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 importance. There is some suggestion in our records no evidence that Felfe might reallY_have been recruited-earlier, Out even if this is so his serious Soviet work probably did not begin until he was properly accredited West German intelligence officer. 24� NO FOREELISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM 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 relfe said he appeared to be very SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 telirm4 *bout him,elreeey gave bin the general Imelture o 1 t. 1 t that he wrote a declaration of vi1llugA444 "to t3rPlotefF14) "Mgt 0111.0 he did not sige a pledge to work for &meet .1.1gr, at.tuch. ge.received the cover WAM, "Pa " He tall, 44 �Ltti1sabout.thi, first visit; he stye he wnit well mined end dined tarlshoret esfehouse stars he spent the night aed that Ma( g est effort to establish a friendli, eociible ateosthere. le scim gave hte no inotructions at this meeting. Whether this is true or zt, subsequent events pas/ed themes:Imes out exactly ,to 74x 's wishes. Ow Oa tbe 26th of Ootober.relfe WA called to Karlsruhe for a personal ww with the chief of Ort."i ft made a good impression, was hired es ea asist*nt to the OV"L" Chief for Soviet CI operations, Oscar Haile, t iee.ted to begin mork on 15 Ibvember. (Fate's deblon Organitation gates reolf6 4104 0Iimens celebrated the event that night with gtoOd. Sometime shortly after this and b,fore be actually began "Irk, Pelf, ;geld his 'second visit to Max. Thie-time Max vial., nor* deeply If i1ta, qua'tion, ofmotivation and access. Ho took Pelf. on the tour o 'N. Aft tat dieoutted. at some length the need for iSoviet-west dereen erotealtv. BO stressed the theme of cr,34.LeT.4.,..ship . . "att. tbe ft ,.....t that Felts would need Soviet Protection to keep his haw , jot ane, to )(444, hie reoort hidden. Having seen one more ageet into the � ! : � ' rganisttiaup nex sis now concerned t6 mmneuver.him to the most deaireble spot. Significantly, he asked felts to try to get himself posted to the GehleaYititquartert. Agate, he stressed the need Felt. ircmao tarp for servistprottotirxt yarning hit that even if his SS metlership were not discovered he would, always run the risk of losing his job in the intelligence serVille because of eame flap Which might not oven be his *ult. Thews -words mare satiothat more than prophetic, for wren then rh brewing in vericius'Perts'of.the dehlia Organisation, end particalarly 41/"LP and its sub-units, the first in a series of scandalous "defection "kid� neloptegt end security4"inridents" ihich mere engineered mbolly or in pArty the Soviets at part of 4 easpaign to discredit wed disorient th41 orgen1Lation. While several oft:hese scandals tiers to erupt in relfe's to inlengir him during the period be mas in av*Lr. 01 0- reinM at tT"L"for the slut 2t months.4Iovember Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 Ta u.,41 %SSW" 110 TaS1%; first as assistant to idile ands later* after Wailes transfer to headquarters In Ally 1952* as the main Soviet OE reformat. sail* became very Impressed vith the young amn's energy ant ability) an* linen he himself moved to the headquarters Cl Croup to work cm Soviet tweets he opened the door for Iftslitt"s Suture career as * Seviet CS Kers again, SS in tare ease at lOrichbams, stembo a:question marks there is mach conjecture and considarable evidence' that Pelle* too, vai vearking on the Soviet side. k 41. Alt t sicas_of Recruitment Ern smi lir 00hlan Ctrgantzation . 17p to this )2(!nt In the stow vs have wee or less accepted Clemens* ant Pelfe's aa etatements concerning their recruitment 'by the B. But there is a peat deal In their ova edmisslore concerning their early postwar year e vhich suggests that Pelf' might have been recruited 133,* the EGB in East tlermsny In the 19401a ritber,than the *5044 The detailed resuming behinl this speculation Is perigheral to the main story am% is not Included here, but it is interesting to rote that when the defector Michat3 Golenievski reed Falfets testimony be lavalletaly .seme to the same conclusion. Golanievski Is the senior Mirth Patelligence (uM) officer Al; provided the lead 'ditch eventually lad to Falthe's arrest. He said he thought Pell% had probably been recruited *Ile waiting for the British and traveling to the East. Ow best gees. � Is that this amid have been in 3,948,, vhert he vas 43legok117 *created by the /bat Gomm Police and released after intercession Ity a benefactor In the Mutation Slin4sti7.4 But Pelee could well have been recruited even earlier than this. * This benefactor vas Herbert Theuerkauf� Thenerkaufes boss in the Ministry of Educations Rudolf Bala, vas a notorious KGB spotter In East Germany. Poe emegtles When UM ostensibly became a Giehlen Oreganization double agent against the KGB, he repealed that it vats Baba vho had put him In touch with the M. Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET ..j NO FOREIGN DISSEM surmised that it was probably Felfe who spotted Clemens to the KGB, which then assigned the "recruitment" of Felfe at to Clemens as a test. Clemens was probably never the wiser. Goleniewski thought the Soviets did not employ this technique of "concealed recruitment" (the writer's terminology) very often, but claimed to have seen it often enough to be completely familiar with the ,method.* Certainly Clemens' account of his recruitment of Felfe mikes it appear that Felfe had been waiting far It with open arms. There, are also alternate explanations of the circumstances surrounding the Gehlen Orgainzation's hiring of Clemens and Felfe, circumstances which Were probably unknowns to Clemens and perhaps also to Felfe. Wilhelm Krichbaum, who was responsible for both of them being hiredby the Gehlen Organization, was himself a highly , 4 suspect individual. Although it cannot be proven, there is a distinct possibility that the hiring was manipulated by the KGB. Krichbaum was alormer Abwehr and Gestapo officer who served as a witness at the Nuremberg trials tOmm from 1947 to 1948 and then entered the Gehlen Organization In early 1950. There is a report that he had some sort of contact with the KGB in Dresden as ()arty' as 1946. In April 1952 he was relieved of his job in the Gehlen Organization as a result of investigations which followed the arrest of KGB agents. Ponger and Verber in Vienna. Ponger had been using. Krichbaum as a source of information on the Gehlen *An example of "concealed recruitment" which occurs in the LENA case is perhaps significant because the LENA case was in so many respects a sort of overt shadow play of Felfe's secret KGB career. LENA reported in early 1954 that he had spotted a close business colleague of his for the KGB. He said his KGB case officer told him he himself would'recruit LENA's colleague and then instruct him to recruit LENA in turn as a subsource. k 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 cmlleegues. (Readers familiar with the LENA case will recognize here an episode involving Dr. Scurla of the "Verlag der Nation.") SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM Organization and had also been trying through him to arrange for the hiring of yet another suspect KGB agent. After his arrest, ranger said he had suspected KrichbuaM of being a Soviet agent; Krichbaum. however, said he had fatsuspected Ponger. The result was the conclusion that Krichbaum had been an innocent Incompetent who had *4 been used unwittingly by Ponger. But when KGB officer Anatoliy Golitsyn defected in December 1961, he prevideda description of a KGB agent whose background paralleled that of Krichbaum. In the. Interim, Krthbaum had died, so the case was never resolved. The role which Oscar Reile may have played in the hiring and subsequent promotion of Felfe is equally suspect, as Ref le too was almost certainty a KGB agent. Reile was Felfe's first boss in the Gehlen Organization, and it was Reile who arranged for Felfe's transfer from Grl." to the Headquarters CE Group. In 1956. Rolle traveled to the United States with a group of CE experts, which Included Felfe and four other BNB officers. When Goleniewski reported that the KGB had two agents in this group, Reile and Felfe were considered to be the most likely candidates. There is also other information from Goleniewski and from Golitsyn which tends to point to Reile, but this is another lengthy story.. Rolle. was investigated 14 the BND both before and after Felfe's arrest but no information could be found which qualified as legal evidence of treason., (Under German law a suspect must be caught almost In flagrante.) 'However, the OND and CIA officers concerned with Reile's.cese are personalty persuaded by the circumstantial evidence available that Refit is a long-standing K6 agent. Because of this suspicion, Relic was retired from the BNB in August 1963. d*It is interesting to note that in the Gehlen Organization's report to CIA concerning Krichbaum, during the Ponger-Verber investigation, there is the statement that Xrichbaum had not been responsible for the hiring of any staff personnel for the Gehlen Organization. It it not known whether this falsehood deliberate or accidental. - 28 . SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM e. Early Stages of KGB Operation -- the BALTHASAR Deception 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 nicknamed "Big Alfred." for want of any other name.. . in 1952A1fred 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 hes took over the' job of case officer - about 26. He spoke excellent German .also English, and had a thorough knowledge of his subject matter: the wartime and postwar�German,intelligence services. He seems to have impressed the older men by his general civility as well as his intelligence. Where they possibly expect to. find the 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 coeinunications 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 constituted a shaky point in the security of the oppration, because if his secret communications with his wife had become known, this could have caused suspicion of Clemens on the part of the BUD. Unfortunately, however, it is just one of several potentially suspicious items about Felfe and Clemens *hitch did not - 29 - SECRET, NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 come to official notice until too late. While Tiebel had been remit-WI at a courier, he could 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 Clemens twice managed to hire him for the Gehlen Organization for brief periods as a source on various general East Germantargets, using the East Zone relatives at sub-sources.) Gehlen employees were in an even more difficult position: no Gehlen employee could travel to Berlin without Special permission - in effect, without an official reason. The simplest answer, then, was to provide the agents with a good official reason for coming to Belin on a fairly regular basis. What was needed was a case 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 (BND cryptonym), an operation engineered entirely by the Soviets for the AdOose of providing mobility to their agent. BALTHASAR was Fritz Baltrusch,4 Russian speaking 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 KGB. At KGB instruction he wrote to Clemens, implying he had something of interest to discuss, and asking for a meeting In West Berlin. Alfred did not brief Clemens in advance that this would happen, nor did he tell BALTHASAR 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 Grim headquarters (very likely to Oscar Belle) that he be allowed to go to Berlin to find out what BALTHASAR wanted and to see what he might have to offer for the Gehlen Organization.* The convenient result was that Clemens was � 47, *The Gehlen Organization had a 'report dated in May 1952 that BALTHASAR was working, for KGB Dresden as an informant on former SD members living in the area. Whether this report went unnoticed or unheeded, we do not know. . 1130.. SECRET NO FOREIGN DISSEN Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN OISSEM ordered officially to Berlin to see BALTHASAR. BALTHASAR 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 BALTHASAR's manner, however, Clemens suspected a'Soviet presence. He told Alfred about the case for the first time after recruiting BALTHASAR and learned that Alfred had indeed engineered the contact expecially for Clemens. Alfred admonished Clemens never to let BALTHASAR gueiS that he, Clemens, was a Soviet agent. "BALTHASAR only knew that Clemens worked for Gehlen. In addition, Clemens was to be very careful in his correspondence with BALTHASAR as the Gehlen case officer; he must always let BALTHASAR take the initiative in setting meetinptimes, so that no one at the uranium plant would have cause to suspect BALTHASAR's intelligence connections. By the same token Alfred claimed that any information produced by BALTHASAR for the Gehlen Organization would be good, and BALTHASAR would reply to any EEL to which he had logical access. (Clemens was very impressed when BALTHASAR was allowed to deliver to the Ghelen 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.)* Alfred said that Clemens would not Peed to report to Alfred about his contacts with BALTHASAR; Alfred would get this information from BALTHASAR himself. Thus Clemens would no longer *It is no coincidence that of all possible varieties of operation which the KGB could have chosen as a vehicle to provide cover for Clemens' trips to Berlin, they picked one which produced information on a target which at the time was of number one importance to the West for posi collection, and to the East for security protection. At the time, BALTHASAR s Information on'uranium ore shipments was constdered one of the few important successes_a_tlieSsohten�Orgartiza_jj_lortf. S. estimates of Soviet nuclear capability drew upon this type information. In addition to providing cover ,for Clemens' trips, BALTHASAR was obviously an ideal deception channel, but' we do not know f her the Soviets doctored the uraniule_semple andth�Jjnformation for this rp�s_p_. ffiere were other sources reporting on this field at that tfme. t Is possible the Soviets were aware the information was already compromised and thus permitted BALTHASAR to Pass good information. It is equally possible the other sources were also under KGB control and part of a multi-channel deception. Both explanations are consistent with known KGB modus operandi. Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 need to.communicate�directly with his Wife. as Alfred would learn of Clemens' plans to come to Berlin through BALTHASAR and would automatically expect to see Clemens immediately after the meeting with ANLTHASAR. For the next two and a half years this case was used as a cover for Clemens's trips from West Germany to Berlin to meet his Soviet case officer. He delivered 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 Karl shorst safehouse, where their discussions 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 BALTHASAR case provided. the main method of communication until the fall of 1955, when it cellapsed because of one Of those unhappy .flaps of which Max had spoken so prophetically to Felfe. (Copies of -BALTHASAR'i reports-A� Clemens were found in the home of a Gehlen employee Who had been accuse&of� working for the East, and the ease :therefore was declared l'blewn to the opposition.") While the insecure link via Gerda Clemens had been eliminated. the BALTHASAR 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 WV and on 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 at headquarters,(Munich/Pullacq and Clemens in Stuttgart and later Cologne. The difficulties in local communication between Clemens and Felfe remained throughout their careers a meek part Of the Soviet operation. since Gehlen regulations officially discouraged social contact between fellow-worker.. Thus, their frequent correspondence, long-distance telephone calls and visits were quite abnormal. For a while, - 31a - . SECRET NO FOREIGN DISSEH Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM 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 Alfred provided Felfe with a cover address and a carbon S/W system, and also with a KGB office telephone number in Karlshorst, for emergency use, thus giving him some measure of Independence from Clemens. . Nevertheless, Alfred's cardinal operating tenet was that his agent must do nothing 'outside of their ordinary working schedule; at all costs, contact with the Sovieis must occur within the framework of officially sanctioned Gehlen business. In August 1953 Felfe was able to transfer to the headquarters CE group with the.' help of Oscar Ref 1e He was new definitely the more promising of AIfirptili agents. Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM . III. Operations of the Early 1950� During the period 1952 to 1955, the major theme on which Soviet CE operationall)lanning 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 organization. 1952 marks the beginning of talk about an eventual restoration of West German sovereignty. Despite recurrent threats to Gehlen's,tenure and powers, the KGB had apparently 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 would one day become the official German service. From the Soviet point of view. it Was no longer simply a vehicle with which to harrass and penetrate U.S. operations, 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 againtt the Vest German ' target. In the early part of the-year an extensive recruitment campaign was mounted in thew,USSR (among POWs) 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 Soviet State Security Service brought to East Germany a new, tougher, more tightly organized group of counterespionage officers.