LIMITS SOUGHT ON SOVIET BUSINESS AGENCIES IN U.S.

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000302300021-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: October 2, 2012
• Sequence Number: 21
• Publication Date: August 16, 1985
• Content Type: OPEN SOURCE

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Declassified in Part - Sanitized Copy Approved for Release 2012/10/02 : CIA-RDP90-00965R000302300021-4
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E. Ar. NEW YORK TIDES
. 16 August 1985
Lrmits Sought on Soviet Business Agencies in U.S.
By JEFF GERTH
Special to The New York Times r
WASHINGTON, Aug. 15? Congres-
sional and Federal officials are seeking
more tools to crack down on commer-
cial offices of the Soviet Union and its
allies that have long played a critical
role in obtaining American military
technology and secrets, according to
public records and Federal law-en-
forcement officials.
Although far outnumbered by diplo-
mats, commercial officials from Com-
munist countries are growing in num-
ber and enjoy rare access to informa-
tion and facilities in the United States.
By operating as legitimate busine3ses,
commercial officials can legally obtain
credit information on American busi-
ness executives, visit military sites and
acquire crucial technology and docu-
ments as Well as illegally recruit spies,
according to Federal officials.
Officials say this access stems in
part from loopholes in American laws
and the status of some Communist
commercial organizations as Amer-
ican- corporations.
Now, prompted in part by the recent
disclosure of several spy cases and re-
newed interest in the adequacy of coun-
terintelligence efforts, Federal law-en-
forcement officials and Congress are
focusing on ways to limit the activities
of commercial and trading companies
and to monitor them better.
Approach Is Ctdled\ Subtle
But one top official of the Federal Bu-
reau of Investigation warns that Amer-
ican business executives are still un-
aware of the dangers in dealing with
commercial organizations like the Am-
torg Trading Corporation, a Soviet
trading company based in New York.
"The Soviets use a subtle approach
on American businesses," James M.
Fox, head of the Soviet counterinteW-
gence division of the F.B.I. office in
New York, said in an interview earlier
this month. "Amtorg can run a credit
check on a business, learn its financial
health. If a company is in trouble they
can get them contracts, gain financial
leverage. They can do so much legal-
Mr. Fox, in an attempt to educate
American officials further about Soviet
spying activities, said he recently
wrote the State Department about
eight examples of "Clandestine activi-
ties," six involving Soviet officials at
the United Nations and two Amtorg
employees.
Dmitriy A. Solovykh, Amtorg's
deputy chairman, initially agreed to
talk about Amtorg with a reporteri but
then failed to return a reporter's phone
call.
Late last month Congress passed
legislation limiting the travels of Soviet
officials at the United Nations. Com-
mercial officials, however, can still
travel almost anywhere in the United
States, including Naval shipyards,
atomic energy installations, computer
equipment conventions and observa-
tion posts near military readiness ma-
nuevers, according to Mr. Fox and a
1982 report by the Senate Permanent
Subcommittee on Investigations.
The chairman uf the subcommittee,
Senator William V. Roth Jr., Republi-
can of Delaware, was the author of the
legislation restricting travels in the
United States of Soviet employees at
the United Nations. His subcommittee
is scheduled to hold hearings this fall
on the question of whether to restrict
commercial organizations, according
to an aide to Senator Roth.
Copmwj-,- anal intelligence commit-
tees have also expforedThlS issue in re-
cent closed hea?ngs into counterintel-
ligence, according to intelligence com-
mittee
.
The question of restricting foreign
activity is a delicate one, involving dip-
lomatic, trade and legal issues. For ex-
ample, American officials in the Soviet
Union are also restricted in their
travels and might be affected by
tighter restrictions in this country.
Amtorg, the largest Communist.
trading company in the United States,
was incorporated in New York in 1924,
before the United States had diplo-
matic relations with the Soviet Union.
Federal officials say it served as the
first base for Soviet espionage activi-
ties here.
Other Soviet trade organizations are
In Seattle and Milwaukee; a nonprofit
council that promotes Soviet-American
trade, now $4 billion a year, is based in
New York.
Seeking Markets for Vodka
Amtorg helps American companies
sell their products in the Soviet Union
and acts as agent for numerous Soviet
organizations that seek to market prod-
ucts like ammonia, vodka and metals
in the United States.
A 1982 C.I.A. report, "Soviet Acquisi-
tion of Western technology." noted the
"increased use of Soviet- and East
European-owned firms locally char-
tered in the United States and abroad to
exploit Western-controlled and mili-
tary-related technoloF.' The report
said there were more hen " 20 such con-
cerns in the United States. According to
an F.B.I. official, the total number of
Eastern European commercial and
diplomatic entities here has doubled in
four years. In addition, the F.B.I.,
which keeps track of commercial visi-
tors from the Soviet bloc, said there
were 1,577 such visitors to the United
States for the last six months of 1984.!
Like any other commercial organiza-
tion, Amtorg officials negotiate con-
tracts, attend conventions and visit
customers.
