LIMITS SOUGHT ON SOVIET BUSINESS AGENCIES IN U.S.

Document Type: 
Collection: 
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
Case Number: 
Publication Date: 
August 16, 1985
Content Type: 
OPEN SOURCE
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-S TAT -- . I 1 Declassified in Part - Sanitized Copy Approved for Release 2012/10/02 : CIA-RDP90-00965R000302300021-4 3 ? 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 _ 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 U " =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 S.or. : I - II Ir)4 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