* This was a period too of intense In-fighting among the nascent West German security and Intelligence services m the HY, the BRD, and, in the Defense Ministry, the future Military Security Service (MAD). These organizations rivaled each other for the supremacy of their service and many persons vied with Gehlen both from within and without the Gehlen Organization, for his job. *Source: Pety. Deryabiniwa444 -32- SECRET NO FOREIGN OISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 Efforts to Discredits the Oehlan Oranizetien '11)* 10113 goals during the early 1950,s were alternately, to weaken aI,idiaortdit the 041= Organization by imposing it es riddled with Soviet agents, and to manipulate it through well�plecelmtnetratione* amoral Gribanov, Chief of the NOB Tettrral Counterintelligence Directorate, is quote1 reliably at having nate the statement that between 1953 and 1955 the Soviat services deliberately exposed over 2.00 of their double sweats ant staff- penetration agents in an affart to fore* changes in the Getaen Organization leadership* MO ,,Seriets, he said, had two agents at that time in the organization's leadetrahip*. One of them MS foreseen as "chief of the organizatio4 2* the context of the statement it � is not totally Clear just at V�ant'by "the organiaationew Our ammo who hoard the statement claims it retried to a MIS plan to replace._ au* Gehl= himaelf with a Soviet agentsejtits�is certainly a legical objective, ant the SIB way have felt at that time that it had the assets to achieve such a goal. However, there is etlso a tentible argument that the *Oliva ZMB3 objectiv:e tor its �Out was the aish as chute of one or the major -components of the organizetion, suelliat crrx.", rather than chief of the organization SS in angr case, the Soviet objectives required two typos of renetratiaas:it the long range penedasations designed to produce high priority Information and to affect policy, end the �barter range penetrations designed to be blown in order to confuse, disorient, tUseredit and, deceive. nue beano a long rengesi operation, but for One ralf* theire were aro number of throwaway penetrations during this period of Soviet operational history* The throwbetways were just as receastary for Soviet sumposet as the long range operations, but frau time to time the one threatened the longevity of the Crther* HEW* Alfred was carefuni deviates a new end canplicatet mod'k us operas:10.i for Pelfe, destructivet aoudads were already taking shape in various of' athletes) field bases* At least ease of them Was seriously to endanger Pelt*. In Tebruary of 2953 a section chief' in Berlin, Wolfgang goiter, was �apparently kidnapped and spirited. into at Berlin* It later became apparent that this was a cue of' a long-ti agent 'being recalled ant that the kidnapping scene had been contrived both for cover ant dramatic effect* (Pelf* was detailed to investigate Rother's disappearance since be and Maher had been friends Be reported on the invesitigetionn to Alfred, and to his superiors in 1,S Goleniewski treat G&W Oleg Withailovicla Calhencry Approved for Release: 2019/02/21 002606321 Approved for Release: 2019/02/21 CO2606321 � C1V piss � the GeW.cit Or i�21 he wirdiLtalnee .Corinistentai, tha:b rbeehact had been � kid of; disa/nearrize00 napped d v en. as not e Soviet. agentas. *, fung va o serificep LuiJt 110eber s. s ubeequ v anti______ ,c)vr4r. Ol.13"311�. ,tek �efface, uts, $&3t O'Ubi.e � sti ,tezei vars..) ot the �milmaat� In ran over G , year another one4*ration, .01. .the collet fie m two in IterlIn� Eats Wee; vats' called to East GertonsT tinier infusible arrest bytie to this xiuriceti Anikei kan of !"�pcei cmoticuIi ar4 .11420,:er-- a sociind iiii**, iriimi ;tiltio.�tO *us tube, . ,,. ,4 '. ' i!! *'''i ,,1 .�, , 't t � , '. ; ial, connsations- beeps* *ant; .ii:ifb; ob�Ain82,*.scitadiato4, ' ressaie. , orryini on' ft* One land dbont Nati reenai sperektissii4 ; of vueiiroalt kr4iifrea C _ Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321. OtiePM* the We 12:4444, soma of the investigators 3,c)oIced as tearoom 'ais the things th said thell were investigating. Mier* vas alarm on many fronts, not the least among American occupetion agencies. In fear of its lerwiellly affixing? U.S. At European Command easel Cle in 1949 to nova * similar seeurtty penetration of the Vast Gerson government in order to test for ridrtist influences. The MC effort, ICIX/M1 as "Operation CANKTS", lasted untL1 19,44, by vhich time it had become politically embarrassing and had to be cloned davits C.AEOU'S utilized two Ger= pricipal *ovate, Reinrich Schmitz and Richard Schweizer, who in turn had their oina "special connections" throughout the various beteral and lard security agencies. Me relationship between Schmitz and Albert vas rather complex. Xtx addition to sherimg sow of 'Me sase informants, Albert had hired Schmitz in ear* 3.9,2 to report on Cle to the .Geb.len , Orgenization. Gehl= later ordered Albert to elm Schmitz-because his reports on Cie were not of value, but Albert did not do so, ostensibly because of his close friendship with Schmitz. Men the =MS operation was term- inated by Cie and Schmitz feared losing his sob, Albert agreed to merge the flow of information Re began giving Schmitz reports on the Gehl= Organization for Masa* to Clew Albert's Mortis to Ole concerred derogatory Information on Gehlen Organization peaisontel, with particular emphasis on Pelf*, id= Albert labeiledi as a suspected Soviet agent. The situation was vaetly complicated, and in retzboepeot it is even more complicated than it appeared at the time, for ve rat laxm sevara very important niditional facts. Ow of these is that Albert reported his "recruitment" by MC To Gen. Gehl*, 'and that be was in effect run by Gehl= as a double agent against C. Another is that he vas also a NM agent all the while an agent who, in the end, became expendable end vu lfrobsW deliberately fingered. and denounced by the MB itself. In the next several pages ye try ,to shed sane light on this cosnegot situation end Felfe.rolO therein, but the reader should note that that follows is & speculative end inteneetive escount. Tors are 121Portant gaps in this aspect of our knowledge of the Felt* case, aid it is possible to interpret the hnovn Theta in other ways. Me story as vs see it begins with the defection of MS officer retr Dervabin. In Vim= in February *54. Deryabin hod served in the German CE section in 1C413 nealg;uartere and bad. read a KGB file on the , AMOMMON Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 C Mellen Organize ono Deryabin vas able te_reparb-te-hisebriefera the crypt:0mm of three XOB sonts in the Oahlen Orstudzation, �two_ of thich 11164f laars later as the EIB cryptnnyas for Pate and Clemens; the third, remains =identified, but mey possibly have been either Gear or EatitZei both of VW= hal 80310 to Bast Twain end been surfaced there lei= to Deryabizes defection* The X= vas waylay =certain of the full extent of leryabinis lamweledge of agent identities* la any cases the XaB hal molt cause tor =cern About the security at its agents vithin the Gehl= Organization* towing that Deryabinle revelaticna wed prompt another txveatigetion of Gehl= Organization securitors it became important to the MB, to divert the investigation' in a vay designed to protect the rest tgoortent lE63 agettsoill The IMB operation vhieh smears to have been run for this pi:23a* knoiei tor its Gehl= tion -cryptonya, "TX�7 In June 3,954� 4uat four,montlus after Deryabin's defections a Germ= citizen reported to the local police in lerbrigsburg, %feat� Germany, that he had seen a a= place conathing =der a certain limpet* The =Ws furtive manner had aroused the citizen's suspicions. On tweeting the spot, the police fouct a deaddrop containing a role ormicrofila._ Several days later, having placed surveillence on the ereas they causpat a man trying to, retrieve the deaddrop* This meniquickly confessed to being a MB agent* Mae microfilm tureel out to be a Very cceoliate report on GV"L" 4.46 its organ- ization, persormeas and zany of its operations* It vas signed "Arturlsi and clearly implied that "Arthr" vas actually in Orl."0 Galen analyats felt that only the chief of aril.? or 1Iis4 &out, could have such a comprehensive knoviledaes yet the style in *lel it vas vritten and certain incorrect nomenclature auggested that the report might have been preparcd. by an out.. eider*� All. things conaidered, the primary suspect was the chief of GM", � Bensigners as he had already been xtoder triestigation for ;carious reasons, tor A long time* Albarvae a second, suspect* � It is afandard to be endangered, KGB v the beat off the actual. ages or he may be an actwal Sari* on State Becurit� training taucht to trainees at least todus andi that vhen an ingortant agent is law= sot up a "false victim," %hole arrest takes The "false 'victim" may be Vholly innocent, agent of israser Impartance. Documents this "false victia" technique vas being - as early as 1$39* Approved for Release: 2019/02/21 CO2606321 App;ovec11;.Z1Zrse:72019/02/21 CO2606321 DISSEM Several days after the t.1TLT 4AB=1 teaddrop vas fowl, a GV'"1: agent vhose first nave vas Artur -K. the sena ma as vas signed to the' report in the deaddrop vas encroached by a Soviet agent tho tried to pomade hi st to gm* to the Dist. lain Artem, refusee, the agent tried to provoke Artur to call the local police tot have his, the Soviet agent, arrested. Artur refused to rise to either provocation. This Incident may have been designed to lead to Albert, eiho vas Art's (NW case officer, or it my have been meant to reedit* a handle to force the public surfacing of the 1.1111 MA= tied for propaganda purpoaes. T7pien337 zusierstanlably.: in view of his position, Pelts vas tames those aasigeed, to investieette the LILLI WM= easel* No 'MMUS to en important break in the case did come several mouths later. A -4- mail intercept 011 the ma ttto had. reported the deedeirop to the laivigsburg police revealed that he vas in contact vith the $am MOB principal agent in Bast Berlin Vito had dispatched the *gent the police had arreste4 trying � to recover the deaddrop. Subievent investigatlea confirmed that had px�criously been vaguely suspected -4. nemaly,' that the discovery of the tiosittrop Vaa a deliberate Soviet expod. The document had been prepared by the KW hence the errors in nomenclature. One lap agent had been sent to Ludvigsburs to eagilace the report in the deaddrop, a second NIB agent bad been instructed to it'll the Ludivigsburg polio* that he had accidentally discovered it, and a third *gent had been sent to 'walk =Fittingly into the police stake-out and be arrested villa attempting to empty the deaderop.** This exposure at the la= MARTZti deedrop as a Soviet deception operation only served to add to the alystery, rathei.then to clerifyiar it. The NOB clearly had an excellent mime of infarmertion on MTV', and the problem of identifying this source remained. over, several additional questicns rose: tihy vault the NOB vent the Galen Organization te know WM" was penetrated? 'Would the ICGB cause so much attention to be '1/4� focused on GV"L" if it really 41.1,1 have good. agents there? Might the MB have had the intention (foiled for the mmaent) of trying to burn an old recalcitrant agent tho vas causing trouble? Or, might laus XARIAN have been an attempt to deflect attention fraa a valuable agent the heti moved elsewhere? Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 g58/err Ala roxera/t) -P/s.ric/if These question vere asked at the tint* but they have naver been answered vith any degree of certainty. In retrospects the noskplausible * lit the times one of the Gehl= Organization seeurit�y office At) toalplainad in veiled terms to his OSA liaison contaot the relrev0 behavior during the =X MARI= investigation vas trgstrating and curiously obstructive. ** The seeond and third, vere both arrested ani both *fantasised. See Annex 13 for a more detailed vrita-00 or the rola tihkses agents played in the _ Itax KAMM mop ineluding their spotting/ doveloplento ant dispatch 6 pky -- Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 5.11 voRsrpt explanation relates to Deryabin's defection and KGB efforts to mininoze the aarzeii 1stto 1;:ratave ti:een iations. The KGB had nothing to lose by indicating it still had. an active penetratica of the Gehl= Organization � Deryabin had already' deme.that. But it did have a vital interest in , creating a certain ispression as to who. or ii19m!''s that Penetration was. . � � By calling attention �to'Gri" as the ,locua of Soviet penetration, both Felfe andOrobable EBB agent Retie were protected, as both had by this time already traxisferred from WNW to Readvarters. ICOB agent Albert, on the other bend, was caught in the middle, and we do not know what the Soviets intended should happen to him. As it varked out, Albert vas procioted from Chief Cl to Deputy Chief of Orr during the reorganization which followed the TAT:17C ISAR= investigatien, so it could be that tpk Soviets intended that be benefit from the operation. It is more however, that be had. become expendable and was the intended `tweet of the TITS:r XARIEV exposure, a scapegoat to make it appear that the most /ice- c-) Important Of the agents kny6t.,own to t,,,,�.Derya had caught. If so, that part of the Soviet plan idlich was intended to finger Albert as the source of the =MI MAR= desAdrop either did, not work (the provocation of &tux) or was aborted after the Galen Organization tumbled to the fact that =placement of the deaddrop was a deliberately staged KGB scenario. Slier EGB probably had cause for being discontent with Albert and writing him out of the way. Mace at least 1953, Albert had been voicing dissatisfaction with certain of Gehlen's personnel policies. Part of this dissatis� faction vu undoubtedly justified part surely stemmed from an old rivalry between GV"I�" and the Beadvarters CZ chief, Dr. Kehler, and when Grr officers like Belle end Felts "defected" from (POW and went to work on Ir. Kohler's staff, they too became personal targets of Albert. But even alert fran the influence of the rivalry with Dr. Kohler, there had been numerous instances when Felfe's behavior, operational and ye:soma, had incurred Albert's particular wrath and. em suspicion. Albert's main objections were to the closeness of Fere, Belle, and certain of their friends in what he termed an "SD clique." Be conaVtered them "politically unreliable" and possibly dangerous. With few eoptions, Albert's complaints fell on deaf eara within the Gehl= Organization, but Big Brother must also have been listening. It is difficult to limes* that TASSE'H Approved for Release: 2019/02/21 CO2606321 'Approved for Release: 2019/02/21 CO2606321 �' - -b ' roREIGIsrDissEit � or vith 1M3 approval. , It is more ilanusible that thtt It1213 Iras considerab , irked at the thoueit'oi cue ICIB'aiient dervauncing another MD agent, that A1bert111, actions east doubt aPop ;:lis,:icAitr,to the .OnUnei Sad, tat the , IMB's hands vere tied Imause tatllins Mort to 3ay off Pelts voull mean' At this point in the Albert story, ye Como to a major sap our _ Albeit rep:a-Mad his "recruitment" bj , Gen. Callen aa U &IAA* agent agains the 'case 1;ersonall,y0 ere vas one ease eer Itt'volvtict who low never iden' to CIA but lib� raw have been This haae Orli* Albert air.vas rettieulauely kept secret from CHET ro/C5/6 e ssz- � Approved for Release: 2019/02/21 002606321 Approved for Release: 2019/02/21 CO2606321 by both (len..Gehlen 4 ii CXC. Gen. Gehin hee persieted 4 believing that. CIA was the actual controlling service babied the = recruit of Albert, and the Gehl= Organization files have been denied to us. Mr meets on the case were also =sever revealed to us, ostensibly because of the hopeless task of attempting to retrieve the flees. Therefore, we do not know ithen'the nioubline of Albert took place. We do not know whether Gen. Gehlen,ssecifically approved Albert's passage of iierogatory infer:reties on Pelt* to elf,. nor, if so, why., We suspect, but do not know for certain, that relfe vas show., involved. ifl the� case. We do not know whether Albert reported truthfully on this aspect of his activity to the EON or whether he withheld this informatien. In view of these gaps .in. our knowledge, we are not certain that the NU knew of Albert's denunciation of Pere ;to CIC, but it is probably reasonable to assume it did, since clearly there vere a number of ways in which it could have obtained this information. If the 203 was aware of Albert's allegatione against Irere, it conIA scaecaly have been hazy about the � situation. indeed, it 'would have had considerably,more urgent ransoms for trying to get rid of Albert than vas the case at the time of the 1.17:171. MAR= operation. �Tile finger was put on. Albert in Kw 19331 nine months after he began reporting to C. rterbert Waternm, a form= Ent German WS case officer/courier, after having been *meted in Vest Germany on a charge unrelated to espionage, made a clean breatt of his espionage past in return for immunity from Prosecution. In so dam hte reported Albert as an WOMB agent, end also compromised. a large number of other, but relatively insienificent, W8 *gent's. According to Weirimann, the first pert of Albert's Mr3 dossier, which he eaaimid to have seen, hedi been translated into Gentian from Russian. lie could not say when Albert had been recruited by thee/MB, or when he had been turned over by the MB to the WO, except that the file went back a number of r era. Albert was arrested on the basis of Welnmannn'a allegations, and during a search of Albert's house certain damaging evidence was uncovered, evidence raver $12 RS made available to CIA:. According topernhardt, a senior security officer of the Gehl= Organization and a reliable source, part of the evidence was three sets of Mee of three Albert employers er, the Gehlen Organization and the lit/13B. Bernhardt stated. privately that he had no doubt Albert was a MB agent, zeil, clear indication that the totality Approved for Release: 2019/02/21 002606321 Approved for Release: 2019/02/21 CO2606321 N� CRET r011tIGN DISSEM of the evidence on this score was convincing to the Gehl= Oravnization. But deepite the evidence, alert refused to shun to Eastern contacts until the night of 33 *Nlya idles his Interrogators 'thought they saw sins be ws ready to talk. Althou& his jailers Tore yarned to vetch him carefull,vs toward coming their attention vendered$ ea Albert was found heate& en action as *baffling still for many people as on the day it ha Mere is no daubt that Waimea vas ea ICS agent of long standings but it is strorgly suspected that his "confession" ard denunciation of Albert was EGB inspired* Although put or his inrOXIBSti0n was clearly va othertTarts were obidously fabricated. Atter his release trate , jail in Novinobera$155, he was the object of sem East Geneee attention Wet looked vary much like an attempt to support his bona fides as a goitre* of information* A very well blesse double agent allowed the Gehl= Orgaalation to come into posseasion o s letter addressed to Velem= by his WS. case officer. la it the la officer �expressed sunrise that Wellman= had. been released from prison so soon na concluded that he must have conducted himself veil. A few months later Wane= was centacted again, but this tine through a more securely =egad contact Vetch may 3:tot have; been intended to cm* to Western attention. At this thee, Weinman received. Instructions to "centime" giviitg Information in the vay he had � 4 een giving it, with a liew specified (ecceptions. The Albert end the related Velma= end =LI cases have been the subject of conskerable =Ayala sal speculation over the years. Mere are many questions Which main uncluritied, but one thing is clear. The net effect of the A3bert case vu to salldifyizather than waken, Felfe's position. It 1)1004:it the uagging derogatory data on Pelf* out into the nen* and shaehow the doubts were resolved in Felfe's favor. That he vas cleared is evidenced by the special trust placed in his by Gen. �elms who bean that ti forward walled in his direction the special "sensitive" cases in which Gehl= bed a personal interest. Tb be sure, in belated consequence of Albert's accusations, Felt� was sub4ected to a security review on charges of "SD end Eastern conanctionsp" but this was a perfunctoary matter. In February U56, Pare was aske.t formally* officer T Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 to officer, "vhether he had been a member of the SD. Re replaad. vith brazen "No, sir," despite the fact that his SD past vas knovn to a number of Gehl= officers and cou3d. have been readily proven by a check of vartine rcdord.s under Allied control at the Berlizt Documents Center.