100 SECR4 T CONTROL/U. 13.

OFFICIALS ONLY
S E CUR ITY INFORMATION

liomp5mikT
IA-6

Copy No /6

CENTRAL INTELLIGENCE AGENCY

• Paper Mills
and
Fabrication

DECLASS IF I ED AND . RELEASED BY

CENTRAL INTELLIGENCE AGENCY
SO URCESMETHOOSEXEMPT ION 3B211
NAZI WAR CR IMES DISCLOSURE ACT
DATE 2006

• FEBRUARY 1952

HS /CSG437 SECURITY INFORMATION

•4116;VECRET CONTROL/U. S. OFFICIALS ONLY
,OCT
9
 WARNING
This material contains information affecting
the national defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.

ti .
 13MSECRET CONTROL/U.S. OFFICIALS ONLY

PAPER MILLS AND FABRICATION

Table of Contents

Page

I. INTRODUCTION
A. The Problem 1

B. Definitions 2
C. The Primary Danger 2
II. DISCUSSION
A. Emigre Politics and U.S. Intelligence 3
B. Money, Manpower and Fabricators 4
C. Soviet Opportunities 5
D. U.S. Evaluation Problems 8
III. REMEDIAL ACTION
A. Source Control 10
B. Specific Remedial Steps 10
APPENDIX
Introduction to Attachments 13
A. The ZAKO Group 14
Annex A (Chart) following page 16
Annex B 17
Annex C 20
B. The Chinese Nationalist Services 22
Chart following page 23
C. Misinformation from Brussels 25
Chart following page 32

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Page

D. The London Polish Intelligence Services 33

Chart following page 35

E. The JEVDJEVIC Case 37

Chart following page 38

F. The MACEK-KREK Group 39

Chart following page 41
G. The SCATT'OLINI Case 43
Chart following page 45
H. The TREMPER-RIESS-ASENDORF Fabrication 47

I. The VUCETIC Case 49

J. The CH'EN Fabrication 53

K. The LIN Fabrication 55

L. The "Politburo Minutes' 'Case 57

M. The THEP Fabrication 60

N. The HENROTIN (USSA) Fabrication 62

0. The Case of the "Soviet-Czech Uranium Treaty' 64
P. The Case of the `Soviet-Austrian State Treaty' 67

Q. The VASILIADES Fabrication 70

R. The AMOSS Fabrication Effort 72

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NOTE ON CLASSIFICATION:

Readers will note that pages 1 through 12 are classified 'SECRET,' where-

as pages 13 through 79 are classified 'TOP SECRET.'

The SECRET portion of this study consists of a descriptive review of the

problem of intelligence paper mills and fabrication as it affects U.S. intelligence

agencies. The SECRET classification is designed to facilitate circulation within

these agencies.

The TOP SECRET portion of this study documents the problem with spe-

cific case histories. This material, as single cases and collectively, is of a sensi-

tive character and is not intended for wide dissemination, or for indoctrination

or instructional purposes. It is included to lend emphasis to the seriousness of

the problem presented in the SECRET portion.

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PAPER MILLS AND FABRICATION

"Six Hungarian intelligence peddlers in Graz (British Zone, Austria)

have formed a pool to distribute refugee information through all
available channels to one buyer each of the British, French, U. S.
and Italian intelligence services ... Remuneration to refugees re-
porting to a pool member varies from 30 to 100 schillings plus one
dinner. The pool partners discuss the latest news at the Cafe
Erzherzog Johann, amend it from their own knowledge, and construct
their reports. Then they determine the distribution to avoid double
appearance with any single Western power ... Secret ink messages
are superimposed on innocent letters from Hungary and offered for
sale ... Some letters thus prepared are smuggled into Hungary for
mailing, and then sold sealed to Western representatives.'

(From an OSO/CIA Austrian

Station Report, 8 August 1951)

I. INTRODUCTION

This staff study on the paper mill and fabrication problem was prepared
at the request of the Director of Central Intelligence following a presentation
to the Intelligence Advisory Committee on 9 August 1951 of a Hungarian emigre
paper mill case. OSO/CIA reviewed all its major pertinent cases to arrive
at the views and suggestions outlined below. Eighteen representative cases
were selected to illustrate the problem and are included in the Appendix.

A. THE PROBLEM

The paper mill and fabrication problem has appeared in many forms
including outright fabrication, the sale of pseudo-intelligence, false confirma-
tion and multiple distribution of both valid and false information, as well as
organized deception by foreign governments.

U.S. intelligence agencies (as well as all Western intelligence agencies)

are being flooded with such information. It is estimated that more than half
of all the material received on several countries of greatest intelligence inter-
est falls into these categories. U. S. estimates are thus endangered and our
intelligence efforts are needlessly dissipated.

Multiple dissemination by paper mills operated by exiles from the

Soviet bloc cuts particularly deeply into the professional manpower resources
of all agencies. Working independently of each other, our intelligence agencies
have not yet developed a mechanism for benefiting methodically from their
common experience in order to remedy this situation.

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B. DE FMTITIONS

Paper mills are defined as intelligence sources whose chief aim is the
maximum dissemination of their product. Their purpose is usually to promote
special emigre-political causes while incidentally financing emigre-political
organizations. The information thus conveyed consists of a mixture of valid
information, overt material, propaganda and fabrication. Its bulk, form and
obscure origin frequently preclude successful analysis and evaluation.

Fabricators are individuals or groups who, without genuine agent re-

sources, invent their information or inflate it on the basis of overt news for
personal gain or a political purpose.

The line between the two categories is difficult to draw and both, there-
fore, have been included in this study. Cases A through F in the Appendix fall
essentially in the paper mill group; cases M through R are fabrication examples;
cases G through K bear characteristics of both; and case L may involve planned
Soviet provocation.

C. THE PRIMARY DANGER

The fact that Soviet deception or provocation is suspected in only one

of the cases presented, and not proved in any, does not imply that we are
merely concerned with the problem of wasted manpower and funds. As long
as the current lack of coordination among our intelligence-gathering agencies
continues, the Soviet Government possesses a tremendous capability of plant-
ing deception and provocation material in U.S. intelligence channels at the
moment of its choice.

Competent fabrication has defied recognition on the part of our analysts

and evaluator's. Well-planned deception or provocation is apt to prove unde-
tectable by analytical processes. We cannot assume, therefore, that more
than a fraction of the number of actually existing cases in these categories
have been identified. The established professional competence of the Soviet
intelligence services coupled with their known preoccupation with deception
and provocation - or, as they term it, 'disinformation' - forcibly points up the
danger confronting U. S. Intelligence.

This staff study is primarily intended to call attention to the nature of

this danger, and to outline remedial action which may in time make the decep-
tion weapon less effective in the hands of the Soviet Government and reduce
Soviet opportunity for employing it.

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II. DISCUSSION

A. EMIGRE POLITICS AND U.S. INTELLIGENCE

1. Motives

U. S. intelligence-gathering agencies have spared neither man-

power nor funds to close the vast gap between our information requirements
and our knowledge of the Soviet bloc. Groups of exiles from all target countries
have recognized that this situation offers them vast opportunities for political
and personal advantage. Their intelligence representatives are well aware of
the multiplicity of American agencies uncritically accepting all information
offered, and even outbidding one another for intelligence sources; their own
experience often proves to them that American agencies do not fully coordinate
their efforts, nor effectively cooperate to expose fraud.

Satellite politicians in exile know that they cannot return to power

in their homelands except in the wake of war and Western victory. The liberal
monetary remuneration offered by Western intelligence agencies for informa-
tion from behind the Iron Curtain offers them a ready-made opportunity to re-
main alive and to preserve a political organization by peddling alleged intelli-
gence. Careful operational analysis has demonstrated that few, if any, emigre
organizations have valid and unique intelligence assets; they lack primarily
the technical communications and documentation facilities for continuous con-
tact with the homeland. Despite this, the unfortunate fiction has persisted
that such organizations have undefined special means of obtaining intelligence.

Exile leaders neither understand nor respect the basic premise of

U.S. policy not to engage in war unless attacked. Their "intelligence' produc-
tion, true, embroidered, or false, is inevitably used to influence U.S. policy in
the direction of hostility to the Soviet bloc and to satisfy the ambitions of politi-
cal pressure groups.

To state the obvious: each exile group, as each sovereign country,

must be expected to use the weapons at its command in its self-interest, en-
lightened or otherwise. Emigre groups consider intelligence production a
weapon to be so used. Yet the record of U.S. dealings with them shows that in
case after case we have ignored the fact that the satisfaction of U.S. intelligence
needs is clearly secondary to their own political interests. (Cases A through
F bear out these points and are typical of most other exile intelligence organi-
zations known to OSO.)

One effect of this cry-wolf policy on the part of the emigres is that
our recognition of their efforts to mislead may result in our ignoring a report
giving true cause for alarm at the crucial moment.

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2. Emigre Intelligence Resources

Immediately after the war, several exile groups had manpower as-
sets behind the Iron Curtain. Hasty, uncoordinated, and totally insecure opera-
tional use of these assets by both emigre groups and Western intelligence agen-
cies permitted the Communist security services to identify and destroy them,
or to use them against us. Initial failure in the West to recognize the ruthless-
ness and efficacy of the Soviet-type police state contributed to this process
which, generally, was completed by 1950.

In view of this, nothing can be achieved by further uncontrolled sub-

sidies to exile groups. Assertion of operational control by U.S. intelligence
officers through financial or other means will normally be resented and sabo-
taged by such groups since it strikes at the roots of their political purposes.
Generally, it has been found advisable not to deal exclusively with the political
leadership, but to take advantage of dissidence within the groups and to make
it plain that we value intelligence production on our terms more highly than
the leaders' political cooperation. The leaders, finding personal control of
their groups effectively endangered, are then apt to come to terms.

This strategy is being followed increasingly in those operations in-

volving satellite exile groups over which OSO/CIA has control. However, un-
less all intelligence agencies also recognize these principles and effectively
suppress extraneous, uncoordinated aid to these groups, the uncontrolled infor-
mation-peddling pattern described in this survey will certainly persist.

B. MONEY, MANPOWER, AND FABRICATORS

1. Inflation

The fact that substantial funds for intelligence procurement are

available to numerous agencies has actually become a handicap. Exile groups
and individual intelligence peddlers know that cost is no object to U.S. intelli-
gence personnel. Innumerable instances are on record in which payment for
both good and bad information was wholly out of proportion to its true value.
U.S. financial liberality and competitive bidding among agencies has led to
inflation in the intelligence market. Quality intelligence is seldom to be found
in pieces of paper upon which a peddler has placed a price-tag.

From the financial point of view, OSO/CIA has developed a pattern

of overseas operations which observes the following conditions, with variations
in their application, of course, from case to case:

a. Control of agents should include their direct financial de-

pendence upon the intelligence officers handling them.

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b. Salaries of agents and sub-agents should be based upon

sound estimates of actual living costs in indigenous terms, and ex-
ceed these only moderately. Excessive personal compensation,
particularly when it is used to encourage volume of production, is a
common cause of padding and fabrication.

c. A portion of the agents' earnings should be withheld in

special blocked accounts until their services are satisfactorily com-
pleted.

d. Unless the use of funds available to agents for operational

expenditures is closely controlled, security breaches or the purchase
of embroidered and fabricated material will result.

e. Subsidies to foreign intelligence services and groups must

be carefully watched to prevent their financing of recognized paper
mill operators and fabricators.

Virtually all outright fabrication cases cited in this study (see

especially cases G, H, I, K, M, 0, and R) can be attributed primarily to dis-
regard for factors such as these.

2. Manpower

U.S. intelligence agencies abroad have reacted in various ways to the

problem of uncoordinated spending on intelligence procurement, provided they
were aware of it. Local coordination on a limited scale has taken place spon-
taneously in some areas. Some OSO/CIA field stations, concentrating their
available manpower on procuring good information, have paid no attention to
U.S. competitors in the field; others have treated the problem as one of counter-
espionage. For the most part, however, efforts have been made' to establish the
origin of all information from the area, regardless of the agency purchasing it
(see cases A, C, D, E and H). The attendant waste of professional manpower
overseas has been prodigious. It is estimated, for example, that one-third of
OSO's intelligence officers in Austria were committed during June 1951 to the
detection and neutralization of fabricators and paper mills.

C. SOVIET OPPORTUNITIES

The attached cases primarily show that, under present conditions, un-
scrupulous information peddlers find it easy to sell their product, and foreign
special-interest groups have a means of influencing U.S. policy. A more dan-
gerous aspect than either of these, however, is the opportunity afforded the
Soviet Government of planting deception and provocation in U.S. intelligence
channels.

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1. USSR Intelligence Operations

The Communist concept of intelligence operations, patterned on the

Soviet model, embraces a much broader field than does the Anglo-American.
Far from being limited to seeking information through clandestine operations,
it includes within the scope of 'state security' a great variety of tasks designed
to maintain the Communist Party in power and suppress all opposition. This
means that all activity which can be construed as even critical of the state be-
comes a priority intelligence target.

The Communist security services accordingly make every effort to

penetrate and control emigre movements abroad which may endanger their
regime. This is an easy task. Emigre groups operate openly in the West with
little regard for security, and normally admit as members anyone who voices
his anti-Communism strongly enough to be heard and who cannot be positively
identified as a Communist agent. This pair of facts--that penetration and con-
trol of the opposition abroad are among the most important Soviet and satellite
intelligence tasks, and that they are so easily accomplished--leads us to assume
that emigre groups can keep only few secrets from the Soviet and satellite
governments, and that Soviet and satellite agents are high in the councils of
such organizations.

2. Deception Planning

There can be no reasonable doubt, furthermore, that Soviet and

satellite intelligence services have the same easy access to the bulk of the
emigre 'intelligence' product as we do. (Charts appended to cases A through
G will serve to illustrate this point.) It follows that Soviet intelligence analysts
are apt to have a grasp of the extent of U.S. information on the Soviet bloc
procured from such sources. They are thus able to base their deception plan-
ning on a thorough knowledge both of U.S. intelligence procurement methods
through exile groups, and of much of the information in U.S. hands against
which deception is likely to be checked.

The lengths to which the Soviet Government will go in keeping track

of emigre activities can best be illustrated by two historic cases:

a. The TURKUL Case

In 1941, Longin IRA, Chief of Intelligence of General Anton

TURKUL's White Russian organization, the Russian National Union of War
Veterans (RNSUV), placed his intelligence resources at German disposal in
return for political and financial support of the RNSUV.

From Sofia, Budapest and Ankara, during the course of the

war, IRA produced more than five thousand reports, chiefly on Soviet troop dis-
positions and movements. He never consented to divulge the identify of a single
source to the Germans, but the fact that so much of IRA's military information
was found to be confirmed induced the Abwehr to give his material a high eval-
uation.

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At the end of the war British and American interrogations

revealed that IRA's intelligence production on Soviet Order of Battle was sup-
plied by the N.K.V.D. By passing accurate information in part, the Soviets
sacrificed an inestimable number of their own troops. TURKUL, when faced
with the evidence, conceded that IRA had been an N.KV.D. agent since 1939.
Considerable suspicion remains that TURKUL himself was under Soviet control.
IRA, under interrogation, denied that he received his information from the
Soviets, but conceded that he invented all of it. This is a patent impossibility
considering that so much of IRA's information was actually confirmed and
could not have been obtained by him through Balkan gossip or overt channels.

Although the precise Russian deception plans executed

through this channel are not known there is little doubt that they played their
part in Russia's successful campaign against Germany. The arrangement in-
cidentally served to maintain a close Soviet check on the military contributions
made to the Germans by the RNSUV and General VLASOV's organization.

' b. The Ligne Interieure

During the nineteen twenties and thirties, in France, Soviet

Intelligence obtained control of the Ligne Interieure, an °elite secret group'
within the strongest Russian emigre organization of the day, the General Russian
Military Union (ROVS). The Ligne Interieure had been designed by the ROVS
for the centralization and political control of Russian emigre groups, especial-
ly those of military usefulness. This aim naturally appealed to most White
Russian emigres; however, since the Ligne Interieure was under Soviet control,
it simultaneously served the purpose of making virtually the whole White
Russian emigration subject to Soviet inspection and manipulation. In 1935 this
Soviet control was exposed when the head of the Ligne Interieure, the Soviet
agent General SKOBLIN, was discovered to have organized the kidnapping of
General Yevgeni MILLER, then head of the ROVS. His intention had been to
replace MILLER with a Soviet-controlled substitute. In subsequent investiga-
tions the background of the Soviet conspiracy outlined above was uncovered in
detail.

The circumstances of the OREKHOV complex (described in

case C) resemble those which brought about Soviet control of the Ligne
Interieure. However, no actual evidence of Soviet control in the OREKHOV
case is on hand.

3. Possible Soviet Deception Intentions

The considerations outlined above do not lead to an automatic as-

sumption that information received from emigre groups is planned Soviet de-
ception or provocation. We lack substantial evidence that the originators of
fabrication were, or are, agents of the Soviets, that the material has been sup-
plied to them by Soviet Intelligence, or that it constitutes Soviet deception.

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(See, however, case L.) On the other hand, it is known that the Soviets are
masters of deception and provocation, and are willing to accept extraordinary
sacrifices in terms of true information passed, such as in the TURKUL case
cited above, in order to make deception stick at the proper moment. This
leads to the conclusion that the Soviets may be using the present to digest their
information and further to develop potential deception channels and materials,
reserving deception operations for more crucial international circumstances
than now prevail.

