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April 9, 1984
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k STAT Approved For Release 2008/04/28: CIA-RDP91-00901 R000500060007-3 Ab UUTA'1'.N;1) YHESS 9 April 1931 SPIES AND COUNTERSPIES "For a $50 subscription to Aviation Week magazine, the Russians can learn about U.S what it takes us billions to learn about them," says William Colby, former director of the CIA. At his desk in the CIA, Colby used to wonder what the job was like for his counterpart in Moscow, Yuri Andropov, then head of the KGB. Both men, he imagined, were sitting in front of a large jigsaw puzzle trying to figure out what the total picture would be. "There was one difference. I didn't have all the pieces and I had to think what was missing and what would the final picture be. He had too many pieces. His problem was selection. "Also, it must have been difficult for him to figure out what the U.S. was going to do because our system involves separation of powers and requires a coalition of forces to resolve an issue. In that sense, figuring out what they might do could be more predictable because the power in Russia is all there in the center and fewer elements are involved." We have a new tale of two cities in Washington and Moscow today, with a remarkable similarity to the period Charles Dickens wrote about. "It was the best-of times, it was the worst of times... an age of wisdom.., an age of foolishness..." Arthur Hartman, U.S. ambassador to the Soviet Union, does not trust the walls of his embassy in Moscow when he wants a private conversation with his wife. They go out for a walk to talk, not too close to any structure where the KGB might have a parabolic mike. Students of eavesdropping assume that Anatoly Dobrynin, the Soviet ambassador to the United States, is equally cautious in Washington. Both men have reason. The Soviets have been known to bug the Great Seal of the United States in the embassy in Moscow and the heel of the left shoe of the U.S. ambassador in Warsaw. American intelligence agents have been Known to dig under the Berlin Wall and tap into East German communications with Moscow. American electronic experts have also intercepted the radio telephone conversations of Soviet leaders as they drove through the Soviet capital. Military attaches are generally regarded as "official spies" busily recording what they see and hear. Nowhere are they busier than in Moscow on the anniversary of the Bolshevik Revolution, when the world is given a peek at the latest in Soviet weaponry rolling through Red Square. It proved more than a passing look several years ago when the Soviets decided to parade the 559, their newest missile. It was so big the parade had to be re-routed and the new missile came by the U.S. embassy. Continued Approved For Release 2008/04/28: CIA-RDP91-00901 R000500060007-3 STAT Approved For Release 2008/04/28: CIA-RDP91-00901 R000500060007-3 At that moment, something ahead broke down, the parade stopped and for a half hour the Soviet's newest and biggest missile was parked in front of the embassy while Americans inside took pictures in gleeful abundance and dour Russians outside took pictures of them. In the global battle of intelligence, both superpowers are aware that both use double agents. In fact, in 9959, at a dinner given him in the White House, Nikita Khrushchev threw an arm around Allen Dulles, then CIA director, and joked that both their countries could save money if they stopped paying the same spies. Khrushchev could not have thought his joke was funny during the Cuban missile crisis of 1962. In that tense period, the U.S. had an agent inside the kremlin, Col. Oleg Penkovsky, who kept Washington informed of the Soviet military response to the crisis. Penkovsky was discovered a short time later and executed. Washington these days is believed to attract more spies than any other city in the world. It abounds in busy Soviets who keep the FBI busy watching them and others entering and exiting the Soviet embassy. Both Soviets and Americans presumably watch the traffic at the Chinese embassy. The Chinese keep a low profile. The Senate Intelligence Committee has been told that Soviets or their subsidiaries in Washington have tried to plant or recruit agents in the policy levels of the state and defense departments as well as the NSA, CIA and the FBI. They have also approached members of congressional staffs with access to secret information. Last year, the "acting" military attache in the Soviet embassy was expelled before he did any more acting. The FBI nabbed him on a dark