The Billion Dollar Spy: A True Story of Cold War Espionage and Betrayal (7 page)

Turner was shaken. Was the KGB listening to their communications? Had they penetrated the Moscow station? Was there a mole somewhere? When a system wasn’t working, Turner felt, the correct response was to fix it. Now he wanted to do the same at the CIA. He took an extraordinary step. He ordered a freeze on CIA operations in Moscow—a total stand-down. The Moscow station was told not to run any agents, not to carry out any operational acts.

The stand-down was unlike anything the Soviet division had experienced before. Turner insisted it would continue until the division could
guarantee
there would be no further compromises. This left many officers in the clandestine service bewildered. Did Turner not grasp the basics of espionage operations? The case officers and their agents were never free from risk. They could
never
guarantee there would be no more compromises.
13

In Moscow, Hathaway was furious; Turner’s action seemed incomprehensible. It ran against everything Hathaway stood for—against his sense of mission and desire for aggressive espionage operations. Instead of running agents, Hathaway’s case officers were forced to sit on their hands. Hathaway kept them busy as best he could, looking for new dead drop sites and making maps, preparing for the day they could resume running spies.
14

Meanwhile, the station began to lose intelligence sources, and one of them was the valuable volunteer from the early 1960s, Alexei Kulak, the KGB scientific and technical officer code-named
fedora
by the FBI. A war hero in the Soviet Union who joined the KGB and was assigned to New York, Kulak walked into the FBI field office in New York in March 1962 and volunteered to work for the United States for cash. He was overweight, a heavy drinker who loved big meals. Kulak served two tours in the United States and in those years was considered an authentic agent by the FBI, but by the mid-1970s they began to lose confidence in him and suspected he was controlled by the KGB.
15
In 1976, Kulak was preparing to return to Moscow, probably never to return to the United States. Hathaway, then getting ready to take the reins as chief of the Moscow station, went to New York City to personally recruit Kulak for the CIA. The meeting, in a hotel room, was filled with tension, as an FBI man berated Kulak and Hathaway struggled to win his confidence. Hathaway won out, and Kulak agreed to work for the CIA once he returned to Moscow. He left the United States equipped with dead drop and signal sites. His CIA crypt was
ckkayo
.

In early July 1977, he filled a dead drop in Moscow for the first time, and the contents were startling. Kulak provided a handwritten list of Soviet officials in the United States who were attempting to steal scientific and technical secrets. Even more promising, he said in the fall he would provide “lists of all Soviet officials and scientists worldwide involved in the collection of U.S. scientific and technical information,” as well as five- and ten-year plans of the KGB’s scientific and technical directorate. This would be a gold mine, a KGB blueprint ten years into the future on one of the biggest issues of the day, Soviet theft of Western technology.

Right on schedule in the autumn, Kulak signaled for the dead drop. But at this point, Turner’s stand-down was in effect, and the Moscow station did not respond. Kulak signaled a second time. The station did nothing. Hathaway was forced to watch as a valuable source was frittered away. The Kulak operation withered.
16

The man who had first approached Fulton at the gas station was standing on a street corner near a market in Moscow on December 10, 1977, looking at the license plates on every car, searching for the prefix D-04 that signified an American diplomat’s vehicle.

More than a year earlier, he had heard an astonishing news report while listening to a Voice of America broadcast on a shortwave radio in his apartment. He learned that a Soviet air force pilot, Victor Belenko, flew his MiG-25 interceptor from a Soviet air base in the Far East to a civilian airport in Japan and defected. It was a daring escape from the Soviet Union, and Belenko was granted asylum in the United States. As a defector, Belenko provided the Americans with an intelligence windfall, surprising new details about the feared and mysterious Soviet interceptor, designed to chase and shoot down the high-flying SR-71 “Blackbird” U.S. reconnaissance jet. In Japan, Belenko’s plane was disassembled by a U.S. and Japanese team, which yielded still more secrets, especially regarding the interceptor’s radar and avionics.
17

The Russian man on the street corner carried a letter in his pocket. Since January, he had been trying to contact the CIA by spotting cars used by the Americans. Starting with his approach to Fulton at the gas station, he had made four approaches, but all were ignored or rebuffed. Then he went on a long work trip out of town and lost track of his quarry. Now he was searching again for the Americans.