D. U.S. EVALUATION PROBLEMS

So much false, overt, biased or irrelevant information is being received

and processed by U.S. agencies that, as this study demonstrates, the ability
of U.S. analysts and evaluators to sort the wheat from the chaff has been af-
fected. For example, half of all Order of Battle information on the Hungarian
and Red Armies in Hungary received by G-2, GSUSA, can be traced to General
ZAKO's mill (see case A), and more is suspect.

1. Analytical vs. Operational Methods

The theory that analysts in Washington are in a position to detect

deception or fabrication rests on the assumption that they have verified
Material at hand against which they can measure their reports. Under the
pressure of the volume of invalid material they must process, with little veri-
fied "control" material to go by, evaluators must rely on their personal skill
and instinct. Their judgment is thus increasingly subject to human error.
Analysis alone, whether on a high or low level in U.S. intelligence, has been
unable to break fabrication or deception cases except when the material lacked
quality. (See cases H, L, M, N, P, and Q.) Evaluators are handicapped not
only by their ignorance of the operational circumstances under which the in-
formation is procured, but by the amount of processing and re-processing to
which it is subjected before it reaches them. Translations, revisions, and
summaries of spurious information frequently eliminate the flaws which might
allow an analyst to detect a fraud in the original. This study bears out the
total experience of OSO/CIA that the only method by which fabrication and
multiple false confirmation can be detected is that of operational investigation
of the source and transmission channels, combined with reports analysis.

There can be no doubt that the Soviets are fully capable of planting
information in our intelligence channels which has all the earmarks of being
genuine. Only by careful scrutiny and cross-checking of the channels through
which such deception material has been forwarded can we hope to reduce the
danger.

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2. Intelligence Fallacies

Unfortunately, the following doctrines, which are fallacious and

detrimental to the U.S. intelligence effort, are still widespread among the
personnel of our intelligence agencies:

a. That intelligence agents of all nationalities are entitled to

keep secret from their U.S. intelligence officers the identities, ante-
cedents, methods of operation, and means of access to information
produced, of their subsouxces.

b. That it is the mission of intelligence officers in the field to

procure information without a determined attempt to ascertain its
origin, leaving it to the experts in Washington to judge its validity.

c. That overseas sources are in danger of compromise if

identities are revealed to other agencies of the U.S. Government
which were established, trained and equipped to protect such infor-
mation properly.

The last mentioned concept has bred a jealousy among intelligence

officers of various government agencies which has prevented a long overdue
exchange of information on fabricators and paper mills. As a result, an ex-
cessive amount of professional manpower had to be devoted to costly overseas
investigation where simple headquarters coordination of suspect sources would
have revealed duplication or fraud.

3. Static Intelligence Sources

The steady concentration of U.S. intelligence agencies on military

targets in the Soviet bloc, and the small influx after 1946 of knowledgeable new
sources, have tended to solidify the intelligence market. Since 1946 all agencies
of the Government have been dealing, with increasing frequency, with identical
intelligence sources. This makes a systematic program of centralized regis-
tration of sources both necessary and profitable.

III REMEDIAL ACTION

In this staff study the most important factors and dangers inherent in
the paper mill and fabrication problem have been outlined. It is hoped that all
U.S. intelligence agencies will examine the problem from their own -points of
view. In practical terms, CIA realizes that an immediate solution is not to be
expected along the lines of a complete coordination of operations, with high and
uniform standards of operational procedures, expenditure of funds, and reports
evaluation. While the need for this is indicated, the inter-Agency coordination
and training effort involved is bound to be long and intricate.

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A. SOURCE CONTROL

In the face of the danger of becoming victims of Soviet provocation and

deception, it behooves U.S. Government intelligence agencies immediately to
take the most promising available steps to cope with the problem. These, in
the view of CIA, chiefly involve application of the principles of source regis-
tration and control, as contemplated by that portion of the National Security
Act of 1947 which imposes upon the Director of Central Intelligence a respon-
sibility for the protection of U.S. intelligence sources and methods, and by para-
graph 4 of the National Security Council Intelligence Directive No. 5, which
states: °When casual agents are employed or utilized by an LAC Department or
Agency in other than overt capacity, the Director of Central Intelligence shall
coordinate their activities with the organized covert activities.'

The statement made in the discussion above that professional manpower

was wasted in the investigation of the origin of spurious intelligence must be
qualified to this extent: The results of such investigations, as well aiinforma-
__tiorr-onTiliuine sources available to OSO/CIA C.
The counterespionage jurisdiction of OSO/CIA carries with
it the responsibility C
of protecting the Government against 'disinformation.'

Over the years C_

= information on foreign intelligence sources of the U.S. Gov-
ernment. Because of the stream of material from overseas on paper mills
and fabricators, most of the participants abroad in these conspiracies to de-
fraud and unduly influence the U.S. Government, as well as a large number of
their intermediaries and minor colleagues, are by now adequately identified
C.

B. SPECIFIC REMEDIAL STEPS

Below are listed the major steps by which the necessary source control
can be applied. They will necessitate, of course, the cooperation of the [AC
Agencies in adapting their respective procedures - primarily by requiring the
identification of sources by field representatives to headquarters - to the tech-
niques of source control.

1. All intelligence agencies should run checks C_

on all foreign sources directly or indirectly used by them, in order to take
advantage of any available information which may cast doubt on such sources.

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2. All intelligence agenciesC

information on suspect intelligence sources.

3. It may be advisable to establish an inter-Agency committee, probably

a sub-committee of the IAC, to deal with paper mill, fabrication and deception
problems, as well as with the further development of the mechanism of source
control. Such a committee would provide a means not only for deciding further
policy questions, but also for exchanging sensitive operational data where
necessary or advisable.

4. To facilitate the analysis of paper mill and fabrication cases, each

Intelligence agency should maintain special files of suspect information. These
files should consist of reports believed to have originated with fabricators and
paper mills, and should be organized by subject matter. They should be ex-
changed with other intelligence agencies, and easily accessible to operations
officers, reports officers, analysts and evaluators, who should be trained and
encouraged to compare incoming information with suspect materials.

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INTRODUCTION TO ATTACHMENTS

The eighteen attached cases were prepared on the basis of official OSO/
CIA records. With few exceptions, there has been no opportunity to examine
relevant information which may be available in other agencies of the Govern-
ment. It should be assumed that additional dissemination channels exist or
have existed in most of the cases under consideration.
Each case is presented as fully as possible within these limitations.
Operationally sensitive channels and relationships are included. While dis-
cussion among officers of CIA and other agencies of the Government is clearly
called for as a step toward solving the problem of fabrication and multiple
distribution, it must be emphasized that, with proper handling and controls,
many of the groups and channels described may still be of use to U.S. Intelli-
gence. Inclusion on a chart or in a case history does not by itself imply that
CIA attaches no current or future value to a given channel of information.
A solid line on a chart indicates definite evidence on hand concerning
the operation of a given channel; a broken line means that, on the basis of
incomplete or circumstantial evidence, it can be assumed that a given channel
is being or has been used for reports dissemination. The fact that most
charts show the operation of multiple distribution channels over a period of
years is not intended to imply that all indicated channels were used simultane-
ously throughout the period.

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4. The attached diagram (Annex A) shows the manner in which MHBK

reports are received by CLA, other U.S. agencies, and foreign governments. In
brief, the NIRBK channels information through its cut-outs and blinds to eactrof
the major Western services and to most of the collection agencies in the United
States. The chart is not definitive as other channels are being detected fre-
quently.

5. ZAKO's intelligence chief stated recently that, because of the emi-

gration from Western Europe of courier and support personnel and the pene-
tration and arrest of MHBK agents in Hungary by the AVH, the MHBK now had
no regular channels of communication or organized sources of information in
Hungary. During a recent attempt to obtain NCFE (National Council for Free
Europe) support for his "resistance activities,' ZAKO admitted that there were
at most nine persons in Hungary on whom he could reasonably depend. None-
theless, the MHBK continues to pour reports into Western intelligence channels
through numerous cut-outs who claim to control organized networks but who
deny or conceal their connections with ZAKO. (See Annex B for an example of
a single fabrication which was received by OSO in six separate reports from
various intelligence services.)

OSO Experience

6. Both the Vienna Station and OSO headquarters have been interested
in the MHBK ever since 1947, and ZAKO has made a number of approaches to
various offices of CIA since the spring of 1948. His efforts to get U.S. support
have increased in frequency during the past year. The output of his organiza-
tion is received primarily through liaison with Western intelligence services
and from ZAKO representatives in the U.S. who are in contact with several
Government agencies. The full significance of the group in the Hungarian in-
telligence picture became clear in the course of a Headquarters analysis begun
in the summer of 1950. Since that time OSO has been able to identify a number
of MHBK outlets by comparing reports and by checking their sources against
the extensive name data on MHBK members which have been compiled by the
OSO desk from field reports.

Conclusions

7. It is OSO's conclusion that MHBK reports are based entirely on refu-

gee debriefings, or on clever rewriting of overt publications garnished with out-
and-out fabrication. This has been largely confirmed by the fact that MliBK
material duplicates reports known to have been derived from refugee debrief-
ings, as well as by the evaluations given to individual reports. (See Annex C
for an example of the type of report disseminated by the MHBK )

8. The full effect of these spurious reports on national estimates can-

not be assessed by OSO. It can be assumed that some of the information re-
ceived from this source has been incorporated in the basic intelligence used for
the formulation of national estimates.

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.444 SECRET CONTROL/U.S. OFFICIALS ONLY

 4130 SECRZT CONTROL.
U. S. OFFICL;LS ONLY

MHBK OUTLETS
1950-51

Origins: Refugees Fabrication

Zako (MI-IBK) Innsbruck

FARAGO/Ne w York RFE

}Public
VECSEY/Vieona FEPS

4 "Bolletino Danunia_no". Rome

"-- Publications "Hungaria, Munich
- Unio Press Service-, Innsbruck
Public

`---.MEGYESSY/Brus sel s Alien in New York

and Canada }CIA
.__lORY/Austria Alien in New York
\
\
(Dutch IS
IS
— -- —Royal Yugoslav IS Italian IS
French IS
IS

KAPITANFFY/Austria Austrian Police 050/Austria

,..._—KOLLENYI/Salztsurs 050/Germany

HORTHY/Portugal 050, C

LAZAR/Salzburg CIC/USFA

MI-es (IS)/Austria

BIS ii0S0t.0
//
U. S. M. A.

`'--BOROSNYAY/London-- —

•--SDECE/Austria

FIB oso c
l u .s. M. A.
L.-BAK/Paris
'''--RATKY/Austria -LISZAY/Italym\
Italian IS

l.--SZAKVARI/Rome G-2

KOZMA/ANDRASSY/B russets - — — Belgian LS

1/4--SZANTAY/Madrid Spanish IS U. S. M. A.

ORB AN/Zurich Swiss IS U.S. M. A.

'•--FERENCHALMY/P o rtuga l— ----Portuguese IS U.S. M. A.

ECKHARDT/via shing1nn State

"Paragrarn Research" FBI

A- 2/05I Germany A

larrt-ECR ET CONTROL
U. S. OFFICIALS ONLY
, I I

116110SECRET CONTROL/U.S. OFFICIALS ONLY

Annex B

MHBK Fabrication Received by OSO

In Sex-tuplicate, via Various Channels

The following are excerpts from six reports on "The International

Brigade' in Hungary which G-2, Department of the Army, does not believe
exists. The sources of these reports have but one common denominator, con-
tact with the MHBK. It is concluded that the information was fabricated by the
ZAKO group. These six reports were obtained through CIA channels, and it is
assumed that more information of this type was received independently by other
United States agencies.

1. Source: Royal Yugoslav Intelligence Service network in Land Tirol,

Austria.

Date: 22 June 1950.

'Headquarters of the International Cominform Brigade in

Hungary is located in Bakony. Soviet General Simkov is commander. He is in
charge of the activities of the brigade, training and equipment.

Structure:
Staff Headquarters
8 Infantry battalions
2 paratroop battalions
2 heavy machine gun battalions
14 batteries of varied artillery weapons
2 anti-tank companies
3 Commando-type assault companies
2 radio telegraph (telephone) companies
3 air squadrons. At present one squadron has only 8
'f iat" pursuit planes, the other has 5 "ja' transport
planes, and the third only two light bombers of the "Tat"
model. The units were only given these planes for the
purpose of training on the Topolca Airport.
1 transportation battalion with approximately 150-200
automobiles of various capacities.
1 pioneer battalion
1 police battalion
1 division field hospital.'

2. Source: Italian Intelligence Service.

Date: 17 August 1950.

'Reported organization of this international brigade in Hungary is

as follows:
8 infantry battalions
12 batteries of artillery
1 scout battalion
1 paratroop battalion at Papa.'

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 1

IOSECRET CONTROL/U.S. OFFICIALS ONLY

3. Source: Dutch Intelligence Service.

Date: 24 August 1950.

"The International Brigade in Hungary will consist of eight motorized

infantry battalions, one battalion of parachutists, two armored bat-
talions, two intelligence battalions, one military police battalion,
twelve artillery battalions, and two independent airforce battalions."

4. Source: A Royal Yugoslav Intelligence Service network in Italy.

Date: 1 October 1950.

"The International Brigade in Hungary is made up of the following

units:
8 motorized infantry battalions, each battalion consisting
of 600 to 800 men.
2 tank battalions, each battalion consisting of 300 men.
1 paratroop battalion of some 800 men.
1 political police battalion of some 800 men.
12 artillery batteries, each battery comprising 130 men.
2 communications companies, each company consisting
of 150 men.
2 autonomous squadrons, each squadron consisting of
150 men.
2 companies of Yugoslav citizens to be used for sabotage
activities, the total equaling 250 men. Commanding and
auxiliary officers totaling approximately 700 men.'

5. Source: 00-B Report from "Hungarian church channels.'

Date: 19 October 1950.

'The strength of the International Partisan Brigade in Hungary is

put at a minimum of 7,000, some sources feel that 11,000 is nearer
the mark. On paper the military strength of the partisan units is
divided as follows:

8 infantry battalions
3 parachute battalions
14 light artillery batteries
2 reconnaissance battalions
1 police company (military police)
1 transport squadron (company)
2 pursuit squadrons (company).'

18

SECRET CONTROL/U.S. OFFICIALS ONLY

 0100SECRET CONTROL/U.S. OFFICIALS ONLY

6. Source: French Intelligence Service (SDECE).

Date: 24 October 1950.

The International Brigade in Hungary is composed of:

8 infantry battalions
3 parachute battalions
14 light artillery batteries
2 reconnaissance battalions
1 police company
1 auto-transport company
3 aviation pursuit companies."

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„ LI 1 1

V. SECRET CONTROL/U.S. OFFICIALS ONLY

Annex C

Evaluation of a Sample,MHBK Report

on Soviet 0/B in Hungary

Report Number 00-B-36476, "Soviet Military Strength,* 20 July 1951,

one of a series obtained by the Office of Operations indirectly from the
is
MHBK in Innsbruck, Austria. It is reviewed below as an example of the type
of fabricated information produced by this group. Evaluations of specific items
were prepared on the basis of the G-2 "Order of Battle Summary of Foreign
Ground Forces' (#9 of January 1951 and 410 of April 1951) and checked with
the G-2 analyst concerned.
Paragraph 1. 'Soviet strength in Hungary numbers about 55 to 60,000 men.
They are divided into representations of seven divisions
Evaluation: There are only two Soviet divisions in Hungary with
a maximum of 30,000 troops, including Air Force, ground and
support units.
Paragraph 2. `One armored division is southwest of Balaton in the area
around Zalaegerszeg and Nagykanizsa ...”
Evaluation: There is no armored division in this area. There is
a slight possibility that smaller units subordinate to the 17th
Guards Division are stationed in this region, however.
Paragraph 3. 'One motorized engineer division has been in the Szombathely-
Kormend area for a very long time. Smaller units of this divi-
sion are stationed in the Soviet Zone of Austria in the Burgenland."
Evaluation: No mechanized engineers division is known to exist
anywhere in the Soviet Army. The 17th Guards Division is in
Szombathely, but none of its units are stationed in Austria.
Paragraph 4. 'The Vienna motorized infantry division has units reaching deep
into Hungary along the Danube, with troops stationed at Gyor
and Komarom. They are an infantry regiment, an artillery unit,
and a large quartermaster depot.'

Evaluation: The 13th Guards Mechanized Division has its head-

quarters in Vienna, but no subordinate units in Hungary. The
Central Group of Forces, with headquarters in Baden, has four
or five signal companies along the line of communication through
Hungary to the Soviet Union, but no infantry, artillery or quarter-
master depot.

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*IP SECRET CONTROL/U.S. OFFICIALS ONLY

 Vae*SECRET CONTROL/U.S. OFFICIALS ONLY

Paragraph 5. "Another armored division is settled northeast of Balaton, occu-

pying the area about Szekesfehervar, Haj masker and Varpalota..."

Evaluation: There is no Soviet division in this area. Again, it

is possible that reference is made to minor units of the 17th
Guards Division at Szombathely.

Paragraph 6. In the northeastern sectidn (of Hungary), motorized infantry,

amounting in strength to about a battalion, are scattered about
and seem to be units of a Soviet division stationed at Szatmar."

Evaluation: There are no Soviet units at Szatmar.

