institutions, each worth around $100 million. The genius of the plan was that such a takeover wasn’t illegal at the time under American law — once the sale had taken place, Dawe could appoint whosoever he wished to be his representative on the board. And, of course, that would have been a KGB agent.
A $1.8 million first down payment on the triple transaction was made before an astute agent at the CIA noticed a peculiar lending pattern by the Narodny branch: money was going from Singapore to the Pacific Atlantic Bank in Panama, to the Commerce Union Bank in Nashville, Tennessee, and, finally, by letters of credit, to Dawe in San Francisco. Rather than simply expose Dawe’s actions, the CIA set up Operation Silicon Valley; in October 1975, the Agency leaked their information to the publisher of the Hong Kong financial newsletter,
Similarly motivated by greed was one half of a pair of spies who would gain notoriety under their code names, the Falcon and the Snowman, particularly after a film of their exploits was made starring Timothy Hutton and Sean Penn as the eponymous KGB assets. Although the film was a fictionalized version of events, based on a book by journalist Robert Lindsey, many spy histories have treated it as a documentary.
‘The Falcon’ was Christopher John Boyce, who had taken up falconry as a hobby as a youngster; ‘the Snowman’ was Andrew Daulton Lee, whose nickname derived from his drug-dealing activities. While it was Boyce who found himself in a position to benefit the KGB, Lee was the one who walked into the Soviet embassy in Mexico City in April 1975 offering the secrets. The two had known each other since they were boys; Lee had drifted into drug-dealing while Boyce had been able to find a job working at the TRW Corporation in Redondo Beach, California. TRW had been at the forefront of development of America’s first Inter-Continental Ballistic Missiles, as well as the Pioneer spacecraft for NASA. At the time Boyce was employed there, they operated the satellites in the Defence Support Program, and Boyce worked in the ultra-secret ‘black vault’ room, which housed the coding equipment for the CIA, his job being to change the ciphers daily.
Boyce accordingly had access to some of the most secret material in America, including details of the Rhyolite satellite and its planned successor, Argus, an essential part of the surveillance of both the Soviet and Communist Chinese. He would also see other ‘chatter’, including information regarding the CIA’s alleged role in influencing the Australian labour unions against the then-prime minister Gough Whitlam. He therefore proposed to Lee that he would copy material which Lee could then take to the Soviets and sell — although Boyce would maintain that his primary purpose for his treason was his disgust at American behaviour: ‘I have no problems with the label traitor, if you qualify what it’s to,’ he told an Australian reporter in 1982. ‘I think that eventually the United States government is going to involve the world in the next world war. And being a traitor to that, I have absolutely no problems with that whatsoever.’
Although appalled at the lack of sense demonstrated by Lee in coming direct to the highly watched embassy in Mexico, the KGB realized that they had access to prime material. Over the next eighteen months they not only provided Lee and Boyce with around $77,000 for their efforts (of which Boyce only received around $20,000), but also trained Lee in basic tradecraft. Unfortunately, Lee’s drug use increased with his available spending money, and he became more and more careless.
Boyce eventually travelled with Lee to Mexico, where their KGB handler proposed that Boyce leave TKW and go back to college, with a view to becoming a longer-term agent working for Moscow Centre. Boyce agreed to do one final job — photographing the technical drawings for TRW’s new satellite, the Pyramider. This would net a further $75,000.
Lee missed his rendezvous with the KGB on 5 January 1977, and, in total breach of all tradecraft and common sense once more, threw a package containing the negatives of the designs into the Soviet embassy grounds the next day. He was instantly arrested by the Mexican police, and the films were developed. Lee eventually admitted he was a spy, but claimed he was working on a disinformation operation for the CIA.