At the market, he spotted a car with the plates. An embassy employee got out of the car. The Russian man quickly walked up to him, handed him the letter, and pleaded that it be delivered to the responsible U.S. official.

The embassy employee who received the letter at the market was the majordomo of Spaso House, a portly man who managed the U.S. ambassador’s residence in Moscow. When he brought the letter to the CIA’s Moscow station, Hathaway opened it and found two typewritten pages of intelligence about radars for Soviet military aircraft.

In the letter, the man described how, after Belenko’s defection, orders came down to modify the radar in the MiG-25. He then wrote something that seized Hathaway’s attention. The man said he had access to development of a “look-down, shoot-down” radar system. He also said he could provide schematics for a radar that was becoming the basic unit for interceptors like the ultrafast MiG-25.

Again, he provided some scenarios for a possible contact and said he would be waiting for it on January 9, 1978, in the New Year.

He wanted “to do what Belenko did,” he wrote. But he still did not say who he was.

The next morning, Hathaway went to visit a friend who was a defense attaché in the embassy.

“What the hell is look-down, shoot-down radar?” Hathaway asked, getting right to the point.

The friend replied, “Are you kidding? That’s one of the most important damn things in the world!”
18

Such a radar would allow Soviet aircraft at a higher altitude to spot low-flying planes or missiles against the contours of the earth. At the time, it was believed the Soviet warplanes lacked the capability; the MiG-25 flown by Belenko did not have it. Moreover, Soviet ground-based radars also couldn’t see targets at low altitude, and the United States had spent years preparing to exploit this vulnerability, either with low-altitude bombers or with advanced cruise missiles to fly under the Soviet radars.

Hathaway was frustrated by the stand-down and by Turner’s fears. “What the hell is wrong with headquarters?” he asked. “They have lost their mind! What are we going to do, sit on our ass?”

While he had a healthy respect for the KGB, Hathaway knew they weren’t perfect, and he felt confident the CIA could run agents in Moscow. “You have to understand, everyone in the station, to a man, knew exactly, we can operate against these people,” he said. Hathaway felt Turner wasn’t getting good advice. He insisted that Turner send his close aide, Williams, to Moscow. Once he arrived, Hathaway took him out on a surveillance detection run, to see the KGB’s methods firsthand—methods that were sloppy, even if the surveillance was pervasive. Hathaway and Williams listened to the KGB radio transmissions with the small CIA scanners. “We hit a red light, and we could hear
pomidor! Tomato!
They were dumb enough to yell ‘red light,’ ” Hathaway recalled. He sent Williams back to Langley with a plea: let the Moscow station come back to life. Williams seemed to get the point. But Turner was unmoved, and there was no change in the stand-down.

After delivering the note in December 1977 about “look-down, shoot-down” radar, the man at the gas station was given a CIA code name,
cksphere
.

Hathaway pressed headquarters to examine the information
cksphere
had provided. From the notes earlier in the year and in December, Hathaway saw the man was an engineer at a top secret military research laboratory.

In an internal memo on December 29, headquarters responded with an evaluation. At this point, it was critical to decide: Did the engineer have anything really important to offer? The headquarters evaluation was equivocal:

The subject matter of Source’s reporting, airborne radio location stations, i.e. radars, is extremely important. When he talks about a radar that “can work against the background of the earth,” he is talking about a “look-down, shoot-down” radar. We know that the Soviets do not have a particularly effective look-down, shoot-down radar and that they are working very hard to solve this problem. An effective look-down, shoot-down would pose a serious threat to both the B-52 bomber and the cruise missile and information on Soviet state-of-the-art in this field is responsive to very high priority intelligence requirements. His offer to provide schematics and sketches of current systems would be of considerable assistance to the analysts.