Paragraph 9. 'The divisions reported about Csanad and Csongrad have been
withdrawn _31

Evaluation: No Soviet divisions have been in Csanad or Csongrad

since the end of the war.

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 SECRET CONTROL/U.S. OFFICIALS ONLY

Case B: The Chinese Nationalist Services

1. The uncontrolled multiple dissemination of intelligence reports by

numerous agencies of the Chinese Nationalist Government creates the outstand-
ing g papermill n problem currently confronting U.S. intelligence collection and
consumer agencies. These reports cannot be ignored since, taken as a whole,
they contain much information of value, but must be screened for factual ac-
curacy and possible false confirmation by skilled evaluators who, in turn, can-
not screen them properly without some knowledge of their origin.

2. The importance of the problem under consideration is underlined by

the fact that nearly hall of the intelligence on China which is currently being
collected by OSO comes from Chinese Nationalist sources. More than one-
fourth of the total, in fact, is derived from a highly successful relationship
with one leading.Chinese agency, v , in which OSO is able
to identify many ultimate sources on the Chinese mainland. It Should be noted
that it is not OSO's relationship with this intelligence organization, or with
other Chinese Nationalist agencies producing or transmitting intelligence, that
is the cause for concern, but rather the fact that an undetermined and probably
very large proportion of the same information which OSO receives and dis-
seminates to its normal customers among U.S. Government agencies reaches
those agencies through a variety of other channels.

3. Thus, on many occasions U.S. agencies have received reports on

subjects of considerable interest which appeared to confirm other reports known
to have originated with the Chinese Nationalists, only to discover later on that
related Nationalist sources, or the same source, had been responsible for both.
For example, Nationalist reports of Soviet submarine activities in the Far
East are sometimes forwarded via Nationalist attaches or other local repre-
sentatives to the offices of.U.S. Army, Navy, and/or Air Attaches in several
Asiatic countries, as well as to OSO and other U.S. representatives in Formosa.

4. OSO has long been aware of this situation and its inherent dangers,
but has not been able to prevent the Chinese Nationalist intelligence services
from passing their products to numerous other departments of the Nationalist
Government and thus having them disseminated through many different outlets,
both official and unofficial, to U.S. and foreign agencies. (See the attached
chart.) Past OSO efforts to induce the Nationalist Government to designate the
distribution of reports given to U.S. agencies have proved fruitless, apparently
because; (a) it is in the Nationalists' interest to have certain types of informa-
tion falsely confirmed; for instance, it was obviously to their advantage, from
the standpoint of their physical security, to have the U.S. Government believe
Soviet submarine strength in the Far East to be greater than it actually was;
and (b) the Nationalists themselves do not always know what distribution has
been given to intelligence originated by them. OSO believes that they allow a

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WODSECRET CONTROL/U.S. OFFICIALS ONLY

 Vie SECRET CONTROL/U.S. OFFICIALS ONLY

large part of their intelligence production to be disseminated at the discretion

of local offices, and in return for a satisfactory quid pro quo, so that it would
be 'inconvenient for the individual Nationalist officials concerned, as well as
for the Government as a whole, to adopt a system of designated distribution.
Moreover, political cliques within the Government pass or withhold informa-
tion depending on whether or not it undermines or favors the position of their
competitors. In short, the problem of motivation which underlies the multiple
distribution of intelligence by Nationalist agencies is exceedingly complex be-
cause there is seldom just one governing factor, unless it is the factor of con-
venience.
5. The Nationalist Government is quite frank in acknowledging its prac-
tice of multiple dissemination, and indeed maintains that this is clear evidence
of a wholehearted desire to cooperate with U.S. officials on every level and in
every connection. It argues that it cannot reasonably refuse to accede to the
many requests for information made by various U.S. representative.

6. Some of the information received by the U.S. Government is also

furnished by the Chinese Nationalists to the British, the French, and all South-
east Asian nations, and possibly even to a number of other countries.
7. Since it is impossible for U.S. agencies to do anything about controll-
ing the original distribution of intelligence material by the Chinese Nationalists,
It is of the greatest importance that every effort be made to identify such
material as being of Nationalist origin wherever and whenever it is received
In behalf of the U.S. Government. OSO has no basis for arriving at an accurate
judgment on how extensively Nationalist-produced intelligence, unrecognized or
inadequately evaluated as such, has affected U.S. national estimates or the esti-
mates of other Western nations, but OSO does believe that it has certainly in-
fluenced them to some degree. The fact that so little is known about the prob-
lem within the U.S. Government serves to make it the more acute, and empha-
sizes the vital need for the establishment on a Government-wide basis of a
secure, commonly understood, and efficient system of source evaluation.

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 114' SECRET CONTROL/U.S. OFFICIALS ONLY

CHIANG 1948-Present

Origins: Agents on Mainland Refugees Guerrillas Embroidery

CHINESE NATIONALIST SERVICES:

Private Chinese—. Ministry of >C 3 * > Ministry of <---)-Ministry of
Nationalist Nets Foreign Affairs Interior National Defense

President's Limited distribution to

Office certain foreign individuals State

Foreign Military Attaches G-2

Members of Special Missions
Far East Command

Department of State State

Members of Special Missions

OSO

Unknown
OSO
Foreign Military Attaches (?)— -- —G-2
Uncontrolled Distrib.

State
Chinese Embassies in Uncontrolled Distrib.
foreign countries

OSO
{_State
Military Attaches G-2

NrSECRET CONTROL/U.S. OFFICIALS ONLY

 WI/SECRET CONTROL/U.S. OFFICIALS ONLY

Case C: Misinformation from Brussels

1. Since the war, Brussels has vied with Vienna for the dubious distinc-
tion of being the leading place of origin of misinformation deliberately invented
to serve a political purpose, slanted and sensationalized for financial gain, or
"planted" for deception purposes by the Soviet Government. The major share
of the misinformation emanating from Brussels is attributed by OSO to a White
Russian group headed by Basil OREKHOV, who edits an emigre periodical called
Chassovoi (The Sentinel). His collaborators, only a few of whom can be dis-
cussed in this paper, are located in Great Britain, Spain, France, Sweden and
several African and Near Eastern countries. Other purveyors of spurious in-
formation in Brussels are Andre MOYEN, alias Captain FREDDY, sensational-
ist writer and intelligence peddler; and Augustin Pedro URRACA Rendueles,
generally known as PEDRO, a Spanish intelligence representative. All of them
trade material back and forth, and disseminate it independently to representa-
tives of those Western intelligence services who are still willing to deal with
them despite a six-year record of unreliability. The largest and best-organized
single element in the Brussels picture is the OREKHOV group.
Background of OREKHOV
2. Basil (Vasili Vasilyevich) OREKHOV was born in Orel, Russia, in
1896, became a captain in the Imperial Russian Army, and served during the
Revolution and the Civil Wars in the White armies of DENIKIN and WRANGEL.
He left Russia in 1920 with WRANGEL's army, lived in Turkey for a short
time and then in France, and since 1934 has resided in Brussels. He founded
Chassovoi with the aid of General WRANGEL.
3. As early as 1934, OREKHOV alleged that he had intelligence sources
within the USSR, among Red Army officers who were preparing for the over-
throw of the Soviet Government. So far as is known, the identities of these
sources were never disclosed, and the rapid loss of confidence in OREKHOV
on the part of the French, Polish and other intelligence agencies receiving his
reports at that time suggests that he was unable to demonstrate the validity
of his claims.
4. During World War II, OREKHOV served as an agent of the Abwehr
in Switzerland. In consequence he was investigated by the Belgian services
after Germany's collapse and briefly imprisoiled on charges of collaboration.
He escaped punishment, however, after pleading that he had secretly worked to
disrupt the activities of units of the Vlassov Army in France.
5. In May 1947, OREICHOV resumed the publication of Chassovoi
which had been interrupted during the German occupation, and became one of
the founders and leaders of the Centre National Russe (CNR), organized for
the stated purpose of welding together all Russian exile groups in order to
establish a Russian national army and overthrow the Soviet regime. The

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ECRET CONTROL/U.S. OFFICIALS ONLY

FULLL
 Re SECRET CONTROL/U.S. OFFICIALS ONLY

CNR's program bears a striking resemblance to that of the Ligne Interieure,

which operated under proven Soviet direction within the largest White Russian
emigre group of the 1930's, the General Russian Military Union (ROVS). Evidence
of Soviet penetration of the CNR is available, but it comes from dubious sources.
Whether or not the Soviets have succeeded in achieving penetration of the CNR at
a high enough level to control its activities is thus open to speculation, although
it is known that such control is a primary objective of Soviet Intelligence.

OREKHOV Information

6. Various prominent members of the CNR have trafficked widely in

propaganda and intelligence material, through both overt and covert information
channels, and alleged first-hand information on the USSR, Soviet intentions, and
Soviet activities abroad is being disseminated by the group. Generally this infor-
mation is sensational in character, and frequently it purports to name chief Soviet
agents and collaborators in various countries. Recently, its subject matter has
tended to relate particularly to countries in North and Equatorial Africa and the
Middle East. Thus, during 1950, CNR-OREKHOV reports have dealt with allega-
tions concerning Soviet plans for military invasion of Africa, Soviet subversive
activity in Ethiopia and Communist infiltration in French West Africa. Typical
examples of unconfirmed and, with little doubt, fabricated reports are those on
the "Lutte des Jeunesses contre l'Imperialisme Colonial," described as a link
between the Cominform and the Colonial Section of the Soviet Politburo, and on
the "Suvorov Plan," concerning Soviet military operations in Western Europe.

7. Duplicates of this type of report have been received by most of the

intelligence services of the Western powers through Russian emigre groups every-
where. The material originates in OREKHOV's Brussels group. There is little
doubt that this group is primarily motivated by a real desire to overthrow the
Stalinist regime in Russia, and to replace it with a neo-Czarist type of govern-
ment in which the pre-1917 elite would be returned to power. Within this frame-
work, individual members of the group vie for Allied support in their efforts to
maneuver themselves into important positions among the emigres and thus assure
themselves of positions of leadership upon their eventual return to Russia.

8. However, Soviet Intelligence, White Russian emigre politics and the

need to keep emigre organizations financially solvent are not the only considera-
tions involved; Belgian industrial and colonial interests also are implicated. With
the approval of Baron Paul de LAUNOIT, one of Belgium's most powerful industrial
figures, who controls the Societe de Bruxelles pour la Finance et l'Industrie
(BRUFINA) with its large colonial holdings, Marcel DeROOVER, a BRUFINA exe-
cutive of Latvian origin, has created a private intelligence and security service.
DeROOVER employs OREKHOV and "Captain FREDDY" as intelligence agents, and
contributes $500 a month toward the support of Chassovoi. OREKOHOV's intelli-
gence material reflects a strong tendency to overemphasize the role of Soviet and
Communist influence in the nationalist movements in Belgian- and French-con-
trolled African territories.

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 IV SECRET CONTROL/U.S. OFFICIALS ONLY

9. Until the spring of 1949, apart from repeated attempts to obtain direct
U.S. support, OREKHOV and his group were closely associated with British
intelligence. Five independent source designations, superficially indicating five
independent operations, were used by the British to disseminate internally, and
to the U.S. Government, the product of the OREKBOV group. In December 1948,
OREICHOV presented to British Intelligence a report predicting outbreak of war
in Iran. It was considered of such importance and reliability by the British that
they requested the chief OSO representative L J to transmit it directly and
immediately to the Director of Central Intelligence. OSO was told only that it
came from a source with high-level Soviet military contacts. The report named
a date for the planned Soviet invasion and described the proposed Soviet 0/B. It
received considerable attention until inquiry revealed OREKHOV as its source.
Questioned about the manner in which he had obtained the information, OREKHOV
claimed that he had received it directly from an informant in Copenhagen, who in
turn had secured it in the USSR. It was later established that the report was com-
pletely false, and OREKHOV admitted to the British that he had composed it because
he needed money. A study was prepared by OSO on OREKHOV and his contacts and,
according to British statements made thereafter, all but one of his operations were
terminated. One high-ranking British intelligence officer privately characterized
OREICHOV's material to an American colleague as "eyewash."

OREKHOV Approaches to U.S. Intelligence

10. With OREKHOV's voluminous material, which purported to represent

world-wide coverage of Soviet activities, continuing to reach the U.S. Government
through the channels outlined in the attached chart, OSO's interest was concen-
trated on the group's claims to possess intelligence resources inside Soviet
Russia. These claims had been repeatedly pressed, beginning in 1947, by several
of OREKHOV's associates, notably by Madame Helene WITTOUCK, nee Princess
SCHERBATOV, the socially prominent wife of a Belgian industrialist. Mme.
WITTOUCK is a key figure in the Centre National Russe. During World War
she assisted Russian prisoners of war in Belgium and received the thanks of the
Soviet authorities for her work. Mme. WITTOUCK has claimed that many of her
ex-prisoner friends, since repatriated to Russia, are engaged in espionage and
anti-Soviet resistance, and have remained in touch with her. OSO, however, has
never lost sight of the obvious fact that Mme. WITTOUCK's alleged Soviet Russian
friends must be at least as well known to the Soviet security services as to Mme.
WITTOUCK.

11. In 1947, Mme. WITTOUCK produced an alleged official of the Soviet

steel industry for interview at the U.S. Embassy in Brussels. Later, in discus-
sions with OSO representatives, she said that her sources included: (1) a contact
in Leningrad, a former Communist and lieutenant in the Red Army with whom she
communicated via a "young man on a boat from Leningrad"; (2) a Russian engineer
who would furnish information on atomic industries in the USSR, but only on the
condition that the U.S. give financial aid to the CNR; (3) through OREKHOV,
various unidentified generals and colonels in Upper Silesia; and (4) again through

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 )SECRET CONTROL/U.S. OFFICIALS ONLY

ORE KHOV, an officer of an Estonian ship who could provide information on the
disposition of Soviet airborne troops in the Baltic countries. None of these claims
was substantiated.

12. In March 1948, Nicholas S. VOYEVODSKI, well-to-do British national

of White Russian origin - a resident of Spain and a friend of Franco - came to the
United States to plead the cause of the CNR. In discussions with a CIA represent-
ative, VOYEVODSK1 stated, among other things, that he was in a position to place
the U.S. Embassy in Moscow in contact with a high-ranking Soviet military official
who was a key figure in the military underground in the USSR. VOYEVODSKI was
unable to substantiate his claims and, in view of their known OREKHOV background,
CIA declined his services. In May 1948, he went to Germany and offered to U.S.
Intelligence, through High Commissioner John I. McCloy, to have the CNR sponsor
clandestine missions to the Soviet Union and the Balkan satellite countries.
Finally, in April 1951, he attempted to approach General Eisenhower in the hope of
of selling his alleged anti-Soviet resistance movement to SHAPE.
13. In 1950, a former Czarist naval officer, Boris M. CHETVERUKHIN,
Finnish citizen and owner of a Swedish arms-manufacturing firm, approached the
U.S. Naval Attache in Stockholm with an offer to produce, in return for financial
support, valuable information obtained from contacts behind the Iron Curtain. He
refused to identify the contacts, but implied that he was in communication with
one of the largest "underground centrals" in Europe, located in Brussels. This
"central" turned out to be the OREKHOV group. CHETVERUKHIN's connection
with OREKHOV was later confirmed by his role as a "letter drop in one opera-
tion in which OSO attempted to use OREKHOV and his alleged facilities.
080 Tests of OREICHOV's Claims

14. In November 1949, OSO obtained through liaison with Belgian intel-
ligence services what was alleged to be the complete production resulting from
OREKHOV's world-wide intelligence coverage since June 1948. It consisted of
five large photostated volumes containing numerous duplications of reports pre-
viously received through other channels, and was thus of considerable assistance
in identifying the OREKHOV dissemination channels described in this summary.
None of the information proved to be of intelligence value.

15. In September 1950, OREICHOV himself made a determined and per-

suasive bid for U.S. financial support by once more asserting, to the U.S. Am-
bassador in Belgium, his claims of possessing intelligence sources inside the
USSR as well as in the satellite nations. He requested support particularly for an
operation which would involve the sending of two agents through Finland to
Leningrad. OSO decided to investigate OREKHOV's claims directly. In discus-
sions with him it became apparent that, while he claimed to have candidates on
hand for the trip to Leningrad, he had neither the facilities nor the knowledge
necessary for documenting and equipping them, nor could he put them in touch

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O
 OP SECRET CONTROL/U.S. OFFICIALS ONLY

with persons able to help them cross the Finnish-Russian border. Inasmuch as
he proposed to leave these crucial operational details to OSO, OSO decided to drop
the operation. OREKHOV, however, was given the opportunity to select from
among the sources at his disposal one with whom contact could more easily be
established and from whom significant information could be expected.

16. In response, OREKHOV summarized his whole operational potential,

claiming that he was able to contact: (a) a Russian general in the military under-
ground within the USSR; (b) the Ukrainian resistance movement; (c) an operation-
al underground in the USSR with 8,000 members and with agents in high posts in
the Soviet armed forces and foreign service, as well as in Soviet industry and
transportation; (d) two men in the office of the Soviet Military Attache in London;
(e) Bulgarian Government circles; (f) the Czechoslovakian Ministry of Informatioii;
(g) two officers in the Soviet garrison at Constanza, Rumania; (h) Estonian fisher-
men trading between the Baltic states and Sweden, with accomplices among Soviet
customs officials; and (i) a Red Army major in Leningrad. He recommended the
last named as the source for an operation which would be feasible as well as
profitable and indicated that a courier was available in the person of a ship's
doctor on a Soviet vessel plying between Leningrad and British ports.