* The results of this "investigation" vane "incenzatteive Although the ;Mos secUrity file on Felt* as kept up in a desultory fashion for the reat tat his careen, nothing much vas to cm* *eve it alone. Itr this MM., Bare vas already.vel on the vay to becoming one of the more energetic and productive CE =parts in the BR.Eioprofeesicual reputation vas [pawing, ani relfels corner vat; a disheartening place tvhich to look fer additional treachery. be Felfe Settles In theit deeektien latile au these atm= vere treating, Felt* vas carefully settling in to his new job.asra holier case officer in the Soviet Section of the CE Group Ileksora (71 Be had his ft:still:meeting vith Alfred as a headquarters officer in the fall of 19541 almost a year after his transfer. The reveals only very vnerally stet they discuseed at this meeting: problems of access, his and Clemsnoij and questions of how to hinder the legalization of the Mien Orgenize.tion. Be� gives no further detail, but =der these headings one assumes, that the basic stodus apart:alit aid a certain number of specific cases must have boon discussed. The basic operating plan vas that reafe should, have one general remting with his Soviet case officers each year. Cassunications from bin vould. be via Clerena as courier and vie S/W letters to an East Berlin aceacenodation address. Carammication from' Alfred voted be via Mame cr directly to Felt** via microdots (Felfe r4 Clemens disagree in their testimony as to who 6e, van to receive saitainireit- geo microdot. �Clemens, atatements seem more plausale, neme3.,y, that it vas Pelf* who handled the microdot comma:Ito:aims, * te.146 ;7 1 retrieving end ItAemeleailam the film end sending to Clemens only those Xvhich 4 Pelfe worked, hard on several. of his C/A liaison contacts to get him en "infornml" copy of his Berlin Documentation Center dossier. The was. clearly cancer:led that it mirAt contain evidence to prove he had lied. tbout his background. Us may have -hoped that he vas lucky and that, happenol in =V came, his file had been lost or van incomplete. Another indication or his concern van a comment to a CIA liaison officer in //larch 1956. Uo ceict be bad beard that Albert had asked Schmitz to invectizate him, that 'while be bid received a vote of confidence from Geblenp ha hoped that nri t, amrthlrrt ,42aro,77..citiorv, in.9,12t, y113111&tenaerre Or_rte_nik fpet � t�S c Approved for Release: 2019/02/21 CO2606321 pertained to hi Approved for Release: 2019/02/21 CO2606321 Tta..142J44,3 Axil, Q./ W CNTJA la.i.SZWV15 IMU &Wen T.0 PC ite in 1954 and, Sn edition, he vas presented vith a Ulnas. These te�clinical innovations in the operation provided yet greater comparteont- ation between rare and Clem= and reflected. the fact that Pelfe vae now seen cos the senior of the two agents. �Prom the fall or 1951i orVelfe photographed Oehlen registry cards on a regular basis for Alfred; he also Terforieed specific nimie checks for the MB* Other file material he photographed on a more selective basis. As an exame.le of his enormous sangfroid. peitaps of the ease with Which a spy can operate even in a highly comp:talented agency), Pelf* says that he usei to photograph file material ree4garest in his office, with. a tripdd, during the twenty rdrazte interval between the official closing time of 5:00 p.m. the beginning of overtime when special registration of one's presence in the balling was required. Be nye; he never photoaphed atNne this hour, even if he worked. late officially, for fear or, being controlled uen leaving the buildings Then leaving � the b134Wrg he hid the film ,ader his clothing next to his skins Sometimes he handed the film directly ill.) Clemens, Sorettrys he cent it to him reeetered rails On othe occasions be checked files out officially and tot.f them With him when had official business in Clemens' vicinity* Then he would The ( :graph the rinterial in Clemens' apartment, to Which he had his own keys! Re was a keen amateur photographer Ord in general 6, lower of gadgets) nd. later on built himself a darkroom in his veckend cottage where h could do eon* of his l3 work* That Pere does not t is us bout this 30, accosting tith Alfred. was, however, probably Sail:A*6 more important* within a very short time after his arrival in headc .):rteessiTelfe had been put in charge of a double agent through whom he was len- to make a reputation for himself as an authority on Soviet CE met re� This was celled the "IENecaise' was unquestionably the mos 4, imoortent single contribution to Pelfele career as an intellimice officer* Pal ! claims he never discuseed this case with Alfred, that it vaa a "cic xi" END operation. This is generaLly accepted ett being inconceivable, at!. relfe's attemted deception only confirms the case's2 importance. T � cue gave Pelee maneuverability as a Seviet agent and stet= Is a I= officers it prcrvided his with a channel to receive and to fulfil t. EgI; it broadened. considerably his access bdth to collect informal Ion and. cornetts's to disseminate disinformation. Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 rt fits the basic formula of the NAIMISAN ease, only with a much 'grander Conception end much greater complexity. Itor the years 1954 to 1938) it MOV013 like the shadow play of Felfels real Soviet career. � LIMA is the END cover name for Guenther Hotel an East Omen political fun- atiozary and publisher. Sore was a member of the Central Committee of the NDPD (National Democratic Party Of Germitny on ostensibly ladeperdent political party), director of its publishing house, "Verlag der Nation," ant editor of the party organ, Nationale Zeitung. He had a minor reputation as a political analyst, traveled frequezrtly to West Germany end was veil received in certain West German Socialist circles as an apparently indepezetent, outspoken East rman. =Vs story to the NO was that he had joined j. various Communist front groups in order to "bore from 'ard that very soon after the VIM he 4.ecide4 for ideological reasons to volunteer his services to a Western intelligence service. Throueta an old Luftwaffe comrade in West Perlin he came into contact vitt( French intelligence, the SMCE� in 1948. The French ran his for several years as a polittcal source end were apparently highly satisfied with him. Py early 3953 it had beeore apparent that the exenftwaffek comrade was working as a principal agent for both the MSC and the Gehlen Organization, and for a year or so UNA vatisf in effect rua jointly. Za ntid-1952; the case vas officially transferred to the Gehlen Organization. Scatevitat ;vier to the tuzzover,tbe Gehl= Organization asked CIA to evaluate ems of USA's intelligence prc4utt for them. Without naming the source, they presented us with a copy of a study of the ZEDPD written by UNA. CIA's branch for the study of international conmanzism wrote an evaluation vhich said in part: "This study is a biased collection of overt and semi-overt knewledge of the NM, missive several essential points pertaining to the organtnttion, purpose and utilization of the Party by the Soviets in Eastern Germany,.. the extensive use of NDPD members by the Soviet intelligence for missions in West Germany is not mentioned." A prophetic note, but easier to read with hindsight. Despite this ore negative evaluation, =A became highly regarded by the Gehl= Orgenization as a political source. Within five akentluz of relfes transfer to headquarters, however, 122U abruptly became eta case. Through the EDPD 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 !arch and immediately assigned to the task of creating a net of agents to produce information on the West German Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 Foreige Office* the Chancellor's Office* and the Federal It�ess Office. The plan was grandiose: =A was to be, the "German not director% to recruit two principal agents ant a sort of general political advisor end spotter* and several support agents* end to provide =vas of potential pene- tration ggente. As a doubla-agent 'in contact with the Soviets* whose activities were directly to affect Vest German security* the IENA case now properly belaegad to the CE Group of the Gehlen Organization. Fere was made the headquarters ease officer. lie directed, =A through a field ease off. leer Whom he net regularly each tine the field. haretimo sav IEGA. Zelfe lenorkatty met /ENA officially on3,y two Cr three tine s� There is noileviderce that the field, handler or any other Gehlen personeel besides Pelf's Who were coneected with the LIMA, case were Soviet agents* although* since all analysis of this case insists that it was a IMB� "set-up" from the beginning, a*. easE one is atrongly tempted. *o assumeA the presence of a helping handin the Gehlen headquarters to ensure that FElfe would. be=de the responsible case officer. The Ili/Ply suspect Reile was Fere's immediate superior at this time; perhaps he helped. steer the case or perhaps this was done from a higher echelon* as the DINA operation received a great deal of attention from the bidiatist levels of the service. URA was cast as the perfect agent: intelligent* cool* a demonic � writer ("needs only four hours of sleep a night") with a plenomenal Inelnaty ( he c3a4tril to find. it relaxing to memorize the license IMMIX= erg :takes of the Soviet automobiles he saw in Karlsherstn Fere took great use to point out IA's excellent personal qualities and to emphasize the indications in his reporting that the Soviet also had a very high respect for him. In contaraat to VA, however* the Soviet 71011a7ey.s seemed somewhat naive. =eel all his Soviet case officers in successsion had the shocking fault of being chatterboxes end through them IENA was osten- sibly able to pick up a great variety of information about other Soviet agents and operations in Vest Germany' which were unrelated to him. Furthermore* the MB officers enjoyed talking polities to such an intelligent maa azet from these long corsversations the 311D was now end than given e. fit-tue...1 an apparent glimpse intopowlet policy in Germeay. Mach of the informatacet that UM delivered to the Gehl= Organization was excellent* Several bona fide MI and ITS agents were identified for the MID in this rauonerj the )0113 apparently had little compunction about throwingemay The assets St >� of its sister services* although it did give away some of its own assets ' too. The license plate numbers, telephone numbers and addresses of Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 g ECTIET NO FOREIGN DISSEM KGB safehouses were all accurate; that is, there were traces from other cases on them. Unfortunately, it was not completely clear in 1954 and 1955 that these other cases Were blown cases of the lm/CE:lotion working against the Gehlen Organizatica and the ether German security services. Lodking took on this fact, one can say that it shcold have been disconcerting to find sour/ traces from blown CE caeca ina case Which the ICSB pretended was a political Intelligence collection operation. disconcerting was the fact that one of IZNA's case officers Vladimir Shchukin, had been described to us in early 1954 by Deryabin as a former colleague working .on West German security and intelligence agencies. Deryabizt described him as incompetent, one feet at least Which seemed to be corroborated by =A. In addition to their venue, Shchuliin and his colleagues were unusual end puzzling in another respect: they dealt with their 'agent under their full, true salve.* TileY were thus roadil,y checkable. Technical diacrepraleies abounded toot for =awls 1.7-1 the MB gave IEVIA a false West'Gernen idatititt doeuemnt in August 1.954' which was so obviou..ily falsified that they said they were obliised to apologizejand that unfortunately they were unable to produce anything *pettei. Cm the surfaceilWle operation to penetrate Bonz: co behalf of the seemed � Sovietepess specta4ular then hisstsperation to penetrate Karlshoret on behalf on the BlID. The Ueda he gathered for the Soviets were ranaerouSi but they often petered .out lbw potential recruits were reported to with the Soviets aethiall 0:me:Azalea stazaling by to we a double recruitment *Note by way of comparison that neither Keit= Pelf� nor George Blake vas apparentl,y, ever given full tames or tInte limes of their Karlshorst �' 1MB handlers. Blake knew the full names of his 1m:don-base4 handlers, however, so that he could Check NI-6 records on them. Although in Germany the KGB case officers were operating from protected territory, we cannot assume that they were disinterested in knowing what traces existed on them in enemy files. Through Rafe they could of course feed names. buried in lists to be traced through Gehl= and CIA files. The MIA case provided one very good nuns or running controlled and repeated traces on certain Soviets without necessarily even letting Pfeifer know who vas who, but presumably he could also have been given lists directly for traeillS�431 SECRET NO FOREIGN MOW Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 tfioevho contented tamer with the product or tas44. estrece untrial. To some observers it Deemed incredible et the Vacs that the 1011 shoul4 go through so mony motions just for this. And, indeed) it did not. The MB vas irtiact wry intereeted in Information ca the Foreign Ministry and Chancellor's office: personnel rosters, tables of organization, interval�directories ant other weaccenda, coropronising information on leading officialsjain. These MX were al1 given directly to Pere by Alfred. lice admits .that at his 3955 and 1956 Meetings with the KGB office.r they discuased these targets. In addition Alfeed asked, him to identify Cehlen informenta within the other govenammt department& Felfe denies that he was able to fulfill Alfred's revirements; he claims he told Aked. he had no access to such information* In a certain SCCISO the this was true, but the fact is that' TM case did his work for Wm The singular and edipecial ivrportance of Mats net of agents in West Gersney see that it forced the Cables Organization to produce rmterial on the target agencies on a systmettic basis and to a greater extent than had ever been done before. It caused, answers to be produced to Soviet questions, while at .the same tine creating the impression within the BUD that the Soviets did not have other agents in these targets.* Because of the eCelVrebbnSiNn nature of IEVA'S targets ea because of his detailed reporting (described by CIA offs as "more than necer.aa Vickly became tagged as Gehlents most important CS case. Pelfe bb for permission to pass approprite material to lceep =A's faltering net alivet 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 liXIS might rennin viable. Pere 's print- cilel problem was that at. this tins there was no provision for clearing material In the 'German government. Felfe first tried to persuade xarious security officials in Bonn, then be went to a CIA liaison officer, hoping that we would intervene in note way. � Sten he went to the Federal Attorney General and obtained .5 statement from his to the effect that esy material already demonstrably know to the opposition vas autoreaticall,y no longer secret.. By extension, that which was no longer secret could be passed to the opposition as buildkup material. Finally, Gehlen himself briefed Adenauee and the State Secretary of the Federal. Chancellory, Dr. liens Globe, on the case and .:.)btai..nedi, globhe's agreement in the mattert " Dizooxr.4 Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 VO V.OREIGN DISSEM specifically, this included permission to pass infoemation on Foreign Ministry personnel to the Soviets.