Spies: The Rise and Fall of the KGB in America (98 page)

Officers in the American stations joined in the hunt for imaginary traitors and Trotskyists in their ranks. Before Gutzeit's recall, KGB illegal officer losif Grigulevich met with "Kurt," one of the legal station's officers.
Grigulevich told "Kurt" that he was convinced that letters to Moscow
Center about treason and Trotskyism among the American station's operatives "`that he sent through "Nikolay" [Gutzeit] were being opened
by him and possibly destroyed."' "Kurt" went on to report that Grigulevich claimed "`while he knew an enormous number of documented facts,
he wasn't able to bring this to the center's attention,"' and then he "`immediately added that if I could inconspicuously put his letter in the mail,
he would consider that his party duty as a Chekist [KGB officer] had been
fulfilled. At the same time he instructed me how to perform this operation with the maximum guarantee that the letter would not be opened by
the station chief at the last moment before the mail was sent out., "
Grigulevich charged that the head of Amtorg in America was a secret
Trotskyist, that Gutzeit was "`the protector of this gang,"' and that
Ovakimyan (deputy station chief) had "`begun to turn corrupt"' as well.
"Kurt" bypassed his station chief and sent a report to Moscow but took
care to close his report by casting aspersions on Grigulevich: "`On the
one hand, the exceedingly serious charge against the station and the
deputy chief, as well as the churn. of Amtorg, but on the other, the extremely strange method of communicating with Moscow suggested by "Yuz" [Grigulevich] compels me to raise this question with the center in
a fundamental way-either Nikolay [Gutzeit] indeed is a protector of enemies, or "Yuz" himself is no less our enemy."'9

Shortly after "Kurt" sent his back-channel report, Moscow recalled,
arrested, and later executed Gutzeit. Aware of which way the wind was
blowing, "Kurt" became more aggressive. In January 1939, Ovakimyan,
who had taken over as station chief, sent a letter to Zelman Passov, whom
he mistakenly believed was still chief of foreign intelligence (he had been
arrested and was later shot). Ovakimyan wrote:

""Kurt" began to conduct subversive work among the station's operatives
under the guise of criticism of glaring shortcomings and supposed exposure of
Nikolay's [Gutzeit's] activities. As a result he went so far as to begin having outrageous conversations with "Grimm" [station cipher officer], demanding that
he show him cipher cables and demanding that he (Grimm) automatically refrain from carrying out the chief's orders. Finally a few days later, without any
grounds whatsoever, "Kurt" called "Grimm" a provocateur, suspecting the latter of having told me everything. "Grimm" took all this very hard, and it took
me great pains to temporarily settle this. On his own initiative "Grimm" wrote
me a report on what had happened, which I am sending for your review."10

By April 1939 New York station officer Andrey Graur was back in
Moscow, where he denounced the head of Amtorg and Gutzeit as Trotskyists and added that Ovakimyan was likely complicit in some way. He
had encouraged another officer, Vasily Mironov, to bypass Ovakimyan,
the new station chief, and report directly to Moscow Center. As for himself, Graur wrote: "`Sought in my work to find the origin of the criminal
work that had been done in our representative offices in America and at
the same time not dig so deep as to create a risk that certain employees
of Amtorg, the representative offices, and the station won't return home
[to Moscow]."' (At least two KGB officers did refuse to return. Armand
Feldman quietly disappeared in mid-1938 and fled to Canada. An officer
named Chivin, chief of a small special operations unit, also disappeared.)
Graur went on to state that Moscow Center had been receiving tainted
intelligence: "`I can safely say that our agents are plants intended to divert attention to a false path."' Grigulevich joined him in discrediting the
agents, reporting to Moscow, "`More than 40% of the Am. station's
sources were obvious Trotskyites."' Graur also told Moscow Center what
should be done: -1. Immediately summon Gennady [Ovakimyan] to
Moscow, first without his family, while temporarily turning things over to
his associate [Gligoly] Rabinovich in order to disorient Gennady. 2. Then recall and replace our entire station staff. 3. Immediately cease working
with agents and carefully review the list of agents, who in my view are almost all plants."'I'