But the evaluation concluded,

The information provided by
cksphere
is of intelligence value but its possession by the U.S. Government does not do grave damage to the USSR.
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Hathaway was stunned. How could headquarters miss the obvious fact that the engineer’s information would indeed do grave damage to the Soviet Union? On January 3, 1978, just six days before the planned meeting, Hathaway sent his own argument to headquarters:

If
cksphere
’s information on the current state of Soviet look-down, shoot-down radar is accurate, the development of an effective LDSD radar must be a very high priority Soviet goal in view of the cruise missile threat. Should the Soviets develop an effective LDSD radar, would detailed information on it be considered in the category of “grave damage to the USSR”? Would detailed information on it enable the US to counter its effectiveness? In other words, assuming
cksphere
is who he says he is, and is in a position to monitor Soviet attempts to develop an effective radar, would it be worth the risk of a PNG?
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The last line about a “PNG” referred to the risk of a case officer’s being expelled or declared persona non grata, as had happened to Peterson.

Hathaway believed the information from
cksphere
was far too valuable for a KGB dangle. They wouldn’t waste military secrets that way. In preparation for a meeting on January 9, Hathaway’s team sent a detailed scenario to headquarters, seeking approval to meet
cksphere
. They proposed a face-to-face walk, to ask the engineer who he was, what he wanted, and whether he had more information to provide. In particular, the station wanted to ask him about a weapons system mentioned in the December note. The engineer had indicated he could obtain schematics for a Soviet radar package code-named
ametist
or “amethyst,” that he had described as becoming the basic unit for interceptor aircraft like the MiG-25. They would also press him for more about look-down, shoot-down radar. Depending on how long that might take, they would set up a schedule for future meetings, with four possible sites designated at thirty-day intervals. The engineer would be encouraged to stuff envelopes through the window of a car, as he had done before.
21

Hathaway was eager to resume espionage operations, to get back in the spying business. He was following the Gerber rules, which meant check out a volunteer, don’t dismiss him out of hand.

The plan went all the way to Turner on January 3, 1978, stamped “SECRET” and “WARNING NOTICE—SENSITIVE INTELLIGENCE SOURCES AND METHODS INVOLVED.”

In a summary memo describing the plan, Turner was told that
cksphere
was “a middle-aged Soviet engineer who has made five approaches to Moscow Station since January, 1977.” The summary memo recalled that the Moscow station did not follow up on these approaches because the man “did nothing” in the first four attempts to establish who he was and out of concern that it was a KGB provocation. Also, there was a desire to avoid an incident while the Carter administration was just settling in. But the summary memo noted that
cksphere
had been more forthcoming in his last note, passed at the market on December 10, 1977.

Was the intelligence really that good? The summary memo, like the earlier headquarters evaluation, was not overly enthusiastic. The MiG-25 radar update “does not do serious harm to the Soviet government,” it said, although look-down, shoot-down radar is “of high priority intelligence interest.”

Under a section titled “Risks,” the memo advised caution. Turner was told,

We have no proof that
cksphere
is a provocation, but his approach to us has many of the earmarks of previous cases that we found to be under KGB control. Even if he was bona fide in the beginning, his several attempts to contact us could have brought him under discreet coverage by the KGB. At best, we view
cksphere
’s bona fides and potential as unproven—in contrast to existing sources in Moscow whom we have not been able to contact during the operational standdown.

Turner was given two choices: Option B was go ahead and meet the engineer on January 9. But the summary memo concluded, “We recommend Option A—do nothing.” The reason? It was too risky. If the operation went bad, the memo said, it could lead to a third expulsion, prolong the stand-down, or even lead to closure of the Moscow station. Rather than contact the engineer, Turner was advised, “Our primary obligation and objective should be to resume secure and productive contact with the proven sources in Moscow.”

Turner agreed—the decision was Option A.

