PART ONE 1981-1983
INTREPIDâS LAST CASE IS REVIVED
ONE
THE CASE THAT WONâT BE CLOSED
A shadow fell over the eighty-seventh birthday celebrations of the man called Intrepid, Sir William Samuel Stephenson, on that otherwise sunny Tuesday in January 1983. Seated in a special corner of his Bermuda library, he read: âThe man who organized American secret intelligence was a German-Soviet mole.â
The bald accusation was given the prominence of a front-page review in the New York Times Book Review for the following Sunday. An advance copy arrived, ironically, in the same mail as a letter of congratulation from Nancy and Ronald Reagan.
Stephenson reacted quickly. The charge was leveled against his wartime aide Charles âDickâ Ellis of the British Secret Intelligence Service. Already, Ellis had been accused, posthumously, of suppressing parts of a Russian defectorâs evidence, supposedly to protect himself and other alleged Soviet moles. Stephenson had âbrought inâ that defector in 1945: Igor Gouzenko of the Russian Intelligence Services.
The Gouzenko case had been revived after a gala dinner given in 1981 by veterans of the U.S. Office of Strategic Services, the legendary World War II intelligence organization that grew from the partnership between Stephenson and General âWild Billâ Donovan. As the book review was now pointing out, Dick Ellis had assisted Donovan in the creation of the OSS âand was in a perfect position to expose and compromise every secret agent, operation and modus operandi of the agencyâ during World War II.
Did Ellis commit gross acts of treachery?
Stephenson had returned to the Gouzenko case to learn how the Russians had âburnedâ the defector in the hope of preventing further detection of agents of the Russian Intelligence Service, the RIS. Gouzenko had submitted documentary proof of extensive Soviet infiltration. Russian disinformation had successfully forced public attention to concentrate only on charges of atomic espionage. When parts of Gouzenkoâs evidence were released, it was made to appear that some traitors who provided the RIS with atomic secrets and government papers were acting out of a muddle-headed loyalty to the wartime alliance against Hitler. Stalin, alarmed by news of the Westâs atomic bomb, had called together Russian physicists: âA single demand I have. Provide us with atomic weapons in the shortest possible time. . . . Remove a great danger from us.â The scientist in charge, Igor Kurchatov, soon discovered, from the traitors in the West, which of several possible paths to follow.
The real issue was Gouzenkoâs frustrated attempts to expose Russian agents recruited from the Westâs own public servantsâeven inside our own intelligence services.
Now it was being said that Stephensonâs hand-picked intelligence expert, Ellis, was such a Russian agent, recruited because his pro-Nazi activities made him vulnerable to blackmail. Ellis, it was said, used his power to help the Russians silence Gouzenko.
The cases of Gouzenko and Ellis were thus inextricably linked. Ellis died suddenly just before the allegations against him were made public. Gouzenko died just as unexpectedly in 1982, in circumstances that dramatized the strangeness of both these menâs lives. Gouzenko was buried secretly under the name of âMr. Brown who came to us from Prague.â A circumspect funeral oration was delivered by an anonymous preacher of an unidentified faith in a place merely described as âsomewhere in North America.â
Stephenson ended his birthday celebrations on a much happier note. He was asked to accept the General William J. Donovan Award for outstanding service to the cause of freedom. This gave symmetry to the review of Intrepidâs last case. The award had previously been made to Britainâs Prime Minister Margaret Thatcher at that earlier gala OSS dinner of 1981, to which Stephenson had asked me to go, hoping to pick up more clues to the Gouzenko-Ellis mystery.
âReformed experts in skulduggery.â The description was delivered by William Casey, newly appointed director of the CIA, when he hosted the 1981 gathering of OSS veterans in New York. He spoke in tones of genuine admiration, for he found much to admire as he surveyed the guests in the Waldorf-Astoriaâs Grand Ballroom. Nearly a thousand strong, resplendent in evening clothes glittering with diamonds and military decorations, Caseyâs old World War II comrades presented an inspiring spectacle.
Survivors from Americaâs first foreign-intelligence agency, they seemed to confirm Johnny Shaheenâs retrospective assessment: âWe got the best.â Shaheen was chairman of the Donovan Award Committee, and was squiring Prime Minister Thatcher. Born in the same farm hamlet as President Ronald Reagan, at Tampico, Illinois, Shaheen had been wartime chief of OSS Special Projects. He had worked behind enemy lines to retrieve secret weapons. He had secretly negotiated the surrender of an entire enemy fleet. Now an oil millionaire welcome in the White House, he could identify around him dozens of distinguished figures who had made their mark in quite a different way some forty years earlier, plunging into secret warfare in the service of democracy.
