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,ftiummome Approved for Release: 2019/02/21 CO2606326 SECRET NO FOREIGN DI SEM KGB EXPLOITATION OF HEINZ FELFE Successful TB Penetration of 4 Western Intelligence Service NO FORM TD1SSEM Approved for Release: 2019/02/21 CO2606326 olim3proved for Release: 2019/02/21 CO2606326 SECRET NO FOREIGN DISSEM TABLE OF CONTENTS I. Introduction and Summary II. 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 d. Alternate Versions of Recruitment by KGB and Hiring by Gehlen Organization 26 e. Early Stages of KGB Operation -- the BALTHASAR Deception III. Operations of the Early 1950's 32 a. Efforts to Discredit the Gehlen Organization b. Felfe Settles In -- the LENA Deception IV. KGB Work in West Germany as a Sovereign Country: 1956-61 Targeting of CIA, Provocation, Tactical Deception tr.*IA4 �A pport of Soviet Policy and Political Deception ethods of Communication dr, New Directions? V. Investigation and Arrest 80 VI. The Aftermath 89 MIXES A. The HACKE Story 92 B. LILLI MARLEN Case 96 C. The Sokolov Case 101 D. ZUVERSICHT Case 112 E. MERKATOR Case 115 F. Glossary of German Words and Abbreviations 117 NO FORiGNOISSEM Page 1 29 33 42 50 53 62 Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 46- OV � at happens e IGB4F has able:a level penetration of a Western enc service Haw does the IGB exploit the voluminous tuZorstLon received on eoemy operations while at the same time protecting the security of its source? More importantly, does the= handling of such an agent leave tell.tale slIgus which wOUld permit an alert and knowledgeable Western counter intelligence officer to surmise the existence of such a penetration? It would he presumptuous to generalize on the basis of one case, but study of the IOU handling of Heinz Felfe maybe* provide 'emmerialieothese questions. Of Penetrations of Western intelligence and security services, Heinz Yelfe was certainly one of the most Felfe was an officer of the West German greiga Intelligence igerviee (BED)** for ten years, six of them as deputy thief of the section responsible among other things for countering Soviet espionage. He was a dedicated Soviet agent throughout this period, antiemained loyal to the Soviets even after his arrest in November 1961. He was detected as a result of a lead provided by a CIA-run penetration of the Poliah Intelligence Service ('UB). Te3!e was more than a simple penetration agent; he became, in consultant to the XUB on many of its operations in West many. Through Felts, the Soviets pursued three objectives: t"'40,-A4r Cgrotect the security of Soviet instsllatio sonnel texelf.CW will be used throaghoat this of the period covered the proper for the State Security Service Was *B or MYD. P om 2947 to 106, when it 44-14 no Oga statuct this was known 41 the Olga= Org04441,140/3.Zn 1956, after West Germany had r444400. savOret004_it Pao*, thil BP, which is the aerama abbreviation Tor 44;teraj,ptal,,ttgenpe Service. For con- vent.; and simplicity it is frequently referred to as the BND even the earlier period is meant. SSONSt NO immix MSS= 44 Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET. FOREIGN DISSIOK in West Germany and in Bast Germanys and to detect Western operat ns inside the Soviet Union. To this end, the 1101 ran deception operations deeigned to expend Pelt es access to informmtion not only from his own service, but also from other WOO German and Allied services including C/A. b. To confuse, disorient and discredit the West German foreign intelligence service. The aim was not only to penetz'at. the service, but to benipulate it to serve Soviet � e. To collect political intelligence on West Germany. This gos3, and the equaLly important objective of political ttsinfoxation, assumed increasing importance as the case programed and new have ultimmtely� become the most important In Soviet eyes, as a support to Soviet foreign policy objectives. The reader will not find here a ease; that mould require a mudh larger vo of the story are here, and one dhapter in primarily to background information, presenting the dramatis -7-4:a744,1ZA,- plitlonte describes how the= recruited first Hans Clemens, and then, thru Clemens, Pelf*. They had been eolleagues in Masi intelligence during the war, motivated after the rile by revenge against the Americans, money, and &desire to be on What they considered the most powerful side. But thde IS essent4ally a selective and interpretive account, for the purpose of illustrating WAS methods of hencl3ing and supporting a well-plaes4staff pertration of a Western service. The lessons to be learned lie in the deception and diversionary operations run by theEnto build up Yelfes reputation in the BUD, expand his access., protect his secuiity, A sad create an Illusion that the German service was effectively fulfiliing it* CS miesion while the Soviets were generally ineffective. There are many ways by which Pelfe might have been unmaUked earlier than he wee. Sven &thorough mooches:lc might have done the trick. He could also have been caught earlier if mo of Pelts � Approved for Release: 2019/02/21 CO2606326 Approved for ,Release:12.219/02/21 CO2606326 110 FOREIGN- PISSEM of suppo evidence Vhieh clearly Indicated something her than waiting to be spurred to action by a report ensitive penetration source. Indications of Soviet the BKD were to be found in the deception and rations run by the no for the express purpose or protecting Yelfe. Although 'smart and protection agent* in *stern aervices is not the only reason run deception and diversianeri operations, it Xe against one service, thee principal reasons for such operations. Study suggests that *hen a number of Soviet deeoption operations are concentrated in one aree% or be carefully anal,ysed to detezmine*bather they Soviet peutition in that area or that $4021/inet# ilany exemples of deceptiondiversionary operations are discussed in detail in this study; the most important are summarised in the following peragraphs. The first WO deception operation in suort of Felts was the MAISMWSWAr case. As far IS Up W Ixnew at the time, BALTBANAB was en* of its better positive intelligenee operations, producing infor- mation on Soviet mining of uraelam in lest GormenKand its Shipment to the R. The agent BALTNASAI vas a wertime friend of Clemens the had re-initiated =teat with him and then allowed himself to be recruited by Clemens for the D. Actually, a GB agent fram the beginning. lite= initiated the operation to filfehm co-conspirator, Clemene, with an official maw for repeated trips to West Berlin (to meet RAPTROW), from where he could easily Mee to' last Berlin to meet with his and Yelfefs MD case officer. Another deception operation, the eo-called "Mr cue vs most important single contribution to Kelfets career as a, West intelligence officer, and probstaly also to his career as a Soviet agent. It gave him statue and stature within the BID, and veribility as a Soviet agent. It was the vehicle for many pubits to broaden hates accese to collect information, especially th- 0; V4! 40 ,.... nth, and sometimes to disseminate disinformation. the doe an-ans c onnd � ;3 Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 NO FOREIGN CISSEM LENA was the BUD 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 BMO 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 f3ND that he had been introductd 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 CF 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 A.., /a& � at the time ises.444imeyteeeeetailatv another KGB penetration of the ONO. With KGB assistance, LENA developed rapidly into the BNO's most important CE case, and it made Felfe's reputation as an authority on Soviet counterespionage. LENA's talkative KrT case officers revealed information on other Soviet operations in West Germany, compromising several bona fide Soviet and East Cermet-, agents in the process. LENA was "such an intelligent clan' that his KGB case officers ostensibly enjoyed talking politics 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 CO2606326 written= the Product of mete baskets Approved for Release: 2019/02/21 CO2606326 tECRE1 ITO FOREIGN DSIJ EU ar more successful thalt- the Soviet penetrate the Bonn Oceirmsent. Although lel recruits to the Sap the only real ru1ted was an ailing and beromportent ffic., 1630 contented himself with the some vaterial. To some observers it seemed incredible at the time that the IOU ahead go through so notions just far this. There was created an impression of 1nampot4nce, mad IMB failure to attain important InOmmeetion tram *mat Sermon government offieest At the some time, IAN, was pessisg the Br/ detailed end comprehensive information on personnel Ions at the NOBs rest Sertem Itemiquerters in that this infOrmation could continue, Pelf* decided it was necessary to prtrolds the NOB with buildwmp material tokeep MA's faltering Meet German net alive. For this purpose, Folfe pioneered procedures within the West German government for the clearance of buildArp notarial. Ile obtained from the libiteral Attorney Generolastatement that any material already demonstrably known to the opposition was autonstieally no longer secret. By extension, thmt Which was no longer secret could, be passed to the opposition as build-up notarial. Thus mben a. NOB case officer told or any other doable agent reporting to the BSD, that certain areas of information were already covered by the e= Felts could argne the virtue of providize this information to LIMA as build-up, to satisfy pre emend NOB cross-checking, or to smoke out the presumal Soviet source in this ray, Felfe was able to ameeuver avid* variety of information lapilli' into Soviet hands. Discussion within the West German government ofcchat could and could not be cleared for passage in response to Soviet requirements greatly.broadened thaltale *mess to positive intelligence otherwise inaccessible to him; infammation which could not be cleared for passage as build material was passel clamimAinelyterrelfe. a provided Nate and the NOB -- with for invostigating Vest Darman personal of target interest to KGB. The NOB case officer would instruct Unto try to obtain certain information concerning a. Vest . Alt al t11,4 Approved for Release: 2019/02/21 CO260632615 Approved for Release: 2019/02/21 CO2606326 SECRET NO FOREIGN DISSEM German official. LENA reported this to the BNB, 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 eamecheck 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 BNB 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. BND information on these installations had been checked in Berlin Base files since 1954, but in 1956 Folfe began a concerted campaign to collect detailed information from CIA on its operational program to penetrate KGB Headquarters in Varlshorst. 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-ai;kkiiiii�a from Berlin Base. 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 intelligence point in Cast 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 ORU, which is on the � General Staff level and so concentrates on strategic intelligence. -6- SECRET NO FOREIGN DISS Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 NO FOREIGN DISSEM safe houses, and license and telvhone 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 cooparation in operations against Karlshorst. In one case when he - 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 t Ku 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 �-e.eear4 Base program against Karlshorst wasAcompromised. There mm were also other cases of provocation to identify CIA agents. One involved am 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 KCB of Western intelligence contacts. Therefore. the KGB closed out all the agent's KGB requirerents 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 MD, but an actual turnover of the case to the BNB, SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 BEC"Tosvi VO FORBIO %So ,t,died>",4 .6:e4e4,,z behavior while in Mbscow. Subsequently, she became the object of4so- it6e "e-s144- SOD/11dang1e" operation a Soviet lover maisainesit potentially recruitable, with Felfe OM MID Heel Sr ease, a Went German woman run by CIA lfe provoked revelation of our interest by sending us reports accusing her of seriously insecure Another ittegral pert of the Felfe case in then= NARCJIr operation, which occurred in 19540 4nd the related COSO of Ludwig Albert the following year. LILLI MUM is the German eryptonym for &Soviet operation which ineolved the intentional COMTOM1Se blithe MS of the fact that it had a eource in the BO field base for CI operations.* To carry out this operation, the= prepared comprehensive report on the personnel, orgenisation and some of the operations of the Brip field boa*. in June 195k, a= agent was sent to place this report in a deaddrep in Most Germany. A second= agent vas *lib sent to confirm that the drop vas in place, then go to the local police and recite a. pre-arranged story of observing a man hide something at this spot. (This agent was sdbsequently arrested and eonftesed his role in the deception.) wa4 on a Else= Three days later, e third OS cont to srecomee the drop, with the intention that he unwittintil walk into a police stakeout and, be arrested. The= judged (correctly) that this particular *gent would quickly oonfess to being dispatched by the ICSB, thus confirming= control of the penetration." Through astikte police work, the operation was unmasked as a Soviet deception, but the fact remained that the Soviets did have a complete and accurate rundown on the activitiles :of this field base and mast therefore have sainially had a penetration reporting this information. SUbsequent investigation, in Which YeIfe played an importaut role, centered on identification of this agent. The report itself provided several clue!,anikSGB provocation crAd-Z7-e5,,t, ted a week after the report was found may have been designed to 'provide additional clues pointing to Ludwig Albert, a senior officer this base, A year later, confessed Seat GOMM agent rixteered Albert, among others, as an The German designation Approved for for this base was Grip , - _ mn voBEVI: Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET �1). POREPIN DISSEM -r-cc,7.