“Do nothing.”
22

T
he engineer still did not give up. On February 16, 1978, more than a year after the first approach at the gas station, Hathaway drove out of the embassy compound onto a side street. He slowed at a dark intersection. Suddenly there was a tap-tap on the window. His wife, Karin, sitting beside him, strained to see and rolled down the car window. The engineer was standing outside, leaned close, and shoved an envelope through. “Give to the ambassador,” he said urgently in Russian. The envelope fell onto Karin’s lap. The engineer turned quickly and disappeared. Hathaway made a U-turn, drove straight back to the embassy, and took the envelope up to the station.

The envelope contained a new letter from the engineer. He wrote that he felt caught in a vicious circle: “I’m afraid for security reasons to put down on paper much about myself, and, without this information, for security reasons you are afraid to contact me, fearing a provocation.” He then scribbled out his home phone number, except for the last two digits. At a given hour in the coming weeks, he promised to stand on a street at a bus stop, holding a plywood board. Written on it would be the last two digits.

Not taking any chances, the Moscow station sent a case officer on foot to look for the numbers, and also sent Hathaway’s wife, Karin. She drove their car by the bus stop, spotted the man, and noted the two numbers.
1

Hathaway again pushed headquarters for permission to respond. The stand-down was still in effect, but Hathaway wanted approval to carry out a simple operational act—to make a contact. As it happened, just as the engineer made his last overture to Hathaway, the Pentagon sent a memo to the CIA expressing great interest in any intelligence about Soviet aircraft electronics and weapons control systems.

That tipped the balance. Headquarters relented and gave the green light to the station for a contact with the engineer.

Hathaway decided they would call him from a public phone on the street, but he knew it was risky; if a CIA officer was spotted by the KGB using a public phone, it might be traced. All the pay phone booths were numbered, and KGB surveillance could easily ask for an immediate trace of the call. On February 26, a case officer from the Moscow station went on a long surveillance detection run to avoid the KGB and then called the engineer’s home phone number from a phone booth. The man’s wife answered, so the case officer hung up. Two days later, the case officer tried again, with the same outcome.
2

On the evening of March 1, darkness had fallen when the engineer approached Hathaway and his wife as they were getting into their car on Bolshoi Devyatinsky Pereulok, a tree-lined lane bordering the embassy compound. Hathaway was unlocking the car door on the driver’s side when he saw the engineer coming, recognized him, and extended his left hand. The engineer quickly placed a packet of taped paper into his hand. In Russian, the engineer said, “Pozhaluista,” or “Here you go,” and Hathaway responded, “Spasibo,” or “Thank you.” Hathaway noticed a pedestrian about twenty yards behind the engineer but did not think the handoff was visible in the dark. The engineer did not break stride as he passed and then slipped away down another side street. Hathaway went back up to the station—telling the guard at the gate he had “forgotten something”—and opened the packet.

Inside, he found eleven handwritten pages, in Russian, on both sides of six large sheets of paper. As before, they were folded inside two other pieces of paper to form a three-by-four-inch package, sealed with white paper tape and light brown glue. There were a few words in English on the outside saying please pass to the responsible person at the American embassy.

The note was the breakthrough they had been waiting for.

The engineer revealed his identity. He wrote,

Since on 21 Feb 78, you did not call me either from 1100 to 1300, nor later, and since on that same evening auto D-04-661 … was parked by house number five on Bolshoi Devyatinsky Pereulok, I assumed (although this seems improbable), that the missing numbers of my phone, shown on the board by house number 32, were not observed from a passing car and could not be written down. To eliminate any doubt, I am submitting basic information about myself. I, Tolkachev, Adolf Georgievich, was born in 1927 in the city of Aktyubinsk (Kazakhskaya SSR). Since 1929, I have lived in Moscow. In 1948, I completed the optical-mechanical tekhnikum (radar department) and in 1954, the Kharkovskiy Politechnicheskiy Institute (radio-technical department). Since 1954, I have worked at the NIIR (p.o. box A-1427). At present I work in a combined laboratory in the position of leading designer. (In the laboratory there exists the following hierarchy of positions: lab assistant, engineer, senior engineer, leading engineer, leading designer, chief of the laboratory.) My work phone: 254-8580. Work day is from 0800 to 1700. Lunch from 1145 to 1230.