In the nightmare atmosphere of the Terror, Moscow Center took
Graur's paranoid fantasy seriously. At the end of September 1939, Pavel
Fitin, the new head of KGB foreign intelligence, sent a memo to Lavrenty
Beria, People's Commissar for Internal Affairs, outlining changes in the
American station. (Fitin was only thirty-two when he became chief of foreign intelligence, and his rapid promotion after a short career in the KGB
was due to the arrest and execution of most of its senior officers.) He did
not adopt the more extreme recommendations of his subordinates but
proposed a severe alteration in the station's operations. Due to the
"`changed international situation in Europe and the existence of contamination both in the staff of the station itself and among agents in the
USA, which could lead to undesirable consequences for us, I think it necessary to conduct all work of the American station with utmost caution
and to minimize meetings with agents."' He suggested a severe cutback
in contacts with those working on the technical intelligence line; "`to meet
only with those agents who are carrying out your special assignment"';
and advocated recalling seven of the station's officers. He noted that
Akhmerov, then head of the illegal station, "`is unknown to any workers
in the department."' Similarly Grigulevich and "Martinez" (an unidentified illegal officer) "`are unknown to anyone in the department."' So devastated was headquarters that none of the current staff knew these three
long-serving illegal officers. And as an additional reason for recall, Fitin
added that Grigulevich and "Martinez" had been sent "`abroad by the
enemies Passov and Shpigelglaz,"' two former heads of KGB foreign intelligence recently executed as traitors. As for the agent networks developed by the American stations, Fitin recommended drastic reductions:
-1. In tech. intelligence, keep io of the 36 agents with whom we are connected. Break off ties with the rest for the time being. z. On the polit.
line, keep 13 of the 59 agents with whom we are connected, and keep io
conditionally; altogether-23 agents. Break off ties with the rest.' "12

Fitin's plan included the recall of Gayk Ovakimyan, the station chief,
who was scheduled to share Gutzeit's fate. Born in the Transcaucasus to
an Armenian family in 1898, Ovakimyan had been a Bolshevik since 1918
and had been imprisoned in Armenia before it was incorporated into the
USSR. After assisting in the Sovietization of Armenia in the early 192os,
he moved to Moscow to study chemistry, and the KGB recruited him for
foreign intelligence work in 1931 while he was in graduate school. After
an assignment in Germany, the KGB sent him to the United States to serve as Gutzeit's deputy, with primary responsibilities for technical intelligence. Formally, he worked at Amtorg and had a fellowship at the
Rockefeller Institute. Under his guidance, the KGB recruited a slew of
technical sources supplying information on topics ranging from oil refining to bacteriological research and occupying jobs in both private laboratories and government institutions.

As the Terror gathered momentum, however, Ovakimyan's successes
in recruiting sources counted for little. Graur and a Moscow Center officer, Senior Lieutenant Butkov, prepared a damning report in September 1939 on his personal histoiy and KGB career. It ominously noted that
when he was studying chemistry at the Moscow Higher Technical School
in 1928, the institution's dean was a "`now-exposed enemy of the people"' and that his station chief during his first assignment in Berlin had
been KGB officer Abram Slutsky, since exposed as an enemy of the people. And, of course, it noted:

"[He] began working in the Amer. station in 1933 as Nikolay's [Gutzeit's] deputy,
and Gennady [Ovakimyan] couldn't help but know about the wrecking activity
that Nikolay was conducting in the station.... As the permanent deputy of the
ex-station chief and enemy of the people Nikolay, Gennady must bear responsibility for the failure to provide Chekist service to Soviet people and to the work
of Soviet institutions in the U.S.... As asst. to the station chief in the U.S. since
Sept. 1933, Gennady not only failed to help expose the station's wrecking work
but, on the contrary, took every measure, it seems to us, either to conceal a
whole host of facts from the home [Moscow] or to confuse it."

