Weekly Intelligence Notes #18-03
13 May 2003

WIN 18-03 dated 13 May 2003
Weekly Intelligence Notes (WINs) are produced and edited by Roy Jonkers for non-profit educational uses by AFIO members and WIN subscribers. RADM (ret) Don Harvey contributes articles to selected WINs  


Editor's NOTE: See Section VI for "Intelligencer" errata announcement.


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FBI Asset Indicted

            Senate Committee Report on Intelligence Authorization



UK Mole within the IRA Identified



Information Technology Advisory Committee (PITAC)

            Is Your PC Infected with "spyware"??



Lost Crusader

            Editor's Notes



Intelligencer Erratum

            AFIO National Luncheon

            Internet Surveillance Conference



Ed M. Writes on SOE URL Correction




FBI ASSET INDICTED -- Mrs. Katrina Leung, 49, a longtime FBI asset in Los Angeles, was charged today on five counts of copying national security documents (from the allegedly unlocked briefcase brought to her home by her handler, also reportedly her lover, veteran FBI agent James Smith), and for having these documents in her possession. Justice Department officials reportedly believe that Ms. Leung was a double agent for China for about two decades beginning in the early 1980's, but the indictment returned on 8 May stops short of charging her with espionage. Among the documents Ms. Leung allegedly copied from Agent Smith's briefcase were a 1997 report on Chinese fugitives, a transcript of a conversation Ms. Leung had with a Chinese handler named Mao, and a telephone list related to an FBI investigation into Chinese nuclear espionage. 

      Ms. Leung, a businesswoman and Republican political fund-raiser who is prominent in the Chinese-American community in Southern California, was recruited in the early 1980's. The FBI paid her $1.7 million over the next two decades to provide intelligence on Chinese espionage in the U.S. that was reportedly used in high-level briefings to the White House. Mrs. Leung's indictment came one day after former Special Agent Smith (retired) was indicted on six counts of wire fraud and gross negligence for allowing Ms. Leung to take the documents and for lying to his supervisor about their affair and about her reliability.

      As noted in previous report, the case is murky, as these operations often involve 'wheels within wheels,' but the FBI is obviously taking this matter most seriously. They have been assessing the damage done. Each of the FBI's thousands of informants and assets are being checked, along with the information they provided. Lie detector tests are being used in select cases. In addition, agent handling procedures are being examined.

       The internal intelligence review comes as Justice Department Inspector General Glenn A. Fine is putting the finishing touches on a classified 600-page report on the case of Robert Hanssen, once a top FBI counterintelligence agent, who was sentenced last spring to life in prison for spying for Russia and the former Soviet Union. Hanssen's case produced changes at the FBI, including regular polygraph tests for counterintelligence agents and closer scrutiny into their financial backgrounds. We must await the results of the current review for further changes that Director Muller will undoubtedly make, hopefully without throwing out the baby with the bathwater. Traitors and deceivers are few, but always with us. These few do not represent the overwhelming bulk of hard-working dedicated intelligence professionals in the Intelligence Community or the FBI. The 'system' must encourage and support them, while having effective mechanisms for detecting aberrant behavior.

      Meanwhile, Mrs. Leung is in jail. Agent Smith is out on bail. Another FBI agent, also one of Mrs. Leung's lovers, is free and cooperating with the investigation. Mrs. Leung's husband is proclaiming his wife's innocence. More to follow. (Jonkers) (NYTimes, 9May03 //E. Lichtblau)  (AP 7 May 03 //C.Anderson) (www.fbi.gov)  (http://customwire.ap.org/dynamic/stories/F/FBI_SPY_CASE?SITE=DCTMS&SECTION=HOME)  


SENATE COMMITTEE REPORT ON INTELLIGENCE AUTHORIZATION -- The Senate Select Committee on Intelligence (SSCI) has released a Report on the Intelligence Authorization Act for FY 2004, Senate Report 108-44, dated May 8. Some selected points of interest:


(1) Recalling its futile effort to criminalize all "leaks" of classified information, the Committee asked the Administration to revisit the issue yet again -- "Understanding that such a broad [anti-leak statute] measure still appears to lack political support... the Committee wishes to encourage the Executive Branch to adopt a new and more aggressive approach to leak issues.  The Committee recommends that the U.S. Government consider the workability of aggressive criminal and civil enforcement, even civil compensatory remedies (e.g., liquidated damages)."


(2) The SSCI report authorizes funds for research "leading to the development of alternatives to the polygraph as a security evaluation tool for the U.S. Government."