My family: wife (Kuzmina, Natalia Ivanovna), 12-year-old son (Tolkachev, Oleg).
3

Just to be sure, Adolf Tolkachev wrote down his home phone number again, 255-4415. He gave his home address, 1 Ploshchad Vosstaniya, apartment No. 57, ninth floor, a distinctive high-rise tower near the embassy, where he had lived since 1955. The building had multiple entrances, so he added, “Entry in the middle of the building from the side of the square.”

Tolkachev also volunteered instructions for how to call him without being detected. If a man phoned, he should identify himself as Nikolai. If a woman, as Katya. Tolkachev said he had spent “hours and hours roaming the streets” in search of U.S. diplomatic cars and, even when he found one, often did not leave a note right away out of fear of being detected. He said he was now desperate for a positive response to his prolonged effort, and if he did not get one this time, he would give up.
4

In the note, Tolkachev provided precious new intelligence, far superior to what could be gained by other means. He reproduced quotations from top secret documents and offered more details about look-down, shoot-down radar. The note included an extremely important piece of identifying information: the postbox number of the institute where Tolkachev worked, A-1427.

The CIA now confirmed that Tolkachev was a designer at one of the two research institutes for Soviet military radars, especially those deployed on fighter aircraft. He worked at the Scientific Research Institute for Radio Engineering, known by its Russian acronym, NIIR. It was about a twenty-minute walk from his apartment.

The time had come to give him a positive response. At last, the Moscow station was revving up again.

The case officer who had made the phone call from the pay phone was John Guilsher. A handsome man, forty-seven years old, with dark eyebrows and graying hair swept straight back, he was quiet and reserved. He loved the outdoors and once aspired to be a forest ranger, but Russia took him in a different direction.

Guilsher’s parents and grandparents had seen their families and fortunes destroyed by the upheavals of the last century in Russia—war, revolution, and exile. Guilsher’s parents, George and Nina, grew up in Petrograd, children of the nobility in the twilight years of the imperial court. They had known each other from childhood. George attended the Imperial Lycée and worked in the tsar’s Ministry of Finance. He later fought against the Bolsheviks after they seized power, serving in one of the White armies that were supplied by the Americans and the British. A brother also served with the Whites and was killed early in the conflict. George was the only member of the immediate family to survive the war. He fled with the defeated White soldiers to Constantinople, landed in New York City in 1923, and was reunited with Nina, who had suffered her own harrowing escape after five years of impoverished, desperate existence in revolutionary Petrograd. They were married in 1927 in New York, where George became a production manager for the equipment manufacturer Ingersoll Rand.

They had three children; John was their second son. He grew up on 122nd Street in New York City in the years before World War II, then the family moved to Sea Cliff, Long Island, after the war. They escaped the summer heat at an aunt’s house in Cornwall, Connecticut. Although they came from well-off families in Russia, they arrived penniless in America, and the early years were lean. When John and his brother were very young, their sister recalled, they were often seen wearing clean and crisp little boy sailor suits, suggesting a certain prosperity. In truth, they each had only one, and their mother washed and ironed them every night. Russian was spoken at home, and their father was often deep in conversation with friends about literature and politics in the Old World. He kept a diary in which he tracked all the historical events of Russia, including specific decrees, birth dates of famous writers and other historical people, and also the saints of the day. He collected Russian stamps and took his sons to museums. John Guilsher had never been to Russia, but Russia was all around him.
5

In 1945, when John was fifteen years old, his father suddenly died of a heart attack. While supporting his mother with summer jobs, including one shoveling out coal furnaces, Guilsher went to the University of Connecticut on a scholarship and studied forestry. His brother had settled far away in Alaska, and John visited him there, enthralled by the big sky and open spaces. When the Korean War broke out, John joined the army but spent his tour on loan to the National Security Agency. In 1955, at the end of his military service, he joined the CIA and was sent to London, where he worked on the Berlin tunnel recordings.