-4.1:41d ext. Ke-d). enti It cannot be proven that this "con- fession was Soviet inspired, but circumstential evidence suggests this was the case. Albert was arrested and later committed suicide; � 4t42.4,4".. evidence found in his home confirmed Although there arcgaps In OUX' enee is lacking, the SZB purpose in the T17/1' MARL= and Albert cases appears to have been three-fold!! First initial impetus for LILLI MARLEN ssothave come from the defection of KGB officer Petr Deryaln. Deryabin had served .1n the German CS branch in IGB isadquarters and was partially Imawledgetible of KGB operations ageinst the BOA The TIT3.1 Mg= operation, Which came just four months after Deryabin's defection, may well have been designed to divert Western investigation of his information. By creating circumstances and feeding information *doh eventually led to the arrest of Albert, the SUB apparently hoped to Shield a more important or more reliable agent, Pelf., from investigation. A 144-t 4- second purpose ems-771,..--� elinination f Albert vhc!Jalthough an actuaS�aantj apparently become dispensable..laftener. MIL (There are several possible explanations for this. One of than relates to the fact that Albert had become a bitter enemy of /elf* and had accused Yelfe of being a Soviet agent) piaimmer And third object vei o further thellEnt, overallAprogram of i,I,Pv and discredi eL�a121 er,i'vt.4-4g- t in the EIND who bad been deliberately se. e years passed, wklab-461090mollerdiett-Horneeep the deception operations became increasingly complex. The BALWASAR operation was followed by the increasingly complicated =A and LILLI eaaes, dis- cussed Above. The f4 n] deception was the BUSCH ciase, *bleb aborted in mid-plot as a result of Folfeis arrest! in 1961. for This IlliigiebAconvolutd-triple-think, a plot within a plot, Iihich is far too complicated to eammari3e here. It is discussed in detail Seryabin knew the 1COMI Gryptonyme ("Petee and "Poul") for both Pelts and his co-conspirator, Clemena,lbut belies unable to provide details shiCh would help �Stall& their identities. Approved for Release: 2019/u2/21CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET NO FOREIGN DISSEel in Chapter IV. Its purpose may have been FLiye a-f-e-4 Act 4- eee< ee�. 8ND,ae or to ;eceive th ug,.Agr ibdimtimbs own securitA ebUt� fl-nce the opera i n endeA 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, LENA, LILLI MARLEN and BUSCH are all cases run on Soviet initiative for the purpose of improving communications, increasing the access of Felfeiamiikmalifietie�refsertmaVroi� or otherwise deceiving the BNDe There is also an entirely different category of cases which merits study. These are apparently clean operations, primarily double anent operations, initiated by some West German servicetiich took curious turns after their compromise by Felfe. Two of these, NVERSICHT and ee MERKATOR are described in annexes to this paper. , UVERSICHT was an ete .2( - RU GSFG operation and MERKATOR an East German foreign intelligence (1fS/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 5peeffireet+lp asked the RU and HVA to neither drop nor 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 runnino the case for four more years, bet devoted minimum effort to carrying out the KGB instruction to keep the case alive. Because of this minimum effort, RU communications with WVERSICHT became more and more "insecure, from the agent's point of view. Felfe used this case to help create the e-e-yee-eeee� .../etieeez4alib -e6Lx *BfV is the German abbreviation for the Office for the rotection of the Constitution, the principal West German internal security service. - 10 - SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET NO FOREIGN DISSEM ..40111m. The casgAillustrates/limaginative use of an agent known to be controlled by the opposition. At-the smrite=6-44me.!V-'ftwomicex�,lt also illustrates how inaccurate reporting or faulty interpretation of information can frustrate Soviet Bloc exploitation of such an agnt. When the KGB advised the HVA that Merkato was a double agent, responsibility for the case within the MfS/HVA Headquarters was transferred to a CI componenet which ap- parently also handled other cases known to be controlled by Western services. Subsequent East German handling, presumably under KGB supervision, indicated that the aim was to cause the BND to distrust its immediate supervisor, the State Secretary in the Chancellor's office, by making him appear to be a suspect HVA agent, and also to aggravate further the already existing distrust on the part of the BND toward the BfV by providing the former with evidence that the latter was penetrated by the HVA. This attempt failed, however, becatw the HVA assumed that the case was controlled by the BND when in fact it was controlled by the BfV. As a result., most of the presumed intended impact of the HVA manipulation was lost. An interesting example of KGB exploitation of such an opposition-contraled double agent is the Sokolov case, also desdribed in detail in an annex to this paper. This case involved extensive coordination -- with Felfe in the middle of it -- between the BND, BfV and CIA in a joint operation to investigake the operations of an RU officer named Sokolov in East Germany and 6.1"mrimir to induce Sokolov's defection at the time his agents were rolled up. The defection of Sokolov never materialized, but the West Germans did arrest five RU agents and identified about 200 additional security suspects. The ease appeared to be a Western success, yet the KGB gave Felfe a rare bonus for his contribution to the KGB side of the operation. The KGB aTTemals to have 3thterla sacrificed willingly the RU agents in return for extensive information on the inter-agency coordination procedures and evidence leading to the arrest of Sokolov, who may well have been genuinely vulnerable to recruitment or defection. NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 ,Dz.Ln41 NO FORF.IGN DISSEN sternpoint Of view, the case eventually came to involve sev al interrelated double agent operation' which resulted in invesOoation of roughly 200 seourity suspects ,a seem 4ply excellent operatio lead to an RI Major (Sokolov) in East Geemany, and the participatioA4', f nearly every German and American'intelligenceand security serviceAn West Germany. By insertintl into MD channels an agent wg claimed to be Sokolov's mistress as s his agent, and who hinted at he might be retruitable, the KG maneuvered the 0N[) (and, Felfe) into a con;rolling posttien in the operation. The BNO inspired an interservice tas'keforceeto work on this case : a CIA liaison A officer worked full time, for si*:months, exclusively on this case. CIA provided traces, guidance d Information o, RIS modus operandi and organization. Felfe's behavior on the task force the case was pursued he direction h incharacteristically passive � d the KGB) desired w thoiit his customary railing atkheincompetence pf his 1 eagues, althoug during ' 4, , . 7 one period he did try to persuade th6 task forcto try to recruit Sokolov 4e ,. , , In place rather han defect'him.e-But most of the a , Felfe simply sat, backandalloWedhimselftohetriefed by all partic action phase of the operatidi proceeded smoothly: RU agents many mor suspects identified, copsiderable esptonage eluipment, Sovi /I sets captured, The West ,an serVices were -roof that ective and eceived one of th newest very' pleasq with close operational amicable. But, ants. The executive.% arrested, including their "success.' .CIA wes impressed by ljaison with the Gepan services could KGB was also very pleased, and Felfeev- .... a rare cash bor for his work. ,.The KGB achieved Sokolov and .d a wealth/of informatten on, the operational liaison p7tedures of esi6n services. Onl$ the RU was left ou cold. F�&s co-cons ator, Clemens, whe was slower and less sophi ticated than F fe,Lwas shocked that the KGR,deliberately allo anagent from dreste Felfe - probable arrest of n the t Germany to walk into a West Ge*Jan trap and be Thity Summary, the Soviets achieved through their various deception operations a far broader exploitation of Felfe than would normally be considered possible. By rigging an operation especially for Felfe, the KGB could answers from &meet:maw elementiof the West German government in the guise of build-up material. - 12 - SECRET/NO FOREIGN DISSEM Approved for Release: 2019/02/21 002606326 RECRh , Approved for Release: 2019/02/21 CO2606326 By having double agents report Soviet interest in certain individuals, Felts was provided with a cover for namedhecking themwith other West German and Allied agencies. By creating various op situations and complexities, the NCB could help relfe in bureaucratic manipulations, AnsalationsrByt factor into anyEND case anylibers, the 1113B c the case to be transferred to the protective custody of Pelf�. By introducing a, Soviet Cl factor urgettly affecting German security into the operation of any other agency, German or foreign, the XGB could hope to bring ther case under !bites scrutiny. When this valuable and versatile source vas endaftered by the defection of a EGB officer able to report on SIB penetration Of Oliglig the BRD, the 133B iroteetrYelfe's security by mounting a deception operation which confirmed the existence of penetration and *bleb vas icalbglity intended to divert the investigation to a scapegoat selected by the 1013. tional There are certain common lenominetors which run through all the major deception operations discussed in this stuay. These areal follows; a. To pursuit of larvalaire,ob.lectives, the XOB was willing to sacrifice agents (their own as veil as mu, BU and Zest German agents), ease officer time, money, good information, and apparently new equipment and procedures I. b. The NB had a veil-placed penetration, Felts, in a positeon to monitor the target service's reaction to and handl4ng of each deception. frequently, this penetration benefited from the deception. The operations were aggressive at times grandiose in their conception and planning, but their execution was frequently inept by comparison. They worked only because of the naiveaof many BO officers ts and sne rigid compartmentation within the BED, which in this ease was a. disadvantage 44 it prevented pieces of the puzzle from coming together in one place. Quite a few CIA officers in liaison with the BBD felt at the time that these operations tive and were0 .114m-A IMis gni niiariiiChffieer responsible for pir Approved for Release: 2019/02/21 CO2606326 / Approved for Release: 2019/02/21 CO2606326 R M. POUT Gr BED security during part of the period in question frrink3y thought they *smelled" and vere indicative of penetration. Particularly in the light of (xereet knowledge of NOB :soft* operandi (including this study of the relfe case), it is quite possible for an alert CI officer to detect such deception knd diversionary operations. The source material for this per and varied. Zven though relfe never confessed to anything more than could be demonstrably proved against his, some of his statements have been helpful. Re was supported throagOut his agent carewrbytso other agents Oho have been more frank and whose testimony has been found generally reliable. These agents were less important and less knoWledgeable than Yalta, but their information has been useful in reconstructing the case. CIA had intimate 14erison vith the END and BIT cone erting the operations discuseed in this paper and was directly involved in several of them. Additional insight into BAD bovoling of these cases was received unofficially through close personal contacts with several of the END officers. This includes information on disagreements within the BND coicerning the interpretation and handling of these operations, and the exact role played by Pare in the intra-service maneuvering. In Several instances we know the facts frwl defectors or from 0Mo-controlled penetration source. CIA was also intimately involved inthe investigation of Waite both before ehd after his arrest. Th 'while there are same gaps in our information, our knowledge of this period of intelligence history in Germany is probably hleost as complete as it ever could be without a fall confession by Waite or a first-hand account from his case officer. j-iziN W Yk6 C-- 10A) fkcl E . .r; . DISSER Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 rt-yry,T113 assume the responsibility for the organize:U.5mnd th trusteeship which was tc last for seven years. (et'4Ii;A-4-64-e/trt) L-t Kr:\ LIkrief- hife The history of the Felfe penetration has its beginning in the early post-war years. The spotting of people like Heinz Fere by the Soviet intelligence services was not accidental but the result of a well-targoted* well-developed recruitment campaign directed against tomer police and intelligence officers of the Maxi Balch. Ther4113=Ywas simple: old intelligence bends will flock together* will seek; to return to the volt they know best. Some o ese people might be susceptible to &Soviet epproach because of their general sympathies. Others* such as (5D) former Elite Guard (SO)! and Security Service ($) members, many of *haw. wereinov war criminals able to maks their way nn3y by hiding apast which had once put thew among the elite, vould be vulnerable to Werirmoill. The Soviet spotters were to be found slmost everywhere in ZUxope - last and West - in the POW camps* in the war crimes screening commissions* in the courtrooms. The future West German intelligence and security services covlA be penetrated almott emesibefi they were created. Npin 604 the closing days of the len of the Fremde Haere Oat (1210)** had brought the remnants of his files and personnel to 0-2* U.S. Amor, for Shoe hMesented a 0 vain:111e and relatively unique source of information on Soviet order-of-battle. Under 0-2's Agin his group burgeoned until by 1949 it bad become recognized as the primary Western agency for the collection of Soviet OS and hventually of CI informstion in the Soviet occupied zone of Germany. It was a loosely knit orgnization made up predominantly of former military intelligence (hbvehr) and PO officers who were held together by the officer's � code of honor and individual bonds of friendship. From an institutional -point of view* however, the problems of control* responsibility and security were serious. 