Bug over the last 40 years some Am-
torg employees have played a less con-
ventional role, figuring directly or indi-
rectly in at least half a dozen spy cases,
according to published accounts. In
addition, law-enforcement officials
say, some Amtorg employees have
been quietly told to leave after the
F.B.I. caught them in spying.
Efforts to Obtain Secrets
In 1980 an Amtorg employee involved
in intelligence activities %It the cam-
Warltde ....;71Yte ?Veal
who had already left the_cquntry had
attempted to obtain classified informa-
tion from a manager. Iota mill con-
accn5pV t_imnrfiesao a law-enforce-
menter
to an Amtorg official at a university
lecture in New York and had been
asked, over a period of several years,
to obtain information on gyroscopic
platforms, gyroscopic computers and
the Saturn V moon rocket, the official
added.
mately a third of Amtorit's 58
are considered intelligence
e a few others arc consid-
ered to be agents who are used on rare
occasions for In Icibtexte activities,
according to AmeliZan hitelligence of-
ficials.
one suchAmtorg employee. Vladi-
mir Y. Kramerovl, a senior engineer,
defected to the -United States last Year
and provided gie F.151-. with valuable
information about Soviet intelligence
within Amtorg. according to a r ederal
official.
?Almost half of Amtor employees
are ee acco
tort nor-
same are from the et inlon, ac-
cording to Mr. Fox. Amtorg records
filed publicly with the Justice Depart-
ment show the average Day for the en-
gineers is less than $250 a week.
Some Data Acquired Legally
Amercian officials say commercial
employees play a variety of roles in
Soviet efforts to acquire American
technology. One task involves the legal
acquisition of data that has been pub-
lished openly. For example, for the last
few years Amtorg, according to the
material it files with its registration as
a foreign agent, has purchased ma-
terial from the National Technical In-
formation Service, a Government
clearinghouse for nonclassified re-
ports.
In 1980, the United States stopped
regular access to the service by the
Soviet Union, but Amtorg has contin-
ued to buy reports from the service.
Amtorg also purchases costly reports
and periodicals from various nuclear
and atomic energy organizations, ac-
cording to the filings.
Declassified in Part - Sanitized Copy Approved for Release 2012/10/02 : CIA-RDP90-00965R000302300021-4
Declassified in Part - Sanitized Copy Approved for Release 2012/10/02 : CIA-RDP90-00965R000302300021-4
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Gompanles incorporated in the
tes such as Amto "can
egally purchase controlled
tactually
'to me s it without
figaM U.S.e dtcpo controls
hey 1.. ri,,V,.t the --!ui . -,
r relatedr'r technicaln the
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=ding to the 1 c.I.A. study. One ip-
: rligenfLitirt 214 --1""11"ailai
red. nonpub c version of the C.I.A. re;
their technology n ?- as well as hel
and illegalmethods.
Powers Under New Law
Agents with the United States gas-
to " = Service which attemots to stoo
illegaltrts that export control
trive them o
st- ifif?tialVit described in
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focus on companies like Amtorg.
"The U.S. is now targeting Amtorg
as much as possible," said Vincent M.
Milano, the assisant special agent in
charge of the New York Customs of-
fice, said in a recent interview.
Commercial officials figured promi-
nently in the biggest spy swap in recent
history, when the United States this
summer released four accused East-
ern European spies in exchange for 25
agents held prisoner in East Germany
and Poland. Two of the four were Intel.
ligence officers qperatina out of com-
mercial offices: Penh* B. Kostadinov,
a Bulgarian intelligence officer Air-
merly_attached to Bulgaria's commer-I
cial office in-New York. and Marian WI
Zacharski. an _gas/ gurooean intelli
gence official formerly 1Po aaico,
a owned item= nn incor-
porated In
A Ign report by Senator Roth's sub-
committee noted that business execu-
tives were sometimes fooled by Polam-
co, thinking it was "just like any other
industrial company in the United
States." The report also found that
even though employees of Polamco,
like Mr. Zacharski, have been con-
victed of espionage charges, "the Com-
merce Department has no authority to
deny Polamco export privileges."
The report recommended that export
privileges be automatically denied t
companies when their officials violate
the espionage statute, but the sugges-
tion was never adopted.
No Diplomatic Immunity
Commercial personnel are not sub-
ject to some travel limitations imposed
on Communist diplomats, but they also
do not have diplomatic immunity. Con-
sequently the risks of spying are
greater since they face the possibility
of jail rather than expulsion.
Mindful of their unusual legal situa-
tion, Amtorg officials appear to be
careful about complying with United
States laws. For 'example, the com-
pany registers as a foreign agent, al-
though legal experts said the corpora-
tion was not required to under existing
laws. In addition, Customs officials
said that Amtorg, as an organization,
has never been directly involved in ille-
gally exporting equipment.
However, investigators with the
F.B.I. and the Customs Service said
they have detected contacts and discus-
sions between Amtorg employees and
brokers involved in illegal exports to
the Soviet Union and other Communist
countries. These contacts, according to
the officials, involve both past and cur-
rent illegal export cases.
Declassified in Part - Sanitized Copy Approved for Release 2012/10/02 : CIA-RDP90-00965R000302300021-4