17. From liaison with the British services, OSO knew that OREKHOV had
claimed to be in contact with agents in Leningrad through a doctor on a Soviet
ship. Investigation rapidly determined that, despite OREKHOV's assurances to
OSO that he was opening up a wholly new and independent channel, he was in fact
inviting OSO to share in an existing British-sponsored operation. A test of the
courier run was completed, however, and three letters were received from the
alleged agent in Leningrad. They proved to be of no intelligence value, and they
did not attempt to answer the simple test questions which had been posed by OSO
as an indispensable demonstration of good faith. Handwriting analysis indicated
that the letters may have been written by OREKHOV himself.

18. To the best of OSO's knowledge, this was the only serious attempt
made to verify the OREKHOV group's claims to impressive intelligence sources
in Soviet and Soviet-controlled territory. Despite the fact that an analyst in CIA's
Office of Reports and Estimates had characterized the OREKHOV material as a
a fantastic mingling of fact and fancy," the material continued to attract the atten-
tion of CIA itself as well as of the Departments of State and Defense, not only at
posts in Europe, but in such distant places as Dakar, Tangier, Rabat, Accra,
Addis Ababa and Istanbul. British, French, Belgian and Spanish intelligence
services also kept on receiving it. In one instance, information believed to have
originated in the Spanish Intelligence Service appeared in OREKHOV reports, was
furnished to British Intelligence, was disseminated to the French through Col.
OLLIVIER (a free-lance French intelligence operative), and, finally, appeared in
Greek Foreign Office reports.

19. The effect on U.S. and foreign intelligence estimates of the multiple
receipt of OREKHOV material has probably been limited because such material
carries its own characteristic warning signals of sensationalism and is generally

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 00 SECRET CONTROL/U.S. OFFICIALS ONLY

viewed with caution by experienced intelligence analysts. Moreover, the members

of the OREKHOV group have become so well known to all intelligence services
(including, one must assume, the Soviet) that the group's product and projected
operations are no longer likely to be trusted.

"Captain FREDDY"

20. Other Brussels paper mills have an informal business relationship

with OREKHOV's, but without any apparent organizational connection. The most
prominent is that of Andre MOYEN, better known under the pseudonym "Captain
FREDDY." MOYEN was born in Belgium in 1914 and worked for both British and
Belgian intelligence and for OSS during World War II. Alter the war he was
accused of collaboration with the Germans in Belgium, but this charge could not
be proved. In 1948, however, he was expelled from France on charges of conduct-
ing intelligence activities for a foreign power.

21. During MOYEN's service under OSS, his controlling officer concluded
that MOYEN's basic motives were an intense hatred of Communism and an undis-
criminating zeal for the collection of intelligence. MOYEN's very sensational
"information' on Soviet activities consists largely of exhumed espionage stories
of the war period. While the bulk of OREKHOV's reports concern Soviet and
Communist activities behind the Iron Curtain and in countries far removed from
OREKHOV's home base in Belgium, MOYEN's ostensible targets are mostly
limited to Western Europe and the Belgian Congo but are more varied as to sub-
ject. Any topic which presents possibilities of sensationalism or scandal inspires
MOYEN, and he is known to write inaccurate and derogatory reports even on his
supposed friends, including the American and Belgian intelligence services, as
well as on his enemies, the Communists. He apparently exchanges material on
the latter with OREKHOV; and for example, he is believed to have based a pre-
diction made to the American Air Attache in Switzerland in August 1950, that the
Soviets would invade Iran in October or November, on a similar report of
ORE KHOV mentioned above.

22. Supposedly secret reports by MOYEN - for instance, reports on the

parachuting of arms by the Soviets into Belgium in the summer of 1948 and on
Soviet espionage and sabotage in the Congo - have been proven by OSO to be
wholly false. A typical example of MOYEN sensationalism is the story, given
wide circulation by the United Press in December 1949, which concerned a top-
secret, fifty-page report alleged to have been made to the Belgian Government by
an agent of the Belgian State Security Service after a three-month, on-the-spot
study of Soviet espionage in the Belgian Congo. Investigation revealed that no such
official report existed, that the information had no basis in fact and that the story
was undoubtedly the product of MOYEN's imagination.

23. MOYEN furnished copies of most of his material to the office of the
U.S. Military Attache at Brussels until the latter discontinued its relations with
him, in December 1949, at the request of the Belgian Surete, which has made

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 ifob, SECRET CONTROL/U.S. OFFICIALS ONLY

repeated attempts to curb MOYEN's activities by depriAing him to his outlets.

He has since made several efforts to renew his contact with the same office and
has approached the American Air Attache at Berne, despite the fact that he states
that he is also sending intelligence reports directly to the Pentagon under the code
name 'SPA.' It is believed that all "Captain FREDDY" reports forwarded to the
Department of the Army bY the Military Attache at Brussels have carried a low
evaluation or a by-line indicating the source's reputation for unreliability.

24. The French, Belgian, Swiss and Dutch intelligence services continue
to receive MOYEN's product but, except for the Swiss Air Intelligence Service,
apparently give it the low evaluation that MOYEN's reputation for unreliability
merits. MOYEN reports have also been disseminated by the British, who them-
selves have received the reports through multiple channels; by PEDRO (see below);
and by Col. OLLIVIER, the free-lance French intelligence operative mentioned
above. Some of the same information handed to intelligence services as "secret'
material has appeared, under MOYEN's pen-names "Capt. FREDDY, OSS agent'
and "Cincinnatus," in the Belgian sensational magazine Europe-Amerique and in
the weeklies Septembre and Pourquoi Pas.

25. No positive identification of MOYEN's original sources is possible.

Despite official Belgian warnings of his unreliability, BRUFINA employs him to
investigate the personnel of its various subsidiaries, and he has planted infor-
mants amongBRUFINA workers as a check upon Communist infiltration. He
claims, in addition, to have a private network of agents established in the Belgian
Congo, operating independently of the Belgian Surete de l'Etat, and has implied
that his activities are supported by the Union Miniere du Haut Katanga. Whatever
actual sources MOYEN may have, however, they appear incapable of providing
items of intelligence value.

URRACA

26. Augustin Pedro URRACA Rendueles, best known in inter national

intelligence circles as the source of the "Pedro" reports, has been attached to
the Spanish Legation in Brussels since 1946 as a Spanish Intelligence representa-
tive. In this capacity, he has served as a channel for the flow of OREICHOV and
MOYEN reports, which he labels as such, into the office of the U.S. Military
Attache at Brussels. He has been a member of the Spanish domestic security
service for 20-odd years, and was Police Attache of the Spanish Embassy in
Paris from February 1942 until mid-1945. During World War II, URRACA
collaborated closely with the Abwehr in France, and is said to have been second-
in-command of the Falange in Paris. He was condemned to death in absentia by
a French tribunal in 1948.

27. Sometime in 1946, URRACA began to provide the office of the Military
Attache in Brussels with reports on Soviet and Communist activities in Europe.
URRACA's reports, some evaluated as highly as B-2, were brought to the atten-
tion of OSO representatives and found to be largely inaccurate. Investigation led

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 MILSECRET CONTROL/U.S. OFFICIALS ONLY

to the conclusion that URRACA's material was deliberately "planted, probably

by Franco agents. A report to this effect was transmitted to the office of the
Military Attache in Brussels.

28. As an official representative of one of Generalissimo FRANCO's

services, URRACA is undoubtedly motivated by strong anti-Communist loyalties.
It is not known whether he actually believes the OREKHOV and MOYEN reports
to be reliable or whether he deliberately circulates false and inflammatory re-
ports concerning Communist plans in the hope of widening the gap between the
United States and the Soviet Union.

29. Little information is available concerning URRACA's sources. He

maintains official liaison with the Belgian Surete on behalf of Spanish Intelligence
and, in 1949, he was reportedly paying OREKHOV a salary of 10,000 Belgian
francs a month. He receives MOYEN's reports directly, through OREKHOV and
also probably through Col. OLLIVIER.

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 41010 SECRET CONTROL
r-- U. S. OFFICIALS ONL -

OREKHOV

1946-1950

Origins: Capt. FREDDY CHETVERUKHIN Soviet Officials Fabrication

Brussels Stockholm Abroad

OREKHOV

----French IS (OLLIVIER), Paris CIA

.\---British IS (5 separate operations) OSO, C CIA

Spanish IS (URRACA) USMA, Brussels G-2

Brussels

de ROOVER, Brussels Spanish Legation, I G-2

Brussels State
Spanish IS USMA
US Embassy State

->KNIAZIOLUCKI, Brussels-.London Polish IS*

-->GAZIVODA - Royal Yugoslav IS CIA

Paris
LVUKOVIC
Trieste

(British IS
News Exchange Bulletin

\. AMANCIC British IS
Brussels Capt. FREDDY C 2
ANIC, Bern, Brussels Public
London Polish IS*

Greek Foreign Office OSO, IL CIA

Publications Continental News Service

Chassovoi (La Sentinelle) Public
News Exchange Bulletin

Largely same distribution channels plus:

OLLIVIER, Paris Uncontrolled distribution

Dutch IS Uncontrolled distribution

* See separate chart on London Polish Services.

.41111VSECRET CONTROL
U. S. OFFICIALS ONLY
 4160 SECRET CONTROL/U.S. OFFICIALS ONLY

Case D: The London Polish Intelligence Services

1. The pro-Communist Polish Government of National Unity was formed

in Warsaw in June 1945 and was recognized by the Western Powers. Its pre-
decessor, the Polish Government-in-Exile in London, continued to function, how-
ever, and to maintain diplomatic relations with Spain, the Vatican, Cuba and
Lebanon. Polish political parties in London joined the exiled government in
opposing the Warsaw regime, and, with the aid of the latter's Ministry of Interior
and Ministry of National Defense, continued to maintain clandestine contact with
the people of Poland. Thus, from 1945 until the present there have been, in
effect, several Polish intelligence organizations which have received and distributed
information on Poland. These organizations have been of two types: (a) political
and (b) military.

2. The political parties are ultimately dependent upon the masses in

Poland for support, and therefore must keep in touch with these people at any
cost. It is known that three of these parties - namely, the Freedom and Indepen-
dence Party (WiN), the Nationalist Party, and the Polish Socialist Party - maintain
more or less regular courier contact with Poland. At the same time, the former
Polish Ministry of Defense in London still maintains an actively operating G-2
section headed by General Stanislaw KOPANSKI, who is responsible to the Inspec-
tor General of the Polish Armed Forces in Exile, General Wladyslaw ANDERS.

3. General ANDERS is not recognized by all the Polish exiled factions as

their leader, but his position within Polish emigre circles is strong because of
the following he has among former Polish army men who have emigrated to
South America, Canada, the United States, France, Italy, Belgium, and other
countries. These veterans have formed an organization known as the Association
of Polish Combatants (SKP) which, according to ANDERS, has a total membership
of 180,000 including 90,000 residing in Great Britain. It should be noted that this
number is more than twice the military-strength-in-exile claimed by all other
East European emigre groups combined.

4. Because of this emigre military potential and in view of the Polish war
record on the side of the Western Powers, the London Polish military intelligence
service and its product are regarded with a respect which has served to enhance
the prestige of General ANDERS and the London government among the Western
Powers, as well as to further strengthen their position among the emigres. The
sincerely patriotic motives of General ANDERS and his group and their willing-
ness to make great sacrifices in order to free their country cannot be questioned.

5. The approach of the military service to the problem of intelligence

collection is quite professional, but that of the political parties is clearly subor-
dinated to improving their position among the Poles (both within Poland and abroad)
and the Western Powers. As a matter of fact, the political parties make no
particular effort to disguise either the bias contained in the party intelligence pro-
duct or their efforts to use it to influence Western governments and public opinion.

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 IPSECRET CONTROL/U.S. OFFICIALS ONLY

6. The political parties seek to tap, for all kinds of information, the mass
of their former (pre-1945) members who are still in Poland, while the intelligence
service of General ANDERS endeavors to use former ANDERS Army men who have
returned to Poland. From a careful examination of the various sources which
have come to our attention, it can be said that most of the intelligence produced
by both the military service and the political parties does not come directly from
such resident Polish sources, developed through clandestine operations by the
London Polish G-2 or by the couriers who serve the political parties, but is ob-
tained from one or more of the following: (a) refugees who maintain overt contact,
through the mails, with friends and relatives inside Poland; (b) escapees from
Poland; (c) friends who travel abroad on Warsaw Government official or quasi-
official business; and (d) other official or quasi-official travelers who are ap-
proached when abroad by the Polish emigres. It can be reliably stated that even
though approximately 48,000 ANDERS Army men have returned to Poland since
1945, the General at present can depend upon a mere handful for information from
this area. In most cases this material is first placed at the disposal of the
British Intelligence Services as a result of the close personal ties formed during
World War II.

7. Polish representatives in the various Western capitals, in order to

consolidate their relations with the governments of the countries in which they
reside and with other friendly governments, including that of the United States,
have furnished, through a great diversity of channels, information on Poland re-
ceived from the London Polish Government ministries and from London Polish
political parties. These reports were collected by CIA and carefully checked
against similar ones from other sources in order to determine their ultimate
source. It was soon discovered that whole sections of reports, and in some in-
stances complete reports, obtained from exile Polish organizations were being
made available to United States officials through numerous other channels. The
attached chart illustrates the flow of this intelligence during this time. It is
assumed that the same pattern still prevails. These reports covered military,
industrial and sociological aspects of life in Poland. In most cases the reports
were not disseminated, but instead were used as a basis for comparison with
items received from the British Intelligence Services, the State Department, the
Army, Navy, and Air Force Intelligence Services.

8. A report on Polish Internal Security organizations of 1946, for example,

was first received from the U.S. Military Attache in The Hague in April 1946,
through Army channels. Substantially the same information, based on a report
from the Naval Attache in Paris, was disseminated in December 1946 by ON!. The
same information was again featured in reports obtained in Palestine in 1947 from
a Polish emigre and Was disseminated anew by the British Security Services in
September 1947. The same report was picked up in Italy during February 1948
from a source in touch with London Polish representatives in Rome, while a sum-
mary of it was furnished in August 1949 by a member of the French Intelligence._
Service. Meanwhile the same material was obtained from London Polish sources
referred to above.

O. SECRET CONTROL/U.S. OFFICIALS ONLY -

 tireSECRET CONTROL/U.S. OFFICIALS ONLY

9. In general, the information derived from Polish intelligence sources

in exile may be broken down into two classifications: (a) basically truthful
material which is embellished and disseminated by the Poles, primarily in the
form of propaganda, and (b) material that is fabricated or contains only incom-
plete elements of truth and is sold for personal profit. About 90% of the reports
received by CIA fall into the first classification, the remainder into the second.
It should be added that certain reports from Polish sources have been regarded
with suspicion as possible Soviet deception. Information on the ultimate sources
of these reports, however, has been virtually unobtainable, consequently proof
is not available. The 0/B information obtained from General ANDERS' intelligence
organization on Soviet Forces in Eastern Germany and on Warsaw Polish armed
forces is evaluated by G-2 as ranging from "fair' to "good,' but on the Red
Army 0/B in Poland as 'poor.' G-2, in its "Order of Battle Summary of Foreign
Ground Forces' dated I January 1951, accepted the presence in Poland of only
two Red Army combat divisions, whereas General ANDERS' 0/B report for 1950
dated 11 December 1950 had estimated the number to be eleven.

10. Quite apart from any official connection with the London Polish group,
individual Polish emigres have, in the multiple-distribution process, inevitably
contributed to the intelligence product in personal ways. Several instances of
fabrication or suspected fabrication are on record; one which concerned a report
on the "Slav Comintern in Switzerland" was received through several channels in
September 1947, while another which dealt with the formation of Russian-con-
trolled "U Cells' allegedly functioning among Polish Missions abroad was received
through numerous channels between 1946 and 1948.

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H I 1

"OW SECRET CONTROL

U. S. OFFICIALS

LONDON POLISH SERVICES

1945-51

Operations Political Parties

Origins: into Refugees in exile
Poland I Embroidery

J J
LONDON POLISH INTELLIGENCE SERVICES:
Represented by:

KOPANSKI IBIS CIA

London US EMBASSY State
USMA G-2
USNA ONI
Dziennik Polski and
other publications

I talian IS CIA
--PAPPE Vatican Church Channels CIA
Rome US EMBASSY State

HEKNER (SPK)* Dutch IS CIA

Holland t USMA G2

GRABOWSKI (SPK)* Belgian IS (CIA

Brussels Publications

c
G ANO French IS CIA
'`--MORAWSKI CIA, j .7
Paris USNA ONI
Publications

`•• Z ALESKI ( S wiss IS CIA

Berne USMA G-2

SPK* Swedish IS CIA

Stockholm Publications

SPK* CIA
Rio de Janeiro Publications
1
\...._.Numerous Polish Emigrees CIA
N. Y. C. and Wash., D. C. G-2
FBI
State
Polish-Language
Press

*Stowarzyszenie Polskich Kombatantow

(Association of PolishCombatants)
-0,
FULL TEXT CO-r(

4101' SECRET CONTROL

U. S. OFFICIALS ONLY
 ad/SECRET CONTROL/U.S. OFFICIALS ONLY

Case E: The SEVDJEVIC Case

1. Dobroslav .TEVDJEVIC is the leader of a group of Yugoslav emigres

in Italy who provide anti-Tito intelligence material to the Italian Government and
to the governments of other Western nations, including the United States. He was
born in 1895 of Serb-Montenegrin origin, and has spent most of his life engaging
in Yugoslav extreme-nationalist activities.