(3) The Committee requests reports on intelligence community data mining capabilities, security clearance procedures, and intelligence lessons learned from the war in Iraq.


(4) The report asks the executive branch to review the executive order on classification policy in order "to facilitate information sharing and data access across the Intelligence Community."


(5) The Committee directs the National Security Agency to develop a pilot program that would permit analysts in other intelligence agencies "to obtain access to and analyze data collected and held by NSA, while retaining appropriate handling safeguards."


(6) And the Committee incorporates the proposed Freedom of Information Act exemption for "operational files" of the National Security Agency, a proposal that also appears in the pending Defense Authorization Act. (Secrecy News No. 40, May 12, 2003)     (http://www.fas.org/irp/congress/2003_rpt/srpt108-44.html) (The Intelligence Authorization Act (S. 1025) itself may be found at: http://www.fas.org/irp/congress/2003_cr/s1025.html)



UK MOLE WITHIN THE IRA IDENTIFIED -- The exposure of Freddie "Scap" Scappaticci from west Belfast as a double agent known as 'Stakeknife' has left the IRA Provisionals stunned. He was one of the IRA's key men in tracing down informers who were later interrogated, tortured and shot dead. He is also suspected of tipping off security chiefs involved in the undercover operation when three Provos were shot dead by the SAS in Gibraltar in 1987. The IRA leadership has ordered an immediate review of its internal security as British military authorities made arrangements for a new life for one of their top spies in Northern Ireland. Even though Scappaticci, 45, once a close associate of the Sinn Fein president Gerry Adams, will be given a new identity and moved abroad, he will face questions by the team of officers headed up by Metropolitan Commissioner John Stevens who is investigating collusion involving military intelligence, police Special Branch and republican and loyalist paramilitaries. (Jonkers) (IC Wales News, May 12) (PPC News)




INFORMATION TECHNOLOGY ADVISORY COMMITTEE (PITAC) -- President Bush announced May 8 that he plans to appoint 25 new members to the President's Information Technology Advisory Committee (PITAC), which offers advice on maintaining America's dominance in advanced information technologies. The panel is to provide information to the president, Congress and federal agencies involved in IT research and development, and helps guide the administration's efforts to accelerate the development and adoption of IT policies for the nation.(Levine Newsbits 05/09) (http://www.fcw.com/fcw/articles/2003/0505/web-pitac-05-09-03.asp)


IS YOUR PC INFECTED WITH "SPYWARE"?? -- Most free file-sharing programs, such as Kazaa, Morpheus, BearShare, and Grokster, contain spyware programs that track users' habits as they swap songs and other digital files. Does it seem like your computer has a mind of its own? When you go on the Internet, for instance, does it seem like you're always seeing the same pop-up advertisement for a new car? Or perhaps every time you open up a Web browser, it takes you to a strange site that offers free games or a search engine that you've never heard of? Chances are you're one of the many millions of Net surfers whose computer has been infected with so-called spyware -- programs that can monitor your online habits, change your computer's settings, and send Latest News about personal information back to advertisers. (Levine05/09) (http://www.newsfactor.com/perl/story/21485.html)



LOST CRUSADER: The Secret Wars of CIA Director William Colby, by John Prados, Oxford University Press, 2003 (Reviewed by David Wise). -- It is surprising that no one previously attempted a biography of Colby, because his story is in many ways also the story of the CIA. From Italy to Vietnam and the controversial Phoenix program, to the military coup in Indonesia, to Watergate, the prosecution of Richard Helms, the congressional investigations of CIA assassination plots, Colby was there, on the ground or deeply involved at headquarters.

           Although written in generally dry, academic style, Prados's study is richly detailed (sometimes overwhelmingly so), and he has mined newly declassified documents and scores of interviews to reveal some previously undisclosed gems. For example, the minutes of a secret 1975 meeting of the National Security Council attended by President Ford reveal Henry Kissinger grumbling, "It is an act of insanity and national humiliation to have a law prohibiting the President from ordering assassination." Apparently Ford was not convinced; a year later, amid disclosures of how the CIA had hired mafiosi to try to poison Fidel Castro, he issued his executive order banning assassination. (Ed. Note #1)

            Prados, a historian and author of 10 other books on national security, has difficulty deciding whether to draw his portrait of Colby in black or white. Which may be understandable, since the CIA director was so low-key, contained, and self-effacing a figure that he fit and indeed tried to personify his own concept of the perfect spy -- a "gray man." Born in Minnesota in 1920, Colby as a boy spent three years in China, where his father, a U.S. Army officer, protested the murder of a black soldier at a cost to his own career. At Princeton, Colby was too poor to join an eating club; he waited on tables in the cafeteria.