night picking up a green plastic garbage bag at the base of a tree in a remote area outside Washington. The bag contained film of classified U.S. military documents. Busy as they are in Washington, the Soviets or their intermediaries have been busier in the Silicon Valley of California. By legal or illegal means, through complicated purchases or dummy corporations or plain, old-fashioned spies, they intently pursue U.S. high technology. The Soviets are well behind the United States in the development of computers crucial to modern warfare. We watch them. They watch us. We are ahead. They catch up. They are ahead. We catch up. Everybody is stronger. Nobody is safer. Approved For Release 2008/04/28: CIA-RDP91-00901 R000500060007-3 V Approved For Release 2008/04/28: CIA-RDP91-00901 R000500060007-3 brUKANE SPOKESMAN (WA) 1 April 1984 C By SHERRY DEVLIN Stefi correspondent f ore~gn policy?i proper tool f MOSCOW, Idaho - Does the United States have any business sticking its nose - that is, its Cen- tral Intelligence Agency -. into i other people's politics? President Dwight D. Eisenhower, said yes. He told CIA operatives to engineer the ouster of Guatemalan President Jacoba"Arbenz..in.1954. They succeeded. . President John F. Kennedy, said yes. He authorized the Bay of Pigs assault on Fidel Castro's Cuban dic- tatorship in 1961. It failed. President Lyndon- B.. Johnson said yes. He OK'd repeated CIA plots to kill Castro. All failed, de- spite the use of Mafia hitmen and Cuban nationals. President Richard M. Nixon said yes. He gave the CIA $10 million to bribe Chilean congressmen not to ratify the election of President Sal- vador Allende_in September1970. The vote was ratified. . "We have witnessed government after government being over- thrown in Latin America, all guided by the invisible hand of. the United States," says Larry Birns, a foreign policy analyst... "Not one of these so-called secret wars has ever been debated in a public forum or approved by vote. of Congress," Birns said. "Not one." Instead, U.S. - presidents from Harry Truman to Ronald Reagan have used the CIA as .their strong arm abroad, said Birns, moderator of last week's Borah Symposium at the University of Idaho. Truman used the intelligence agency to save. Western Europe from the Communist threat of the late 1940s, subsidizing leaders, po- litical parties and unions in Germa- ny, France and Italy. : - From there, the CIA took' its in-, fluence peddling across the globe: { the Philippines, Vietnam, Iran. Guatemala, Chile, Cuba, Angola, Laos and most recently Nicaragua. "The record of CIA intervention is dismal, with no clear successes and many disastrous failures," said' Amos Yoder, UI political science! professor and an organizer of they Borah conference. This year's symposium zeroed in on CIA intervention in Latin Ameri-, ca, with emphasis on Chile and Ni- caragua. - The seven panelists, including former CIA operatives, Latin Americans and political anal yysts, raised a long list of questions. Few, were answered. . , Does U.S. support for the 10,000 troops fighting Nicaragua's leftist' Sandinista government constitute international terrorism? Did the CIA engineer the over- throw and death of Chile's Allende in ,September 1973? What did- the United States stand to gain by de- posing Allende and installing Gen. Augusto Pinochet? Does continued use of the CIA for intervention weaken this country's . moral and political position abroad,,., and stimulate retaliation? .1. 1 Should there not be more explicit legislation to control the CIA - as one participant said, "put a leash on the dirty tricks?" William Colby, director of the CIA from 1973 to 1976, provided' the defense of covert operations- abroad. "The CIA,"? Colby said, "enables - our leaders to make foreign policy and defense decisions on the basis of knowledge rather than in the. haze of ignorance and suspicion." Jaime Barrios, a Chilean ' exile - now living in New York City, pro- vided the indictment. The CIA-backed government in his native country has created"an economic wasteland ruled by coer cion, intimidation and terror," Bar- rios said. 'The United States has robbed a -. whole generation of Chileans of the opportunity to determine their own destiny," he said. "La CIA has few friends in Chile." The trouble started, Barrios said, when Allende won Chile's 1970 presidential election with 36 per- cent of the vote. Nixon was incensed. Allende, said Nixon, was another Castro. "During the two months follow- ing Allende's election, the CIA planted 1,000 articles in the Chilean press describing the horrors of so- cialist rule," Barrios said. "Nixon funneled $10 million into the operation, telling the CIA to as sassinate Allende if all else failed,";. he said. "But on Nov. 4, 1970, Al- lende was installed by the Chilean'. congress." The CIA, however, did not give' up its campaign to destabilize Chile's left-wing government. Over the next three years, $8 million in "There also was a very close re- A..,cr;non ..,........ r. :_s... nrs __ ?_.. .. . -%I- s>--,- --. Approved STAT STAT Colby said the money went to the country's moderate political par- ties - those that supported trade unions and a free press. "We were looking toward the elections of 1976," he said. "We rather hoped the centrist forces could recover their power. That ef- fort, however, was preempted by the military coup of September 1973." Barrios described a more nefari- ous involvement. - "I don't believe 'a word Mr. Colby has said," he told one Borah ses- sion. "The lies, misinformation and sabotage engineered by your CIA undermined Latin America's oldest democracy." The September coup left as many as 20,000 Chileans dead and many thousands more in exile. Allende was killed at the presidential pal- ace. Pinochet was installed as dic- tator. "Chile under. the junta has suf- fered a long tableau of human rights violations and total social control," Barrios said. "Pinochet says destiny gave him his job. I say the CIA gave him his job." And the CIA will continue-'doling out control of Latin American countries as long as it is the covert arm of the president's foreign poli- cy advisers, said Ralph McGehee, a retired CIA operative and critic of agency policies. "The agency's task is fo develop an international anti-communist id- eology," McGehee said. "The CIA then links every egalitarian politi- cal movement to the scourge of in- ternational communism. "As with Guatemala in 1954, the CIA starts covert actions .by drag- ging a red herring across the trail. The Soviets are coming, the Soviets are coming. "A Soviet threat somehow justi- fies all that follows." "All that follows" includes assas. sination of foreign chiefs of state, the murder of thousands of suspect- ed Viet Cong in South Vietnam and the current offensive in Nicaragua. "What you're forgetting, though,"' Colby told McGehee, "is that this isn't a black-hat-white-hat situa- tion." "Let's look at the real facts," Colby said. "Mr.. Allende was de- posed because he tried to impose socialism on a well-established Chi- lean lean middle class. - "The military overthrew Al- JV 4L A'Ektircrpproved For Release 2008/04/28: CIA-RDP91-00901 R000500060007-3 April 1984 DKFAGE-4-L ---a The story of the CIA's Nugan Hand Bank-an institution Committed to heroin dealing, money laundering, arms trafficking, and covert dirty tricks. lift)tll) NIOATI.I' BY PENNY LERNOUX J arly on a Sunday morning in Jan- uary 1980, two policemen driving along a lonely stretch of highway near the Australian city of Sydney came upon a Mercedes-Benz sedan with its lights on. Inside the car slumped across the front seat in a pool of blood was the body of a middle-aged man. In the dead man's pockets the police found the business card of William Colby, a Washington lawyer who three years earli- er had been director of the Central Intelligence Agency. On the back of the card was the itinerary of a trip Colby intended to make to Asia. Next to the body was a new rifle. Alongside it was a Bible with a meat-pie wrapper as a place mark. On the wrapper were scrawled names-William Colby's and California Congressman Bob Wilson's. Wilson was then the ranking Republican member of the House Armed Services Committee. The dead man turned out to be a Sydney merchant bankiamed Frank Nugan. He was a co-owner of the Nugan Hand Bank, an Australian bank with 22 branches worldwide. Investigators at first theorized that Frank Nu- gan had killed himself because of business troubles. Only later was it learned that among the people with whom his bank did business were a number of prominent mobsters. But this would soon seem like a minor de- tail. For Frank Nugan's apparent suicide triggered an international scandal that continues to this day, involving heroin dealing, arms trafficking, money laundering, the CIA, and enough high-ranking U.S. military officers to ,launch a major invasion. aw, as An thr the As bo to An cor on co rill ga At the time of his death. 