2. JEVDJEVIC began his career in 1918 by becoming associated with a

Fascist organization which was opposed to the regime of King Alexander. From
late 1918 to 1939 he cooperated with one dominant faction after another in Yugo-
slavia and acquired the reputation of being willing to sell himself to any political
group in return for personal favors or advancement. In 1935 he served under
Premier JEVTIC as propaganda chief of the Yugoslav Government. In 1941 he
become a Chetnik leader under General MIHAILOVIC, working closely with the
Italian forces which were occupying the Dalmatia-Hercegovina area. He was
widely known for his pro-Italian sympathies and MIHAILOVIC himself is reported
to have remarked, jokingly, that "JEVDJEVIC is an Italian who likes Serbs.'
Among the Italians cultivated by JEVDIEVIC during this period was Achille
MARAllA, who, after the war became a leader of the Italian Christian Democratic
Party and Minister of Labor in the Italian Cabinet. Early in 1944, JEVDJEVIC fled
to Trieste and eventually settled in Italy in order to avoid repatriation to Yugo-
slavia and trial by the Tito government as a war criminal and collaborator.

3. As soon as the war was over, JEVDIEVIC became prominent as an

opportunistic leader in Yugoslav emigre politics and intrigue. In 1946 he spon-
sored the formation in Rome of the Serbian National Committee and, with the aid
of the above-mentioned Achille MARAllA, published at Eboli a Serbian-language
newspaper, Srbske Novine, which followed a pan-Serb and anti-Croat line. He
broadened his sphere of influence further by establishing contact with Italian neo-
Fascist groups, as well as with an anti-Communist group of refugees known as
the "Committee of Nations Oppressed by Russia.'

4. At the same time, JEVDJEVIC began collecting military and political

information on Yugoslavia from refugees arriving in Italy via Trieste, and from
other Yugoslav emigre groups in Trieste, Greece and Italy. By 1949 he had
allegedly developed a channel into Slovenia through Trieste, large nets of infor-
mants andpropagandists in Italy, and intelligence collection centers in Greece,
Albania and Bulgaria. Except for the Italian complex, these facilities are believed
by OSO to have been exaggerated if not entirely fictitious.

5. The first customer for JEVDIEVIC's intelligence material was the

Italian Service, which reportedly used him as an informant in 1946 and 1947, after
he had been introduced to it by other emigres who were already under its control.
By 1949 his material was also being received by the Italian Ministry of the Interior
as well as by the U.S. CIC and the British FSS in Trieste, and by French intelli-
gence services in Rome and Paris.

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(If!,
• tO,
 tit SECRET CONTROL/U.S. OFFICIALS ONLY

6. Apart from .TEVDJEVIC's direct dissemination to Western intelligence

services in Trieste and Italy, his material has received wide, uncontrolled dis-
semination through his contacts with other Yugoslav emigre groups than his own.
For example, he exchanges information with Miro DIDEK, self-styled intelligence
representative in Rome of the Croat emigre leader Vlado MACEK, and with
Monsignor JURETIC, a representative of MACEK in Switzerland. The multiple
dissemination given to material entering these channels is shown on the chart
attached to an accompanying paper, "The MACEK-ICREK Group." IEVDJEVIC's
correspondents in the United States include Constantine FOTIC, former Royal
Yugoslav Ambassador to the U.S., and Momcilo DJUJIC, a former Chetnik general
who worked with the Italians in Dalmatia during the war and who is now living in
Chicago. DIUJIC has been passing JEVDJEVIC's material to CIA in the United
States. Finally, JEVDIEVIC is in close touch with the exiled Yugoslav Royalist
movement and provides the Italian intelligence services with information gathered
by Yugoslav Royalist intelligence networks in Italy.
7. JEVDJEVIC now lives in Rome under the alias "Enrico SERRAO,"
belongs to the "Association of Free Journalists of Central-Eastern Europe," and
publishes a confidential periodical called the Royal Yugoslav Intelligence Bulletin,
which is ostensibly sponsored by Yugoslav emigres. He gives copies of this bul-
letin, along with his regular intelligence reports, to the Italian intelligence ser-
vices and contributes articles to various newspapers, including the Serb nationalist
Srbobran, published in Pittsburgh, Pennsylvania.
8. OSO receives JEVDJEVIC's material through covert sources. In addi-
tion, intelligence items believed to have originated with JEVDJEVIC have
occasionally been received from 00 and other U.S. Government agencies which
have obtained them through one or another of the various channels mentioned
above. OSO believes that his current rate of production is approximately eight
reports per month and that about half of the reports which he introduces into any
one channel are duplicates of those which have been directed into another. In
general, JEVDJEVIC's material is believed to be a mixture of outright fabrication,
exaggeration (particularly with regard to anti-Tito resistance inside Yugoslavia),
speculation, and basically true information which, however, is slanted against the
present Yugoslav Government.
9. Less than two percent of all intelligence identified by OSO as the prod-
uct of JEVDIEVIC's group has been disseminated by OSO to other U.S. Govern-
ment agencies, and none has been given to a foreign government.

10. Since JEVDJEVIC's information appears-to reach U.S. Government

agencies through numerous seemingly-independent channels, OSO believes that
false and misleading information on Yugoslavia may have become available, with-
out proper qualification, to the offices responsible for preparing U.S. national
estimates. The danger inherent in this uncontrolled dissemination of the
IEVDJEVIC reports consists in the possibility that some of them may be erron-
eously accepted as confirmation of others, causing the recipient to arrive at an
exaggerated estimate of anti-Tito activities inside Yugoslavia.

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 41110' SECRET CON _ROL
U. S. OFFICIALS ONLY

JEVDJEVIC
1946 - present

Origins: Yugoslav Refugees Press Sources inside Personal

Yugoslavia Embroidery
(questionable )

c_J
JEVDJEVIC

Emigrees in Ernigrees in Emigrees in

Greece Trieste France

MARAll.A (former Minister Italian IS

of Labor)

Trieste OSO

British FSS, Trieste BIS

FIS, Rome FIS

Italian Intelligence oso, CIA

Momicilo DJUJIC, Chicago CIA

Constantine FOTIC, Washington
4 SRBOBRAN, Pittsburgh, Pa.

Miro DIDEK, Croat emigree leader, Other Yugoslav

Rome emigree personalities
Uncontrolled distrib.
"Royal Yugoslav Intelligence Bulletin" OSO, C,
"Notiziario Jugoslavia" Italian IS
BIS et al

Royal Yugoslav IS, Italy Italian IS OSO

JURETIC, Croat leader in Swiss IS

Switzerland AIS
Uncontrolled distrib.

SECRET CONTROL
U. S. OFFICIALS ONLY
 SECRET CONTROL/U.S. OFFICIALS ONLY

Case F: The MACEK-KREK Group

Background

1. From the end of World War II through 1949, a large number of reports
on Yugoslavia were distributed to all major Western intelligence services by
Slovene and Croatian emigres who had fled to Western Europe during and after
the war and found temporary refuge chiefly in Switzerland, Italy, Austria, and
France. Although they did not develop a formal, centralized organization for
either political or intelligence purposes, these emigres were bound together by a
common hatred of the Tito regime and by a common needlor Western support for
the eventual return to power of their political parties in Yugoslavia. Two major
political groups were represented among them: the Croat Peasant Party of Dr.
Vlado MACEK, who was first in Paris and later came to the United States, and
the Slovenian Republican Party headed by Dr. Miha KREK, who reached the
United States after spending several years in Rome. The political aims of these
groups were not solely responsible for the widespread sale of material on
Yugoslavia; a large proportion of it was distributed by individuals whose principal
motive was sell-support.

2. These Slovene-Croatian intelligence producers claimed almost invari-

ably that they had reliable agent networks in operation in Yugoslavia. Their real
sources, however, appear to have been refugees arriving in Trieste, Italy and
Austria, and some of their reports were simply based on press articles and on
previous knowledge of conditions in Yugoslavia. A characteristic report would
Include a small amount of real, if not new, information expanded to acceptable
length for distribution and eventual sale. Many reports are believed to have been
complete fabrications.

3. In the absence of central direction regulating their collection and dis-

semination efforts, the intelligence originators and intermediaries sold material
not only to as many Western customers as they could find in the countries in
which they were residing, but sent the same material indiscriminately to com-
patriots in neighboring countries who embellished and disseminated it still
further. A limited amount of centralized control existed in Switzerland, where a
Colonel VA UHNIK was informally recognized by the Slovene-Croatian colony as its
chief in intelligence matters. VALTHNIK, formerly Yugoslav Military Attache in
Berlin and an accomplished reports writer, received information from groups in
Italy, Trieste and Austria, as well as from refugees in Carinthian DP camps with
whom he had direct contact, and "processed' it for dissemination to British
intelligence officers in Berne. At the same time, he gave copies to other emigres,
such as Dr. RODMAN in Zurich, for sale to U.S. and French representatives, and
Monsignor JURETIC at Fribourg, for transmittal to the U.S. Legation at Berne.
The Swiss intelligence services received reports from these two men as well as
from VAUHNIIC, and probably also from other less important emigres. Monsignor
JURETIC, besides distributing reports in Switzerland, forwarded through Vatican

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Ii 1

ir SECRET CONTROL/U.S. OFFICIALS ONLY

and MACEK Party channels information which eventually reached other European
nations and the United States. It is believed that France, in particular, received
much of the material distributed by VA UHNIK via JURETIC during the time
MACEK was in Paris.

4. By 1950 the large-scale production of intelligence by Slovene and

Croatian emigres had ceased as a result of the dispersal of its originators and
distributors to other Westerr, countries, including the United States.

OSO Experience and that of other U.S. Agencies

5. OSO's principal observation of Slovene-Croatian emigre intelligence

production and dissemination was in Switzerland. However, OSO offices were also
concerned with them, between 1946 and 1950, in Trieste, Italy and Austria. The
reports reached the U.S. Government not only via OSO but also through CIC in
Trieste, Austria and Italy; through G-2 in Trieste and Austria; through the State
Department in Switzerland and Washington; and through the FBI and CIA's Office
of Operations at various points in the United States.

6. In September 1946, OSO in Switzerland gave the British a report

•obtained from RODMAN which the British recognized as identical with one that
they had received earlier from VAUHNIK. Material subsequently transmitted to
OSO by the Swiss showed that the latter also were receiving the same information -
frequently carbon copies of the same reports. In addition, a series of FBI reports
on Yugoslavia, forwarded to Europe for evaluation early in 1948, turned out to
have originated with the VAUHNIK group. The high degree of unreliability of
the Slovene-Croatian emigre reports finally became evident when OSO and other
U.S. agencies began to receive first-hand information from Yugoslavia after
Tito's break with Moscow.

7. On one occasion, an OSO representative in Switzerland was asked

whether he would be willing to pay 2000 Swiss francs in gold for a report on plans
of new Yugoslav coastal fortifications, especially those of the Bocca di Cattaro
area. RODMAN had long claimed that he had an agent working in naval installa-
tions at Bocca di Cattaro, with whom L. courier, running between Ljubljana and
southern Yugoslavia, was in touch. This agent was supposedly the prime source of
the information in question. OSO showed an interest in acquiring the material
but refused to make a commitment until samples could be examined. After many
promises, postponements and lurid descriptions of the dangers and difficulties
involved, a long report containing beautifully-drawn maps and charts and com-
plicated appendices was finally presented to OSO with the explanation that it was
not quite what had originally been promised, since the agent in Bocca had not
been able to make contact every time with the courier. Nevertheless, some
information had been received from him and was combined in this report with
information from other agents reporting on the same and related subjects. Even
cursory examination of the document showed it to be a study of the Yugoslav
military and naval situation which probably prevailed several years earlier.

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• SECRET CONTROL/U.S. OFFICIALS ONLY
 ;-
1

AlleirSECRET CONTROL/U.S. OFFICIALS ONLY

It was prepared, presumably by VALTHNIK, out of all sorts of odd bits of intelli-
gence his group had received up to the time of its production. OSO refused to buy
the report, but it is not known whether or not it was offered subsequently to any
other prospective customer.

Conclusions

8. OSO does not know how much of the NIACEK-KREK-VAUHNIK "intel-

ligence's on Yugoslavia found its way into the reservoir of basic intelligence upon
which national estimates are based in part. It is certain that some of it must have
done so, and equally certain that a great deal of it must have been accepted at
one time or another by other Western nations. Despite the fact that OSO and
British Intelligence had cause as early as 1946 to suspect fabrication and the
danger of false confirmation in connection with the Slovene-Croatian emigre
intelligence paper mill, the latter was able, because of its many complex and
uncontrolled dissemination channels and the inadequate exchange of source
information among various U.S. and West European intelligence agencies who
were purchasing the material, to pass it on successfully for several years there-
after.

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00SECRET CONTROL/U.S. OFFICIALS ONLY

 •

Of SECRET CON,
U. S. OFFICIALS ONLY

CROAT-SLOVENE
EMIGRE MILL
1946-49

Origins: Refugees in Refugees in Refugees in Embroide ry

Trieste Italy Austria

J
RIBNIXAR

>MACEK-KREK CIC
Groups in: OSO
BIS
< FIS

Rome IBIS
G- 2
OSO
Italian IS
Vatican

- Berne, VAUHNIK BIS

Swiss IS
\ Zurich, RODMAN e-OSO
F („Swiss IS
JURETIC OSO
[Swiss IS

\--London MACEK group BIS

""--Paris MACEK group fFIS

OSO
State

MACEK group /FBI

State
CIA
MACEK-KREK group

\. CIC

OSO

fState

411100, SECRET CONTROL

U. S. OFFICIALS ONLY
 likipSECRET CONTROL/U.S. OFFICLALS ONLY

Case G: The SCATTOLINI Case

Background

1. Shortly after the liberation of Rome by the Allies in 1944, Filippo

SETACCIOLI and Virgin° SCATTOLINI established a new information service on
the Vatican which eventually developed into a widespread "news service."
2. Prior to embarking upon this venture SETACCIOLI had been associated
with two advertising firms in Rome while SCATTOLINI had written plays and
pornography. Some time before World War Ef, SCATTOLINI began to issue a
news bulletin which served German and Japanese clients, among others. In 1939
he ostensibly abandoned his anti-Vatican leanings and became a member of the
staff of the Vatican's official daily, the Osservatore Romano, and he was jailed
briefly, in June 1944, for anti-fascist activities.
3. Under an agreement concluded by SETACCIOLI with SCATTOLINI the
latter, who claimed to have an important Vatican contact, was to collect highly
sensitive items of information, including actual texts of Vatican communications.
SETACCIOLI, for his part, agreed to serve as the "cut-out" and to disseminate
the information among Allied newspapermen, with the assistance of his friend
Reynolds PACICARD, the UP representative in Rome.
4. The daily "news service' which resulted from the foregoing agree-
ment soon numbered among its subscribers the New York Times, the UP, Agence
France Presse, and La Nacion of Argentina. By January 1945, it had found new
clients in the British, American and Polish Embassies, and in the TASS News
Agency.
OSS Experience
5. In December 1944 SETACCIOLI was picked up and interrogated by the
Counterespionage Branch of OSS. He was allowed to continue his work in an
effort not only to determine the sources of his information but also to identify
other intelligence elements in the operation. It was soon discovered that the
Secret Intelligence Branch of OSS in Italy had already retained SCATTOLINI in
order to exploit his Vatican coverage. The lack of coordination displayed by
these two branches of OSS was due to.their independent methods of operating
overseas. This and similar incidents led to the subsequent merger of the branches
and their overseas operations.

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 fit SECRET CONTROL/U.S. OFFICIALS ONLY

6. Fundamentally, the Secret Intelligence BranCh, which was responsible

for positive intelligence coverage, based its evaluation of SCATTOLINI's material
on reports analysis. The Counterespionage Branch (assisted by the U.S. Repre-
sentative to the Holy See) established in the course of its operational investigation
that much of the material was fabricated and was slanted to serve political
purposes. Adequate authority was lacking at the time to reconcile both sets of
facts at an operational level.

7. OSS's successor organization, SSU, received several SCATTOLINI

items at Berne in 1946 which were later traced to an Italian intelligence officer.
In the same year, French Intelligence received SCATTOLIN1 material which SSU
proved to have originated in the Italian Military Intelligence Service.