        When World War II came, Colby joined the OSS, precursor of the CIA. He had learned to ski as a high-school student in Burlington, Vt., and parachuted into Nazi-occupied Norway as head of a 100-man sabotage unit. After the war, he went to Columbia Law School, then joined the Wall Street firm of Gen. William J. "Wild Bill" Donovan, who had been head of the OSS. Not long after, a former OSS pal recruited Colby into the fledgling CIA, where he ran so-called stay-behind nets in Scandinavia. This was a program to cache weapons and radios for an underground that was supposed to materialize if the Soviets overran Western Europe. While ostensibly serving as a Foreign Service Officer in the Stockholm embassy, Colby recruited 1,000 or more Swedes for the network.

            Posted to Rome, he clashed with James J. Angleton, who later became chief of counterintelligence, and whom Colby, as CIA director, fired two decades afterward. It was the early 1950s, and the CIA was spending hundreds of millions on political action to shore up Italy's Christian Democrats. (Ed. Note #2).
        By 1960, Colby was station chief in Saigon and then head of the entire CIA operation in Vietnam. According to Prados, Colby thought the United States could win the war by supporting President Ngo Dinh Diem, but the Kennedy administration thought otherwise and encouraged the generals who overthrew and killed him. The intrigue in Washington, Langley and Saigon surrounding the 1963 coup was a rat's nest; Prados struggles manfully, with only partial success, to penetrate it. (Ed. Note #3)

        By 1965, with Colby now head of the CIA's Far East division, the military in Indonesia overthrew Sukarno, bringing about a regime change long favored by the agency. In the bloodbath that followed, Amnesty International estimates that more than a million people died. "The full panoply of CIA assistance to the Indonesian military remains shrouded in secrecy," Prados writes. But the United States turned over hundreds of names to the military, and he quotes an unnamed CIA officer as saying that a secret review by the agency "admitted much broader engagement in the bloodbath." (Ed. Note #4)

            But it was back in Vietnam, to which Colby returned in 1968 as director of "pacification," that he became forever tarred by the Phoenix operation, a dark page in the history of the Vietnam War. Phoenix was a program aimed at "neutralization" of the Viet Cong network in South Vietnam, a euphemism that all too often meant torture and murder. Although Colby testified to a House investigating committee in 1971 that Phoenix was "not a program of assassination," Prados makes clear that "there was plenty of killing in Phoenix" and "success was defined by locking people up or killing them." Still, Lost Crusader misses an opportunity to define the Phoenix program and Colby's precise role in it clearly once and for all. (Ed Note #5)  

            Back in Langley, Colby became CIA director Richard Helms's chief subaltern in trying to contain the Watergate scandal for Richard Nixon. In 1977, Helms was prosecuted and convicted for misleading Congress about the CIA's role in Chile; it was Colby who had referred the matter to the Justice Department, an act for which the CIA's old guard never forgave him. Then, during the Church and Pike committee investigations of the intelligence agencies, Colby, albeit reluctantly, gave up the "Family Jewels," a 693-page compendium of CIA abuses that totally alienated him from his buttoned-down and button-lipped colleagues. He waved a CIA dart gun at a Senate hearing, and he talked. There is an irony here because, while Colby did reveal the agency's sometimes felonious misdeeds, the truth, as Prados points out, is that he "cooperated just enough" to save the institution to which he had devoted his life. He died in 1996 on the Maryland shore, drowned while canoeing alone one April evening, adding a slight touch of mystery to the end of a clandestine life. (Ed. Note #6).
        If at times Prados is too admiring of his subject, there was nevertheless much to admire in the courage that Colby showed when he parachuted behind Nazi lines in World War II to blow up rail lines in Norway, and when he opened the Pandora's box of CIA abuses to public scrutiny. He paid dearly for revealing the agency's transgressions, but he was comforted by the knowledge that what he did was right for his country and his conscience. By portraying William Colby's life in all its nuances, Lost Crusader makes an important contribution to intelligence literature.  (Review by David Wise, slightly abbreviated by WIN Editor.  David Wise is the author of "Spy: The Inside Story of How the FBI's Robert Hanssen Betrayed America.") (WashPost 27 April 2003 /Book World p. 6)




Note #1 -- Ref. Assassinations of foreign heads of government, this policy appears to be   currently observed 'with exceptions.' Generally, poison or bullets seem to be out, missiles and bombs are in. (Jonkers))