Just as dangerous for Ovakimyan's survival was concern that he had relied
too heavily on the CPUSAs Jacob Golos: ""`Gennady" allowed "Sound"
[Gobs] ... to delve deeply into the station's work and made him the principal operative, his work adviser. Gennady doesn't decide the principal
matters of station work without "Sound." All new recruits are checked by
"Sound." "Sound" knows almost every agent. "Sound," meanwhile, turns
up in the testimony of Durmashkin (sentenced to the supreme penalty),
as a secret Trotskyite personally connected to Cannon, and that he and
Cannon jointly infiltrated Mensheviks and Trotskyites into the Soviet
Union from 1920 until recently for counterrev. work."' (Ilya Durmashkin,
a Russian immigrant to the United States, had joined the American Communist Party in the 19206 and worked for Amtorg. He returned to the
Soviet Union in the early 193os and worked in the Soviet printing industry. The KGB's internal arm arrested and executed him in 1938. Durmashkin's admissions recorded in KGB files were one of the typically absurd confessions of the Terror. He stated that he had been an agent of the Tsarist secret police who had infiltrated the Russian Marxist movement;
then a Menshevik who had infiltrated the Bolsheviks; then a Trotskyist;
and, finally, a German Spy.) 13

Earlier Moscow Center had thought well of the technical information flowing in from Ovakimyan's sources. But Butkov and Graur decided
retroactively that the material was of little value:

"a) Gennady [Ovakimyan] personally recruited all sources in chemistry without taking into account interest in defense matters. These agents were and are
the principal supplier of worthless material and the principal absorber of the
enormous amounts of money that the station has been spending.

According to American law, inventions in technology are a state secret for
2 years from the time they go into service in the U.S. Army, and upon expiration of the 2-year period they become merely a company secret. The materials
received from Gennady were, as a rule, z, 3, or 4 years old, i.e. materials that
were easier and safer to obtain. Gennady was an ardent defender of the interests of the `army of scoundrels' that `nourished itself' around our station in the
U.S. b) Gennady took the most active part in the wrecking work method that
the station selected, namely: `Fake it."'

Graur and Butkov also argued that given how many sources Ovakimyan
had recruited and flaws in his espionage tradecraft, the FBI must have
known he was a Soviet operative, and the very fact that it had not moved
against him was more evidence that he was actually under American control. They ended their report, "`On the basis of all of the foregoing, one
conclusion can be drawn-recall Gennady home as soon as possible.' "14

Fitin formally recommended Ovakimyan's recall in October 1939,
Beria approved, and Fitin then secretly contacted Pavel Pastelnyak, then
an officer of the KGB New York station:

"Pavel [Beria] has decided to leave you working in the U.S. as assistant station
chief so that, very soon, after Gennady [Ovakimyan] is recalled home and you
get acquainted with the conditions of working abroad, you can take over things
from him and head up all of the work of the Amer. station. Gennady will be recalled home in the near future. We will notify Gennady by special letter about
your appointment as assistant station chief. Try to make maximum use of this
segment of time to get acquainted with the work of the entire station. You
should have the very best relationship with Gennady Don't give him any indication that you are preparing to replace him. In order to correspond with you
independently of Gennady we are sending you a special cipher, and in the
next few days we will send a reliable cipher clerk who will contact you upon
arriving. All cables from us and to us must go only through this person. Ab solutely no one, including Gennady, must know about our correspondence
with you. Please keep this in mind."

The KGB's chief of foreign intelligence had contacted an officer of the
KGB New York station by a back channel to prepare him to take over
when his station chief was lured back to Moscow to face what was likely
to be a grim fate. Moscow Center was even sending a new cipher officer
to assist with the plot against its senior officer in the United States. It had
convinced itself that Ovakimyan, like station chiefs Gutzeit and Bazarov,
five former chiefs of KGB foreign intelligence itself, and thousands of
other KGB officers, was an enemy of the people and might defect unless
he was decoyed back to Moscow. As for Pastelnyak, he had only limited
experience in foreign intelligence and spoke poor English. He came from
the Soviet border guards (also run by the KGB) and had originally been
sent to New York to oversee security at the Soviet exhibit at the 1939
New York World Fair. When that task ended and with most New York
station officers recalled, the KGB shifted Pastelnyak over to foreign intelligence and made him Ovakimyan's assistant station chief.rs

Ovakimyan received orders to leave New York in March 1940 and return to Moscow via Naples, Rome, and Berlin. He did not go and remained the KGB New York station chief. Did he realize that something
was wrong and find plausible excuses to stay in New York? Did Moscow
Center change its mind? Or had it only decided to postpone matters? Exactly what happened is not set out in the documents in Vassiliev's notebooks or elsewhere. Pastelnyak, however, continued back-channel communications with Moscow Center at least through April 1940.16