OSO Experience
8. In 1947, OSO in Vienna received "high level Vatican intelligence' which
turned out to be SCATTOLINI material received through an agent of Italian
Military Intelligence.
9. At the request of OSO, SCATTOLINI was arrested by Italian Counter-
espionage authorities, in September 1947, and under interrogation revealed the
widespread dissemination of his material. He made the statement, which is
believed to be entirely without foundation, that a special section under the Vatican
Secretariat of State was set up to fabricate information and circulate it through
Jesuit channels. Following his release, he told OSO that "Italian Intelligence" was
supplying "false Vatican information" to U.S. Military Intelligence. Throughout
the development of the case, OSS and OSO Counterespionage personnel accumu-
lated evidence that former members of the Fascist regime, who had been taken
over by Italian intelligence agencies, participated in the transmission, if not in
the manufacture, of SCATTOLINI material in the pursuit of their own varied
interests.
10. Another explanation of the material's background was suggested by
the Italian Communist Party's use of so-called "Vatican documents" in its anti-
clerical campaign preceding the crucial national elections of 1948. These
'documents' were traced back to SCATTOLINI, and the Osservatore Romano
denounced them as fabrications. SETACCIOLI was arrested and detained for a
short time but his whereabouts since 1948 is unknown, while SCATTOLINI was
last reported in 1949 to be writing a book about his experiences in the Vatican.
Conclusions
11. Between September and December 1945, OSS received 435 reports
from SETACCIOLL An analysis of this material, made before operational
investigation in the field had revealed the bad faith of SCATTOLLNI, demonstrated

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 digirSECRET CONTROL/U.S. OFFICIALS ONLY

that 35% was partially true, that 16% was definitely false, and that the remainder
could not be judged. Later admissions by both agents indicate that fabrication
and embroidery of overt information accounted for an even larger share of the
information received. SCATTOLINI's real motives were never satisfactorily
established. OSO believes that he may have been engaged in political intrigue
on behalf of Italian Fascist elements, the Italian Communist Party, or possibly
other principals, but that, in any case, he was probably prompted by the desire
to exploit, for his own financial profit, the gullibility of the various intelligence
customers who were in the area at that time.

12. The Department of State and other U.S. Government agencies received
SCATTOLINI material through OSS-CIG channels. From the evidence which OSO
can piece together at this date, it is believed that the material did contribute to
misinforming and confusing U.S. Government officials responsible for analyzing
Vatican foreign policy during the period involved. Since the material was also
received by several smaller Allied countries with lesser capabilities for intel-
ligence evaluation, it is assumed that it had even more serious effect on their
estimates of Vatican policies.

45

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 SECRET CONTROL,
U. S. OFFICIALS ONLY

SCATTOLIN I
1944-43

Origins: Fabrication Vatican Italian I.S. (?)

Contacts

r
SCATTOLINI

ISETACCIOLI

J
Reynolds PACKARD (U. P.. Rome) United Press

Agence France Presse FIS

Herbert MATTHEWS N. Y. Times

Comm. Alberto DEANGELIS Argentine

\_. Press Attache Rome
}-Ar' gentine Gov.
Argentine Legation to
the Holy See

British Embassy BIS

Polish Embassy Polish I.S.

VISHNIEVSKY (TASS Agency, Rome) RIS

US Embassy, Rome US Dept. of State

OSS, Rome OSS

\.. Via U. S. Rep. to the Holy See —Dept. of State

Italian I.S. OSS/Berne

FIS
SSU/Vienna

Alberto CONSILIA Italian CE

Hon. Vincenzo SELVAGGI (Italian Politician) G 2, Rome area

Giovanni ENGELI Italian press

Communist Party, Italy Italian press

AI* SECRET CONTROL

U. S. OFFICIALS ONLY
 Apik SECRET CONTROL/U.S. OFFICIALS ONLY

Case H: The TREMPER-RIESS-ASENDORF Fabrication

1. In August 1950, the OSO station in Berlin received from one of its
covert sources a thirty-page document purporting to be the draft of a peace
treaty which the Soviets were ready to offer to a united Germany after the
October 1950 elections in the Soviet Zone. The OSO agent stated that he had
obtained the document from an unidentified journalist who, in turn, had claimed to
have gotten it from a translator in the Foreign Office of the East German Govern-
ment. At about the same time, an exact duplicate of the document was received
by the U.S. Embassy in The Hague from a 'Berlin correspondent of a Dutch news-
paper.' Another was offered by an American newspaperman of German origin,
Curt RIESS, for a considerable sum, to a State Department representative in
Berlin.
2. Investigation of the document by OSO in Berlin revealed it to be a
poorly fabricated product of an intelligence-peddling combine with which OSO had
had considerable experience since the end of the war.
3. Between February and June 1947, OSO employed as an agent in Berlin
a German journalist named Willi TREMPER. In time it was discovered that he
was resorting to the fabrication of information as a means of augmenting his
income. His confession was obtained and, in October 1947, he was tried and
sentenced by a Berlin Military Government Summary Court to eight months'
imprisonment on the charge of "knowingly making any false statement orally or
in writing, to any member of or person acting under the authority of the Allied
Forces, in a matter of official concern..." (Berlin Military Government Ordi-
nance). To 080's knowledge, this is the only case on record in which an
intelligence fabricator was tried and convicted for his offense.
4. After serving his term, TREMPER studiously avoided OSO represen-
tatives and associated himself with another newspaperman, one Werner ASENDORF,
then Berlin Representative of the Central China News Bureau.
5. In May 1948, an article appeared in the New York Times, under the by-
line of Curt RIESS, asserting that a General SCHARNOV had arrived in Berlin
from Moscow earlier that year in order to assume the direction of Soviet policy
In Eastern Germany. His tasks were allegedly to force the Allies out of Berlin
by 30 June and to purge Soviet leaders in Germany who were not hewing to the
Party line. In April 1948, similar information concerning General SCRARNOV
had reached ONI in Berlin, and subsequently it was received by the U.S. Embassy
in Prague and by S-2, Berlin. The same item appeared in Berlin newspapers dur-
ing the month of June.
6. OSO in Berlin identified the intelligence report about 'General
SCRARNOV' as having been invented by TREMPER and distributed by ASENDORF,
and traced most of the Berlin newspaper stories on the same subject to Curt
RIESS. Other American intelligence agencies in Berlin were advised of

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IL

*SECRET CONTROL/U.S. OFFICIALS ONLY

TREMPER's and ASENDORF's records. However, in August 1950, OSO Head-

quarters was advised by the Berlin station that TREMPER was currently serving
as an informant for ON1 in Berlin.

Background
7. Willi TREMPER, who had worked as a photographer for the German •

Propaganda Ministry during the war, was a police reporter on a Berlin daily
newspaper when OSO first encountered him.
8. Curt RIESS, born in Germany in 1902, edited a Berlin tabloid before
1933, went to Paris when Hitler came to power in Germany, and continued his
newspaper work there until his arrival in the United States in 1940. He became
known in this country as a free-lance writer of sensational material concerning
Hitler Germany, much of it invented. His application for a position with OSS in
was disapproved on security grounds. He has since returned to Europe as
1944

a free-lance writer and as the Berlin representative of Transradio Press of New

York. His reputation among journalists is low, and Berlin representatives of
OSO reported in August 1951 that his accreditation as an American correspondent
had been withdrawn.
9. Besides working for the Central China News Bureau, Werner
ASENDORF - a Hitler Youth leader before Germany's collapse - has been Curt
RIESS' business manager in Berlin.
10. The TREMPER-REESS-ASENDORF combine is only part of a sizeable
community of sensational newspaper writers in Berlin who have been selling
truths, half-truths and falsehoods, undistinguishable from one another, to the
highest bidders, whether intelligence services, news services or newspapers.
Conclusions
11. This case illustrates the manner in which U.S. intelligence agencies
can be duped by irresponsible newsmen, including some of American nationality,
whose basic motives do not include a desire to stick to facts. A functioning
system of source control would have prevented the acceptance of intelligence
reports from the TREMPER-FtEESS-ASENDORF complex after TREMPER's un-
reliability had been established by one American agency, OSO, in 1947.

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 1.10SECRET CONTROL/U.S. OFFICIALS ONLY

Case I: The VUCETIC Case

1. Marko VUCETIC, a Yugoslav national born in Istanbul in 1894, was re-

cruited by OSO in Trieste in August 1948 and furnished information on Yugoslavia
until late 1950. He had previously been an agent of SSU. During World War I he
had served in the Austrian Army until captured by the Russians and recruited for
service in the First Serb Division against the Germans. After the war he settled
in Odessa, where he remained for sixteen years, until his business was confis-
cated by the Communists. He then returned to Istanbul and from there moved to
Trieste, where he married a wealthy resident and became a successful wine
merchant.

2. OSO has been unable to determine the exact extent of VUCETIC's

intelligence activities before he was employed by OSO in 1948. He is believed,
however, to have served as an informant for several intelligence services at
various times, and his employment by the Italian Military Intelligence Service
(SIM) at some date prior to 1946 has been confirmed by an officer of that service.

3. On the recommendation of the same SE■il officer, SSU established con-

tact with VUCETIC in the summer of 1946. The information he supplied during
the few months of his association with SSU was considered to be reliable.

4. In renewing contact with VUCETIC on behalf of American Intelligence

interests in 1948, the OSO £ .1 had as its principal objective the
creation of an agent network designed to penetrate Yugoslavia through Zone B of
Trieste. VUCETIC agreed to work for OSO, stating that he had contacts in
Yugoslavia who could obtain intelligence on military, economic and political
subjects as well as on the activities, both inside Yugoslavia and in Trieste, of the
Yugoslav police and the internal security service (UDB). He refused to reveal
the identities of any of his informants, giving as his reason the fear that their
lives might be endangered by an American security leak. He had maintained this
stand consistently and effectively during his previous association with SSU.

5. VUCETIC's initial reports were received with great interest by U.S.

intelligence consumer agencies. However, when they were neither confirmed by
other sources nor clarified through the submission of additional details requested
by customers - details which could be verified by on-the-spot investigations -
incredulity became apparent in customer evaluations.

6. Meanwhile, OSO's efforts to assess VUCETIC's actual operational

assets were being hindered by his continuous refusal to identify his sources. The
OSO c was given added cause for suspicion by the fact that, while
VUCETIC had not accepted a salary from SSU, he now took money 'for distri-
bution among his informants,' but refused to sign receipts for it. However, a re-
examination by the Trieste office of his apparent motivation, both past and
present, did not suggest any reason why he might have changed from a sincere

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 (7'

i SECRET CONTROL/U.S. OFFICIALS ONLY

le

Yugoslav nationalist, anxious to serve the anti-Communist cause, to a fabricator

of intelligence reports for financial gain. The large income he derived from his
wine business had not diminished, and he continued to express a desire to emi-
grate eventually to the United States, where he has a brother living in San
Francisco.

7. Nevertheless, as the operation progressed, it became increasingly

apparent that VUCETIC's information could not be disseminated without clarifi-
cation of its ultimate sources. Faced with this fact, VUCETIC very reluctantly
supplied the identities of several collaborators, whom he described as follows:

(a) An official of Technoprom, a Yugoslav firm with an office in Milan,

who was also an unwilling agent of the UDB.

(b) An inspector of mines employed by the Ministry of Mines in Belgrade.

(c) A merchant in Ljubljana.

(d) A correspondent of Tanjug, the official Yugoslav press agency.

(e) Two sleeping-car conductors, one on the Sofia-Trieste line and the
other on the Belgrade-Trieste line, who served as couriers.

8. All the names submitted were checked but without conclusive results.
It was noted, however, in the course of a review of VUCETIC's material made by
OSO Headquarters, that many of the reports alleged to have been supplied by the
newly identified informants contained information to which those sources could
hardly have had access. The OSO C .0 also noted that, taken as a
whole, the VUCETIC material did not look like a collection of intelligence reports
from independent sub-sources, but rather had the appearance of a flow of informa-
tion which had been carefully planned along certain lines of interest. Neither the
field office nor Headquarters could yet identify the exact interests which might
have prompted the reports.

9. In December 1949 and January 1950, OSO Headquarters made a final,

exhaustive study of VUCETIC reports material and operational data. This time
many discrepancies were noted. For example, one informant who had been
identified by VUCETIC as operating within Yugoslavia was discovered to have
left for Argentina. Confronted with the results of the study, VUCETIC alleged that
he had deliberately mixed up the data on his informants in order to protect them
from harm through an accidental disclosure of identities.

10. One important admission was made by VUCETIC at this time. He

stated that he gave his raw reports to a resident of Trieste for translation and
that, since he did not always read them beforehand, he could not be certain that

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 latA ECRET CONTROL/U.S. OFFICIALS ONLY

the translator made no changes or amendments. The translator was eventually

identified as a known agent of an Italian intelligence service. VUCETIC stoutly
maintained that he believed him to be an honest man who merely translated reports
in return for needed money.

11. Because of this new insight, OSO again studied certain facts in
VIJCETIC's background, including his former association with Italian Intelligence
and his a wine-purchasing trips' to Padua (where an Italian counterespionage
center is located), and came to the tentative conclusion that at least some of the
VUCETIC reports had been "planted' by an Italian intelligence service. VUCETIC
was given a lie-detector test and thoroughly interrogated and, while the results
were not in all respects conclusive, they enabled OSO to arrive at the following
evaluation: (a) VUCETIC did have some true sources; (b) his apparent under-
standing of his agent function was in reality a sense of cunning whetted by an
appetite for engaging in intelligence activities; (c) he was prompted by a combina-
tion of a sincere desire to help his American friends against Communism and a
wish, perhaps fortified by Italian pressure, to accommodate his Italian hosts by
providing them with funds for other intelligence operations.

12. Because of their apparent importance, all but seven of the 87 reports
received from VUCETIC were disseminated by OSO to the Departments of State,
Army, Navy and Air Force, as well as to various CIA offices. None, however, was
given to a foreign government. The political reports, which constituted the
largest group, usually contained sufficient truth to make the whole appear con-
vincing. They were sometimes confirmed, in a general sense, by other sources.
The element in them which eventually led to the suspicion that they had been
"planted' by an Italian service was a consistent criticism of the Tito regime and
of the Slovenes in particular, coupled with a conspicuous lack of criticism of
Italian methods, aims or ambitions in connection with Yugoslavia. The general
slant of these reports was such as to make them appear to confirm official
Italian allegations and charges.

13. Upon discovering the apparent part played in the VUCETIC operation
by Italian Intelligence, OSO sent memoranda to all agencies to which it had pre-
viously disseminated VUCETIC material, identifying each VUCETIC report by
number and informing the other agencies that the information was now believed to
have been the product of a foreign government. The identity of this government
was furnished orally to individual analysts in appropriate customer agencies.

14. The VUCETIC operation appears to have been a deception effort

perpetrated against American Intelligence by Italian Intelligence for the purpose
of influencing U.S. estimates concerning Yugoslavia and Trieste to the advantage
of Italian Government interests. The reserve which U.S. intelligence consumer
agencies early adopted towards the VUCETIC material probably prevented its
having much, if any, actual effect on U.S. estimates.

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 SOSECRET CONTROL/U.S. OFFICIALS ONLY

15. The VUCETIC case has a certain 'salvage value" in the retrospective
identification by U.S. consumer agencies of the type of information which the
Italian Government would like the U.S. Government to believe. Such knowledge
can be applied by U.S. estimators to similar material whenever and wherever it
appears.

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 Olt SECRET CONTROL/U.S. OFFICIALS ONLY-

Case J: The CH'EN Fabrication

1. In March 1951, one CH'EN Chung-i approached the U.S Consulate

General in Hong Kong, representing himself as a member of a dissident (anti-
Stalinist) Chinese Communist Party group called the CCP Democratic Revolu-
tionary Alliance, and requested certain limited aid from the United States to
help his organization's activities. This information was reported in detail to the
Department of State and to OSO Headquarters:

2. CH'EN described himself as follows: a native of Wuhu, he had joined

the CCP in 1938 and done political work for the Party during the Japanese occupa-
tion of China. From 1946 to 1949 he attended Shanghai Law School, where he
carried on political activities among the students. In 1949 he served as a political
commissar in the crossing of the Yangtze River by the Chinese Communists.
Later, on behalf of the Communists, he conducted investigations of KMT and other
persons in Nanking and Shanghai.

3. According to CH'EN, dissatisfaction with MAO Tse-tung's leadership

of the CCP began in 1937, and in August 1950, feeling a war between the Soviet
Union and the United States to be imminent, dissatisfied CCP members decided to
establish an organization. The resulting Alliance, CH'EN alleged, opposed the
doctrine that the end justifies the means, deplored the cruelties being inflicted
on the Chinese people and believed that a reformed CCP should seek a less pain-
ful way to change capitalist into socialist society. CH'EN represented himself
as head of the Alliance's Overseas Department and said that his job in Hong Kong
was to establish a propaganda organization and a "Chinese Peoples Democratic
Revolutionary Front," as well as incidentally to pass on to the U.S. Governments
information obtained by Alliance members. He requested money only in return
for specific services, such as the writing of a story of his experiences for USIS;
however, he later accepted larger sums.
4. In view of the potential importance of a "Taoist movement in China,
the Department of State requested that CIA look into the matter with a view to
possible support of CH'EN's activities. Limited CIA financial aid was given to
CH'EN beginning at the end of May 1951.

5. OSO received four reports from CH'EN between late June and early
August 1951. These purported to deal with top-level Chinese Communist policy
decisions regarding the Malik cease-fire proposal, and with the Chinese Com-
munist attitude toward the cease-fire talks: They were of a general nature, and
the predictions which they contained were carefully qualified. In view of the
significance of the subject, however, the reports were disseminated by OSO to the
Departments of State, Army, Navy and Air Force, as well as to the Far East
Command. (At the same time, because of the difficulty of evaluating the source
and because of State Department knowledge of and interest in the case, OIR was

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. C" 11 1% ..!.%

L TErf
 at SECRET CONTROL/U.S. OFFICIALS ONLY

informed of the source's true identity. OCT was also notified.) It is not known what
further dissemination was made by these agencies, or whether the reports were
incorporated in national estimates. They were not distributed'to any foreign
governments by 080.