1G-2 asked CIA to IOW Annex 7 for a glossary of German terms used inthis paper. General Staff section dealing with infOrmation concern as of countries to the Zest of Germany' (7 7 7 nf Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET NO FOREIGN DISSEM To the outsider and to its enemies, the Gehlen Organization looked much more like an American puppet than it actually was. many ach4ev ilettreanye Inst- rn defecte Berl 1 n: and ,011,,,t-47*--bita.s_of were-ableetteeeep o- 4ntensify JOS Ey rid-1952;m* 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 operatiens whic was located in Karlsruhe. Arai Within the Gehlen Organization this4ase was designated as GV"L"," and it will be referred to by that designation throughout this paper. GV 1" was especially attractive to the KGB. The major part of its work involved tee 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 aoents. It Was especially vulnerable because it was heavily staffed by former SO and SS personnel who in order to maintain their jobs were obliged at least prooma to conceal their background, and who still suffered to some extent from old social and professional caste rivalries which kept the former Abwehr and FHO officers in ascendency. In reaction to this situation there had gradually Oil *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 tha there may have existed restricted files to which he had no access. Ernst ) a Gehlen Headquarters officer working on Czech operations, came under veey-e, strong suspicion of being an agent for some Eastern service in the/Fall of 1952. **The GV stands for General veAmIl6g -- General . _�7 _ is an arbitrary designation. SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET NO FOREIGN DISSEM developed within GV"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 ,t4L/7,D- vree4X--, through this base, GV"L", that teNS4uralor- c*Sigelagoemetre etleetes--ofee,litelpgtskteg was launched. a. Backvound Information on Felfe ----> Heinz Felfe was born in Dresden in 1918, the son of a criminal police inspector. He started his own police career at the age of 13 as a volunteer in a border unit. In 1938 he was inducted into an SS reserve unit, and from then on his schooling, legal training, and subsequent assign- ment to a job 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 Holland - for a while under Schreieder of "Nordpol" 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 r izations have existed since the end of the Second World War. The KGB haha ch 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 (UR) officer Michel Goleniewski, and concerns an origanization which he called HAM. Information on HACKE 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 mei, areas of the world where former Naztehave settled. - 17 - SECRET NO FORFIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 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" operations to manage for the chief of his German service. Infinitely cool and brazen in the face of danger, thoroughly aware at all times of what he was doing, - 17a - SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 WI ?Qpp DFILirm, Felts was the "ice-coldcalculator" as he once 1miringly described his favorite agent, The only Mealy emotions detectable in him are hisAftehadieseem* enjoymont of the game and his disdain for his fellow man. Thesis, together with his greet admiration for Soviet 'power and efficiency, seem to home sustained him throughout his career and imprisonment His attachment to his wife and two Children seems to have been .:.elatively perfUnctory As for his colleague in espionage for ton year* and friend in adversity of even longer standing, Hens Clemens -Pelf. found his in the end merely a convenient scapegoat. AS a British POW, Felts was interned at B interrogation center near Utrecht, which spec in the interrogation of former German intelligence pereonnel. It is possible that his name nal* to Soviet attention through an agent among the Dutch interrogators. One of Felfess fellow- risoners a former SD officer named Helmut Proebsting, reported to Dutch authorities in 1946 that he and Pelf* had been approached by MMX WeeSeTf the interrogators, to work for the Soviets. But Felts denied that any such incident bad occurred, When confronted with this information after his errest, This is one of a number of suspicious points in Felfe's background 'which could have been uncovered by an aggressive Investigation long before his arrest. Felts returned from the var in November 1946 with the deter- sinatiori to settle in the Western zone of Gereany, although his home bed onaistently been in Dresden, whasaM the Soviet oc Ni. wife and Child joined him at the end of the year. S difficult months followed until he finally found work es en agent for a British military intelligence unit (Sixth Area Intelligence Office, BAOR). His task:was to develop information on Communist student groups at the University of Bonn. Under British instruction he settled himself in the Bonn erlie, registered in the F*culty of Lew and joined the Communist Faly(KPD). In the course of his work he msde several trips to East Berlin and to East Germany to observe student rillies from Which he took off on his own initiative to visit his mother in Dresden. Here again the possibility of Soviet targeting estate. Felts says that on 07) .130TIT.;N Approved for Release: 2019/02/21 CO2606326 - Approved for Release: 2019/02/21 CO2606326 SECRET � NO FOREIGN DISSEM one of these trips, in 1948, his Fiother 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 tttpolice. 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 securit!, reasons, none of whiclunfortunate Y, 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 BO 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 news services and to the East German Socialist Unity (i.e., Communist) Party (SED). They also contained an account of Felfe's attempt to involve thP 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 give up 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 Vest German Communist Party for the Land security office (LfV) in Nordrhein-Westfallen, to which ha 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 teport on it to a contact in East Germany and for having tried to peddle the plans for the BfV charter, which he had somehow acquired from someone in the Finance Ministry, to a West - 19 - SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET NO FORME 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 (V0P0). He remained at this job, eventually writing a study of the VOPO for the Ministry) until his recruitment into the nehlen Organization in 1951. b. Background Information on Clemens Anyone who has tried to understand Germany knows that bonds of common local origin are often far strorger 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 en SD field office in Dresden in the late thirties, when he had worked against the German Communist Party (KP0). Later he was posted to RSHA Amt VI (foreign intelligence), where he learned to know Felfe well, and subsequently he went to the SD command In Rome. At the end of the war he was captured 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 Ardeatine Caves. At some point during his captivity he learned that his wife Gerda, in gresden, with whom he had been corresponding, had been sleepily) 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 Cast Germany after his release from POW camp. He settled in Vest Germany in 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-lerman Affairs when Germany regained its sovereignty in 1955. The latter name is used here for simplicity and clarity. - 20 - SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET NO FOREIGN DISSEM 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. Later, he .had been assigned to the Swiss ;iesk of RSHA. VI, where he had also known Felfe. He was to become 6 support agent for Clemens and Felfe in their work for the Soviets. Felfe had already looked up Tiebel in 1947. Clemens wrote to him from 2oa SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET fOREP,IN DISSEM killing verses She reported to a KOMI Colonel called "Max" in an office in the Soviet Command, Dresden, which according to Clemens, wee concerned with tracking down farmer police aii intelligence officers fraa the Dresden area who were liable for war crimes. later told angled to reet him utter his relsais. A le 1949, addressed to the Rolfe family and ends were knotted very soon after the . Tiebel was on a list of war cem4rials ana there is some suggestion that Garda Clemona was working as A Soviet agent probably bid been since the end of the itiah case officer. ger cover name was Clemens bed been bit as much be declared bimeelf sore frank of versals coarse and probdhly brut were more real and meaningful than Pelf* Ar a It i as Pelfe with the LUff entially a less complicated Clemens' human attachments Where one has the iapressian tioni eg that Pelf, never mode armors without a reazon or reccaVenee, one cOM tmegoveo Clemens asking a gratuitous or spamteneoss gesture of loyalty or frieneVh1114 11412f0 considered Clams= his cultural ard intellectual inferior Which is correct in a certain eenee. But after tis arrest, berimetended that the older man Clemens is 16 years Pelfe's senior - had exercised a dominating and pernicious influence over hint by drawing him into the Soviet service end making him stay there. Througheut their BaD careers, however, they remained good. friends, and Clemons labia post-arrest statement claimed that there had never been any friction or rivalry between thme in their Soviet work. Within a remarkably Short about two months - Max vent Garda Clemens to Vest to with a t.. meat proposal for her husband. This oceurred just at the end oti99 or possibly in early AnwerY 1950. Clamart claims that the situation was perfectly clear to him comply or face rbm. gas. Mbreover, he had no steady job, he needed mammy, and be vez also intrigued by the idea of a secret contact. MO discussed the situation with both Ftlfe and Tiabel. While none of the three seems to have opposed outright the idea of accepting 7, Approved for Release: 2019/02/21 CO2606326 - Approved for Release: 2019/02/21 CO2606326 b ' SD D'ISSEU a tertain 4.1he notion of try1ni to offer Clemens even ta3lced to an official toly, the latter u?uabed hint off Felfe may have offered Clams Alibis British case officer in hte had. already tried unsuccess to sell his to the Britith as an 586nt. (] also tried to persuade thus to recruit Tiebel.) This *ftcat hati merely earned. his the admonition to stay away from his old ine for someone supposed to penetrate the 1950 Pelfailvied again, this time offering Clemens as a itSoviet double 'agent. A letter dated 25 ammery 3.950 from Tiebel to Felfe states that Clemens had already agreed in principle to cooperate vitt' the Soviets in Dresden. The British files contain a memo of a visit by Pielte to his case offtcer on 29 Jhnuary 1950, during which he reported that Garda ClOCOMB had. arrived two days earlier and vas planning to rata= Shortly to Dreedea with her bPstAnA in order to put biz in touch with the XD26 The Mritish lingered apply briefly over the decision of whether to play Clemens as a double agent* Shortly after Pelfe's proposal, evidence of his double-dealing with the IfV became evident, sal be confessed to having sent a report on that orgenization to an, Shot Gerson Communist Phrty contact in East Berlin. Vhen Prim Clime= appeared in Germany again in early Aprill and ftlfe tried once more to persuade his employers to undertake an o_peration, the Dritish case officers came to the declaim that they ahould drlp Poire and list Clemensas � security risk" By this time, of course, Clemens was no longer .ust a scurir risk; be had already gout to Dresden and becomeaSoviet agent. In ribrunrY 1950 Clemens vent to Dresden, where be vas led by bis wife to meet Colonel Mix in the Soviet "Valdsehloesschen" Compound. Ore, Max debriefed Clemmeis on his life history and present contacts lectured him on his cuipdbility as an SD cr4m4m1, probed his feelings of contusion and resentment, listened. cceetructively 'while Clemens deliver ed himself of a long pent-up statement of his hatred for the Americans. (They had been tvide the cause of German defeat, etc., had smadhed his home town and caused the death of at least five of his relatives.) Mix at this point took Clemens on a tour of bombed-out Dresden end, at the tide of Clemens' emotional reaction, offered Milan opportunity of revenge against the Americans. The proposal vas clear cut and precise: Approved for Release: 2019/02/21 CO2606326 ""? �"") Approved for Release: 2019/02/21 CO2606326 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. The Gehlen Organization was an "Amiladen" (an American shop), and any blow aimed at it was a blow at the Americans. Clemens agreed: for money, for a personal cause, and to be on the side of power, but not, he insisted, because of any special sympathy toward the Russians. (Here, as in many other cases, are strains of the old Nazi theme of German superiority to Russians.) He signed himself on as a Soviet agent with the cover name Peter:" later he used German girls' names. At this first meeting Clemens provided Max with a list of potential recruits in which he included the names of both Felfe and Tiebel. Clemens says he was very impressed by Max and by his psychological adroitness: Max was civil, sober, authoritative, knowledgeable, but most importart - 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 Orqanizaticn. 