* Thus armed, Felfer was able to man� euvor a vide variety of information !legally" into Soviet hands. All that LENA's Soviet ease officer had to do was to declare that certain areas of information were already known or already "cowered." by them, and then Pelf* could argue the virtue of providing that information to =A as build-up or to satisfy presumed KGB cross-checking on LEIA:jor as -a way of trying to smoke out the presumed Soviet source.: Any number of Soviet targets could be traced in Bonn and in BED files simply by working in -Eine LENA ce.� them into IENAws HE/ in some way. there are many examples in /MA's uAticti reporting of persons or Subjects of Soviet interest iAaas flash into the limelight for a moment perhaps long enough to be checked out in Western files? . and then disappear from the /SU case with the Soviet case' officer's remark that he is no longer interested. this exercise more thorough Felfe-eventually managed to get permission to conduct his own investigation ofFinel know to be under study by the Soviets, and =Idiom the Soviets were seeking information on vulnerabilities for recruitment attempts. Even more brash is the incident when Felfe slaked a CIA liaison officer if CIA could provide leads, from lists of dropped agents to persons who might be employed at a relatively high level in different Bonn ministries whom he could then recruit and "feed" to the =via LENA Through the LEM operation, the END became intimately involved in the security of the West German Foreign Ministry, checking on targets of interest to the Soviets, passing build-up and deception material, etc. This established an important precedent at a time When the nascent West German intelligence ,and security organizations were Still engaged in baton. sive in-fighting over the precise definition of their functions and * HereA.a aLquote.fromarks -about Felfe's technique written by the CIA liaison offigt-Wlse&rity matters:te=the=aehlan-argentmettenY reife "very cleverly played the Gberbundeseasalt (Federal Attorney General) agtinst his own superiors. Ha obtained access to the Chancellor's office through Gehlen'a own access. Then he used (the Chancellery's) 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 WV and esturity officers it the Foreign Office. AlUin all, be made fools out of everybody in the Wm* of the security of the Federal Baal-ie." S E C 1Z E NO FOREIGN DISSE1/ Approved for Release: 2019/02/21 002606321 Approved for Release: 2019/02/21 CO2606321 MISSING PAGE ORIGINAL DOCUMENT MISSING PAGE(S): 4.7 Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM target reported the approach. Thus, if Felfe did not learn of any such . approach. the KGB could be confident of the workman's bona fides and feel free to use its best (and most sensitive) type of audio equipment. The LENA case, while dazzling for a While, produced many questions and suspicions in the minds of analysts in both the Ghelen Organization and CIA. The unnatural talkativeness of the KGB 05e:officers, the endless and inconclusive backing and filling in the setting up of his net, the lack of Gehlen control (LENA came and went at his OWD initiative, and always in a, hurry, to the West Berlin home of his old Luftwaftfriend, 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 Fella's., Dr. 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 possibility 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 "external" one:, 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 constituted the second obvious major danger signal - after Albert's denunciations - to Felfe. The LENA case would have to alter its course. SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM IV. KGB Work in West Germany as a Sovereign Country: .1956-61 The years 1955-1956 mark a major change in KGB operational policy in West Germany. The post-war period was over and West Germany had become a sovereign nation. By spring 1956 the Gehlen Organization had become the Federal Intelligence Service (Bundesnachrichtendienst BND), a dependency of the Chancellor's Office, the legal foreign intelligence collection agency of the Federal Republic of Germany. Formal CIA trusteeship had ended. The BUD was considerably reorganized and its relationship with CIA gradually began to normalize, although CIA has never really lost its "favored' position. To meet the new situation new units were created in the BUD and BfV for the penetration of the Soviet installations, which were set up following the restoration of sovereignty and establishment of diplomatic relations with the USSR. CIA bases in Frankfurt and Bonn also. turned their efforts on these targets and in doing so found the need, and the obligation, 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" head- quarters - Embassy, Trade Delegation, KGB and GRU - in East Berlin, producing in the process a fairly 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 Aims liaison relationships. For the KGB,- the BUD 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 might still have certain political dreamt which could be played upon. The fundamental theme of Soviet polity in Germany, now stronger than ever, was neutralization,- and as West Germany's economic. and military status Increased the Kort. moved correspondingly to support its Own government, not simply with the Collection of information or the parrying of its enemy's operations, but by mounting a number of "influence" or "inspirational" operations, some of which filtered through Felfe't fingers. - SO SECRET NO FORE GN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 � SECRET. NO FOREIGN DISSEM � With the. help of the .LENA case - and iR spite of its potential dangers and the distrust of Dr. -0 Herder Felfe had established himself in the headquarters organization fairly solidly by 1955 as the most energetic, aggressive case officer working On the Soviet' Intelligence target. In late 1956 or early 1957, he succeeded Relic as deputy chief (in practice the real chief) of Soviet Section of the CE Group. Broadening of Felfe's access became a primary objective. Alfred's factual EEI for the period 1956-59 reflect the KGB need for detailed organizational and personnel information on the BM and its liaison partners: the internal security service, the military security service, the Foreign Ministry, the Chancellor's Office and, among the Americans. primarily CIA. Alfred's purpose was mainly protective: of Soviet installations in Bonn and East Berlin and of the operations run from them. USSR internal security requirements were reflected, too, in requests for Felfe to develop Information on the 8ND section running penetrations into the Soviet Union and to outline Foreign Office security procedures for the German Embassy in Moscow. In general, Felfe and Clemens were expected to warn the Soviets of any projected operation against them, They Were also given specific names to check. With a:better bureaucratic position and the allure of being an "expert," Felfe had considerably more maneuverability in his own right after 1956. In addition he was enterprising and his talent . for elicitation was phenomenal. He made a practice of winning .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 not develop an ,1 already existing contact he would ),try to Insert one in the guise -51- SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 pproved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM of a special connection.'" 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 Communist Party operations of the BND and BfV which otherwise were not of official concern to him. From the fIND't own damage assessment we have the characterization of Felfe du'rinq this period as "shamelessly curious." Clemens in the meantime had been transferred to Cologne to work in one of the new units targeted against the Soviets in Bonn. His unit *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. Felfo was instrumental in having Klemm taken on as an agent by the END 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"I Somehow Felfe'succeeded in selling this idea to his superiors, but there was never any sign of a Soviet approach. (There are various possible explanations of Felfe's motive for inserting Klemm into the Chancellor's office.. It may have been simply to use him as an unwitting Source on this office. A more Ominous speculation is that Klemm was a KGB agent, and that Felfe devised the BND operation utilizing Klemm as cover for moving him into a sensitive job and ensuring all concerned of his "security.") Klemm later became the END liaison officer to the Security GroOp (SG), the unit responsible for security of high governmental officials and the executive action arm for espionage and subversion cases of the Chief Federal Prosecutor. 52 - SECRET ' NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 van penetrate (primarily by audio installation) the Soviet Trade Delegation, mod it %forked In tandem 'with a camel:Pm:ding unit directed by the Bfir against the Soviet /Debussy*. Pe3f. could learn much about these operations from Clemens, end in any ease, as a CZ staff officer be had the right to review certain relevant cases from tine to time. Pelfess involvement faith these operaticins increased stormly, so that by late 1959 he vas officiell,y responsible for the headquarters supervision of nearly all BM operations against the Soviets in Genansys `Zse XGB could well congratulate itself.- At the same time it had to be 'willing and nimble enough to coveter the Western efforts on a broad scale 'without endangering its source. a. Targeting of CTA, Provocation, Tactical Deception The rzNA ease also helped to break ground en liaison with CIA 0/orations against Soviet installatices inBast Zerlist. The CIA Berlin Operations Base; Which hittud e these operations, still enjoyed the possibility of working unilaterally. The BM naturally wanted badly to have its share of sources in Xarlshorst, the seat of XGB Ireadqutustera in Zest Germany, and Fate strove with a variety of ploys to further both the BM'a and the MB's cause. In Septesciber 1936 Pelfe sad Belle visited Washi-nown CIA ThsedquartersA an mft.,uters of 41 BM CZ orientation group. During this visit rate gave a talk on the MIA case, describing it as clean, one of the best operatic= the BM had; and practically a penetration of the MB itself. The /ZNA case bad at this time produce sizeable amounts of information on XGB real estate in Xarlshorst safe hence addresses, license plate numbers,' telephone numbers, etc. 4. and in June 106 the Berlin Base Soviet operation's chief hod, discussed the casewith Felfe, offering fu.0 support in evaluating and checking out IZNA's information. Pelfe to supply all the positive operatioral ; 44 detail obtained by DMA through nemal B/46C/A charnels, and he also offered, off;�thewrecord, to less vhataver sensitive information be received effecting West German security if we woUld agree to be very , discreet about it. We responded with alacrity. i Not only did we wish to 1 keep our foot in the door nos tat the neul.y, legalized' IUD was often eager to dispense with us, we hoped that 'through this ve could induce the apparently clumsy end =professional 1033 ease officer, Shchulin to defect. Even more important was the itsvfl;se417 to have cis uany sources as possible within; nerriet controlled ter, itory cfa/L9b otf, Ipitleheret who 0004 give us r. Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 early warning" information on soy major Wall% revree-G or yedisposition in East Germany. (me Soviets ahovad their this res170ect by letting USA give * Whole twenty4our hour advance notice of the East German- USSR Troop ASroonentos and Mean by giving son* spurious indications of alleged Soviet withdrawals free the lOarlehorst Compound. In 3.95'T.) The by-product of cooperation on the I. cause vas to indicate more of less =Avoidably that qu had a certain coverage of the Earlehorst Compound. A site ter process vu repeated in another operation vhich had been run / by the END against the Soviet Trade Delegation Irtlyelinic in Narlshorst end whiett produced an 0130131301,15 qtantity of personality information on the Trade Delegation end on some intelligence officers urder Trade Delegation cover. In late 3956 Berlin Base offered full support to this operation,. vhich was eventually to follow the' almost clusio pattern of suddenly turning into a CE cue .and being put into Felfeis hands. In 1958 Felfe began a concerted campaign to collect detailed information from CIA on its Xorlohorot penetration Drove& To this end he engineered. a series of crises in CTA-IBID relationships Which resulted in his being � briefed by CIA on the status of its effort. The first of these briefings toMlout 153A0 �arFtova\,, �cowed in lefty 3958. In October 1958 Pere tried uro,fficiallNitto get At" efl e from anotheift the chief of Berlin 13ase, but vas turned dovn. A second official briefing fo.Uoved in February 3.959 and a third. July 1959. At this point a mechanism vas created for close, continued official MID-C/A cooperation against learlahorst. A Mil ease officer vas placed in the U.S. Army Berlin Compound end worked closely with Berlin Base Unison officers; Thia vas an important and delicate step since the VIM representative bad. to be documented as a U.S. Army Berlin Comeand employee, supplied with an automobile with 17.8. Forces license plates and other American Army support facilities* Felfe in turn became the MD headquarters" supervisor for the now officl* BID Virlehorst penetration program and the innoilate supervisor of the RID cue officer in the Berlin - Command. confound. At a meeting with Alfred in Berlin In December 1959, Fare discuesed the CIA operations against Karlshorst. lb said he had been making some headway in discovering what the Imericans were up to, but as yet they were not revealiug their sources to hie. Alfred proposed that he "help" the Americans by sending some sources for than to recruit, but Felfe an he naturally vould, that he trilidritto pert-wage this. Some cases of , NO :CJIZEIGN DISSE14 Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRBT ,0 rolinrcuDrg recruiiiii var. of curse 'uncovered by CIA, but not through PeIfet's admissions, so *we have no proof that they %rem amuttpulated in direct support of relfo.. Ta other cases, 11%Ife's role is somewhat clearer. In mi4-19574, /*elfe had discovered through trees* on sone of the WS safehouses in the /ERA case, that Perlin Bees had an excellent source in the 1:Z3rlahorst Rousing Administration. (A source in this spot vas table to prcovide considerable "order of !cattle" information on a variety oil's Soviet agencies, including the intelligence services, through regular murithly reporting on Soviet billeting assigalme:. ats.) Thistsoureethad been one of Berlin Base's major Ilarlshorst *stets for sane years. By 3.959 the Soviets had apparently succeeded in identifying the CIA source, as at that time one of l'elfe's concaves suaceeded in recruiting this source's corker in the Rousing Administaation. After this, vs began to note that our source's access to infuaination um* slowly diiniabiug. We presume the RGB decided to leave her 'alone in order to protect their source but restricted her access in order to minissise the amount of harm she could cause. We know her activities yea* closely monitored. Although Mat German surveillants vatched her come to West Violin for meetings vith her CIA case officers, she vas eventuany allowed to refugee to West Berlin. Shortly after she fled, the wi� recruit, vho sSy well have been KaBeeolitralled, claimed to have received an anonymous morning and also fled to West Berlin. Taus the Housing administration 'Wu purge!. ' In several other cases vs have been able to determine that Vithin a certain period of time, ranging from two to nine amonths after an agent or prospective recruit had been identified to )elf., the agent was either arrested, or sitgay disappeared troll sight, or lost access to our target. lax one case when Volt* suspected CIA had an agent in another East Berlin housing office, Pelf*, vith NIB essistsuace, boldly provoked confirmation of this fact by trying to recruit one of our agent's colleagues. He ;deiced an ad in the West Berlin revapapers designed to attract secretarial. help from the Bast Sector. our agoutis secretary answered it (mat ElB behest) cud Felts eaneunced to us that he intended to recruit her as a SSD source on Marlathorst. We 4ment then teilnagirstedashas that we already employed her chief and asked him to stop his aplreach since it might endanger our agent who already covered the target in any case. As a result of such aggressive esinipulation by Pelf* Mai the RGI3, the hitherto unilateral Perlin Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM � Base program against Karlshorst was largely compromised. The Berlin Wall erected on 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. The KGB also manipulated Felfe in support of its investigation � of other suspected CIA operations inside the Soviet Union. One case, which occurred in 1960# involved a West German businessman recruited by Berlin Base to report on Soviet trade contacts during his frequent visits to the USSR. This businessman was subsequently recruited, by the KGB, independent of the Berlin Base recruitment, and targeted against the West German and U.S. Embassies in Moscow. When the KGB suspected him of having Western Intelligence contacts, they reacted by closing out all the agent's KGB requirements except one, namely, to spot, recruit and maneuver'into place a West German -girl suitable to be a German Embassy secretary. By this maneuver - :of introducing a CE factor urgently affecting West. German security-, the KGB succeeded not only in forcing revelation of the case to :the BND, but in actual turnover of the case to the BND. Felfe became the BND Headquarters case officer, and the KGB continued to play the operation for the purpose of identifying other ory assets inside the USSR.' .In another case, that of a West German woman run by CIA, Felfe provoked revelation of our interest by � sending us reports accusing her of seriously insecure behaviour while she was in Moscow. Subsequently, she became the target of a KGB "dangle" operation -- a Soviet lover was introduced whom the KGB made to appear potentially, recruitable. The Berlin Wall made ps CI work In Berlin considerably easier, but it did nothing for the Soviet diplomatic and trade installations in West Germany. In the West the problems of negating German and American counterintelligence operations without revealing the existence of a major leak were more difficult. Paradoxically, SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM Felfe himself had been largely responsible for promoting an operation 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.