Note #2 -- The US, along with other states, has been active in overtly and covertly influencing selected foreign electoral and policy outcomes. In Italy the CIA was deeply involved in the early 1950's. We spent millions and were just barely successful in preventing a communist government. It was a crucial victory. One must look at these efforts realistically (rather than emotionally) when considering and countering the efforts by foreign covert influence operations in the US, such as those surfaced again recently in the FBI - Chicom espionage case or the earlier Johnny Chang affair, exploiting the dark underside of American politics (politicians for sale). (Jonkers)


Note #3 -- The assassination of President Diem, with the consent of the US government, was in this editor's opinion at the time, and still now, one of the most baffling and damning political disasters of US policymaking of the Vietnam War. Colby was absolutely right. (Jonkers)


Note #4 -- The killing of communist party members went out of control in Indonesia. But in context, during the Cold War we treated communists as they treated anti-communists when in power. It may have been a "Cold" war (contained) at the top, but there was plenty of Hot War action, including two outright, bloody US wars (Vietnam and Korea) and brutal action below deck, including pursuit and killing of adherents on both sides. (Jonkers)


Note #5 -- The Left literature has never recognized the brutal nature of VietCong communist operations and terrorism. There now is applause for going after Islamic and Arab terrorists that was lacking during the war against the communists. The Phoenix operation, along with the Chieu Hoi (psywar) operation (this editor's experience in VN), were pragmatic war operations, and as successful in countering the Vietcong as was possible given the US political environment and military decision-making. If Phoenix was "notorious," our current war on foreign terrorism must also be. Ideological nonsense. (Jonkers)


Note #6 -- Whether it was necessary to do what Colby did to "save" the CIA is the author's or reviewer's opinion and an open question, not a firm conclusion.  There is no doubt, however, that the process of the Church/Pike Hearings and investigations did enormous damage to US intelligence operations (and assets) by multitudinous leaks and compromises as well as public political grandstanding.  Intelligence leaders in the Agency and Defense feared the worst for national security. (The formation of AFIO, as well as NMIA, was a minute reaction and expression of that fear). Colby's course of action during the Church-Pike Hearings was controversial, to say the least. But times were rough, emotions high. National Security was being severely damaged. The hemorrhaging had to be staunched. DCI Helms was convicted by outsiders, DCI Colby got bashed by insiders. The CIA survived and is riding high again. (Jonkers)



INTELLIGENCER ERRATUM -- A significant and unfortunate error was discovered in the latest edition of "Intelligencer" just mailed. The scholarships funded by the Harold and Maria Ransburg Foundation, announced on pages 83 and 96, mis-identified the name of the scholarship. Please take pen in hand and correct both entries to read " The Harold and Maria Ransburg American Patriot Scholarships."  (It now refers to "Julius" and Maria etc) The editor was reading a book about Julius Caesar, and unfortunately transposed the names. Mr. Harold Ransburg was a tremendous help to AFIO in years past.  Mrs. Maria Ransburg, who is interested in fostering patriotism in our youth, has generously continued to provide funding for scholarships and assistance to AFIO. We owe them both a debt of gratitude. As for me, mea culpa, and apologies. Too much to do, getting old. (RJ)


AFIO NATIONAL LUNCHEON: Tuesday 24 June 2003 at the Holiday Inn, Tysons Corner, McLean, Virginia, 10:30 (registration begins), Program - 11 a.m. our first speaker is John Prados, author of "Lost Crusader" (see review Section IV above), who will talk about his book on DCI Colby. After lunch (three course, salad, roast beef, desert, coffee) the 1 pm speakers will be Milt Bearden (CIA ret) and James Risen, NYTimes journalist, who will talk about "The Main Enemy: The Inside Story of the CIA's Final Showdown with the KGB." Registration $27.50 via email or phone/credit card (703-790-0320 or afio@afio.com)The author's books will be for sale and they are willing to autograph. (RJ)


INTERNET SURVEILLANCE CONFERENCE -- will be conducted 05/29/03 & 05/30 at the Hilton McLean, Tysons Corner, $1,395 registration fee.  Covers legal surveillance and infrastructure protection. Contact Tatiana Lucas, tel 703-734-2639 or email talucas@telestrategies.com  (NOT an AFIO conference)




Ed M. writes on SOE URL Correction --Near the end of the WIN #17-03, the URL on the latest UK SOE file release was given as http://www.pro.gov.uk/releases/april2003/list.html. The correct URL ends with .htm not with .html.  (http://www.pro.gov.uk/releases/april2003/list.htm)

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