Boyce was arrested a few days later. The two men were tried separately; Boyce claimed that the material on Pyramider had been over-classified, since the project didn’t go ahead, and that Lee had blackmailed him into continuing with the treachery. He was found guilty and sentenced to forty years’ imprisonment. He would later escape and go on the run, allegedly planning to fly from Alaska into the Soviet Union, but he was recaptured before he could try. Lee’s lawyers maintained his story that he was part of a CIA disinformation plan, and that both he and Boyce had been abandoned by the Agency when they got into trouble. Lee was sentenced to life imprisonment.
As in Britain, during the seventies the KGB concentrated on scientific and technical espionage against the country they regarded as ‘The Main Adversary’ — the United States. Their attempts to penetrate the inner circles of the Nixon and Ford administrations met with little success, although Secretary of State Henry Kissinger was one of many policymakers to grant favoured access to Soviet ambassador Anatoli Dobrynin, much to the annoyance of the KGB, who wanted to cultivate their own ‘back door’ to the power players in Washington. They had slightly more luck with the United Nations, with KGB agents becoming personal assistants to the secretaries-general from U Thant to Javier Perez de Cuellar. However they had to admit in 1974 that ‘For a number of years the Residency has not been able to create an agent network capable of fulfilling the complex requirements of our intelligence work, especially against the US.’ When Jimmy Carter became president in 1977, attempts were made to capitalize on previous friendly relationships between Soviet officers and Secretary of State, Cyrus Vance, and National Security Advisor, Zbigniew Brzezinski. Neither succeeded. Valdik Enger and Rudolf Chernyaev, two KGB agents at the UN, were arrested by the FBI in May 1978 after accepting classified information about anti-submarine warfare from a US naval officer who was actually working for the FBI and the Naval Investigative Service (the forerunner of the NCIS, as featured in the popular TV show).
The KGB were far more successful recruiting scientists. The Falcon and the Snowman weren’t the only TRW employees engaged by the KGB — a scientist, code-named Zenit, was recruited a year after Boyce’s arrest. There were agents at IBM and McDonnell Douglas, and researchers at MIT, the Argonne National Laboratory and the US Army’s Material Development and Readiness Command. Some of these agents were approached on a personal level by Soviet colleagues in the same field; others worked purely for cash.
Inevitably, some were caught. Dalibar Valoushek, a Czech border guard, had been placed under cover in Canada in 1957, and ten years later become the controller for the KGB’s most important Canadian agent, Hugh Hambleton, whose access to research projects made him an ideal spy. However a year later, Valoushek was moved to New York and ordered to infiltrate the think tank, the Hudson Institute. When this proved unfeasible, Valoushek was removed from the assignment. In 1972, he told his son Peter of his double life, and recruited him into the KGB; Peter was trained in Moscow and sent to McGill University in Montreal and later Georgetown University, looking for students whose parents had government jobs, or other likely recruits. However in May 1977, Valoushek senior was arrested and turned by the FBI.
According to KGB files, for the next two years, Dalibar Valoushek tried to inform Moscow Centre that he was now a double, but no one took any notice. The FBI tried to use him to put pressure on Hambleton in 1980, but the latter was confident that he could not be arrested. ‘A spy is someone who regularly gets secret material, passes it on, takes orders, and gets paid for it,’ he said at the time. ‘I have never been paid.’ The RCMP and the Canadian Ministry of Justice tried to bring charges, but found insufficient evidence. Hambleton was eventually arrested when visiting London in 1982.
Three key KGB agents provided material throughout the seventies: two in the US, one in Europe. John Anthony Walker, Karl Koecher and George Trofimov were all busy during this period, passing classified information often in exchange for large sums of cash.
Walker had volunteered his services to the Soviets in 1967 when he was working in the communications room for the US Navy’s submarine operations in Norfolk, Virginia: ‘I’m a naval officer,’ he told staff at the Soviet embassy in Washington. ‘I’d like to make some money and I’ll give you some genuine stuff in return.’ The first item he stole was a key list for an old cryptographic machine — which, it was later suggested, led directly to the North Koreans’ desire to capture the US spy ship, the USS