6. In mid-June 1951, two associates of CH'EN voluntarily informed the

Consul General at Hong Kong of their relationship with CH'EN, stating that they
had reached the conclusion that he was a clever opportunist who had attempted
to deceive first the Chinese Nationalists and later the Americans for financial
gain. They also stated that he was fabricating reports on the subject of U.S.
intelligence activities for the Communist Public Security Bureau in Canton.
Furthermore, following the issuance by CH'EN of a manifesto stating the aims of
his alleged group, OSO received a reliable report citing the opinion of a well-
known Chinese political figure - a former Communist - to the effect that the
manifesto was a ICMT fabrication, similar to one KMT officials had asked the
author of this opinion to promulgate some time earlier. This report was dis-
seminated to the agencies which had received CH'EN's four reports, and the
latter, whose source had previously been given only a general by-line on the
dissemination form, were now identified to all customers as the ostensible product
of the "Chinese Communist Democratic Revolutionary Alliance."

7. There have been no identified duplications of CH'EN's reports in

material received by OSO from Chinese Nationalist intelligence agencies. This
fact would suggest that the CHIANG government, ever eager to disseminate
acceptable information (see "The Chinese Nationalist Services"), was quick to
discern the hoax - if, indeed, it did receive material from CH'EN. The latter
asserted that the Alliance which he represented had been in contact with
Nationalist intelligence agents on the mainland since November 1950, aiding them
operationally, and that it had supplied the Nationalist Government with informa-
tion on Communist agents in Formosa and on Peiping strategy toward the island.
The statements by CH'EN's former associates confirm his contention that he
received financial support from Nationalist agents in Hong Kong, but add that the
latter broke off relations with him after a short time, when he failed to supply
details about his organization. No mention was made of the transmittal of
information to the Nationalists in Hong Kong.

8. The CH'EN case appears to be a clear-cut instance of an imposter

seeking to purvey wholly fabricated information for personal gain. As such, it
has limited ramifications in itself but is characteristic of one type of problem
which is constantly faced by intelligence collection and user agencies. Around
the world, a dozen mercenary schemes of this sort may be claiming attention at
any given time, and not all will be detected as readily as that of CH'EN. While,
unlike cases of politically-motivated deception, they can be dismissed as soon as
they and the damage they have already caused are recognized, they may mean-
while have cost U.S. agencies much wasted time and effort and, at worst, have
resulted in erroneous policy decisions of consequence.

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 Mer SECRET CONTROL/U.S. OFFICIALS ONLY

Case K: The LIN Fabrications

Background

1. LIN Chin-Su has been selling information to OSO representatives in

Hong Kong since early 1951. He was connected during World War LI with SACO
(a Sino-American intelligence organization headed by Admiral Miles) and had been
reported to be an agent of one of the Chinese Nationalist intelligence services.
He claims to have been earning a living by dealing in intelligence for eighteen
years.

2. LIN also claims to be accepted in Chinese Communist circles as a

fellow Communist and thus to have access to the information he reports, but this
has not been verified. Among his alleged sources are anti-Communist guerrillas
in China and agents in Shanghai, Hankow and the Kwangtung-Hunan border area;
penetrations of the Marine Office, Hong Kong, and the South China Bureau of the
•Chinese Communist Party; and persons having access to information from Com-
munist radio stations in Hong Kong, Fukien and Kwangsi. The material received
to date from LIN has not confirmed the actual existence of these sources.

3. At the end of June 1951, when OSO was getting many reports from
various sources on Chinese Communist attitudes and intentions with regard to
the Malik cease-fire proposals, UN furnished related information purporting to
emanate from secret high-level conferences between Soviet and Chinese leaders
in Peiping. OSO has not been able, on the basis of available operational data, to
establish that LIN actually had access to such information.

OSO and Other U.S. Experience

4. OSO's attention was drawn to LIN's material in Hong Kong in September

1950 through a U.S. G-2 representative who had obtained some of it from a French
Consular officer. The OSO representative expressed doubts about the information
and did not enter into the operation at that time.

5. In January 1951, following a direct approach by UN to the G-2 officer

in Hong Kong, OSO began to purchase LIN's information at the request of G-2,
U.S. Army, but the G-2 officer in Hong Kong continued to act as the intermediary.

6. Between 1 April and 30 June 1951, LIN submitted approximately 150

reports covering a wide geographical area and a variety of subjects, principally
in the counterespionage, political and 0/B fields. A thorough check of this
material led to the belief that LIN's operation was not based on first-hand
sources in Communist-controlled territory and involved possible fabrications.
Numerous reports seemed to duplicate material from Chinese Nationalist intel-
ligence agencies, and it developed that British, French, Chinese Nationalist and
American intelligence services were receiving a suspiciously similar product.

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7. After several instances of false confirmation apparently had occurred

as a result of G-2's independent receipt of LiN's reports from the G-2 officer in
Hong Kong, OSO stopped disseminating the material and currently attaches very
little value to the product of the UN operation.

Conclusions

8. The multiple dissemination of reports by LIN may have resulted in

false confirmation in the evaluations made by the ultimate consumers of the
"information" in the various countries which have been receiving his product.
American estimates have probably not been seriously affected, since LIN's pro-
duct has been regarded with suspicion from the outset.

9. LIN's unwillingness to supply adequate descriptions of his sources,

and the results of an investigation of his operational claims, have led OSC) to the
conclusion that most of his reports are fabrications.

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Case L: The "Politburo Minutes" Case

Background and OSO Experience

1. In February 1947, Nicolas SVIDIN, a White Russian emigre living in
Brussels, approached a member of the Belgian Surete de l'Etat. He claimed to
represent a "high Soviet official and chief of the NKVD in Belgium" and offered to
sell, at a substantial price, the stenographic transcript of the minutes of a joint
meeting allegedly held by the Soviet Politburo with Soviet military chiefs in
January 1947. These "minutes' discussed Soviet secret weapons, including the
atom bomb, and referred to a high-ranking U.S. Army officer as a source of
information which the Soviets were currently acquiring. SVIDIN was known to
belong to the Union of Soviet Patriots (UPS), a Soviet-sponsored organization of
emigres in Belgium, and had been used by the Surete since 1946 as an informant
on T YI=S matters. His police record revealed several offenses, chiefly of a minor
n-cure.
2. The Belgian service, interested but unable to meet SVIDIN's asking
price, invited OSO to participate in the operation. OSO representatives were told
that SVIDIN had refused to identify the "high Soviet official," but that the Belgian
Surete believed him to be Nikolai SKOBELE V, First Secretary of the Soviet
Embassy in Brussels and responsible for Embassy liaison with UPS. SKOBELEV
had long been suspected by the Surete of being an MGB official. Because of
earlier reports of shady financial dealings involving SKOBELEV, and because
SVIDIN's terms included the stipulation that asylum in North or South America be
guaranteed for the "Soviet official," as well as for himself, in the event of dis-
covery by Soviet Intelligence, the Belgians believed that SKOBELEV was seeking
to sell material through SVIDIN in order to acquire funds preparatory to deserting
to the West. It was assumed also that SVIDIN's motives were purely mercenary,
although he claimed that he was motivated solely by his hatred of the Soviets.

3. OSO made arrangements to purchase the document and, on 6 March

1947, it was delivered by SVIDIN to an OSO representative. Experts at Head-
quarters recognized it at once as an amateurish fabrication which, in their opinion,
may have been produced at the Soviet Embassy in Brussels.

4. When SVIDIN was confronted with the discovery that his document was
worthless, he identified SKOBELEV as his principal and further stated that the
source of the document was SKOBELEV's nephew, a stenographer in the Politburo
offices in Moscow who had sent the document to SKOBELEV by diplomatic courier.

_ 5. All efforts to substantiate the allegation that SKOBELEV was involved

in this transaction proved fruitless. The Belgians accepted further material from
SVIDIN, primarily in order to confirm SKOBELEV's involvement and to trap
SVIDIN into revealing the true identity of his collaborators, if he had any. SVIDIN
subsequently produced other documents purporting to be copies of directives from

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Moscow which were allegedly obtained by an employee of the Soviet Embassy in

Paris, who had passed them on to SKOBELEV. The Belgians, however, were
never able to determine the actual source of any of the documents. OSO did not
disseminate either the document that it purchased or any of the SVIDIN material
received through the Belgian Intelligence Service.

6. SVIDIN next came to OSO's attention in May 1948 when he attempted,

under an alias, to sell to Swedish representatives in Brussels the same docu-
ment that OSO had bought in 1947. The OSO C A determined from
an analysis of the alleged channel that the operation was undoubtedly a fraud, and
this was confirmed by OSO Headquarters. OSO informed the Swedes of SVIDIN's
unreliability and requested their cooperation in trapping SVIDIN, but they de-
clined to do so for fear of possible embarrassment.
7. During 1948, OSO learned that SVIDIN, under several aliases, was
attempting to peddle various documents to the intelligence services of Norway,
Switzerland, Portugal, the United Kingdom, and The Netherlands. Several or these
services are believed to have purchased SVIDIN's worthless material, probably
out of ignorance resulting from inadequate liaison facilities or from failure to
use existing facilities.

8. SVIDIN was last reported, in June 1950, to be in jail in Belgium for

having attempted to sell non-existent typewriters.

9. SKOBELEV is at present First Secretary of the Soviet Embassy in

Berne. OSO has notified Swiss intelligence of his background.

Conclusions

10. It is possible that SVIDIN was the real author of the "Soviet docu-
ments's which he purveyed but, even if he was, it is believed that he must have
had either the deliberate or the unwitting assistance of SKOBELEV or other
persons who had access to information obtained from the Soviet Embassy at
Brussels.

11. In view of the subject matter, the fact that the alleged sources
occupied official positions through which they could obtain such material, and
OSO's belief that access to information from the Soviet Embassy was required in
the preparation of the documents, it is believed that the possibility of deliberate
Soviet fabrication cannot be ruled out. If the documents were of Soviet origin, (
the motive behind them may have been (a)to obtain revenue for Soviet intelligence( =A ' .
activities; (b) to discover the extent of liaison among the various Western intel-
ligence services; or (c) to deceive and confuse the Western nations. In the jj• ,
SVIDIN case, deception appears unlikely in view of the inferior quality of the
fabrication. However, the case does serve to emphasize that a channel such as
SVIDIN's could be used successfully by the Soviets for the purpose of deceiving
Western intelligence services with well-constructed, seemingly authentic docu-
ments allegedly produced by sources who, like SKOBELEV's "nephew,” could be
expected to have access to the information supplied.

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12. U.S. estimates were not affected by SVIDIN's material unless it

reached U.S. customer s through channels of which OSO is not aware. OSO does
not known whether the SVIDIN documents had any effect on the estimates of the
other countries which purchased them.

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Case M: The THEP Fabrication

1. A chart purporting to describe Soviet activities in Thailand was

received in November 1950 by the °SOC. .17 through the U.S. Embas-
sy. This chart had been given to the Bangkok manager of Pan American Airways
by one of his employees named THEP Vilaihongse, and had been accompanied by
an offer to place an agent network at the disposal of the Americans for the pur-
pose of conducting surveillance operations against Soviet officials in Bangkok.
In response to questions formulated by the OSO representative and transmitted
to THEP by the Pan American manager, THEP stated that he controlled a large
number of anti-Communist Indochinese agents, but he did not identify them
individually. Although THEP professed that he was not interested in money, he
requested "support" of quite substantial proportions as a prerequisite to the
operations of his alleged group.
2. The OSO representative's examination of the chart revealed that its
contents came primarily from overt and inaccurate sources and that it appeared
to be the work of someone who lacked intelligence experience or contacts.
Because of its obvious worthlessness, no dissemination of THEP's information
was made in Bangkok or by OSO Headquarters.
3. An investigation of THEP by OSO C revealed that he was a
Lao by birth, about twenty-five years old, quick-witted and intelligent, and well
thought of by his employers at the Pan American office. He appeared to be
constantly worried about his financial situation, and in the habit of requesting the
advice of all his acquaintances as to means of increasing his income. He was
also given to bursts of patriotic feeling, during which he would assert his willing-
ness to work for Laos against the Communists without regard for recompense.
As a result of this investigation and of the analysis of the chart, OSO decided not
to make use of THEP or of any further material which he might offer.
4. In February 1951, the OSO office\ at Saigon received a report from a
local representative of the ,Frencli Intelligence Service about a Russian who had
allegedly visited Bangkok and called on two Soviet commercial firms which were
strongly suspected of being Soviet espionage centers. Similar information had
appeared on THEP's chart. No other OSO source had or has ever heard of the
individual in question, however, and he is believed to be non-existent.
5. In March 1951, OSO Headquarters was given an exact duplicate of
THEP's chart by G-2, Washington, which had received it from G-2, Tokyo. A
detailed analysis, pointing out inaccuracies and inconsistencies, was made for
G-2 by OSO. At about the same time, the Military Attache in Bangkok had shown
the local OSO representative another copy of the same material and had been
given a similar judgment. G-2 later received through the British Mission in
Tokyo an evaluation of the chart which was in accord with OSO's findings.

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6. Also in March 1951, CIA's Office of Operations disseminated a report

containing approximately the same information and attributed it to a source in
Tokyo described as "an employee of a U.S. airline in the Far East." Subsequently,
00 stated that an American in Tokyo, cited by name, wished to return to Bangkok,
where he had formerly been assigned, and was offering to American intelligence
the fruits of his useful contacts in Thailand. This man, who mentioned THEP as
one of his sources, was thus identified as the source of the 00 report.

7. Although the THEP material passed through many hands and involved
a number of American intelligence offices in the Far East and in Washington,
causing a certain amount of confusion and wasted effort, it did not, to OSO's
knowledge, become incorporated in U.S. national estimates. This was because the
material itself was analyzed and found to be spurious, rather than because of any
automatic checking on the source. Had THEP simultaneously released a variety
of reports, some of them credible, through several different channels, the result
could well have been the widespread use of his material by U.S. consumer
agencies.

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Case N: The HENROTIN (USSA) Fabrication

Background

1. On 31 March 1949, Roberto HENROTIN de SANTARES attempted to

sell to the American Embassy at Buenos Aires copies of a number of Argentine
Police reports. He described himself as a French citizen, born 13 January 1900,
who had been sent by the Vichy Government on an economic mission to Argentina
in 1941. He subsequently resigned his official connection and remained in Buenos
Aires, where he was jailed in 1948 for the fraudulent importation of trucks.
HENROTIN claimed that he had translated some documents for the Argentine
Federal Police while under arrest on this charge. His offer to sell copies of
these documents was declined by the American Embassy.
2. At Montevideo, on 24 February 1950, HENROTIN left with a high-rank-
ing Uruguayan official three documents purporting to be part of a series which
had originated in the Soviet Legation in Montevideo. HENROTIN said that he had
obtained them through a French Communist in Uruguay. The documents osten-
sibly consisted of instructions from the UNION SOVIETICA DE SLTD AMERICA
(USSA), Zone 2, to Communist leaders throughout South America. (HENROTIN
stated afterwards that one document in this series had also been given to the
Bolivian Minister at Montevideo.)
3. In May 1950, President Peron of Argentina asked an American business-
man in Buenos Aires to take twelve of these same USSA documents to the United
States and, because of their great importance, bring them to the attention of the
proper Government officials.
OSO Experience
4. Between February and May 1950, nearly all the South American offices
of OSO were flooded with HENROTIN documents, which were received from covert
sources as well as through local State Department officials. The consensus of
the OSO field representatives concerned was that the documents were fabrications,
and this was confirmed when a thorough analysis was made by experts on Com-
munism at OSO Headquarters.
5. HENROTIN was arrested by Uruguayan authorities, on 19 July 1950, on
suspicion of espionage for the Argentine Government. Under interrogation he
admitted that he had fabricated the USSA reports and also confessed that he was
employed by the Argentine Federal Police, on a regular monthly salary, to report
on Communist and anti-Peron activities in Uruguay, as well as to observe the
activities of political exiles from Argentina. He was deported in August 1950
from Uruguay to France.

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6. In May 1951 the American Ambassador in Peru received, from the

Ecuadorian Ambassador, two of the USSA documents earlier identified by OSO as
spurious but OSO does not know when or how they reached the Ecuadorian Am-
bassador.

Conclusions

7. Although reports on the alleged plan of the USSA were disseminated by

OSO to the Department of State and to CIA's Office of Research and Reports, they
probably did not affect U.S. estimates, since fabrication was suspected im-
mediately by all U.S. recipients.

8. The HENROTIN material has had considerable influence on the pro-

grams of certain South American governments for dealing with the Communists.
Several Latin American Presidents purchased the documents and Peron ap-
parently believed them to be authentic.