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 this 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 Clemens. Tiebel was later to be used as a courier. Clemens was able to carry out his assirenment for Max with amazinn 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 NO FORCIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 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.') Krichbaum himself was later to become highly KC. 13/ suspect as an early.MM/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's unit for two years, during which time he reported on the organization and personnel of both the Bavarian unit and its parent base, GV"L , and on anything else that came his way. His reports were typed on thin paper and hidden in cans of powdered milk which he sent periodically to his wife in Dresden. 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 Clerens 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 finistry 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, but even if this is so his serious Soviet work probably did not begin until o. he was properly accredited Vest German intelligence officer. A -24- SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET NO FOREIG;1 DISSEM Around the first of September 1951 Felfe flew to West Berlin, where he was met by Gerda Clemens, who c nducted him to Max in the East Sektor, Max drove him to the Soviet Compound in Karlshorst, where he questioned Felfe on his background - Felfe said he appeared to be very - 24a - SrCRET NO FOREIGN DISSE Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 b NO FOREIGN DISVM veil informd about him already - and gave hin the general lectLre on guilt. Pelf* admits that he 'wrote a declaration of willingness "to work for ac4 but claims he did not sign a pledge to wort for Sovillet intelligence as such. He received the cover name "Ileuir Me tells us very little about this first visit) be says be was veil vined and dined in tni Karlshoret safehouse where he spent the night and that Ilex mede a great effort to establish a friendly, sociable atmosphere. He says Mix gave him no iestructions at this meeting. %ether this is true or not, subsequent events played themselves out exactly to Max's wishes. IR 111111111111116 Onthe 26th of October Felts wee -ailed to interview as an assistant to the arxr chief for Soviet Cl opera bief of GV"Ir. He made a good /Wile and requested to begin work on 15 Novesiber. (Plelfe's Gehl= Organization alias vasPriesen) Felt. and CaMMOnn celebrated the event that night with a good dinner. Sometime shortly after this and before he actually began work, Fere Void his second visit to Mex. This time Mem vent more- dearly into questions of motivation and access. Se took POMO on the tour of Dresden and discussed at some length the need for ISloviet-Vest German understanding. He stressed the theme of crInisisitty of SS membership and the fact that Pelts vould need Soviet protection to keep hisIgivrY job and to keep his record hidden. Havinel=p4-41-"IZ into the organisation, Max was now concermed to maneuver his to the noat desirable spot. Sigrificantly, be anked !elf. to try to get himself poetSd to the GablenIieadvarters. Again, he stressed the need ?safe would have for Soviet Orctection, yarning his that even if his SS nomirk3erinap were not discovered he vtuld alms run tilt, risk of losing his job in the intelligence service because of some flap which might not even be his fault. These 'words were someWhat more than prophetic, for even then vire brewing in various parts or the lehlen Organisation, and particularly in GV"L" and its sub-units the first in a series of scandalous "defecti id- mappings" and oecurity "incidents" 'which were ensdneemudvholly or in part by the Soviets as part of a campaign to discredit and disorient the drganization. Mile several Athose scandals vere to erupt in Pelf's's vicinity, noes was to endanger him during the period he was in GV"IP. 741fe remaimed at GV"I" for the next 21 months,�Novenber 3.951 to 6 k; G 17-0 le! Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 TO R PORET6VDTSn774 August 1953 transfer to Belle became very impressed with the youngnan's energy and ability.; and he himself moved to th tdcjuartrs CE Group to lock on Soviet trgsta be opened the door for elfe's future career as a Soviet CZ expert.t) again, a is much conjecture on the Soviet side. �1 t0 4rro. 1422! Ver6 assistant to Belle and, later, after Billable s in July 1952, as the main Soviet CE referent. the case of Krichbavm, stands a question mark; there considerable evid*niv that Thsile, too was working Hiring Cleth,10zi in the story we have more or less accepted Clemons statements concerning their recruitment by the B. But there is a t deal in their own adm!_asions concerning their early post-war years which suggests that Felfe might have been recruited by the MB in list Germany in the O's rather than the 1950's. The detailed resealing behind this speculation is peripheral to the main story and is not Inc 3e here, but it is interesting to mote that When the defector Miche1-% l Golenieviki read Felfels testimouy be immediately same to the IMMO conclusion. Goleniewski is the **filar Polish intellignnes (n) officer who provided the lead which eventually led to Filfe's arrest. Be sold he thought Felts had probably been recruited while marking for the British and traveling to the Kest. Our best guess is that this vauld have been in 1948, when he was allegedly arreeted by the lest German Felice mad released after intercession by a besefactor in the Education Ministry.* But Pelf* could well have been recruited area earlier than this. 4nieveki him in Berbeinheuerkae. Theuerkauf's boss in the Rudolf Boehm, yea a notorious KGB spotter in last when 1ENA ostensIbly became a Ciehleu Organisation the KGB, he reported that it was Boehm who had put KGB. e Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SeCRET NO FOREIGV DISSEM surmised.that it waleklenseuggleof Felfe who spotted Clemens to the KGB, which then assigned the "recruiteent" of Felfe id to Clemens as a t es t Clemons tv.ioNimf4ra44.,�iaimw the wiser. Golenlewski 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 makes it appear that Felfe had been waiting for it with open arms. There are also alternate explanations, of the circumstances ceeqeefeefic 'S surrounding the Gehlen Orgainzation's hiring. of Clemens and Felfe, circumstances which were probably unknown to Clemens and perhaps also to Felfe. Wilhelm Krichbeum, who was responsible for both of them being hired by the Gehlen Organization, was himself a highly suspect individual. Although it cannot he proven, there is a distinct possibility that the hiring was manipula Krichbaem was a formeeAbseeiweete witness at the Nuremberg trials hem 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 early 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 Pongee and Verber in Vienna. Fenger had been using Krichbaum as a source of information on the Gehlee ed by the KGB. /4e:0:eel A:zee) who served as a -*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. LENA should pretend to accept the approach without admitting that he already was a Soviet agent and responsible for the other man's recruitment in the first place. In this way the KGB would have an excellent double check on the new agent and LENA himself would enjoy a slightly greater degree of security since he and the other man were very close professional colleagues. (Readers familiar with the LENA case will recognize here an episode involving Dr. Scurla of the "Verlag der Nation.") - 27 - SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 . SFCRET NO FOREIGN DISSEt1 Organization and had also/been Irvine through him to arrange for the oND� hiring of yet another suspect K14. aggntp After his arrest, Ponger 1- request from Alfred. In the end Pell* had beccee much mo lust leer scientist prebiblY in respernse to a specific a siwpme servant of the KGB. (It's doubtful if he ever thought of himself as such.) Evidence from intercepted CA171, broadcasts sell, of course, as Pelfe's own statement* - shoes that Alfred often asked Felts for advice about the Soviet banning of certain operations. This included advice on the Soviet handling of BED-KGB double agents and the tieing and tenor of KGB propaganda operations. Pelf. htd become in many vays something f a consultant to the KGB, as veil as an agent. In spite of the fact that in many vays Pelfe position, there is evidence that in 1960 be vas move on to a aew job. This we the post of secur KM almost ideti tea by the KGB to ricer for the EIND Communications Oat. At this time, discussions were underlay for the (comiNT) establishment of the IND as the Oermen communications intelligencep!uthor- ity. Pelf, knew that the poet of communications security chief was shortly to b ecome vacant, through the retirement of ita ineusibent, and he probably 1411 e-vs, 4041,00 that the job would assume greater importance once the COMINT agree- ment vas signed. 1St submitted his application for the post early and worked bard to Ian himself as the next candidate. 10 many respects, however, this is .job Vhith might not have interested him as muCh as his old one, and it is curious that he tried so herd to get it. /n his post-arrest etatementsjhe vent to great pains to claim that the KGB was definitely against having him transfer, but there is sufficient evidence (including intercepted telephone ccesents between Pelf* and Clemens) to suggest that the opposite is true. If so, then the obvious Wepli lags outt Abe KGB aceebteetweemosimmitie have asked an agent who vas facto chief of the BED Soviet CR Section to give up this job unless had a replacement with equal or better *mese the-diffiult inoblen ough Peli*1 to balm f' by various i recruianother / in 0C3eetrat4I's opinion,/ have vtrkild for the Soviets f source in the BED to them idea of Approved for Release: 2019/02/21 CO2606328 71 QC:- VO FUEkiitin ViOomm I1 -p,a,zApproved for Release: 2019/02/21 CO2606326 For almost ever, of Felfe's stover xistence of &wog- story information vas entered in the files of same Western agency. Wort- unatelyi no one agency, much less tbe BED, had it all until shortly before his arrest. Both Clemens and Pelf* have praised Soviet security practices as greatly superior to those of the INID, and their account of the KGB handling shows a continuing concern irith operational eecurity. The veakness Of the Soviet operation cannot be laid so much at Alfred's ) (- door as at Felfe's and Clemens �. The weakness, of course, was built: in: the c3',nl abmasa and susceptibility of the ex-SD off iceri which drew them to KGB attention in the first place5also bore the seeds of an eventual breakdown. Felfe and Clemens refused the discipline of maintaining contact via an insisted on keeping up their lateral communications and their trips East to Meet the KGB officers. One can at least understand vhat psychology sight have motivated the two agents in their refusal of the impersonal and rechanical:conanunications system) but their stubborts vas disastrous and as time passed their operational practices became more and more lax. Mat saved them for so long ims the fact - over which they had little or no control - that no thorough investigation was ever made of either Pelf* or Clemens by any one agency. The END, hamstrung between the requirements of "respectability" and the need for experienced personnel, did not (at the time Aare and Clemens vere recruited) perform background checks on new employees and did not routinely trace them with other agenctibs. Instead it tried to rely on rigid internal compartmentation as its primary security technique. Al early as April 1959 )British files contained sufficient derogatory information on. Fere to make anyone vary at the very least. Aside from information an such general and COMM= post-mar sins as the falsIfication of personal history statements, "insecure" talk, and information peddling to several agencies at once, the British file contained: (a) Felfe's report on Gorda Clemens' attempt to recruit her husband for the KGB in Dresden, an indication that Clemens night have accepted recruitment, and Felfe's offer of Clemens to the British as a &VOA agent; (b) Felfe's admision that he had sent a report on a unit of the LfV Nordrhein-Nostfallen to a contact in the SED in East Berlin; (c) a report that Felfe had attempted to peddle to at leant two Nest German nem agencies the charter of the proposed Bflf Which was about to be presented to the Ministry of Finsnce for SECRET Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 NO FOREIGN DISSEM approval. The history ofwith Nix albett end Helmut Prciebsting 1 as well es indications of untrustworthi s possf.ble theft an.general "varn iShing of the truth". Some of this intonation vas aMa available in gement." terms to the END in Jenuary 1958/when the BOD requested traces on Felts in the course of their 1946-57 investigation of bin. Cie had a certain amount of derogatory information on Pelt, by the f*U of 1954, mostly from indwig Albert, who had become aware of the existence of black Jerks ealinst Polfe in the WV and the Federal Crimine, Office through his own early Clitoris. Cle els� had the report of Nee Wessel's allebed tow **waft* to Felfe. By 3.956 CIA had what Cie bad, a hough in condensed tor*, without source description. It also boa Deryibin's information in early which 4141.1cated the aistence of two EGE agents ilk the Malmo Organisation with the cover mames"leter" *ad "Paul" (Clemens' ad Filfe's cover mama at the ius), but umfortuately Deryabia wm9ale to provide details to help identify the agents.