* 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 tuite sanguine about the joint ONO-CIA audio operation against the New China News Agency. Felfe reported to the KGB on this operation and it remained moderatIey successful from our point of view. But, the KGB seems to have been willing to allow us a passive � coverage of thq.0-_offic1al installations through telephone taps. it :was somewhat more energetic in trying to counter audio operations against their own installations and-personnel, and in frustrating Western agent operations mounted on the basis of the audio product. By procrastinating' bureaucratically Felfe could foil many a plan. If this 'did not work, then the audio equipment would often fail technically for some unexplained reason, no given case could the. failure be positively ascribed to anything but accident. In other cases, the target of would suddenly be moved to another billet at the-last:minute after the audio installation had been completed and an employee of no great interest to us would be assigned to the wired apartment in his stead. In some cases, however, the *Golitsyn reported that he learned in 1959 or 1960 that the KGB had many reports on the monitoring of conversations in Soviet installations in West Germany. He conjectured at the time that these must have come front a KGB agent connected with BUD audio operations. 57 SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM � defensive ploys had to be more complicated, and sometimes they did not succeed. Two of the best known examples concerned the Soviet � intelligence officers, Kirpichev and Pripoltsev. Dmitrty Ivanovich Kirpichev was a KGB 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. Kirpfchev had been under surveillance by the BfV in an effort to establish some legally incriminating material which might serve as the a basis for an arrest.' Felfe says he learned of this case and of a plan to arrest Kirpichev at a routine OND-BfV conference sometime in the first half of February 1961. On II 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 Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 negative, as long as the Soviet counter -operation were carried out "with the i2eceseary finesse". He even suggested the idea of having Kirpitlev pretend to fall sick while on * trip to arils� � laimediately after this, on 16 February, Fe.U'e had a conference with the BfV referent for work on the Soviet lbsbassy. liras him he learned the details of Kirpichevi a emigre operation, including th* emigre's coverneme, "K2 and the fact the arrest vas to take place soon. Pelf* reported this to Alfred in secret writing. At the time, he knew that the police "leveled to interrogate an= fermaily on 2.1 February for the purpose of eparing the legal basis for the subsequent arrest of 1C-ixpichav in Hamburg. He way or may not have been aware that the arrest vas 40firkite34r Paapnai for this On the afternoon of 2.1 February ICirpichev left Hamburg and travelled to Bonn, where he spent the night in a hotel neer the Soviet Embaasy. Print to his departure, various Soviet offices Indicated that Idtipichev was about to leave on a business strip to Berlin, but would return to Hamburg fihrne on the Etisi of Februw. The BED tendnettespemaidee-on the Trade Mission produced this information, as the lelB knew it would, and Felfe sent it on to the BfV.. ICirpichev proceeded to Berlin on the 22nd. The 23rd ceme went with no arrest. A few days later ICirpichev's wife in Hamburg made some remarks on the SWAG premises, where aHID agent vas employed, which "explained" why her husband had not returned to Hamburg. Presumably this agent was known to the EMI in any case, Xirpieheve took care that he overheard her saying that her husband was severely ill in Berlin. Two more days passed end the BED agent in SOVAZ vas able to report the receipt by that agency of an official announcement from Berlin that Kirpichev had been stricken by en inflamed appendix and confined to a -Berlin hospital. Felfe \sent this report to the BM in a routine wanner. 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. Nov all that remained for the MB to do was to give the DM and the I3M) a specific reason an Which to pin the entire failure of the ICirpichev operation, and. which at the same time might head off any potentially dangerous general inuiiJ. Kixpicherva let the BED source in SOVAG hear her remakk that she had been under surveillance in Hamburg by en unknown person. � Meanwhile the BrVis double-agent, ICRP11K, received a Ziaalparataraa."e loastage � from Kiroichev warning lain that thil$ had 'bail - rig A d' Approved for Release: 2019/02/21 CO2606321 ----Approved for Release: 2019/02/21 CO2606321 ----- their last meetiig and that ltirpiebev had, fled. West Germany for security reasons. nre *famed the In of the, &NAG penetritice agents* report; � the IV sent him the item about Itirpichev's message to ERTI11C,and it seemed as though the operators had only. themselves to blase for everything. Alt.hough after his arrest Pelf's tried to give the impression that be had not given this operation away in the first place, be vas .obviously interested in seeing, it work out veil for the B. According to Clemens, Pelts asked hip some time 521961 to ask Alfred "if everything worked out and Nirpichev got out *11 right.' Clemens said Alfrel answered in the affirmative. Ala interesting aide light ca the asodus 21?erandi in this case is that in its earlier stages (before Pelf* had reported to the =that zarrnc was a dou.- bleoagent), the MN provided =nix vith en emergency contact when he could reach 'by telePholne in the Press Section of the Soviet Beibitssy. The sign.. ificance of this is that the Press Section was housed ma separate build- ing fres the rest of the Embassy and theNG3 knee, through Felts, that it vas not tapped unlike the offices of letiMirts regular case officer. Not. so successful was the Pripolteev OM. Velesatin Aleksendrovich Pripolteev vas an engineer assisted to the Soviet Trede Mission in Cologne. The lifir had. uncovered Pripolteev's role as cue officer in three cases vhich it vu monitoring. Pelfe.leirned of tbis first in Hey 3961 at a routine interagency conference. In July, at a second conference, he learned that the Itfir vas thinking of making an arrest. The date of the Planned arrest vas, hovevem, a closely guarded secret. Pelf* learned it on 24 August, only two days in advance of the arrest date. The result was that he was unable to yarn Alfred in ties. Pripeltsev an arrested end sentenced to four years *prison on charges of espionage. Felts in turn received a repriamnit free the IOU (Ibis event became another cause for the KGB's subsequent insistence on a faster eomunications system through the use of en 13.1.egal. Pelf. nude scene sort of effort, however.. As soon as he beard of the date for the irrest he sent a telex to the Cologne office of the INTD suggesting, on his own initiative, that it have a Rusaian linguist standing by. In doing this he used, a cryptographic reference in a strange way teach revealed the game of the Soviet to be arrested. The MD subsequently surmised that Pelf's could have done this to alert Clemens or simply to extend the range of knowledge of the plumed arrest in order to cover himself in the event that Pripoltsee disappeared before 'VMURElar NO FODT:Tau nrarmir Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 his arrest. Another operatiansknoft as the Sokolov case, demonstrates Felfe's usefulneas in mattera of Soviet internal secuiity. During 1959 and 1960, in the course of investigating an insecure Rtrofficers Pelfe and Alfred managed to direct a series of provocations in such a manner as to involve nearly every German and Ameritan intelligence service in Vest Germaay together in one anti4oviet case, thus giving the Ma reagrkable insight into the liaison pratices of the Vestern agencies. This ease is treated in some detail in Annex Co It is *mother *canna exatcple of operational deceptioqvery intricate, vellrtimed deceptions etivtlatevith apperent confirmations and crosv.checks of information and real sacrifices of agents and equipment. The ,primary goal of the EGB in this affair vas to investigate and entrap Sokolov, an insecure and potentially treasonous DU officer Vho had been operating for some years against Mair bases in Wet Germany. The case can also be reed as an illnatration of the BDBsdasion to investigate the security of its military intelligence colleagues. Dv creating, or elaborating upon, various doUble agent operations involving Sokolov, the XaMoms instrumental In provoking operational interest inhimand his Vest German agent net on the part of the IWI4Atvo Xeres the DEDs and CIA (both on its awn, and in its capacity as liaison representative on C/C and OSI interests By inserting into BED spottliv channels =agent vho claimed to te'Stkolovis mdstresiEs as well as his agent, enditho hinted that :he might be detectable, the ROB put the BED in a position to inspire the creation of, and then to - monitor, a joint task 'force consisting of representatives of all the interested services. Por six months the Germania American representatives operated in close, daily liaison to prepare the hoped0for defection of ,Sokolov and capture of his Vest German agentAlo This constitatd a bureaucratic V A tour de force which put Pelfe at the center of hat yes virtually a sort of central clearance nechanisa for the handling of this ease. This experiMeat in close inter-service coordination proceeded to the general satisfaction( of all parties concerned The prometionandmonitoring of this coordination process vas probably one of the specifielaBoijectives in the Sokolov operation. There is no doubt that a. continuing system for exCi4mge of P, information on double agent cases, vdth Pelf. Ina position to menitor It, vould have satisfied the Sovieta enormously.. We also know that General Gribanov, chief of the BOD's latertgAl Counterintelligence Iiireetorate, *ale briefing Soviet and satellite CI officers in late 1958 and. early 19590 stressed NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 rolev5 jUst to sit,back,and :';'..tnuter be *Ifite,sti bir all sides. t eurea time to e.jin'th* exeCtititi action taajute'olf 'the operation, the e of tho'''nerWest 1146viet W T 'aits;:vat-:.e.aittnetd.** Not so mi.ecessful� oweveT� were the efforts to defect Solcoloy. This vu not In the 13 inteizt,ath each tIme ie tried to move closer to bu be 11192ii../!.� �:the hospital" or otherwise out . of re in the:Mire interest, ith liokolov's other , -ek,tensr4/ agents, 'the %man veto PuPported' his mistress. Despite herAvilliereness in elpirtg her Western handlers 'to try to defeat Sokolov, she failed. � ultimately to convine them' of her' belie fides.) Iter testimony described. Solsolov a insecure behavior and his "Western tendonai Tete states that he sent a copy of her testimony (or excerpts therefrom) to Alfred, v-Z tea assnmes that trots there it found its way Ito the Soviet military prosecutor. Clemens alma a little slower than 'Pelf* �was shocked that Alfred had let this agent be arrested by the West atoms, indeed had deliberately let Sorcrce: Goleniewskit report of 3 April 3.939. ** This WiT set had previously been compromised to CIA byACol. Popov. This fact was known to the 1CO, as Popov had been arrested before the start of the Sokolov case But it was not known to the German servides which were very interested in the "new" Soviet equipment� Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 her walk into a trap. .411fteit's reply to him vas to sting wizen "this boa nothing to do with my officer and "Sokolov will eertainly be arrested." Pelf� admitted that he bad observed 'thid case with sass glee and was amised to deliver deroge.tory itemization to ibe /MB about the RU officer, Re received a bonus frau the REE of 1,000 DR for his efforts. Ms liest German proeecutors thought it was strange that he should receive &bonus ins easershieh had actually been a "failure" for the Soviets, e.g. five agents arrested. ,11,elfe probably found this amusing, too, as he =rely replied that be had been comPonsated for hard work despite the "losses" suffered. Annexes D and E describe two other cases VIVERSECBT and WM= which show that happens when the ono/tics ISOM that cone of its operatiotta has been &ALIA ameinst it 21 one of thee* cases, the operstion 1iaed along in deoultory fashion for quite a few Aare, leg rats used the ease to support his contention of opposition innaapabenoe. The other case vii es:Waited aoror'?eareasivalv as a dowel for peaeles both political and counterintelligene disittforeation. SuTPort of Soviet Policx and Politioal &cotton, Mile Pate could eery* almirably an watchdog itir V113 assets in (lemony" � Soviet needs on a sonewhat broader level after 1955 had else created for him a private role on the political scene, whieh in MO Vey* IdeAt have provided him anCiven (later se of ateiteetzt and importance thito, did his bureauseatie oseciscience. JENA 4. as ever provides a clue. During the Darla of lemlitatiort and reorganization In the MCDJ, the LEN case had beet dormant, possibly sleeping off Dr.Earder's probing aritiolat;a. tzat44. 1956 it suddenly awoke, but this thee in the guise of * political ease, thchukin told IENA, to target tarportaily about his net to penetrate the Portage Office and to concentrate on, Investigating the existence of a postable neutralist faction in Vest Gomm. Shcluticin said that the Soviets word doing everything in their power to establish a neutralist party which -would rake some dent in the 1957 vote for Adeneuer. (Vben election tine canS, however, be admitted that the Soviets did not have this capability: he said they had no assets for starting a political partyS) Soviet Interest in ot � task waxed and venal several time during the leer been the suitiner of 1956 and the suramrr of 2957, but as tension began to grow in the uoit about the imminent unveiling of a Soviet I= sad over the East Gen= trbop agreements, IENA's case officer spoke more urgently of the neutralist aShignment. la the eummer Of 3070 rgelfec Tor to a CU officer itith a report from /70 7(""Tr'i DTSS"." � Approved for Release: 2019/02/21 002606321 Approved for Release: 2019/02/21 CO2606321, MA which he said be considered wry significantt the KGB wanted LENA to find out if there did indeed exist in. the West German goverment a fathtion advocating closer rapport with the East Oeritell government and with the USSR. Nothing very much cane * this item of "intelligence". It was not treated sigo,ificantly for a variety of reasons, not the,least of Which had to do with CIA's increasing bafflement, with the =A case as a whole and increas- ing speculation that it might be a deception. As an indication of BUB operational intent, however, it s interesting., After this, =NA re turned briefly to work on the Bonn penetration project, but in early Me was told definitely by the 103B to ease out of it end to devote himself en- tirely to political reporting. Simulteneously, Felfe was involved in another MB attest:et to Support its government's voila. This Barmen proposala for * Central Europe bed ems to naught with the successful. passage by this Bundestag in Lid S.weapons March 3958 of a resolution favoring nuclear grammesents- in West Germany. Never. thelees, Soviet clandestine feelers for acme kind of rapprochement were still out. We can see a saall example in one of Felfe's operations. Ever since the early 1950's, the Soviet* had been interested in the ex-Webresse. ht officer, Boguslav von Bonin. Von Bonin vas a vellstepoken, aml outspoken, neutralist: with excellent social connections, strong idealism and rather little political acumen. Be had been chief of the military plennots section of the Mt Blink, the Predecessor organisation of **Theme Ministry, end in 1955 he had, been dismissed from the Defense Ministry for publicly propounding his neutralist views. At that time the KGB, throueb General Aleksandr Petvlovich Tarim', Chief of Staff7 of the Soviet Forces in Germany, invited his to ccae to East 'Berlin to discusses the Gezman problem. Ks went, was .delighted with General Tarasov, left his his notes on his thoughts, but violently repudiated .a direct recruitment pitch from a KGB representative. 'Gen. Golden, who had been in touch with van Bonin on and off for severai years, backed him in his trip to East Berlin. Although he realized .von Bonit'd basic political naivete; be bad hoped to use hizv!! in some way to further an old personal dream; that he could ehmehow be instrumental in 'bringing about' a rapprochement, if not a reunification, of his country through a personal iehannel to the other side. Felfe we Gehlen's personal representative in dealing with von Bonin.* * Felre stated to his American interrogators that he thogght the von Bonin case was a good example of a Soviet "political operation run by CE methods." The added his opinion that the Soviets, in running this type of operation against the BED, were under the impression that the BED played a far more important role in the German political scene that( it actually does play. .49 Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 aW4.4.1:04.Um In the fall of 1958 the von Bonin case was raised again from the Soviet side. In that year rate had three *portant settings with the 3. The first; in Berlin; vas with Alfred; and vas designed prismarily to introduce a faster -communication system by means of OWL Through the my radio oysters Pelf* was aummoned to Wenn* In September ,1958 to meat a new and imposing person introduced ellepli as "the direc The following month be most the director ligain In Berlin. Pelf* will not tell uscan detail or in any kind of organised Sashimi about these! meetings; but he does convey that the basic operational reason for them wee to discuss von Bonin; Pelf. says the director asked his advice about Vhat to do with this case; if Pelte thought it weal be advisable for the Soviets to =tan& another invitation for talk�to von Bonin, These meetings seem to have made a great impression on Felts. Us speaks Of the director almost with reverence. Certainly this man appalled to Felts Intellect... 