37-year-old Frank collapse. Stephen K. A. Hill, a Nugan Nugan was facing criminal charges for de- Hand director who later testified that he re- frauding shareholders in the Nugan-tamily wrote the books on Frank Nugan's in- food business. Auditors had discovered structions, had had no problem with the big cash payoffs by the company to peo- auditors during earlier meetings. On at ple apparently linked to drug trafficking, least one occasion he was accompanied Three months later, after the Nugan Hand by another high-ranking former U.S.-mill- Bank collapsed, it was learned that Nugan tary officer, Earl P. ("Buddy") Yates, re- had illegally diverted S1.6 million of the tired U.S. admiral and former chief of staff bank's money to the family business. The for strategic planning with U.S. forces in bank's directors knew of Nugan's legal Asia and the Pacific. Yates was the Nugan, troubles. and one of them frequently ac- Hand Bank's president. companied him to the hearings that led to Nugan, at that time, had taken to going formal charges. This man was General to church almost daily. He wrote mystical Edwin F. Black, former commander of notes to himself in a Bible, which was al- ! troops in Thailand during the Vietnam War ways with him. "Visualize 100.000 cus- and later assistant army chief of staff in the tomers worldwide." said one. "Prayerize. Pacific. He was then the Nugan Hand Actualize." And he spent money as if he Bank's representative in Hawaii. owned the mint-S500,000 to remodel his Frank Nugan was also in hot water with I family's lavish waterfront home in Sydney, the bank's auditors. who had refused to complete with sand for an artificial beach. acorove the accounts for the bank's Ba- On the day he died he was completing ne- hama and Cayman branches. This meant gotialions for the purchase of a $2.2-mil- 1hat the bank was about to be decertified. lion country estate. If it were decertified, it would lose its com- If such actions reflect suicidal intent, mercial status with other banks and would none of Nugan's associates seemed Thr the yea ban be the ca a st only in isolated bits and pieces, in part be- cause of the U.S.-intelligence communi. ty's reluctance to help or supply informa- lion to Australian investigators. The Australian government's investiga- tion of the bank's dealings is still under way, and among the details that have emerged so far are the following: ? The Nugan Hand banking group par- ticipated in at,least two U.S.-government- covert-action operations. ? The bank had strong links to the U.S.- intelligence community, and some of the banking group's executives were involved in large weapons shipments to American- aided forces fighting against Communist guerrillas in Angola. ? According to the report, retired Admi- ral Yates, while president of Nugan Hand, as part of a bank project urged a CIA con- tract agent to threaten the Haitian govern- ment with a coup. (Yates told the Wall Street Journal that the overthrow threat wasn't proposed by him but by a prospec- tive bank client. Yates said he quickly re- jected the idea.) . ? Most of the bank's business was found to have been money laundering rather than deposit taking. ? The bank was also involved in deal- ings with international heroin syndicates, and there is evidence of massive fraud against United States and foreign citizens. Corcrz1VZTF , Approved For Release 2008/04/28: CIA-RDP91-00901 R000500060007-3 Approved For Release 2008/04/28: CIA-RDP91-00901 R000500060007-3 IJNITEL) PRESS iN1tK1NAIIUNaL 27 March 1984 CIA NOSCOU, IDAHO Former Central Intelligence Director William Colby said Congress vigorously oversees the L.S. spy business. However, former CIA agent Ralph McGehee claimed lawmakers and the public were victims of the aaency's misinformation. Colby on Monday told a symposium on Latin America that Congress proved it monitors CIA activities when it halted the intelligence-gathering agency activities in Angola in 1975. . "There have been and still is vigorous supervision over Central Intelligence operations, " he said. "Oversight committees work by fixing responsbility on a small number of congressmen and committees so that, if thefiis some error, it is clear that senators and congressman are responsible for the error.'' But McGehee told the University of Idaho audience that congressional oversight committees only hear what the CIA wants to tell them. ''Unfortunately the oversight committees are briefed by the CIA which tells them what it is doing in a country, " he said. "I have helped prepare briefings for congressional committees, and I know how distorted those briefing materials are. They are not presented with the true facts. " He said the CIA deals in misinformation with the American people as the primary target. STAT Approved For Release 2008/04/28: CIA-RDP91-00901 R000500060007-3