My host was a law secretary to New Yorkâs Mayor Fiorello LaGuardia and a member of President Franklin D. Rooseveltâs âbrain trust,â Ernest Cuneo. A peppy, all-American athlete and patriot, Cuneo had received the highest British secret-intelligence award for his work of liaison between the White House, OSS, the FBI and Stephenson, and for settling the basis of anti-Nazi Resistance operations. Cuneo had brought along his old friend Arthur Goldberg, the former Supreme Court Justice, who managed the wartime infiltration of the anti-Nazi labor movement in Europe.
Around us sat ex-CIA chief Bill Colby, who had parachuted behind Nazi lines and was almost killed on a sabotage operation; the Countess of Romanones (formerly Aline Griffith of Pearl River, N. Y.), who escaped a Nazi trap by leaping from a speeding car. James Angleton became the CIAâs most notorious spycatcher after learning the trade among Anglo-American codebreakers. Travel writer Temple Fielding smuggled devices stinking of human excrement into Nazi-occupied territory âfor their psychologically disturbing impact.â Michael Burke fought with the Resistance, later organized guerrilla forces, then became a CBS-TV executive and president of the New York Yankees and of Madison Square Garden. TV chef Julia Child traveled the world on OSS business. Beverly Woodner, a prewar Hollywood set designer, became an OSS expert on deception and visual aids. So many had been drawn from the Social Register that the OSS became known as the Oh-So-Socialâa misnomer, because many others had been recruited among new immigrants to America, and still others (conspicuous by their absence on this night) came from the ranks of safecrackers and cat burglars, counterfeiters and confidence tricksters.
The group, assembled this final night of February 1981, symbolized the spirit of American-British-Canadian coordination that attended the creation of the OSS in 1942. They had invited Canadian ambassador Ken Taylor for his clandestine support in Iran during the long hostage ordeal. When host Casey presented the Donovan Award to Britainâs Iron Lady, there was no trace of the Artful Mumble by which he was known to baffle eavesdroppers. Instead, he announced proudly the purpose of the award, âto foster a tradition and spirit of the kind of service to country and the cause of freedom Bill Donovan rendered for the worldâs security and safety.â
âLittle Billâ Stephenson had coached Donovan in Britainâs secret arts. They had become a legend as âThe Two BillsâBig and Little,â after Stephenson cabled the Secret Intelligence Service in London, âOUR MAN IS IN POSITION,â on June 18, 1941. A year later, Donovan had set up the basis of the OSS with administrative guidance from Dick Ellis. Without Ellis, wrote one of Donovanâs intelligence chiefs, David Bruce, âAmerican intelligence could not have gotten off the ground.â*
Stephenson would have appreciated, no less than Casey, this revival of ABC unity. The term ABC, used loosely to describe the American-British-Canadian teamwork, arose from a 1941 âreview of strategyâ before the United States had yet entered the war.** The ground had been prepared by British Security Coordination in America, established by Stephenson using the codename Intrepid. The combined efforts of the three countries had won an unpublicized race to build the atom bomb. There were ABC agreements during United States neutrality that resulted in the sabotage of Nazi-held sources of exotic materials for nuclear experiments, and in the rescue (some would say the kidnapping) of physicists from Nazi territories. British experts were secretly moved to the American continent. Canadaâs vast hinterland concealed experimental projects, and in World War II was the free worldâs only source of certain raw materials needed to create an atomic bomb that for a time seemed to be made mostly from the cobwebs of fantasy.
Another ABC creation would prove of utmost concern to Stalin: a Fourth Arm of subversive operations to rank alongside the army, navy, and air force as an arm of the regular defense services. The Fourth Arm had been conceived as the means by which Nazi despots would be overthrown in Europe by local patriots, led by trained guerrillas, aided by saboteurs and other experts in insurrection. A Fourth Arm, if it persisted in the postwar years, would be used against other tyrants, of whom the most obvious was Stalin. And Stalin had been obsessed, even in the worst moments of Hitlerâs war against Russia, with the danger of internal revoltâespecially with the danger of uprisings fomented by that archvillain among anti-Bolsheviks, Winston Churchill, and his American friends.
The violent reaction of Stalin to the Fourth Arm theory of subversion was best known to Dick Ellis, whose first secret-intelligence work during the Russian revolution had earned him Stalinâs personal hatred as a British spy fomenting âcounterrevolutionary forces.â The part played by Ellis in Fourth Arm operations after the first ABC talks revived the Soviet dictatorâs hostility to Stephensonâs deputy.