11/111y; and he obviously cultivated rate's not insignificant ego. Felts told Clemens When he returned frau the Berlin meeting that he and the director had talked at length of many 7deep and Important" things* To his intern:ow talk 1,extvcretorasok::::attitiwarsentel the poltiva Gfertathe:taremaireato. tic:4;16137w� voselitawsitighidd it tinier the circumstances; consider it eleo in term of mi kind of itropagade outline. The director began with a discussion of historical Russian respect for Germany. He said that Soviets realised the impossibiliV of asking West Gerson)* into a Communist Country; but. that this vas the more reason why everyone should try to seek. agreement; to find some guarantee of peace. The Soviets were disappointed; he said; ,that the contacts stetted by Adenauer on his trip to the USSR in 1,955 had not teen followed. up. There now seemed little likelihood of success on the Now the Soviets must try to intelligence chiefs should maintain satisfactory contabt with each other. There were distinct possibilities in this direaties and "the doors were always open." This is all Pere tells us; hut in the context of. the von � Bonin operation it suggests much. It also looks' as though information passed in the ono case; IENA; namely that the Soviets ware sincerely 'interested in a peaceful solution in Germany; was produced to confirm the ritAtness of Gen. Gehler0s in tions in the other case; von Bonin. These are but small details � one would expect to fins many more of the peace memo which has often been played against the louder themes of more warlike Soviet statements. (About three weeks after the directors,* meeting with Pelf" on the Von Bonin case, the Soviet government mast its first threatening statement of the $ k 0 Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 BerLin crisis orlthrushohav's statement of 10 llovesiber 39>o., _ � Pell* says that the director wereeemmewibur urgelhim to develop his political reporting ra. even to join the Foreign Office (although this lest cement might be one of Telfets own embellielneents rather then a real aAso )3113 idea). The directorerged. Pelts to speed up his political reporting, particularly the izenmaittal of,EaM4m1 WIT weekly morrtbly situation reports, which he had begun to send regularly in about Mara 1958� Es also asked for information on the IND. offices concerned with political intelligence collection on areas other than the Soviet Union. Yethod.s of Comentication -"� In addition to imreased coneentretion en the political scene, the 1958 meetings between Tete end Clemens and their KGB menter also brought about important developments in the agents' lathed of comenication with the B. It will be recalled that in 1952 +1 set up the cue to provide cover for Clemens to make regular labile to at Berlin on 2ND business(' and that during these /zips Clemens vent over to East l'erlin for meetings with Alfred. After the BALIEWIt. case collapsed in faLt of 1955, Erwin Tiebel, who had been more or less in reserve since his recruitemat, took , over as courier between West (lemony end Alfred in Perlin. Upon occasion, � homver, Pelf* aryl Clams also travelled clandestinely to Berlin, despite the risks which such tripe entailed. For these trips, Alfred supplied all three agents with West German iAentitjy documents in other nszere (completely valid documents" unlike the obviously forged product in the LUNA cane), Mt suitcases with a false panel to conceal ieports and film. The agent 'would then drive through the East Zone, holding a wick meting with Alfred at a predesiviated kilometer marker (Mu Stone 1%)7) on the � * � �.1Lielt years later, the Von Bonin cue vas dredged up by the Soviets on yet a third occasion, this Um as a propaganda weapon to discredit Gen. Gehl= and the BED. In December 1965, the Iftectow correspondent of Thor Spiema magazine, the West German equivalent Of Tim or Newsweek? "arc on Soviet initiative, given an interview by a Sov"lirf Colonel karpov. The � ostensible purpotte, qttbe, interview vas for Col. Karpov to provide dero- gatory informatioli;i:r&i, be claimed to have known pommel-1y, thakevekt_x), � and to attack the "The Penkovakiy Rulers." Near the end of the inter- view, however, Col. Karpov casually mentionel that he was not unknown in West Germany, and in response to questions from the corregondent (*to is � reportedly a KGB agent), Kerpov then proceeded to reveal t he was the individual who had inert with Gen. Oehler:nig personal representative (von Bonin) � when Gehl= initiated contact with the Soviet military leadership in East Germany in 1955. Earpov's account of this operation was tailored to give the impression Can. Gehlen had initiated secret discussions with the Soviets on the German problem without the knowledge of either the West 'German or the U.S. governments. The interview, together with BED rebuttal, appeared in the 10 January 1966 issue of Der Spiefrjel. E . O B.OREIGN DIS$LIti Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 Belmatedt-Brerlin Autobahn Inside Bast Geivany, to loss him 4ioeurentary or 'akar incriminating noteriAl. The agents then proCeeded normally into Vest Berlin and. raet Alfred later for IA lengthy meting in 19sr3.shorst. Clemens, at this time (1956) had also been given an AN systaa mei a code system for tniniCeleNttlzet S.$ ?17d pads. This procedure vas fairly satisfactory, but Clerns.had lasanseeleagler less chance of lonely oral reporting to Alfred, while at the same time the volume of reporting increase!. Bete had begun to rely more and mare tler the tope recorder (he vaa apPereetly very lea about *myosins 'tten reportsj- Ye several instances of Alfred,s impatience with him in this respect are documented), and his reporting eonsisted privarily ate handful of rolls of Minot film and soy. era sPeolh or tape on 'which. (aocording to ClAmene) be recorded, situation reports the lAtitist obahgee in ititD personnel and WO. Smartires be would visit ("lemmas in Cologne, vhere he would dictate a report in olyher which 'would then transpose into Oa., This vorked well enough until 1958, when Clemens was unexpectedly relieved, of his post in the Cologne tration unit and demoted. to et surveillemee teem. Mums* superiors ih BM headquarters hod apparently been dissatisfied with his work for sem* time Ilov his usefulness to ref* end to the NOB was sharply curtailed. 14 claims that Alfred was uninterested in the information he was able to develop from most of his surieillanne activities (prissally against members of the Algerian independence movement in Germany), Ai this point 01171, V3$ introduced. Clemens acted as the receiver mad decoder. Cemmurdcation vas made once week,- with one alternate per week as well. After awhile, a "burst" transmission method was introduced, for which Clemens had to use a tape recorder hooked to his radio. s After recording the higla-apeed trans.. mission, be would'play tlr, tape at slov..speed and thasawahemita deciPher the spessaget At one ilne =rad vented to introduce a system of rubbing metal shavings onto the tare so that the impressi,ons would become visible, but Clemens and. Felfe found this method. too maw anti toe =reliable tad refused to use it Clemens says that from 1958 on he evolved very few persona instructions from Alfred end that the sesjorits, at the messages were for Fella. Ta thort, he had become largely a support agent for Pare. Mien Re did go to Perlin -ago b.1e,s,s 1.fter this date it vaspecigie$2411.17 (until 1960, when P'elfe was able to bring him iseck briefly to an operational role in a double agent ease), Alfred tightened up .1 I v 40 the security by refusing to let Clemens come to the East Sector of Perna 4.� q , any longer. An their meetings were merely brush meetings oa the street, t) S ,,11-�1'. ljnefUl only for exchanging material, but not for discussion. ?elf� tried, ,i,,), ' -- � Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM , 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 communications remained a serious one. It was as much to this problem as to political matters that the director addressed himself in his September and October 195B encounters with Felfe. He announced that he wished Felfe 4nd Clemens to sever personal contact with Alfred and the East Berlin Rezidentura and to t work from thee on solely through an Illegal'RezIdent in West Germany. They would be introduCed to the Illegal,-but their primary 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 communicate laterally se often with Clemens on KGB business. 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 proposal was adamant. They claimed , that the introduction 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.!'. Sometime in 1959 Felfe received a new KGB cover name: 'Kurt." Clemens. became "Hanel," and along with Tiebel, was referred to in KGB files as part Of "Kurt's Team or "Operation Kurt.** 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 *The KGB use of Illegals to handle West German CE operations goes back a long way. Deryabin told us in 1954 that while he was on the Getman Desk In Moscow in 1952-53, there were Plans afoot to set up two such Reiidents, one In Duesseldorf and the other in Munich. **Source: KGB defector Gelittyn. - 67 e NO ntitItIN DISVA Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN ['ISSN KGB Chairman, Shelepin, and a bonus of 2,000 DR. Felfe also received a 'letter from Shelepin, and we presume also a bonus, although he did not confess to this. Alfred held his last meeting with Felfe and Clemens in Vienna in I , September 1961. At this time he informed' his old agehts that at the end of the year ho would leave Germany for good. , This time there was to be no question of whether or not they would werk with an Illegal Rezident. Alfred informed Felfe and Clemens that at their next meeting later in the iall they would meet the Rezidept, 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. � A very rough estimate of theirequency of personal meetings between Felfe and/or Clemens and their KGB case officers during the course of their KGB career is once every three months. But this frequency varied greatly during different stages of the operation, depending upon the availability of cover for travel and the intensity of the operational developments at the time. The personal meetings were, of course, heavily supplemented by impersonalleoMmunications. d. :New Directiona We have seen how Felfe as thief Soviet counterespionage referent . in the BND, was able In the last years of his career to cover Soviet requirements on a variety of levels and a Variety of topics. 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 operational situations or . *A BND comment on this subject conjures up a humorous scene in which Clemens "in the purest Saxon dialect" innocently asked his KGB case officer "who this Shelepin might be." Alfred apparently was really shocknd, and Felfe claimed to be annoyed with Alfred for not orienting Clemens better. - 66 SECRET NO FOPEIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM complexities, Alfred could help Felfe in his bureaucratic manipulations, indeed even promote the formulation of helpful bureauvatic regulations or precedents. By introducing a Soviet CE factor into any BNB 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. Finally, Felfe, because of his own personal qualities brashness, inquisitiveness agressiveness - was able to broaden his access to information in areas in which he had no official excuse to be interested. (In this respect he is reported tqions as having tried to meddle in' in one of the BND security investi Approved for Release: 2019/02/21 CO2606321 [Approved for Release: 2019/02/21 CO2606321 ' B U it jqT loNt.:ti 111:10111 1i2Lvo1ving a West German nuclear scientist �probably in response to a specific request from Alfred.) z the end, Pelt* had become much more than just a simple servant of the NIB. (It's doubtful if he ever thought of himself as mach.) Zvidence from intercepte4 3WVI. lxecadcasts 4. as wen, of course, as Pelfeis own statements � shows that Alfred 'often asked rife for advice about the Soviet hardline of . certain operations. This inepided advice on the Soviet hardline. of Mamas double agents and the timi4 and tenor of KGB propaganda operations. ?elf* bad become SA may veva *clothing ate consultant to the rap as veil allt as sent. In spite of ,the fact that in maoy ways Telfe hat en almost ideal position, there is evidence that is 3.960 he Ina Instructed by the XGB to move on toanew job. This vas the post or security officer for the BBD Communicaticms Unit. At this time, discussions yore underway for the establishment of the MD) as ,the German cossounicatices intelliger('tccco;Alti All) ity. Pare knew that the post or cossamications security chief vas shortly to b ecome vacant, through-the retirement of it* Incumbent, and he Invobably knew Co guessed that the job vault assume greater importenne once thedomnrocagree� ment vas signed. Xs submitted his applicatiiss for the post early end vorked hard to sell himself as the next caolidate. tow respects, however, this is 'fob which might not have interested him as much es his old one, tug it is curious that he tried so hard to sit it. In his post-arrest statements)* vent to great pains to claim that the KGB vas definitely against having him transfer, but there is sufficient evidence (including intercepted,telaphone consents between Pelts and Clemens) to suggest that the opposite is true. If so, then the obvious corollary springs out: the KGB could not conceivably have asked an agent vho vas a facto chief of the I= Soviet CE Section to give up this job unless it had a replacezoent with equal or better scow& This raises the difficult problem' of nether ! liSoustrati 's 'Which is suggested all. through Mt.'s history, end of idiots* existence, if not identity, ve have been inforteld by various defectors. Pelts, of course, denies that he ever recruited another source. Possibly he did not, but in Goloniewskils opinion, for exesple, it is impossible that Pelf* could have worked for the Etoviets for ten years vithout having tipped another source in the 7rtio riheze, and it is very likely that Pelf* has an idea of litho 8 C No rontro3 Dragrq Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 --SEORET VO YOREIGN pis= among his leads become a recrufte4 source. One Of roWs last operations lends itaitlf to the interpretation that it imiiht have been intended in .tome respects as a suppert operation for another CI section penetration. (Mee the Busch case, describedhelaw.) There are also disturbing end mysterious, indications in OWVI.traffie and in the notebook which Fare kept so net. idulously orbits =and END operetionsA readditioni the*" is a variety of *Mee of possiblit.suspecta which have been suggestad:to Us through other operations end other sources, particularly those among Felre's and Clemens' coterie of ex.SS officers. Finally, titer, is * general and simplified quality about Alfred's Wit EX to rare *Leh suggests that they might have been, in part at 1st, eompreheasive instructions for someone else, but here, admittedly; we are allowing ourselves pure speculation. In FeIfe's last meeting with Alfred in Minna in September 19634 Alfred elaborated on a =above specific questions or themes for Felfs. to vork on for their next meeting.' Ha gave Fells a:typewritten raminlimr, which liste4Ittf4=by the Meter August 13th, ad a result of the changed Berlin situationj explanation of certain END operational .---moves against various Soviet officials la Wait dermanyi:further development of the Busdh case.. VUOly, ins rather strange repetition Oftheobvious EE1 which Felts bad already beenitcovering as si iter of course for some years, Alfred listed instructions to report on all END *gents; to report the contents of all cases run by the END against Soviet installations; to find out more about END liaison Vith the !mender and with NATO, and more about END Work against the USSR; and to report nay recruitment leads among Starrett tot =beer Voss tsomeratime OWL traffic Sreseassess contained ref;rences to someone called Ymnfred appeared to be a cover name. Neither Fell* nor Clemens ever olunteered his as one of their three or four cover names. Clemens simply did not know the name. When Felfe vas asked Who manfrod was, he reacted violently and strangely. Ea seemed upset and tried to pretend_ he didn't know the name, then he somewhat clumsiU accepted the interrogator's suggestion that it might have been 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 vith him, he snatched up a pen and scratched out S name in * sentence reading "According to Schumacher is a Karlshorst source." "overused to divulge the name on the grounds that it VOA "incriminatineS Various hypotheses as to the name have been made; possibly the alosest so far is Rails, since Sehumsetter did at one time work closely with him... R 11�1, � -AlTu nitUm ��-� Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM aponsibilities. The MT, 'Witch bats formal responsibility for the urity of govermaseat offices, was not yet sufficiently vell.orgenized to exercise fulliYithis responsibility. Using the iazga cases the lain) Nove4 into the vacuum and established a precedent Which still bolds. Ike DUD still exercises certain de facto respormibility for Poreica Office security, despite the Brett formal autberity in This field. There was another jute otiu ebtit in the =NA operation which vas used by Pelfe to exacerbate the already existing friction betveen the e E END and the PVT. Oa Pelfe's Instructicas,Aexpresaed concern to his Soviet case officer about operating in West Germany as a Soviet agent and about the e.anger tat the WV might get en his .trail. The Soviet cas a.