* After 1957, when CIA officers began to work more closely with Felts, the file of suspicious, or at least puzzling: it about bin grew. For example, in February 1957 a CIA officer from the liaison base in NIumicb/Pullach occompanied Fere on a trip to Berlin. The purpose of the trip as a special meeting 'with LENA, at Which, Pelf* said, be hoped to obtain additional detail' comeerming an earlier LENA report that the En vas targeting a hessosecual officer of the U.S. Department of Stets stet load in Berlin.** After ?WO and his C/A liaison officer had already arrived in Derlikaad separated, Berlin Base received a cable indicating that Gin. Gables as concerned *bout Felfess safety and bed requested that he be usder CIA's 0 bour-a-der protectios. Wes this one of Geblen flashes of intuition, and could Ise have trAwpected the truth even them? This possibility cannot be rejected out of band.) After this cable see received, the CIA liaison officer reabboriag remerk Pelf. had Ode earlier in the day that be intended to to a movie it 1133Cite Etryabin lee of it At thtlt point ia irvestigation into the beCkgrounds of derogatory intonation awl possille :.ndicaticae of pert eta number of END employee*. ** IhiefiXe typical diversictzr tto. CIA's Berlin Base and the State Depertment security office a considerable effort to investi LEKA's report. The investigation over a jeer, until it vas With no conclusive result. Approved for Release: 2019/02/21 602606326 Approved for Release: 2019/02/21 CO2606326 U A hotel at 2030 hours. Pelfe was not there, nor had he returh4,4 by four in the morning when our sleepy officer decided to abandon his vigil. Located in his hotel at 0800 the next morning, Felfe 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 2230. Again without being asked or dhallengedl he exhibited two movie tickets. This 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 tiekets, and that even if Felfe had in fact attended the second movie it would not have lasted Until some time after four o'clock in the morning. The liason officer did not reveal his suspicions to Fate, but he did prepare a apeatiar -e -e-Aidagaik report on this disapppearing actire.,4-ee, /' uftl&d7 The BND had Ludwig Albert's denunciations of Felts as early as 1953, but these went unheeded. Albert made a practice of denouncing many of his colleagues who transferred from GV"L" to thelfieadquarters CE units and, furthermore, was not entirely above suspicion himself. The first concerted investigation of Felfe of which we have record was begun by the BND 1956 on the official grounds of 'Suspected SD and Eastern Connection When the BND traced tile British in the course of this investigation, they received a memo on 21 January 1958 generally outiining Felfe's insecure and deceptive practices as a British agent and specifically pointing out suspicious contact with Helmut Proebsting and "the EIS attempt to recruit ClemenR!) The memo did not contain an account of- Felfe's having offered Clemens to them as a double agent. In addition, the British pointed out that as late as August 1957:. Felfe had attempted to establish an unofficial connection to a British intel3jigence officer in Duesseldorf. None of this seems to have stirred the BND part- icularly. Felfe was called in and asked, in a vaftscHkalforma manner, about his SD connections. Fate, equally pro forma, denied having been an SD officer. The "investigation" seems to have petered out at this point, despite the fact that the falsity of Felfe's statement could have been proven very easily. In the meantime, during 1956 or 1957, the CIA security liaison atteer to the Mfb had been making a reviewOf the horrendous OV"IP flaps of the early 1950's. Be reasoned quite sivly and accurately that if the *4t V40 later conflrmeel ..4 -444, A., =.2_04� Be1 that evenina. Approvedthi i"1 ftor Release: 2019/02/21 CO2606326�� rin 11/ Approved for Release: 2019/02/21 CO2606326 SECRET NO POIRETON DISS M KGB had deliberately sacrificed a number of agents in the Grin 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 BNO. To find the remaining penetrations, one should look primarily in thefieadquarters 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 a memo dated in early 1957, this officer suggested several candidates for investigation, among whom were Felfe, Relic, Clemens and Schuetz. His conclusions were given to the FIND security section, where they were added to the general suspicions of Felfe and his coterie, but again, unfortunately, did not succeed in sparking any sort of investigative action which might have tested out the logical analysis:" 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 larch 1959, Michel Goleniewski, a senior officer in the Polish Intelligence Service reported to us that the KGB had had two agents in the 5ND group which visited the U.S. in September l95F. The KGB also had an agent, Goleniewski reported, who was in position to obtain information on a joint American-PND 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: Cen. 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 Information and several other leads from-Goleniewski, and despite some questions concerning Goleniewski s bona fides, CIA began a quiet, closer Investigation of suspect KGB agents in the BNB. This investigation centered on Felfe. As a first step, file information was pulled together on Felfe and on the stranger of his oper-- 44*Revelation of such infornation even to the chiefs of the satellite services was a major KGB mistake. SECRET/NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 F' Approved for Release: 2019/02/21 CO2606326 NO FOREIGN DISSEM ational activities,� the LEA and Busch cases. He was placed under uni- lateral CIA surveillance on several of his trips out of town, and a unilateral phone tap was put on his Milnich telephone. The BND was not immediately informed because of the extreme sensitivity of the source, Goleniewski, who was still in place. By ear 196i the cireumstantial evidence against Felfe, the positive evaluation of Goleriewaki's information in general, and especially the fact that Goleniewski had by then safely defected to the West, 'cc-y-4k brought CIA to the point where it felt it ease inform the BND. When General Gehlen was told in Februery 1961 of the specific report about two KGB agents in the rolip which visited the U.S. in 1956, he immediately agreed that his heretofore favorite case officer - Felfe- was the major suspect! He set up a small special task force to investigate Goleniewski's leads to penetration of AA the BND. Now, with the impetus of information from the horse's mouth," their investigation of Felfe picked up rapidly where it had left off six years previously. The BND noted that Felfe had a weekend 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 he house was located in an area with virtually no other residents, but as soon as this tap began prod- ucing, the KGB's operation "Kurt" unraveled rapidly. The first lead came from a remark by Clemens, who complained to Felfe about the high cost of his phone calls to Felfe: if these had been official calls there would have been no need to complain. The BND then began to look at Clemens more closely and discovered that he was in correspondence with his daughter in Dresden via a third person (Tiebel), even though he went to great pains to give the public impression that he had no connection with his East German family. The BND security team also discovered that Felfe had been falsifying his expense accoucang, and they noticed his relatively high standard of living. In the summer of 1961 Felfe began dropping remarks about having received a large bequest from a recently deceased aunt in the U.S. CIA checked and found the aunt very much alive and that there was no record of hero/ having made any foreign money transaction. Indeed, a few weeks later Ipe applied for a passport to make a trip to Germany visit Felfe, and Felfe then ^11 Valfol. vxcasarcanti began mentioning a loan instead of a bequest. During the course of the spring and slarirwr of 1961, telephone coverage �Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 It T " 7:r ri I 3SElt clandestine contact with each other on matters which coUld not be identified with official Gehlen operations.* 04 They spokke quite openly - very "insecurely" - about Gehlen affairs on e. the telephone, but double-talked certain other matters. It wao also evident that they were corresponling with each other on operational mattera of some kind although they had no official BND reason to do so. Mail coverage was placed on Felfe. By piecinqogether various sc4p_ A and shavings from the tpps and from close observation of Felfe, the. BND security officer was able to establish a significant pattern of action on Felfe 's part. It became clear that Felfe was always curious and aggressive just after his bi-monthly 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 BND from wreckage of a Czech owned IL-18 whtch had crashed in Bavaria - at a time when normal interest in the air crash had died down, but just after one of Felfe a trips to Cologne. relfe later admitted that the whereabouts of the IL-18 engine had been an urgent EEI from.Abfred.) The investigators reached the conclusion that Felfe was receiving his EEI in Cologne via Clemens, who served as a communicatioas link to the East. In August three very damning telephone intercepts revealed that Clemens had been "called" and asked to find out from Felfe what had happened in the Fripoltsev affair. Felfe told Clemens that he had written something about it the previous day, which would be "over there the following day. By early October it was clear to monitors that Clemens was receiving OWVL, and they were able to establish his frequencies and schedules (every Saturday at noon, alternate repeat on Mondays at 1700 hours). Several messages were subsequently broken when Clemens relinquished his one-time-pads. In addition to this form of observationfielfeis more extraordinary operational behavior was 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, Hofe, announced thatt(Soviets had lost interest in him and turned him over to the East *die phOne-tap�On Felfe 's Munich residence remained generally unproductive. Felfe knew this phone was easy to tap, and he apparently instructed Clemens to always call at the country home on Saturday evenings. Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET NO FOREIGN DISSP 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 BND investigators watched nervously as Felfe and Clemens prepared to accompany Busch to the 9 September 19G1 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 would have given an honest account of what happened at this meeting.) By Atirnand.a. October 1961, the evidence from telephone intercepts was convincing enough to prompt the BND to seek the opinion of the Attorney General's office as to the chances for taking executive action against Felfe. On 19 October the Federal Attorney advised that none of the tapping evidence was juridically useful so far, but he advised that the investieation be continued. On the 28th of October, a series of very provocative telephone calls was recorded between Clemens and Felfe. From these calls it emerged that Clemens was having difficulty deciphering a "call from Alfred." Clemens said, "They must have called when I wasn't here.' since "several pages seem to have been skipped." When Clemens was at last able to read Alfred's message, he reported to Felfe that Alfred wanted Felfe's advice for the continued direction of a press campaign then being directed by the KGB against the BND regarding the murder of the Ukrainian emigre leader, Stefan Bandera.