Having known Ellis, I could well imagine his response to the 1981 reminder that ABC ties still prevailed. The New York Sunday News headlined its report on the OSS dinner: THATCHER BACKS PREZ IN FIGHT TO CURB SOVIET. Ellis would have said this new celebration of solidarity must attract the attention of Moscow Center, that the principals at the dinner were sitting ducks for KGB character assassins. âSowing suspicion is the classic KGB tactic,â he had told me. âTheyâve got a name for it, dezinformatsiya, and a department to direct it.â
TWO
DISINFORMATION AT WORK
Within weeks of the OSS dinner Bill Casey was under attack as unfit to direct the CIA. It took many months for him to survive scrutiny by the U.S. Senate Intelligence Committee. Time magazine commented: âThe character and judgment of Americaâs top spymasters are being questioned around the world.â
The London Daily Mail set off a series of scandals with the front-page flare: M15 CHIEF WAS RUSSIAN SPY SUSPECT. The new upsurge of âspyfeverâ in Britain had begun with serialization of veteran correspondent Chapman Pincherâs Their Trade Was Treachery during the week of March 26. An earnest investigator, Pincher claimed to have uncovered more instances of Soviet espionage than were known to a public convinced that the notorious Kim Philby represented the most serious case of Soviet penetration. Pincher pointed to Sir Roger Hollis, onetime director general of MI5, as having twice been investigatedâwith results sufficiently inconclusive that Prime Minister Thatcher was later moved to attest that it was impossible to prove Hollis a spy.
So on the morning of Friday, March 27, 1981, Russian defector Igor Gouzenko was rousted out to appear on Canadian television. Hooded, out of what some reporters openly suggested was an irrational fear of Soviet reprisals, Gouzenko claimed that his evidence of treachery at the highest levels of British intelligence had never been acted uponâindeed, had been willfully suppressed.
As a friend of Gouzenko, I sat in the studio, surprised by his vehement statements. He seemed especially vulnerable because his credibility had been eroded by thirty-five years of subtle backstabbing. It was ironic that this man who had told me, âStephenson saved my life,â was now exposing himself to danger once more. He was a man of rare courageâsome would say recklessly brave, for he had set out to challenge the agents of Soviet revenge so many times. Few remembered now that, soon after his defection, he had authored a remarkable novel of Tolstoyan quality that revealed his intimate understanding of the methods by which Stalin controlled thoughts as well as actions within his Soviet empire. It was the work of someone better educated and more knowledgeable about the internal workings of the Russian secret police than his attackers wished to admit. They dismissed him consistently as a mere âcipher clerk.â
Stephenson, using his own resources, now believed it vital to reopen the case. One of the reasons the case had been juggled away out of his hands in 1946 was his insistence on the Russianâs right to testify in public. Had Gouzenko been allowed to speak out earlier, to present all his evidence of moles and super-moles in our democratic institutions, the disaster of McCarthyism might have been avoided. Instead, the frenzied response to Gouzenko by hidden bureaucrats left a vacuum that McCarthyâs demagogic and ultimately counterproductive hysteria filled all too nicely, as far as the Kremlin was concerned. The search for Soviet spies degenerated into a decade of witch-hunting.
Stephenson would be up against character assassins again: Gouzenko had already been libeled as a drunk, a spendthrift, and worse. His revelations of secret Soviet successes were distorted and neutralized. Stephenson himself had come under attack. And the reputation of Dick Ellis, his trusted aide, was especially vulnerable. Ellis had suffered interrogation in the sixties, during an earlier outbreak of spy-fever. Even now, Chapman Pincher was saying he could prove Ellis confessed to spying for both Nazis and Russians. Ellis was entitled to have someone spring to his defense. His maverick ways, the distrust he shared with Stephenson of bureaucrats who cultivated an air of infallibility, had shadowed his career. The charges against him were predictable, but Stephenson knew what he knew: the unobtrusive Australian who started out to be a musician had been a brilliant linguist, a tough soldier, and, as he moved undercover between the wars, tracing the tangled threads of Soviet-Nazi collaboration, the very model of eccentric creativity essential to any successful intelligence service.
âI must insist on Ellisâs innocence until, and if, I hear the tape of his alleged confession,â Stephenson cabled the Australian prime minister, whose own security service was now said to have been compromised by Ellis, a founding father. And to the commissioners of a fullblown British investigation into the charges of KGB penetration, he wrote: âThe authors of the allegations against Ellis must be made to reveal their sources.â
Stephenson was on his way to shaking out the truth of the Gouzenko case. He had the contacts. I had the mobility. We resumed an old working relationship. Through the spring and summer of 1981, while the public was treated to the spectacle of Western security agencies being forced once more into self-purification that seemed only to damage their effectiveness, we began our own investigation. Stephenson had been concerned that all through the years, traitors had made use of âofficial secrecyâ to disguise their own activities inside the bureaucracies. âThe best defense against that kind of treachery,â he had long argued, âis public disclosure. It then becomes the best safeguard against KGB misrepresentation, the best antidote to the dottiness lurking in the corners of the institutions of intelligence.â
We met obstacles at each turn in attempting to reassemble the facts behind the Gouzenko case. There seemed to be greater interest in guarding the myths of institutional infallibility than in placing the facts before the public. âThe public is allowed to see only the tip of the iceberg, and itâs little wonder,â Gouzenko told us. âThe iceberg is one on which the armada of Western intelligence has been ripping itself apart since the wartime alliance with Stalin.â
Suddenly, smelling more scandal, journalists in North Amer...