> officer allegedl,y advised =A to latve no foar, as the BfV had only...two files on hint end they coniztinecl onl,y routine information on LMA's party activities. Men /Pare .at This izfortation free: /MA he checked the BM' on . � , \ . an aperopriate pretext and 'found that their files were exactly as described by the Soviet casiii officer. tiis was proof, Pelfe then said, that the I , � r V was 7011421,Tate,:* � 140. event was cited rather widely by Gehlan, Pelfe and other MD ofitieers to their American colleagues end preeumably to , - other elerenteof the Ger= government. Felt' diecovered during the course of the LPIIA operation that C/A coull useful to hita in various viol. la that IIA case as in mmay euy�equent ("pints, his contact with CIA vws of ellOrIZIOug$ Value as a kind for super-34Sison, since the various German services would sometimes tell their foreip confidantes more then they would tell each other. When 1(1)/B Itfticer NItitted him to recruit a leborer working on the new ceake6 ice building in 1955 to that a transMitter might be tatied in it Pelfe \came to CIA with the complaint that there were at least seven cliff German agencies to which a vorktaan might report a recruit. meat appreach and that his Organization could be sure of tearing automatically from only two of these Ite feared that if he did not have timely warning of such an approach he Xtli&iit love the opportunity to double the worker securely: would we Vaasa remaitor the situation for him? TiPicallY for the IMA case, nothing came of this plan to recruit a workman and to audio device. In retrospect, lee speculate the Soviets were plentting to approach such a webs= idependently of and that they is tactic to insure that Pelf. 'would learn of it if their actual ERP Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 tECRPT .NO FOREIGN DISSMT BM headquarters members (specifically, Alfred bad, been for some time interested in the IS) officer vba controlled the agent card files). One wed assume that after several years of being irtstructed to report on these moral. targets, Pate vould not, mead a ferittan minder of them. communications -, Riving noted Pelfisis effort to eot the job of 03102at security chief and raised the question of other penetrations, vs will proceed to a description of the Busch case. This vas another cceiplicated operational chess match, somewhat on the order of the MIA ease, possibly replacing it to acme extent as an operational vehicle. The Busch use had as its immediate purpose to deceive the BIM about its own security. Read side � by side with a description of Itelfe's effort to he transferred to a rev and with Alfred's instructions of September 196l, one is left wondering, at least, if the case might also have been destined as a support in ease way for another Soviet CZ soation penetration. � The Busch case is actually 'two came, 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 123B/CE officer (calling himself "ffainen) rung a deception Operation against the BO. Be had begun with a straight penetration attempt, discovered it to be controlled by the BED, and then tried to salvege teat he could by using the connection to pass deception about' the stati Of RIB Information on the MD. At the other end of the operstion Us aBUD field cue officer mud Pried. rich Busch, who worlied uader the direction of various BNO Soviet CZ section officers to counter the WS oration With deception material on the BUD. At a certain point in the operation, when both the BUD and the MB seemed to Vita it unworthy of furtber attention, Pelf* ex4 Alfred entered behind the scenes � to direct it in laws Which suited their own purpose. On the BM side, Busch vu of course unwitting of Mites inimical role. On the MB side, the 1233 eau officer "Vedas" vae allegedly unwitting of Alfred's role. late quotes Alfred as saying, "Bush's cue officer has no idea of the real situation5) Ai did not *vet know Alfred verso:08127. This was a bad situation in some Wet Alfred** Ilittlenotte itia not allays dance tba way Alfred vented him Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRtt NO FOREIGN DISSEM Consequently, Alfred had to ask Felfe to make his OND puppet, Busch, .provoke the desired responses from the other KGB officer. Felfe was forced at the same time into 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, but from the risks which Felfe was willing to take to manipulate this operation, we can conclude that it was destined for an important role. The ostensible purpose, as planned by the BND� was to set up a BND staff officer for KGB recruitment, as a BND deception against the KGB. From Alfred's point of view, we conjecture, it had to do in some way 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 ttie Busch operation was so strange it wouldn't even be surprising if Felfe were to suggest himself as the eventual target for KGB recruitmentl* We would like to describe this operation in detail because at nearly every stage OfjjS 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 and many other cases, prevented anyone from putting two and two loogther fora bong_timeir To inake sure that no one 'toad 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 1961.- as he had Schuetz - and *Alas Fleming _0 CIA Liaison Officer SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM subsequently Busch worked for a time in GV"L"...with Reile and Felfe. His professional history is cloudy at best: while a GV"L" case officer he appears to have tried to run i Soviet double agent case without informing his 8ND superiors. When the deception was uncovered he gaVe'a rather lame excuse and was transferred to a non-sensitive )ob in a field debriefing office. He is described as a weak man who cries under pressure and who .4 not particularly "quick on his feet." Our files contain a note that Felf, tried at some point to get him Ca staff position in headquarters, but was unsuccessful. In early 1956 Oscar Reile brought Busch into an extensive KGB deception operation known by the BND cryptonym "PANOPTIKUM.' The first player to fill the lead role in PANOPTIKUM was General Friedrich Panzinger, a former senior officer in the RSHA. He had been in charge of Rote Kapelle investigations for awhile, later Chief of SD Dstland (Baltic States and � Belorussia). In 1947 he had been captured by 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 penetrate the END 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 UV, to whom he reported the KGB recruitment and who in turn passed him on to the BND in the person of Reile. Reile's plan was to put Panzinger in contact with an ostensible BND net (real people, fabricated activity), about which' he could then report to the KGB. When Panzinger happened to become reacquainted with Busch, whom he had known before the war, Reile allowed Panzinger to mention this to the KGB. Panzinger did not know Busch was a BNO man until the KGB wrote back telling him to be wary of Busch. Reile *Busch's double agent operation was 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 assisting former SD personnel to cover their tracks and to find gainful employment. The KGB in Vienna caught on to him and with this compro- mising knowledge managed to recruit the Gehlen employee. The Gehlen man re- ported 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. - 73 - SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 � OWILI NO FOREIGN DISSEM then made Busch Panzinger's BNB case officer and a deliberate sitting duck for recruitment by 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,pieriod 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 LENA case safehousos in s Berlin!), and the whole proceeding had come to a near standstill when Felfe moved in. � -73a_ SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 "-EIVCRET NO FOREIGN DISSEM At this point the case picked up apectaeularly. Felt* proposed to the CS section to make Pansinger store attractive to the Int be had. Dimino:. tell Mine that Busch bad asked him to Sane as a letter drop for the BND and also that Busch had been nate ohief of a special ETD office handling Baltie and North Sea operations. re February 1959 he had Panzinger ask the NIB for * sleeting. As reason for the meeting, Pansinger vas to disclaim the war trines *Urges /Which hung over his head. - The Soviets bad released Perisinger without giving Wm an' amnesty and the old Ocaeral lived in fear of arrest.. Actually* senetisie previously the laND had arranged with the Bavarian 72V President to brief * high official of the Bavarian Justice Ministrt so that no action would be taken against Pansinger without prior earning to the BND. Unfortunately* only ,one such person in the ..Tustice lanistry was briefed. The NM apparaitly knew of it, however, since once before when Itansinger had discussed the charges with his um case officer, the latter had ssawad him that his case would never come up. Nevertheleas, under'Velfe's direction Pansinger asked the NIB case *officer for a meeting, to discuss this pz'oblers. Be traveled to Berlin on 22 February 1,959. lie NOB ease Officer told hi* be would see what be could do about the charges, but did not offer much hoe for an amnesty. At the sane tine, be said be thought leasingerse case merited a more "secure" communications arrangement and instructed him in the methods of OM. reception. (Pelf* told his stern colleagues with great interest that this was the first RID double agent to receive OM from the KGB.) � Nov strange things began to Am= in Penzingoes operation In - East German ally be received a pl/3 Instruction VIA WM to find. out if *IVA defector Ilex Nola bad bees a IIND or a WV *gent prior to his defection. This vas in zany ways a very indiscreet question as the part of the %v. TI2o CIA liaison officer for securitzir natters, who was already on Felfels trail at this time, wrote the following ccp�a in August 3$591 "Wass Pan:anger has grossly overstated his MID connections to the Soviets it is strange that the 10111 amass to think be night have uses* to this inforretion; f the 3 actually *eked the question this could be an indication that the Iktra knows Plizalugur has been turned and calculates that the BO will supply * true 41111SWeri Cu the other Itand...ccesider the possibility that (haU.) has been asked this question.*** Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 In the meantime Pet/Willger had imoee*tly carried out his KGB ease officer's instruation to ask Oehlan, 'has be knew slightly, for a Job in the END. Re wrote `a letter of application and, after en appropriate interval, Fere drafted an answer for the signature of one of Gablen's deputies. Pelfe's draft was nothing short of a death blow to the Pansinger operation., and indeed there vas speculation even at the tine that it vas for some reason a deliberate blow.. Pelfe and his colleagues in the 121D awl CIA had discussed the type of answer Which should be prepared to Bensinger's � letter of application ami bed decided together that a sort of non-committal reply suggesting "no present vacancies* but still leolding.out sow would be the beat. It appeared strange, then, Wheel Pelts produced the signed reply which stated that ,Gebione could not **lay` Pansinger until the matter of vex' (trims chi!trges vas settled. The CIA liaison officer early August 1959, Approved for Release: 2019/02/21 CO2606321 7Approved for Release: 2019/02/21, CO2606,911, Imantinger they bat been able to gather enough evidesece of Daschis sindiecretions"to enable then to make en approach an approach which earlier they might not have believed possible. Ka fact, said Pate, the KGB might SIM be expected to move against Busch end in doing so they might *WM go so far as to reveal their inowleige that Busch, too, vas a 'gar criminal. (This leas, the first tine this information about � Busch became known to CIA.) While' making wise sundaes about the tom to his American colleagues, Nate set about frantically in the= to cause the very contact with Busch which he had been predicting. Shortly after Psesinger ts suicide Pelf. and Alfred met in Vimema, where, Melt* admits", Alfred asked him bow - they could keep the operation going and embeal it to Busch. Pelfe hit upon the effective end simple plan of having itmsinger's brother write to Pensingeres' old KGB accemmodation address saying he had found the ram end address among Pansingeros effects end was informing them of Peneingees death. The brother invited the addressee to write heck either to him or to Peneleger's "closest friend during his last toe. Busch. Its this way Basch began corresponding directly with the KGB� A meting was arranged to take place In Rom; in August 3960 dozing the Olympic Carne. An urgent OWVI. message from lfret abolished Pelf* to remember that be was responsible for the safety of the KGB off'icer, id2o was coming from Moscow for�this meeting. The KGB officer, Heine jtold Busch he had been sent from Moscow especially to recruit him, but on BET) instructions Busch saved, challenged the KGB officer to provide bona SE121, and refused to accept recruttamant by anyOne but the "bossC29" They ported with en agreement to meet again In Geneva in early 3.961. A � Petro presented this, turn of events to the as very ramarkablej I � and he immedibely set about the *creation of a deception unit on which Busch could s*port in the *vent of his recruitment. Some people found this a bit Premature/ but rare kept moving and during the next few months gave the Impression of great activity surrounding the Busth case while he collected all the necessary approvals for Busch to accept a KGB recruitment, to neattnete a (reel) candidate for MB recruitment in the beadquarteass,enl for the release of deception material. He set Busch up in Heidelberg in an office consisting of Busch, one colleague and a secretary. His theory was that Busch wouti report freely on this office, thus givang the latS the inceretripb iaphey had :seedbed their goal of - 7' - � DISSZu Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 iij V�'aSI" h-- penetrating the BID. Ms reasoned that In this way the BUD could keep the EGB busy Wine fending them, off vith deception and monitoring the extent of 1,31B kaowledge about the 13= The files show fairly universal feelings of incredulity at the ti se Agfa propounded his plan. Cefortunately the incred- ulity did not extend to Pelfe's itamed.late supervisor, the MID CE chief. Us vas fairly well hoodwinked by Pelts in this came, and in several (*hers, to his intense embarrassment later. Each Usti the security section officers wanted to reviev the case, they found that the material vas ifleccesiib3i � � Val y: in :lay 1961, one of them vas ablm to get Into Pelfais safe ant discover, to his armaament, that contrary to all. impressions, absolutely not.hing had happened in the Busch case since the meeting in Bow a year earlier. The NOB _simply did not appear for the. meeting With Busch in Geneva, and no word cams from the case officer Rai= suggesting a new meeting. AT the same time, Pelf* krieni from Alfred that there weld be no meeting. Vie Clemens, Alfred sent the message in early 1961 that Ilusch's 103B can officer � Ints having difficulty in obtainin,g documents for a trip to Svitserland. The B33)isEcins was hard to push around, however. Cesi 011.11111i600 that he was already quite auspicious of Busch awl sceptered to drop the ease. (it vial be rent* embered that, accordirg to Alfred, 'Seine- wee-unwitting of the true circumstances of the case.) Mins would have to be podded from the West. liday 1961, Busch wrote hima letter sayiug he vas sorry theY' bad Isleteed each other end that if "Veins" vs* interestad he should set a new meeting date. Busch stipulated that the place should be anywhere but Trance, since he was :bikeklisted in that *country. Slightly mere then, two months vent by 'before, "Mine replied offering to meet Busch ** in 7urisS 16f Busch had to vivito another letter. (A tap on Felfe's telephone, which vas already operating by this time, reveals that Pelf* informed Clemens about this time that the BUD would not give Busch permission to keep a lalB meting in. Paris. �Since Clemens had absolutely no official reason to know this information, one assumes that be vas supposed to, pus it on to Alfred. Anotber six weeks were used up in negotiation for a new meeting nally) Busch arta Mina agreed to Meet in Vienna on 11 September 3.961. At a meeting in Berlin on 3.0 August, lelfe's own am handlers informed bias privately of the new meeting plan. They urged Pelf* not to let the 13ND counter.. t, i> surveil Busch,e meeting with Heins, since it Iteins, flidio doesn't know the real real situation:vex* to spot the survei31en00 be Wed /limply break Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 =tact' Nevertheless, the BM) vas ineistent about the surveillance, various sections for various reason. The CS section-vented to identify . Heins) /Pelf* vented an excuse to get Clemens (nov in the surveillance unit) a chance to meet vith Alfred end to conitersurvail Pelf's's; own rieetings vith Alfred, and the Security Section an& CIA vented to surveil leer.: To this it must be added that the KGB Ileinschad his *countersurveillance; the only man vs do not knov about is Alfred posed* be vould have done veld to have had. some surveillance of, his own if be didn't. When Busch arrived In Vienna, mina told him that he vas the 1615 "boss" for this operation; that he had come again eapecially from Moscow and vas prepared to 'offer Busch 45100000 if be wall work as a source on the D. (me money you'd, be paid later into a,Svise Bank account, for Which Busch shouldlinake his own arrangements.) 