* The KGB had already learned from Felfe about planned American and German ------7,767-I1TEefore this, the KGB assassin Bogden Stashinskiy had defected to the West and confessed the murder of Bandera. To counter the adverse publicity the KGB disinformation group in East Germany mounted a campaign to discredit Stashinskiy and place the blame for the assassination on the BNB. . � SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SEtRET NO FOREIGN DISSEM publicity on this case, and on the basis of Felfe's information and with his guidance were preparing to steal the show with counter publicity of their own. Alfred also wanted Felfe's opinion about the further handling of Fritz Busch's operation. Most important for the investigators, however, was Felfe's news for Clemens that he had just made arrangements for Clemens to accompany Busch to Berlin in rid-November as a counter-surveillant for a meeting Busch was to have with a double agent. Clemens could, therefore, have an opportunity to see Alfred again. Felfe remarked that the double agent didn't know yet that there was to be a meeting, but that Felfe was about to write (to Alfred) to arrange a meeting on the 13th or 14th of November. At last it looked as though there would be an opportunity to catch one or the other of the agents with incriminating evidence on him. Furthermore, it seemed certain that Felfe's request to the KGB to make a specific meeting arrangement would produce a response from the KGB in the next scheduled OWVL broadcast. This was to be on Saturday noon, 4 November, or alternately on Monday afternoon at 1700 hours, 6 November. Furthermore, It was likely that Clemens would be telephoning to Felfe immediately after the receipt of the OWVL message to report its contents. Perhaps at this point the much needed legal evidence would appear. '91iTiliiinfrIVEszatesr-e-eac4SPRJe. The expected OWVL message was picked up on Saturday noon. During the afternoon Clemens made three telephone calls to Felfe, the gist of which was that Alfred's message contained more about the press conference, nothing as yet about the new meeting in Berlin, in fact "nothing special)" consequently, Clemens would just send It along to Felfe by registered rail. Thus the weakest link in the KGB's communications channel was presented to us. The opportunity was ideal. The following day, Sunday, saw hurried legal conferences between the ONE' security chief and the Federal Attorney's office and between CIA and the chief of the mail intercept service (which is under Allied control). The coordination and plannine among these offices for Felfe's arrest was superb - not a simple matter, since Felfe's own "special connections" had to be circumvented without arousing ire or suspicion. -447- SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET NO FOREIGN DISSEM At 1030 on Monday morning, r November, Clemens' registered letter to Felfe was officially handed to the BND and the Federal Attorney. Dy 1130 the appropriate police officers with BND escort were assembled at the BND Meadguarters building in Pullach; Felfe had been summoned to the office of a senior BND official on an unalarming pretext; the compound gates were locked, the telephone lines cut; all principal were armed, and the BND doctor was standing by for any emergency. A few minutes later, the arresting officers entered the office in which Felfe was conferring and served their warrant. Felfe's first reaction was to grab for his wallet and attempt to destroy a scrap of paper which was in it. There was a small scuffle; the officers retrieved the paper, subdued Felfe. 5y an enormous stroke of luck the captured notes turned out to be Alfred's typewritten EEI which Felfe had received in Vienna in September. Felfe refused for several days to make any admissions. Clemens. whose arrest had been carried out in Cologne about eight minutes after Felfe's, began talking immediately and led his arrestors to the place where he had hidden his code pads. Erwin Tiebel was arrested the following day in his home town. Thus ended, nearly ten years to the day, Felfe's career as a West German intelligence officer.e,a,e SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 NQw SECRET NO FOREIGN DISSEM Ji IA VI PC 14 By 3 December 1961 news of the arrests was generally known throughout the West German government. By 12 December it was in the newspapers. The trials took place after lengthy (and from the counterintelligence officer point of view, unsatisfactory) interrogations in July 1963. Felfe received a sentence of 14 years in prison, Clemens nine years in prison, and Tiebel two years at hard labor. Through his mother in Dresden Felfe managed to reestablish contact with the KGB and continued to correspond with the Soviets even from his prison cell. Ever resourceful, Felfe first prepared an S/W system from the alum in his shaving kit; later, he undoubtedly received a better system. From time to tine he "recruited" criminals about to be released from jail to smuggle letters out for him. Some letters were intercepted, but others apparently got through, and it is evident that Felfe asked the KGB to send him', suitably concealed in laundry, reading matter, a chess set, etc., various paraphernalia for escape and for clandestine communications. He also asked for poison to be taken in the event the KGB was unable to spring him. He also gave the KGB a fairly comprehensive and self-exonerating damage report -- blaming as much as possible on Clemens. The Soviets on several occasions have attempted to gain Felfe's release in exchange for prisoners In the East. As of the last reporting, Felfe remains confident that he will eventually be pardoned, exchanged, or will manage to escape. His spirits undoubtedly were boosted when George Blake succeeded in escaping from jail in England. In Felfe's two major deception operations, LE1A and Busch, the KGB endeavored to act as naturally as possible after his arrest. Fritz Busch received a routine message in early 1962 asking why he hadn't corresponded lately with the KGB. OIRWetifixtwasfeetitir LEA sem went to elaborate lengths to misconstrue or simply to ignore the danger signals which the BND kept sending him, and he insisted on sending "political intelligence" back to his West German case officers. The KGB even went so far as to let him come to West SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET NO FOREIGN DISSEM Germany on one of his regular business trips, at which time he was arrested and interrogated on charges of espionage. He refused to admit KGB control; however, there were enough inconsistencies in his story to bolster the earlier analysis that he had been KGB directed from the beginning. After a brief period in prison, LENA was returned to East Germany in a prisoner exchange agreement. The manner in which the East Germans conducted these negotiations was evidence in itself that LENA was regarded by the East as a person of special importance, whose return was urgently desired. The entire prisoner exchange agreement, which was a big thing and Involved well over 1,000 prisoners, was made contingent upon the release of LENA.* One can see in ttlt Felfe ease the gradual deveiopmnt of KGB , \ / counter ce opera Beginniritl the comparatively 1 / simple ak ion aUonsprogrssed graduAily, th Nettolthe absurdly cnv. Thisch ' z. ', 4,4,... � his period to exploit agent I' - wtYs. ons in 'a wide tration of a recruitMeit of an O - *Pe sons knowledgeable on this case have speculated that LENA awl* be a long term KGB Illegal. Re , syn rgierted that In Germany-in 1950, doeble agent eptiepil, but that by 1 15 they had become very much In He learned this from an Q -leer whq had retyrpi,to Moscv h KGB r zi Ja .. nit Ge really notht, � 54rne officer also cd that that, the Western inte e duldriTt find out abut East Germigy, and that cons, GB disposed of vase-mount of expendable build-up or thr9w-aw er1a1 fxpm East Gefany which guld be used tp tOoort of its LoperatIons. (From NO intervIew of Golittyn in kl , - SECRET NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECITE NO POPEIGN DISREM elfe wou7A-never haves e A ilf.nd 44114""i'l!jrstAttrir: 91'314'. ;A" :9 PI . , It!nt really-gaVed him W o so long to t it , 3 ' took flPE. fortultous agpearante of a d_ WhiC4-th� ?t" inca,ted-w4; fri it has taken to hesrt the sad lessons learned from this SW mad has made vigorous efforts to improve and protect its security. Although historical developments of the last 25 years inevitably make the German services more vulnerable to penetration than other Western European services, r, a' a,-7-e�.2 one should note that sinc�fibit the BND has faced this problem squarely. The determined efforts of a small group of the DNDIs most competent younger officers have been focussed on this problem, and much progress has been made in detecting and removing �Milers who because of their wartime background or for other other reasons ame4e1asbied as security risks. tr imite4467the 7ery cow ust be r d by t ously s ful et tion / *cur -6 spat, t U.S militar en PLITI(1.T::1 11,111 Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET TO POREIGN DT,f;EM Annex A: The HACKE Story At the end of 1943 hazi Party boss artj ormarri foresaw the approaching defeat of the Third eichanWeoan to uild up a secret Nazi cadre organization unknown to Hitler and other Nazi leaders. This organization has come to be known in Western'intelligence circles unaer the codeword HACKE.* According to Bormann's plan. HACKE was set up according to the "V" pattern (5 ',arsons): members of one 'V" became leaders of further 'V's, and the laadertala was anonymous to the lower circles. It was to be numarically limited. but expended as needed. Its objective was to ev!raise claadastirv, influence over affairs of the Third Reich, and to prepare the roundwork for continues activity after the defeat. In early 1944 there were alleaedly only 35 members; by the end of that yaar, half million dollars in concentration camp booty had been amu oled abroad and clanoestina bases had been set up in Spain, 'artugal. Argentina, ,Iloan and Italy. HACKE members were quite different from those who opposed Hitler on more or less moral grounds and who orqanized the attoLateo assassination of Hitler on 20 July 1g44. They were war criminals, fanatics and far-sighted opportunists who saw the handwriting on the wall and moved early to assure their personal future. To the extea, that ideology as well as opportunism played a aria, their militance and authoritarianism brought them far closer to Communism� than to Western democracy. After the war. HACKE kept alive the old Nazi slogan "Fiaht the Jews and plutocrats in the USA," and its goal was tae founding of a Fourth Peich. Typical of Soviet capabilities in this milieu, is the fact that thr Soviets learned of HACKE at its inception. Cornann consulted with r,estapo Chief Heinrich Mueller concerning tl-a.2 oroaniaation, both for *This codmame was originally coined by Michal Goleniewski for use In reporting on this subject while he was still in place as a CIA penetration of the Polish Intelligence Service. Since we do not know the actual name of the organization, the codeword HACKE has stuck and Is still used for want of any beater term. FaithiuA .L66EM" Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 TaRET 7OR1TGN DIM)/ advice on conspiratorial organization and to gain Mueller protection vis-a-vis SS Chief Himmler, who was an enPmy of Bormenn and who Bormann feared might learn of the organization. Gestapo .414104aaLf Chief Mueller, in turn, wax1ready in contact with the Soviets at least as early as the beginning of 1944, and he informed then of Bornann plan.* The Soviet operation with Mueller was directed personally by 04,..EalAci 44144442 El A t 44< 4 Gen.Abakumov, then Chief of SMERSI,land subsequently head of the entire A MGB, predecessor of the ROB. Abakumov immediately recognized the importance of HACKE and di evervining eossible to penetrate the organization and direct it toward lone range Soviet goals. Mueller's knowledge of HACKE was limited. e wasonly used by rormann; he wao not fully trusted nor was he a mrater of HeCKE himself. But his ,ization, and without waiting for the end of the war, bakumov,rethi.iit several HACKE members by blackmail and tireat of denunciation to Hitler and Himmler. One member of HACKE with whoa: the Soviets reportedly were in touch during the war is SS Colonel Otto Skorzeny, who is fmrous for leading the airborn rescue of Mussolini from Allied imprisonment. Skorzeny was under active development by , kumov's unit as early as 1/42. He was suspected for a while of playing A double game, but was reportedly firmly recruited by the Soviets in mid-1944. For a brief period shortly before the end of the war, Skorzeny was maneuvered into position as chief of Nazi military intellietance. Through Skorzeny, Abakumov hoped to catch in time and exploit for Soviet purposes the Nazi Abwehr knowledge was sufficient to identify other members o *Mueller was well-known as a student and admirer of the NKVD, and this apparently led him to general sympathy with the Soviet cause. In his memoires, Gen. Walter Schellenberg, a senior SS and SD officer, quotes Mueller as saying in Spring 1943: "I cannot help it; I incline more and more to the conviction that Stalin is on the right road0 He is immensely superior to the Western heads of state, and if I had anything to say about it we would very quickly come to an agreement with him." It was not long after this that Mueller apparently did make his own personal accommodation with the Soviets. The Soviet contact to him was reportedly arranged by Maj. Welgen, the Gestapo chief in Danzig. who had been recruited by the Soviets sometime in 1943. Mueller's post-war whereabouts Is a much-debated mystery. It was first believed that he died in the siege of Berlin, but there have been a number of reports that he escaped successfully to the Soviet Union. Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 d T, NO FOREIGN DTSSEM agents in the U.S. and South America.