Before his departure to London, he had met and fallen in love with a beautiful young woman, Catherine, known as Kissa, who was also a scion of Russian nobility. Her father had fled the Bolsheviks and settled in Belgrade, where Kissa was born. The family was uprooted again by the upheaval of World War II and fled to the United States. By her teenage years, Kissa had felt the wrath of both communists and Nazis and was eager for a better life. She met John one summer evening in Washington, where she was studying at George Washington University. They were engaged for two years while he served in London and she finished her degree. They married in London in 1957. John was already starting a career in the CIA, but on their honeymoon he wistfully broached the possibility of giving up intelligence and following his dreams to work in forestry in Alaska. Kissa protested, emphatically. Guilsher spent the rest of his career in the CIA.

John spoke Russian with a very slight accent that suggested he was from the Baltics, but his language skills were superb and proved to be extremely valuable in those early years of the Cold War. In the 1950s and early 1960s, he participated in two of the CIA’s most significant operations against the Soviet Union: the Berlin tunnel and Penkovsky.

When Hathaway was assigned to become chief of station in Moscow in 1977, he handpicked Guilsher to join him. They had never served together, but Hathaway knew of Guilsher’s language skills. One day, Kissa and their children were summering at the family home in Connecticut when John called with the news: they were bound for Moscow. She was delighted, despite the hardships. They were going back to the land of their forebears, not as children of the nobility, but to carry out espionage against the Soviet Union. They were unsentimental about it; the Russia of their ancestors had been destroyed by the Bolsheviks. John had been working against the Soviet target for twenty-two years from various posts outside the country. But this job would be different. Previously, he had been a language officer, unraveling the spoken and written word. Now, for the first time, he would be a case officer, running agents on the street, inside the Soviet Union. And Kissa would be helping him.
6

They arrived in Moscow on July 16, 1977. An embassy officer was sent out to meet them at Sheremetyevo International Airport. After they cleared passport control and collected their dog from the veterinary station, the embassy officer confided some shocking news: Marti Peterson had been caught placing a dead drop, and she was leaving Moscow at that very moment from the same airport. John immediately grasped the consequences: Ogorodnik was compromised and would probably pay with his life.

A few weeks later came the Moscow embassy fire, then the second agent was caught, followed by Turner’s order of a stand-down. Guilsher found the mood grim in the Moscow station. The quarters were cramped, and there was construction all around to repair the fire damage.

Guilsher also was a target of close surveillance by the KGB—more so than most. His apartment was bugged. When John and Kissa wanted to talk about anything sensitive, they wrote notes to each other, but carefully, on wood or metal, so as not to leave an impression on the page underneath that could be read later by the KGB. John repeatedly insisted to Kissa that they live a “low key” and mundane life in Moscow, repeating their routines over and over again so the KGB wouldn’t notice anything out of the ordinary—drawing on the 1950s lessons of Haviland Smith. Kissa chafed at the restrictions; she was as outgoing and personable as John was reserved.

The KGB surveillance could be surprisingly unsophisticated. John and Kissa more than once went to a closet to reach for an overcoat, only to find it was missing, apparently taken by the surveillance people to implant a microphone. The coat would mysteriously reappear later. One summer evening, the family decided to meet some friends at a restaurant outside Moscow and discussed the trip over a phone line, knowing the KGB was probably listening in. As they drove, the Guilshers counted no fewer than three surveillance cars in front and behind. Then they got a little lost. One of the KGB surveillance cars pulled off to a side road unexpectedly.The Guilshers didn’t know where they were going, so they just followed. The KGB surveillance took them right to the restaurant.

At the same time, the KGB could also be quite sophisticated. In 1978, inspectors uncovered an antenna in the chimney of the embassy building. The purpose of the antenna was never discovered. Typewriters were examined that year, but the technician did not find any bugs. In fact, the Soviets had begun in 1976 implanting hidden listening devices in IBM Selectric typewriters sent by the State Department to the Moscow embassy and Leningrad consulate for use by diplomats. The bugs, which contained an integrated circuit, would send a burst transmission with data from the keystrokes on the typewriter. Ultimately, sixteen typewriters were bugged and remained undetected for eight years, although none were located in the CIA’s Moscow station.
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