'Busch modest* replied. that he doubted if he could, be a very good source since he Van not a hemiqua ease efficer; bad been in a debriefing unit (ignoring the previous fabrications about his work) for *me years as a result of earlier difficultieo, and actually knew no more about the MD then that which had been published in the Fest German end Soviet exposes of �VT? at the time of. the great flaps of the early 1,930's� Veins assured him (Pelf* wrote in his report to the "more to him") that, incredible as it might sces the content, of � these old exposes vas in fest the sua. total of KGB knoviedge about the BO and they 'were hunger for more. Bs said that Busch was a most ixu t wan for the Soviets, end he gave Busch a list of requ*ements OA the BDID: truetlaMea and pseudonyms of case officers; identification .of agents in the East; all Lemmatise about the headquarters, about bus routes to the headquarters, IUD license plate numbers; political and opernticeal inform mation about Berlin. /rt addition to these penetrating EX, Bitins wee several interesting political observations much in the old DMA Pelfe wrote them up as follows; "It was said that ,the Soviets do not understand Adenauer. Because Menem. ' doubted the determination of Soviet denude concerning Berlin, and vas not ready to negotiate sooner, now, after the 13th at August, hie negotiating position is appreciably less favorable than it was before. "The Americans in Moscow were said to be of the sem. opinion. Prom them it became knout to the Soviet intelligence service that they wanted to force 'SECRET NO FOREIGN DIM?! Approved for Release: 2019/02/21 CO2606321 1.. voultt not beocze so Imerful es'Idenauer. tationi The interest or 4,230.8oviete i undOubtegr,in thi8 casse-ta headquartmrs or st. least to develop the possibilities .for do the tutus* hotvrirgof this ease it is, Os:fxid Approved for Release: 2019/02/21 CO2606321 - � veaticatiOn Approved for Release: 2019/02/21 CO2606321 Itt and Arrest For almost every year of Felea's postomer existence an ites of derog- Atm. information vas entered in the files of some Western aSena7. trarart40 =Ivan no one agency, each less the MD, had it all instil ahartly , before his arrest* Both Clemens tual Felts have praised Soviet security practices as greatly superior to thee* of the MD, and their account of the MB handling shows' a continuing eoncern Stith operstional securit4 weakneas of the Soviet operation cannot be laid so much at Alfred's door as at Folio's erti Clateens, The weakness, of course, WO bui3 int the cliamlahness end susceptibility of the ex4D officers Mitch drew them to KGB attention in the first placteilso bore the seeds of an eventual breakdown* Pelf. and Clemens refused the discipline of sidntaining contact via an Illegal, insisted on keeping up their lateoral.commmications *ad their trips Mat to wet the 1013 officare* can.,at least understand what psychology might have activated the two agents in their refusal of the impereozalaM meohanicarecanunications system, tint their stubborrisa vas disastrous and as tizat passed their operational practices became more and more lax* IThat saved them for so long was the fact over 'which they had little or no control 0-that no thorough investigation vas ever made of either Felfe or Clamens by any one *Sem". The BM heasateraaS 1340twaan the requ.trimasnts oil "respectability" enit the need for experienced versa:eel, did not (at the tine Felfe and Clesins leers recruited) perform background checks on may employetes end did. not routinely trace them 'with other agentitee Instead it tried to rely on rigid intertuil compartrentation as its primary AS early as April 3$9, British Was sontained sufficient derogatory information on Felt* to make mippete very at the very least* Aside frem information on such general and coxes postoater sins as the falsification of personal history statements, "insecure" talk, and information peddling to several agencies at once, the British file oontainedt (a) Felfe's report on Garda Mamma' attan't to recruit her husband for the KGB in Dresden, an indication that Clemans might have accepted recruitment, and Felfe"s offer of Clemons to the British as a double agent; (b) Felfe's admtision that he had sent a report on a unit of the lifY Ifordrheirt.liestAtilms to a contact in the ETD in East Berlin; (c) a report that Pelts bad attempted to peddle to at least two West GOMM news *sondes the charter of the proposed BfV which vas about to be presented to the Itirdstry of Finance for : Err h('''� TNT Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 epproval. The history of ?We'll possibly dame:roue contacts vith Max - *steel and Ileasext Probbstingyes also recorded In eate detail, as veil as irdications of untrustworthiness, possible theft anl general "varn- ishing. of the truth". Some of this infortation.vas made available in iteneral terms to the BUD in January 1958j4ien the IIND requested traces relfe in the course of their 19156.57 .investigation of him. CIC had.a certain amount of derogatory information on Fere by the fall of 1954, mostly from Ludwig Albert, who had became aware of the existence of black marks against Felts in the Bf7 and the Federal Criminal Office throueh his Olin early CI Voris. CIO also had the ,it of Mx Weasel's euebott two approaches to Fare� AT 1956 CIA had what CM had, although in condensed farm, *without source descripti�. It also had. Deryabin's information in early 11934, Which indicated the existence of two KGB agents in the Gables Organization with the cover names"ftter" end "Paul* (Ciastenal end relfe,s cover names at the time), but unfortunately Deryabin vas 'unable to provide details to help identify the agents.* After 1957, When CIA officers began to work more closely with Fare, the file of suspicious, or at least puzzling, items about him team, For *Mee, in February 1937 a-CIA officer from the liaison base in PlUnich/Pullach accompanied Felfe on a trip to Berlin. The purpose of the trip vas a special meeting vithiallA, at Which, Felts said, he hoped to obtain' additimal details concerning an earlier /EU report that the KGB vas targeting a homoaexuel officer of the t1�13. Department� of State stet- , toned in Berlin.** After Felts and his C/A liaison officer hid already arrived in Berl-intend separated, Berlin Base received a cable indiCeting that Gen. (lehl= was concerned about Felfete safety and had requested. that he be under .C/Aie 2&homr.aftday protection. (Was this one of Gehlen's flashes of intuition, and could vs have suspected the truth even, them? This possibility. cannot be rejected out of hand.) After this cable was � received, the CIA lialflon officer, rometbering a remark Pelee had made earlier in the day that he Lebtnibid to go to a smvie at 1830)te1ePhone%\ire3fe's 41 Nevertheless, betryabin:1a744fat the fact of penetration should have led to a review or peraaanel security practices within the END, but it did not. At tiWb point in West German and END history, almost any typo of investigation into the backgrounds of END personnel would have turned up derogatory information and possitle indications of Soviet connections on the part of a number or WAD employeea. ** This is a typical diversionary allegation. MA's Berlin Base and the 2State Department security office expended considerable effort to investigate =A's report. The investigation lasted well over a year, until it was dropped with no conclusive result. nonET VOREIGN DISSEt 1/- Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 hotel at 2030 hours. lealfe was not there, nor had. he returned by four in the morning when our sleepy officer decided. to abeam; his vigil. Incited. in his hotel,. at 0800 the next morning, Fella invited. our liaison officer to breakfast* Without being asked to account for his - time, Felfe volunteered. that he had. gone to the movie at 1830, had - had something to eat and a drink, and had. then gone to another movie at 22300 Again without being asked or challenged, be exhibited two movie tickets,* Tata voluntary display of props to support a story struck the liaison officer as quite unusual* Equally unusual was the fact that the stub was torn off only one of the tickets, and that even if Faire had. in fact attended the second movie it would not have lasted Until some time after four o'clock in the morning* The liaison officer 4# did. not reveal his suspicions to Felfe, 'but he did. prepare a special ettMeit report on this disapppearing act** The BED had Ludwig Albert's denunciations of Felfe as early as 1953, but these went unheeded* Albert made a practice of denouncing many of his colleagues who transferred. from GrL" to the headquarters; CE units and., furthermore, Nwas not entirely above suspicion himself. The first concerted investigation of Pate of which we have record. was begun by the BED in 1956 on the official grounds of "Suspected SD and Eastern Connection %Then the BED traced. the British in the course �. of this investigation, they recaived.4 memo on 21 January 1958 generally outiir,Ing Fete's insecure and. deceptive practices as a British agent and. specifically poin4ng out suspicious contact with Helmut Proebsting and "the BIS attempt, to recruit Clasen The memo did. not contain an account of Pelf& s having offered. Clemens to theta as a double agent* In addition, the British pointed, out that as late as �August 1957t Felte had. attempted to establish an unofficial connection to a British intelliegence officer in Duesseldorf* None of this seems to have stirred the BED part- . Felfe was called in and asked, in a rather p, form form mannerli about his SD connections* Felfe, equally m, forma, denied having been en SD officer* The "investigation" seems to have petered out at this point, despite the fact that the falsity of Felte's statement could have been proven. very. eamily. In the meantime, during 1956 or 1957, the CIA security liaison officer to the )1ED had been making a review of the horrendous GV"L" flaps of the early 1950's. Be reasoned quite simply and accurately that it the * via a later confirmed that Felfe met with the KGB in That Berlin that evening. Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 NO FOREIGN OMEN .NAt had deliberately sacrificed a number of agents in the Crt, bases, It did not do so without leaving some penetrations in place to report on the subsequent CE and CI organization'and operations of the BUD. 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 dissolution of that base. In aelemo'dated in early 1957, this officer suggested several candidates :for investigation, among whom were Felfe, Relic. Clemens and Schuetz. His'Conclusions*ere given to the BNB security section, where they were added to the general suspicions of Felfe and his coterie, but again, unfortunately-, did not succeed inc',sparking any sort of investigative action which might have tested out the logical analysis. The security situation continued to fester quietly in this way until! early 1959, when finally a report from a high-level penetration source shot us into action. In March 1959, Michel Goleniewski, a senior officer in the Polish Intelligence Service reported to us that the KGB' had had two agents in the BUD group which,visited the U.S.. in September 7956. The KGB also had an agent, Goleniewski 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 traveling 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 the highest level of the KGB: Gen. Gribanov, the Chief of the Internal -Counterintelligence Directorate, who revealed this information in a briefing of the assembled satellite intelligence chiefs in 1958.." On the basis of this information and several Other leads from Goleniewski, and despite some luestions concerning Goleniewskis bona fides. CIA began a quiet. closer :investigation of suspect KGB agents in the BUD. This Investigation centered on Felfe. As a first step, file information was pulled together on Felfe and on the Orange,* of his �per-. ' � *It is a frequent occurrence for senior supervisory personnel to heavily discount the unpleasant conclusions reached by CE analysts, and therefore to decide against taking resolute action on the basis of analytical evidence. Certainly this is characteristic of the entire history of the Felfe operation. This tendency may be the understandable result of CE specialists crying "wolf" too oftenibut in the case of Felfe the analysts were correct and the result of inaction was disaster. **Revelation of such information even to the ,chiefs of the satellite services was a major KGB mistake. ' - 83 ;1-- SECRET/NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606321 �Approved for Release: 2019/02/21 CO2606321 e.tional activities the "LENA ana int3C/I MEMO � sw mum kwa...0.4 under lateral CIA surveillance on several of his trips out of tom, and. a unilateral phone tap was put on his NMnich telephone. The BND was not immediately informed, because of the extreme sensitivity of the source, GolenieWski, who was still in place. At early 1961 the circumstantial evidence against Fate, the ,positive evaluation of Golenievski's information in general, and espepially. the fact that Goleniewaki bad by then safely detected to the West, brought CIA to the point where it felt it must inform the BND. When General Gehlen was told, in February 2961 of the specific report about two KGB agents in the p which visited. the VA. in 19,6, he immediately agreed. that hie, heretofore favorite case officer - ?Ate- was the major suspect Be set up a:amall special task force to investigate Goletiewskils leads to penetration of im the 28D. NOW, with the impetus of information from "the horse's mouth," their investigation of FeIfe picked. up rapidly where it had. left off six year* previously. The =noted. that Felfe hadaweekend. house built, suspiciously it seemed, right on the Austrian border, .and in mid-March a tap was put on the telephone on this house. This was difficult to achieve because the house was located in an area with virtuallino other residents, but as soon as this tap began prod- uting,-the KGB's operation "Kurt" unraveled. rapidly. ,The first lead came from a remark by Clemens, who complained to Fate about the high cost of his phbe calls to Felfes it these bad. been,official calls there would. have been no need, to complain. The BND then began to look at Clemens more closely, and. discevered that be was in correspondence with his daughter in Dresden Agvia a third person (Tiebel), even though he vent to great pains to give the public impression that he * itad. no connection with his East German family. The BND security team also discovered that Felfe.had. been falsifying his expense acconkting� and they noticed. his relatively high standard of living. In the glummer of 1961 belie began drOpping remarks about having received. a large bequest fran a recently deceased aunt in the U.S. CIA cheeked and found. the aunt very much alive and. that there was no record of her/having mdde any foreign money transaction. Indeed, a few weeks later fO applied for a passport to make a trip to Germany to visit Felfe and. Rafe than began mentioning a loan instead. of a bequest. During the course of the spring and summer of 19610 telephone coverage on Felfe's weekend house revealed that be and Clemens were definitely in Approved for Release: 2019/02/21 CO2606321 . Approved for Release: 2019/02/21 CO2606321 andestine contact with eaca or on mamvara vnlon coup. not be identified with of del Gehlen operationa.* They spoke %lite 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 Felts. Por plecingt.ogether various scraps and shavings from the tpps and from close observation of Felts, the BD security officer was able to establish a significant pattern of action on Felfe's part. It became clear that Felts was always curious and. � aggressive just after his bi-montbly trips to Cologne. (The investigator drew up an impressive analysis showing how Felfe pushed. for information on a subject not normally of direct concern to him - namely the whereabouts of an engine recovered. by the BED from wreckage of a Czech owned IL-18 Witch had crashed in Bavaria at a time when normal interest in the air rash had died down, but just after one of Felfe's trips to Cologne. Felts later admitted that the whereabouts of the IL-18 engine had. been an urgent EEI from Alfred..) The investigators readhed the conclusion that Felfe was receiving his EEI in Cologne via Clemeni� 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 fraa Felts what had. heppened in the Pripoltsev affair. Felts told. Clemens that be 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 OWN/0 and. they were able to establish his frequencies and schedules (every Saturday at nnon, alternate repeat on Mondays at 1700 hours). Several messages were � Subsequently broken when Clemens relinquished his onetime-pads. In addition to this form of observation)Yelfels more extraordinary t, operational behavior 'wiles being scrutinized as never before. In the LENA ease 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, Hots, announce& that hhe Soviets had lost interest in him and turned him over to the East *The phone lap O'n rate's litinich residence remained generally unproductive. Felfe knew this phone *as easy to tap, and he apparently instructed Clemens to always call at the country home on Saturday evenings. -711 C R E MAN Approved for Release: 2019/02/21 CO2606321 Approved for Release: 2019/02/21 CO2606321 SECRET NO FOREIGN DISSEM German service. In Felfe's safe, evidence was found that he had falsified official Registry records on the LENA case. In the Busch case, both CIA and BUD investigators watched nervously as Felfe and Clemens prepared to accompany Busch to the 9 September 1961 meeting with the KGB in Vienna. / CIA surveillance of Felfe in Vienna revealed that he took extreme evasive tactics when leaving his hotel at a time when no activity was scheduled in the Busch operation. It was a Sunday morning, when the Vienna streets were quiet. , Felfe drove very fast, made several U-turns and crashed a red light. The surveillance team was under instructions to let Felfe go rather than risk being detected. It was later learned that Felfe met with'Alfred barely ten minutes after the surveillance had been broken off. Clemens was in his hotel room with a bad cold and could not make the meet with Alfred. (This was unfortunate, as after his arrest he I.would have given an honest account of what happened at this meeting.) By, the.-rend