* It is not known fspita4r whether Skorzeny is still a Soviet agent. Deryabin tells us the KGB was trying to locate him in 1952, perhaps to reestablish contact. He is presently living in Spain, from where he maintains active contact with wartime friends and associates. After the war, the Soviets concentrated on maximum investigation of HACKE and maximum infiltration of agents into its membership. The organization expanded in 1947-48, and this opportunity was exploited. Several war criminals who were knowledgeable on HACKE were located in various Eastern European jails. Goleniewski, for example, has described the two-year effort to break HAM member Foerster, the former Nazi Gauleiter of Danzig, who had been sentenced to death as a war criminal In Poland. It was Goleniewski himself, who in mid-1952 after six months of patient debriefing and persuasion, finally induced Foerster to reveal what he knew about HACKE. In this case, as in a number of others, Goleniewski operated on direct instructions from the Soviets, wholly independent gf his own Polish service. As soon as Foerster began to talk about HACKE, he was immediately removed from prison and flown to Moscow in a special plaue. Our only source of direct knowledge on HACKE is Goleniewski, and most of Goleniewski's knowledge comes from his involvement in the Foerster case and subsequent discussion with KGB officers who specialized in German operations. Deryabin has provided circumstantial confirmation however. He reports that the voluminous files on Abakumov's wartime operations against high level Nazis were known in the KGB as "Abakumov's legacy,' and that they read like a novel. There was renewed interest in these files about November 1952 (i.e. after Foerster began talking about HACKE); at that time the files were removed from the Austro German * One of the reasons Abakumov rather than Merkulov became chief of the MGB in 1946 was that Stalin agreed with his demonstrated policy of maximum emphasis on intelligence operations against the United States. /K- Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRE T NO FOREIGN D I cmi Section to a separate location, and a high degree of compartmentation was put into effect with regard to all files pertaining to former Nazi officers. .A.mi(04,947440-uraaica-ie k014010 The HACKE story is generally regarded' as an important backdrop to A understanding post-war German security problems, and particularly to an understanding of Soviet penetration of German intelligence and security services as illustrated by the Fclfe case. It shows how early in the game - game and with whatiOuccess the Soviets moved to penetrate and exploit the various formal and informal eroupings of former Nazis. Former $S and SO officers were particularly vulnerable to Soviet blackmail, as the Soviets systematically sought out and exploited the evidence of their war crimes guilt. In this group for which conspiracy had become a way of life, the Soviets could also make an ideological appeal -- continued hatred of the United States combined with respect for authoritarian Soviet power. Many of these former Nazi officers, including some with a record of hushed-up war crimes, obtained important or sensitive positions in the West German government. This group exercised a particularly fatal attraction on The renascent West German intelligence and security services, which had an obvious need for experienced personnel to counter the growing threat of Soviet espionage. 2 e� R 17 DIS41174 Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET NO FOREIGN DISSEM Annex B: The ULU f4ARLEt Case Using information gathered (At believe) by several penetrations of Gehlen's CE branches, the KGB prepared a comprehensive document on the personnel, organization and operations of GV"L". The document had the appearance of a report from an agent in place in GV"LP or near the chief of GV"L" and was signed with the name "Artur." The content was genuine and implied a real Soviet penetration or penetrations, but there were some discrepancies in the use of organizational terminology which suggested that the document itself might be a fabrication. The document was photographed on microfilm and the microfilm placed in a dead drop at the base of a lamp post in the West German city of Ludwigsburg by an agent whom we lave never identified. The document was brought to the attention of West German police by a KGB agent who was briefed to report to the police that he had accidentally discovered the dead drop. Another KGB agent was briefed to empty the dead drop and in doing so, unwittingly, to walk into the police stake-out, be arrested and thus provide confirmation of the existence of a Soviet penetration in GrL". The account of the recruitment, preparation and handling of these two agents (drawn lamely from their confessions) erovides some excellent examples of tactical deception techniques. In general it should be noted that both agents were of very low calibre - too low to possibly be used In any real intelligence operation; both had already been blown in one capacity or another to various Western intelligence agencies. The KGB presumably used them in the LILLI MAREEN operetion not only in spite of their low agent qualit;.yi but because of it! The Agents: "The Informer": Bodo Fromm, born in 1915, was a former Wehrmacht resC Lieutenant from the Dresden area. He joined theihtin9 Group against Inhumanity in early 1951, was caught distributing leaflets in East Germany and recruited by the KGB In Dresden. Fromm continued to work for the Dresden KGB office as a penetration of the Fighting Group and Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 C Tri 1T0FORE7Gli- DISSEW and staged a "flight" to West Berlin when the Soviets arrested his colleagues. Subsequently he tried, on Soviet instruction, but without success, to get agent work with the French, the British and the Americans in West Berlin. Later he was able to operate as a penetration of the Conmittee for Liberation from Totalitarianism, a group which was eventually taken over by the Gehlen Organization. At this point Fromm was introduced to a new case officer in Berlin who told him that his targets were the BfV and the Gehlen Organization. In the fall of 1953 all the West German agents whom Fromm had been able to identify to the Soviets were arrested in the Soviet Zone (except one - so that Fromm might not be suspect)) and Fromm was ordered to move from West Berlin to West Germany where he was to await further instructions. "The Throw-Away": Walter Kende, born in 1908 in Berlin, was a periodically unemployed salesman. In 1950 and 1951 Kunde worked for the Britis=lin, but was dropped on charges of being a swindler and A a fabricator. While employed in a West Berlin department store in 1951 and 195; Kunde made the acquaintance of an East Berlin customer named Rolf Rhodin. Rhodin was an old German Communist Party member from Dresden, a long time Soviet and ifS principal agent, spotter and recruiter. He was already documented in the files of various Western intelligence services. (Of interest in connection with the LILLI MARLP; case is the fact that Rhodin had also appeared in the case of Wolfgang Hoeher, a Soviet penetration of one of OV"L"s sub-bases in Berlin who had returned to the East through a staged kidnapping in 1953, an/ who could very well have provided some of the information contained in the LILLI MARLEN document.) Kunde lost his job in mid-1952 and was destitute for the next year and a half. In late November 1951 he accidentally met Rhodin on the street; he told Rhodin his troubles and accepted Rhodin's offer of help in return for ''favors," to be specified at a later date. Kunde thought at the time that Rhodin was referring to matters connected with East-West trading. Between November 1953 and mid-May 1954, Rhodin met Kunde fairly often without making any specific points, but was apparently assessing him closely. Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 SECRET NO FOREIGN DISSEM The Operation: As of spring 1954 both From and Kunde were on call for the KGB's CE section. From was a completely initiated Soviet agent and was in direct contact with KGB officers. Kunde knew only Rhodin and had no precise idea of whom or what Rhoein represented. Neither agent knew the other. In mid-May 1954 Frani' received a summons from the KGB to come from West Germany to Karlshorst for a meeting. Rhodin at the same time called on Kunde and told him to prepare himself to make a trip to West Germany. (Kunde had to apply for the appropriate travel documents.) On 24 May Frornm met his case officer in Karlshorst and was told that in the near future he was to receive instructions to do something (not specified) within a 50 km.radius of his home in Stuttgart. The case officer gave Fromm instructions in S/W, a cipher, and open code signals to be used for making meeting arrangements. On the 10th of June 1954, Fromm received a telegram summoning him again to Karlshorst, but From was unable to travel until the 17th. He let four days go by, however, before he informed the KGB of this fact. In the meantime Rhodin had told Kunde to keep in very close touch with him since he was waiting daily for a telegram from West Germany which would give him some idea of when Kunde could make his trips. Kunde had his travel documents ready by the 11th of June. On 17 June 1954 From arrived in Karlshorst for his meeting with the KGB case officers. They were annoyed that he had not been able to come earlier and said that Fromm's task concerned a very important matter which had "already cost many thousands of marks." It was crucial that From be in Ludwigsourg on 18 June at precisely 0700 hours. From was then given his mission: he was to look for a minox box con- cealed at the base of a certain lamp post. If he found it he was to leave it there and go punctually at 0200 to the Chief of the Ludwigsburg police and tell him the story of seeing a man put something near the base of the lamp post. He was to give a plausible excuse for being at that spot himself early in the morning and was to say that the man had Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 VECRE NO FOREIGN DISSEN acted suspiciously making From suspect some spying activity. The Soviets also gave Fromm a physical description for the man, which they said was notional and which he could relay to the police. From was to be sure to report only to thp Chief of the Ludwigsburg Police, since he was known to be very pro-Anerican and would certainly inform American agencies and have the dead drop surveilled. The Soviet case officers further explained that another man would empty the dead drop, would be arrested and would confess that he worked for the Soviets in Karlshorst. (Here they relied on Rhodin's personal assessment of Kunde's character.) As soon as Fromm had completed this assignment he was to send a report to Rolf Rhodin. While Fromm was being thus briefed, Kunde was meeting with Rhodin. Rhodin explained that the matter of Kunde' trip trip to West Germany (task still unspecified) would become acute two days later, on the 19th of June. .Rhodin would meet Kunde on tne morning of the 19th and give him the exact details of his mission. On the 18th of June From arrived in Ludwigsburg, found the minox in its cache as predicted and reported to the Chief of Police at 0900 precisely as instructed. Later in the day he returned to Stuttgart and sent his report to Rhodin. On the 19th Rhodin informed Kunde how to travel to Ludwi sburg'and where to find the dead drop. He instructed Kunde to empty it between 0600 and 0700 on Monday. 21 June. He then told Kunde that he should wrap up the film capsule and mail it to his own address in West Berlin, then return to Berlin and give the package to Rhodin on either the 22nd or the 24th of June, when Rhodin would meet him. He promised Kunde a reward of a new suit, a pair of shoes and full set of dentures. Kunde was given no advice about what to say if he was picked up by the West German police. The bewildered man was arrested exactly according. to Soviet expectations and willingly told all he knew about his contact with Rhodin. Not according to KGB plan, however, was the fact that From was an unconvincing actor and aroused the suspicions of the Ludwigsburg police when he made his first report about accidentally finding the NO koidEi'JN Approved for for Release: 2019/02/21 CO2606326 -73-- Approved for Release: 2019/02/21 CO2606326 JZOREZ )TO FOREIGN DISUM deaddrop. Also contrary to Soviet hopes was the initial Gehlen Organization reaction to the ULU MARLIN document; owing to errors in the use of organizational terminology. it suspected Soviet deception. Surveillance and mail intercept coverage was instituted on Fromm, and he was detected mailing a letter to Rolf Rhodin in East Berlin, This was evidence of a direct link between Fromm and Kunde and the KGB. Fromm was eventually arrested and confessed his role in the Soviet deception. Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 The Sokolov Case The Sokolov case illustrates how the Soviets were able, through Felfe, to monitor a double agent operation against the RU involving the interests of a number of German and American services and necessitating rather elaborate liaison coordination arrangements. ilcummilmiamixemstammxlix At the same time, the KGB was oyak1441% able to monitor a Western attempt to induce the defection of an apparently inept, insecure and disaffected RU case officer (Sokolov). There is reason to suspect that the Soviets manipulated the case (a) so as to make it more attractive to thi Western services and thus prolong its life, and (b) to involve the BND which was not originally connected with the case in order to enable the KGB to RINK monitor it closely through Felfe. In the end, the KGB was willing quietly to observe and permit the roll-up of an RU net in West Germany consisting of five agents and a Soviet high speed W/T transmitter. The case involved considerable expenditure of time on the part of the Amelican and German services affected, and if one of the Soviet aims was to divert the efforts of the Western services to non-productive activities, they must be credited with having succeeded. 1,1,0 � CA. �iii 1.11.,P. 1. o, � 'I R.,01:14j1,.4.161. In addition to the extensive liaison involved in the unsue-essful attempt to induce A Sokolov's defection, the West German services investigated approximately 200 security suspects. We have only two items of collateral information m which offer some insight Clemens told kat& his interrogators that when into the objectives of the case as seen from the KGB point of view./ idaimediftsommta he deliberately iblionam expressed to Alfred his concern that the Soviets would/allow an agent from East Germany to xmxk walk into a trap and be arrested in West Germany, the KGB officer shrugged and said "...this has nothing to do with my office, AINE ... Sokolov will certainly be arrested." This suggests that at least by the end of the operation, 742-ei 4` I let t_ ett:tp the investigation and arrest of Sokolov, who 44j entay genuinely vulnerable to Western xmanacitiaa blandishments, had become a principal KGB objectivei justifying the sacrifice of the GRU agents and the bonus Felfe received for his role.iglidamr, same A second indication of KGB objectives is the UB officer,Michal Goleniewski, who reported on a briefing given to Soviet and satellite CI officers in late 1958 and early 1959 by General Aribanov, chief of the KGB's Internal Counterintelligence Directorate, Gen. Kadin= Gribanov stressed the need to collect information and documentation oil "coordination" among the Western services, as this information could be exploited in propaganda against these 301306iNIX services. Thus fostaring and monitoring the elaborate inter-service coordination mechanism which was set up to handle the Sokolov case may have been one of the specific KGB objectives. Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 apprised We do not know whether the KGB trait/the RU that Sokolov's net was penetrated. If it did, this 2k1/would have enabled the KGB to direct the RU's further handling of the came and would have facilitated greatly its manipulation. On the other hand, if the KGB suspected Sokolov from the beginning, it may have kept the A RU in the dark about agents. the status of Sokolov's =mit In this event, it would have been considerably more difficult foril the KGB to manipulate the case, and some of the developments which appear to have been the result of KGB manipulation may have to be regarded as mama not the result of KGB direction or control. Approved for Release: 2019/02/21 CO2606326 CCPEn.-1 Approved for Release: 2019/02/21 CO2606326 The central figures in the Sokolov case were: (1) Major Sokolov, a GSFG RU Transborder Intelligence Point officer at Erfurt, East Germany, who ran a network targeted against an American airfield at Sembach; (2) Karl Heinz,Kiefer, a German railway employee, member of Sokolov's net, who was doubled first by CIC and later turned over to the BfV. (3) Bruno Droste, a refugee from Erfurt who is suspected of having been played into CIA by the Soviets. (4) Lore Poehlmann, a long-time Soviet and MfS agent who served as principal agent and safehouse keeper for Sokolov, with her husband, (5) Waldemar Poehlmann, an RU Transborder Intelligence Point agent; and (6) Wilhelm Haller, a BND agent who reported on MfS activities but who is suspected of having been under Soviet control. The Soviet case officer, Major Sokolov, had been running agents to collect OB data on various US air bases since the early 1950's. Numerous traces on him, under various names, rested in CIC files. The consensus of inform tion indicated that he was an almost unbelievably careless operator: a drunkard, an insecure talker, a flamboyant and promiscuous type, well-known around Erfurt for exactly what he was. One of Sokolov's longer-lived operations involved a net of low-level West German agents whose main target was the collection of information on the American airfield at Sembach. When one of these agents, a railway employee named Kiefer, confessed and volunteered his services to CIC, the latter promptly doubled him. CIC's handling of the operation can perhaps best be characterized as defensive; there was apparently no particular CIC interest S ECii ET /65 LI . Approved for Release: 2019/02/21 CO2606326 OCODET Approved for Release: 2019/02/21 CO2606326 NO FOREIGN D1SSEM in Sokolov's vulnerabilities. (Kiefer, himself, complained that GIG dalliance was causing the Soviets to become suspicious.) Nevertheless, GIG continued to run him from 1954 until March 1959, when, after five years of relatively unproductive activity, they turned the case over to the BfV and the local LfV with the recommendation that the case be terminated and the network rolled-up. However, since the operation appeared still to be viable the BfV was in no hurry to roll it up. In keeping with BfV philosophy that W/T agents should be doubled if at all possible rather than arrested, they were particularly interested in one agent in the net who happened to be Kiefer's brother-in-law and who was reported by Kiefer to have him issued a W/T set by the Soviets. (Although this agent was later judged to be unsuited for a D/A role) he continued to be of key interest.) The BfV was also intrigued by the relatively large number of fringe personalities who appeared in the case as agent suspects. They felt that further investigation of these individuals would make for a more effective roll up if this line of action were to be taken later. Finally, they also felt that more positive handling of the case including the release of more build up material, might lead to additional interesting developments. GIG had requested that all action be closely coordinated with them. Although the main RU targets ) O. were U.S. Air ForceA t4ts-..-1-at-tet. had not been apprised of the case by GIG. The BfV now felt obligated to coordinate with OSI. In order to preclude simultaneous coordination with several American agencies on one case the BfV requested CIA to act as coordinator and represent the total American interest vis-a-vis the Germans. CIA agreed to do this. After reading into the case CIA also became strongly interested in Sokolov as a recruitment/defection target. SE.GRET a " 110 I el 0.6 I " Pt ra SIM Approved for Release:_2019/02/21_CO2606326 Approved for Release: 2019/02/21 CO2606326 OLURL: NO FOREIGN fiiSSEN At this point, the case began to take on greater interest. Sokolov gave Kiefer an OWVL system; and he engaged him operationally with two Erfurt-based agents previously known to Kiefer who were to help him recruit a source at the Sembach airfield. These agents, a married couple named Lore and Waldemar Poehlmann, acted as principal agents and safehouse keepers for Sokolov. Frau Poehlmann was already a long-time Soviet and MfS agent; her husband had for some time been listed in GIG files as an RU Transborder Intelligence agent. From Sokolov's action, it appeared that he did not consider Kiefer to be under Western control. ',get- � There special significance to Kiefer's being given OWVL just after the BfV took over the case from GIG. We now realize (although we did not at the time) that it the Soviets -CliliEeaeaFt44an-S2,4, to supply agents whom they know or strongly suspect have been doubled by the opposition with's�oa-told, oK communications systems./ least least as early as 1958, the RU was deliberately continuing to run such cases with increasingly elaborate communications. This is (oon6isiime4 by information from Apenetration of the GRU, Lt. Col. Popov. In July of that year, Popov was discussing with an RU colleague several Transborder cases aimed at Holland. The Soviet remarked to Popov that his "entire Dutch residency had been compromised." significantly, it was after this conversation that the RU trained one of these agents (Dutch Cryptonym PARKER) in OWVL. If we presume that this n consi ering the reasons why the RU gave their agents OWVL after they knew them to be controlled by Western services, we surmise that this action served several purposes. It was a new development which whetted the interest of the doubling service and indicated that the agent was well-regarded by the Soviets. At the same time, it provided a measure of protection to the RU, as it allowed them to keep the cases running with a minimum of direct personal contact between case officer and agent. It also allowed a formal contact to be dragged out for a considerable length of time without any real substantive content. For example, the number of Kiefer's OWVL broadcasts consisting simply of a call-up signal and a negative message indicator is impressive. So is the numbeivqf broadcasts which wa-e unintelli- gible for technical reaillias4dLi NO FOREIGN DISSEM Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 NO FOR ti3N DISSEM development in the Sokolov case is related to the fact that the KGB had discovered by this time that Kiefer/had been doubledjthen it must also be presumed that the KGB shared this knowledge with the RU perhaps including Sokolov. However, adequate information to support this premise is lacking; in fact) some of Felfe's state- ments after his arrest suggested that the KGB may not have informed the RU.Lturing the summer of 1959 Kiefer's information was investigated more fully and a plan was devised for the fell-up of his net sometime in the fall. In September, however, two developments delayed this action: (1) CIA came upon what appeared to be an independent lead to Sokolov; and (2) a BND agent appeared who was in a position to provide information on the Poehlmann's The new CIA lead was through one Bruno Droste, a refugee from Erfurt of obscure loyalties, who was then giving music lessons to Americans in Frankfurt. To one of his pupils, an American officer, he offered information about a Soviet intelligence officer named "Starov" with whom he was in contact in Erfurt. Droste described "Starov" as a remarkably insecure drunkard, who ran operations against US installations in Wiesbaden. Contrary to CIA orders to disregard Soviet attempts to contact him, Droste met "Starov" in a safehouse in Karlshorst, East Berlin, in September 1959. From Droste's description of this encounter, "Starov" was identified as Sokolov. At the same time, it was also discovered that Droste had earlier reported having seen blank East German residency permits in "Starov's" safehouse which were signed with the name "Kiefer." This information led to speculation that Droste and Kiefer might be part of the same net. \Droste, consequently, was turned over for handling to the BfV. The other development involved a resident of Erfurt named Haller. Haller had been spotted by another BND agent in NO FORt�, LASSEN,. Approved for Release: 2019/02/21 CO2606326 Approved for Release: 2019/02/21 CO2606326 �LURE. I NO FOREIGN DISSEM Erfurt who reported that Haller would be amenable to recruitment and that he could provide information on MfS activities. Haller was easily recruited and proved to be a prolific source of information on Frau Poehlmann. In September 1959, Haller stated that the Poehlmann's were both MfS and Soviet agents. A short time later, he reported that Frau Poehlmann was working for a Soviet intelligence officer named Sokolov, and that the two were having an affair. This report that Frau Poehlmann was being run by the Soviets rather than by the MfS caused her case to be turned over by the BND's MfS section to the direct control of Felfe in the Soviet CE section. In mid-November, Halla. reported that Frau Poehlmann was going to West Germany for a "holiday." The BND, under Felfe's direction, then began to plan an operation against Frau Poehlmann, to use her as a means of access to Sokolov. Until this time, there had been fto official coordination between the BND and the BfV on this case although it is possible that Felfe learned about the case informally through his contacts within the BfV. It was not until the BND submitted a priority namecheck request on the Poehlmann's to the BfV and CIA that it came mt2 the open that all services were working on the same targetA If we presume that Felfe learned about the case informally from the BfV and reported this to the KGB)or that the KGB had already learned about the case from another penetration of Western intelligence, then a further interesting premise presents itself, i.e., that the lead to the Poehlmanns through Haller was contrived by the KGB and fed to the BND in order to bring the latter into the case and enable the KGB to monitor all further developments through Felfe. The KGB co id have done this without cutting in the RU. ei,z4 g/vb '-that-frximAiww41771mmititir- 4frietA-tay AFederal Republic et=the-tlfta, taking a rest cure. li.. MET in 'TM IAA V. Approved for Release: 2019/02/21 CO2606326 o 9 Approved for Release: 2019/02/21 CO2606326 OttAL NT FOREIGN DISSEM A BND man, Richard Schweizer, acting on Hailer's information, had contacted her on her arrival in West Germany and had easily established a liaison with her.* He reported that he found Frau Poehlmann more than approachable; that, in fact, she seemed to go about the business of being promiscuous as though it were a duty. 4t=4.WOVITe- apparen.I�Zkett-Tids lead to Frau Poehlmann gave the BND a significant equity 1112`4-12'; case took on some additional interest in the -00.14 qa-L O4I,t0