9. While HENROTIN admitted his status as a paid agent of the Argentine

Federal Police, there has been no indication that specific pro-Peron political
motives were behind the fabrication of the USSA documents.
r.;

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Case 0: The Case of the "Soviet-Czech Uranium Treaty"

1. Early in August 1950, OSO reported the text of a Czechoslovak-Soviet

treaty which granted to the USSR extraterritorial administrative rights for
fifteen years in the uranium deposit areas of Czechoslovakia. The treaty extended
mining concessions already granted for the Jachymov mines to the entire terri-
tory of Czechoslovakia, not excepting defense areas. The Czechoslovak Govern-
ment undertook to provide security facilities, labor (including technicians), and
equipment, and agreed to future frontier revisions ranging up to three miles in
favor of the East German mining areas.
2. After examining the document, OSI of CIA evaluated it A-1. OSO in-
vestigation in the field revealed, however, that it was a fabrication, and customer
agencies were notified to this effect early in September 1950. British Intelli-
gence, which had also received the document, then conceded that the "responsible
(British) department at first believed that this report might not be without foun-
dation."
3. The author and distributor of the "uranium treaty" report was
Bohumil SVOBODA, a clever young Czech mining engineer who had escaped from
Czechoslovakia to the U.S. Zone of Germany in October 1948. OSO learned about
him from a Czech refugee in the United States who had received seemingly val-
uable information from SVOBODA through an intermediary, via the open mail.
OSO in Germany was accordingly instructed to determine, on the spot, the extent
of SVOBODA's potential contribution to intelligence. OSO representatives used
Czech emigre cover when they approached him at the beginning of July 1950.
4. SVOBODA stated that after his escape from Czechoslovakia he was
interrogated at the European Command Interrogation Center (ECIC) near Frank-
furt, Germany. Released when ECIC had exhausted his information, he was
taken over by a British-sponsored intelligence group. SVOBODA revealed to the
British essentially the same information he had previously presented to ECIC.
He told OSO that he was still procuring information for this British group, but
agreed to submit his reports to the OSO representatives as well as to the British,
In return for money to pay his couriers.

5. SVOBODA's first reports were in line with his knowledge of conditions

at the Iachymov mines and were thus accepted as information which, at the least,
he conceivably might have obtained from more recently arrived Czech refugees.

6. Then SVOBODA Produced the uranium treaty, which called for close
investigation. By means of Government-wide checks, it was discovered that
SVOBODA had capitalized on his treaty information through numerous other
American intelligence channels. 00 of CIA received it from a Czech emigre in
this country who claimed to have obtained it "from Czechoslovakia through

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clandestine channels," and disseminated it on 14 August 1950. A CIC informant

in Germany passed it on to his superiors. The FBI received it from one of its
"confidential and reliable sources. La Nation Beige, a Brussels daily, printed
extracts from it, crediting Agence France Presse. The U.S. Air Attache in
Paris, digging into this press report, discovered that the Secretary General of
the Free Czechoslovakian Council was its source and that he had allegedly re-
ceived it from "Catholic circles inside CSR." The British, of course, received
their copy directly from SVOBODA.

7. Unaware of the OSO investigation, and encouraged by the response to

the information he had given, SVOBODA extended his coverage. He claimed to
have sources, which he named, in the Czechoslovak Ministries of Interior and
Industry, the Moscow Central Planning Institute, the Soviet Atomic Institute,
the Soviet Department of Industry, the staff of General ZHUKOV, MVD stations
in Russia, and the Hungarian, Rumanian, and Bulgarian armies. He topped off
his performance with a report on Chinese Communist invasion plans for Formosa.
At this point OSO gave- up circumstantial investigation and used the lie detector
on SVOBODA, who promptly confessed to having fabricated all his reports with
the exception of those initially given to ECIC after his arrival from Czechoslo-
vakia.

8. The background of SVOBODA's "intelligence operation" turned out to

be simple enough. In September 1949 the British group, which had exploited his
knowledge after ECIC had discharged him, had once more exhausted his useful-
ness. He lost his comfortable board and lodgings and found himself in an over-
crowded DP camp with no paying job. It occurred to him that the British group
for which he had worked had apparently done little to check on his information;
so he contacted it again and began to develop his imaginary operations by reach-
ing first back to his old stamping ground at theJachymov mines, then a bit further
into the Prague Ministries, then to the Kremlin, and finally to China. He explained
that the names he mentioned as his sources were either people he once knew in
Czechoslovakia, or those whose names he had heard on the air or read in the
papers. He had never obtained information from any of them.

9. In the less than two months that SVOBODA was in contact with OSO
representatives he produced 76 reports. Very few of these received dissemina-
tion in view of their doubtful origin, and only the "uranium treaty's report caused
concern at higher government levels.

10. This report also prompted a British investigation and the closing of
their part of the operation.

11. OSO interrogation and lie-detector treatment revealed that monetary

motives alone were behind SVOBODA's fabrications. His patriotic statements
concerning the help he wanted to give the Czech cause in exile can be dismissed,
but it is very significant that he managed to distribute his spurious product
largely with the help of well-meaning Czech emigre politicians, who not only
helped him to disseminate the "information' s but enabled him to conceal its real
source.

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12. The case further demonstrates that analysis of the product alone is
apt to be unsatisfactory in the case of well-fabricated material. Without field
investigation and ultimate interrogation of SVOBODA, analysts might have re-
mained under the impression that the 'Czechoslovak-Soviet uranium treaty' was
a fact.

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Case P: The Case of the "Soviet-Austrian State Treaty"

1. In January 1950, OSO's station in Austria came into possession of a

document containing far-reaching implications for U.S. Foreign policy. It pur-
ported to be an aide-memoire from the Soviet Foreign Ministry to the Austrian
Political Representative in Moscow setting forth conditions for a separate State
Treaty between the Soviet Union and Austria, and implied unmistakably that the
Austrian Government was secretly negotiating such a treaty with the USSR. While
U.S. diplomats probed into the assurances of Austrian Cabinet Ministers that no
such negotiations were taking place, OSO representatives in the field, after months
of investigation, discovered that the document was fabricated. To this day, how-
ever, the key question - who wrote the "aide-memoire"? - remains unanswered.
2. The agent who supplied the document under consideration, known for
the purposes of this summary as HANS, was (and still is) an employee of the
Austrian Foreign Office. HANS had been born in the German-speaking part of
Czechoslovakia in 1920 and educated in Czechoslovakian schools. In 1941 he was
drafted into the German Army, but deserted after service in Denmark and Italy
and was recruited by OSS from a PW camp. He jumped into Austria with an OSS
parachute agent team in 1944, was captured by the Gestapo, interrogated, and
sentenced to death, but managed to escape during the confusion of the German
collapse. Upon returning to American-held territory he was re-employed by
OSS, serving as an agent in Austria until 1946, when he entered newspaper work.
In December 1948, he obtained employment in the Austrian Foreign Office.
Learning of HANS' new position from a wartime OSS team-mate known as
FRITZ (who, as an Austrian newspaperman, had continued in the service of SSU
and 0S0), OSO decided to attempt to recruit IIANS in order to exploit his access
to dispatches from Austrian officials in the USSR and satellite countries. When
approached by OSO, HANS claimed to be willing and eager to serve, Western-
oriented, active in Austrian conservative politics, and in need of money.
3. HANS began furnishing information to OSO in November 1949. A few
original Foreign Office documents were followed by reports which he had al-
legedly culled in shorthand from material summarized, in the course of his
normal duties, for the briefing of the Austrian Foreign Minister. 0/B observa-
tions purportedly extracted from the reports of Austrian representatives in
satellite countries had aroused OSO interest but had not yet been subjected to
close Headquarters scrutiny when, on 19 January 1950, HANS reported the afore-
mentioned "State Treaty.' This information was disseminated by OSO with a
B-2 evaluation. Two days later G-2, USFA, cabled to Washington information
which was very similar in content, although not identical, to that received from
HANS. It had been obtained from an Austrian right-wing politician who was con-
sidered to be "usually reliable." Immediate efforts to ascertain whether true or
false confirmation was involved resulted in apparent substantiation of the

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material's validity. Soon afterwards, British Intelligence representatives in

Austria reported similar information obtained from one of their own sources,
and by the end of January 1950 similar rumors had been received through nu-
merous official and unofficial channels of the Western Powers occupying Austria.

4. It took nearly a year of interrogations, handwriting and typewriter

analysis, and physical surveillance to determine that all the reports on the "Soviet-
Austrian State Treaty" flowed from the document originally produced by HANS
and had "leaked' into the various channels which have been indicated as a result
of indiscretions committed by FRITZ. These facts were revealed only when
sufficient evidence had been accumulated to enable OSO to submit FRITZ to a
lie-detector test.
5. Shortly after receipt of the "State Treaty aide-memoire" from HANS,
OSO, through an independent channel, was given an opportunity to compare the
HANS material with reports actually written by the same Austrian officials who
had allegedly written the reports summarized by HANS for the briefing of the
Foreign Minister and for delivery to OSO. Comparison of the two reports series
and close analysis of HANS' material then revealed that his reports, while con-
taining an occasional excerpt from a Foreign Office document, were largely the
product of his own imagination. They were characterized, in general, by frequent
errors in German syntax and vocabulary (clearly a result of his Czech schooling)
and the 0/B reports contained errors in geographical and military fact, which
had become more numerous as HANS had stepped up his production to the rate
of a report every day.
6. The "aide-memoire," however, which had attracted the attention of
high officials of the U.S. Government, was written in flawless German, certainly
by someone other than HANS. On the other hand, close examination revealed that
it contained contradictions in substance.
7. In October 1950, OSO field representatives were able to obtain HANS'
confession to having fabricated nearly all the material which he had given OSO,
but his confession was "too complete" because he claimed to have written the
"aide-memoire" itself. Since he is believed to be incapable of such a feat, it is
admitted that the true author of this document has not yet been discovered. Un-
fortunately, it had not been possible for OSO representatives operating under
cover to put enough pressure directly on HANS to solve the case, • since such
action would have implied an embarrassing admission to the Austrian Government
that agents of the U.S. Government were using Austrian officials in espionage
operations.
8. The political motives which may have inspired the "State Treaty" hoax
are obscure. None of the parties which could possibly have been involved, in-
cluding the Soviet Intelligence Service, Soviet Occupation Headquarters, the Com-
munist Party of Austria, or any responsible Austrian political group, could
plausibly have expected to gain from a necessarily short-lived maneuver of this

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kind. Sufficient factual evidence had been accumulated to dismiss the possibility
of official Austrian sponsorship. It was established that there had been no col-
lusion between HANS and FRITZ. Pending identification of the document's
author, the most reasonable explanation which OSO can advance is that some
A' personally ambitious representative of the Austrian right-wing opposition party,
the Union of Independents, may have hoped by planting the document with a U.S.
intelligence agency to provoke an Austrian Government crisis, in the course of
which the incumbent Foreign Minister would be unseated.
9. It is some consolation to note that Soviet Intelligence, shortly after the
perpetration of the "Soviet-Austrian State Treaty" hoax, was the victim of a
similar scheme. An Austrian intelligence peddler advised CIC in May 1951 that
from March to November 1950 he had been instrumental in transmitting to Soviet
Intelligence fabricated shorthand summaries of official Austrian Foreign Office
documents, in particular a report on separate treaty negotiations between the
Western Allies and Austria. The Soviets finally ceased paying for this production
when the Austrian fabricators foisted upon them the purported minutes of a con-
versation between the Austrian Chancellor and General SVIR1DOV.

10. HANS is presumably still peddling fabricated information. His current

customers are not known to OSO but, at the latest count, 32 intelligence agencies
of various nations, not counting emigre or other unofficial groups, were operating
independently of one another in Vienna alone.

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Case Q: The VASILIADES Fabrication

1. Antonios VASILIADES was born in 1904 on the Greek island of

Mytilene. During the Axis occupation of his country, he served as commanding
officer of a sabotage regiment of ELAS (underground resistance forces) and pro-
vided Allied intelligence officers with information on German movements. In
1947 he claimed to hold several high-ranking positions in the Greek Communist
Party (ICKE), as well as in the National Liberation Front (EAM), a Communist-
sponsored organization.

2. In March 1947, OSO learned through a covert source in Athens that

VASILIADES had become disillusioned with the Communist cause and was
supplying information to the Greek Government through General Napoleon
ZERVAS, Minister of Public Order. The subjects covered in VASIL1ADES' re-
ports were the KICE, Communist-front organizations, Cominform activities in
Greece, and Communist Parties of other countries. OSO made arrangements to
receive copies of these reports but, since they were obtained without either
VASILIADES' or ZERVAS' knowledge, could not learn the evaluation ZERVAS gave
them.

3. In May 1947, in view of the possibility that ZERVAS might not long
occupy his ministerial office (he in fact relinquished it in September), OSO
established direct contact with VASILIADES in order to be assured of the con-
tinuing receipt of his material. VASILIADES accepted an offer of collaboration
with "U.S. intelligence" in return for a sizeable salary and stated that, in addi-
tion to obtaining information through personal observation of his fellow Com-
munists, he also planned to establish a network of informants in the ICICE and its
satellite organizations.

4. In July 1947, OSO began to suspect that VASILIADES might be padding

his reports with fictitiotis information, because other sources did not confirm the
large number of arrivals and departures of Communists from other countries
which VASILIADES reported in detail. Test questions were then put to VASILIADES,
but with inconclusive results, as he refused to answer some of the questions and
gave indignant, evasive answers to others. OSO began to doubt his claims that
he held high positions in the ICICE, especially after an investigation revealed that
his name did not appear on any list of Greek Communists available to various
other OSO sources.

5. When a thorough investigation failed to establish the reliability of

VASILIADES' information, he was subjected to direct interrogation. Many of his
replies to the questions posed were at variance with information he had previously
reported. He finally confessed that he had been embroidering the truth with
imaginary incidents and fictitious characters in order to make the reports appear
more important. Although he maintained that only about 30% of his material had
been fabricated, he was proved to be such an inveterate liar that no credence
could be given to any of it. Such of his information as was true probably did come

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from his personal contact with the EKE or EAM, but this contact was on a much
lower level than his reports implied. His motive for engaging in intelligence
activities, described by him as purely patriotic, is now believed by OSO to have
been primarily financial, but also in part psychological: that is, he derived a
feeling of self-importance from his acceptance by the Americans as a trusted and
daring collaborator.

6. During the thirteen months of VASILIADES' association with OSO he

submitted approximately 332 reports, about one-third of which were "disseminated
by OSO to other U.S. Government agencies. None was transmitted to a foreign
government. The only instance known to OSO of supposed "confirmation" of the
material supplied by VASILIADES dealt with the subject of International Brigades
which had allegedly been sent to Greece to aid the Communist guerrillas.
VASILIADES had probably been aware of the rumors about such brigades which
had gained currency in 1947, capitalizing on them to provide the Americans with
reports of likely acceptability.

7. Ttie VASILIADES material was initially well received by analysts in

U.S. agencies. However, the fact that it quickly became suspect to customers
when it was not confirmed by intelligence from other sources suggests to OSO
that probably little or none of it became incorporated in U.S. national estimates.

8. VASILIADES was only one of many sources who reported on the ex-
istence of International Brigades in Greece. In late 1947 and early 1948, repre-
sentatives of CIA and the Department of State held a series of conferences which
resulted in the decision that, despite apparent confirmation from sources in many
areas, there was no evidence to support any of the reports on this subject.

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Case R: The AMOSS Fabrication Effort

Background

1. Ulius F. AMOSS, an American citizen, attempted unsuccessfully in

1948 and 1949 to pass unreliable intelligence material to U.S. military and naval
intelligence officers in London. AMOSS was born in St. Louis, Missouri, on 28
July 1895. From 1922 to 1927 he was Chief of the American YMCA Mission to
Greece. In May 1942 he joined OSS as a Lieutenant-colonel. He was stationed in
Cairo as a specialist in Greek affairs until late in 1943, when he was released
from OSS and joined the U.S. Ninth Air Force.

2. For a short time after the war, AMOSS published in London and
Washington a periodical called the Report Letter which purported to be a sum-
mary of foreign intelligence material. In November 1950, he began the publication
of two periodicals, British Services of Intelligence and International Service of
Information, designed for circulation in England and the United States, respec-
tively.

3. AMOSS contends that his information is obtained from numerous

reliable agent networks inside Russia and its satellites. This claim is not sub-
stantiated by the quality of his information, and he is not believed to have any true
sources. It is possible that he receives material from a group of Russian emigres
in England who sponsor the weekly publication East Europe and Soviet Russia, in
which AMOSS has claimed to have an interest. Some of the articles featured in
the AMOSS periodicals mentioned above are believed to have been written by his
wife, Veronica GROGAN AMOSS, an English woman who was employed by the
Psychological Warfare Division of MI-6 in Cairo, where AMOSS met her during
World War II.

4. AMOSS' sole motive is believed to be to make money, as evidenced by

his remark to two American officers in London, in 1949, that his "reports" are
subscribed to by 'a whole lot of damn fools who are paying two hundred dollars
0. year for (them)."

OSO Experience and that of Other U.S. Intelligence Agencies

5. In November 1948, the U.S. Military Attache in London asked local

OSO representatives if AMOSS was known to them. The request was made on
behalf of General HALL, U.S. Army, Berlin, to whom AMOSS had offered intelli-
gence information, giving the impression that he was a member of CIA. The OSO
representative, after checking with Headquarters, assured the Military Attache
that AMOSS was not connected with CIA and was considered unlikely to have access
to information of intelligence value.

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6. Three months later the U.S. Air Attache in London made a similar
request to OSO and was informed of AMOSS' unreliability.

7. In June 1949, AMOSS passed some reports to a U.S. Naval Intelligence

officer in London, this time implying that he was connected with U.S. Air Force
intelligence. In reply to the naval officer's request for an evaluation, OSO stated
that AMOSS had a reputation in Washington as an incompetent dabbler in intelli-
gence, that the Director of Air Force intelligence disclaimed any connection with
AMOSS, and that CIA considered his material worthless.

8. In February 1951, OSO received from CIA's Office of Operations a

report attributed to AMOSS and his "correspondents behind the Iron Curtain,"
and entitled "Aircraft Production: USSR/Czechoslovakia." OSO evaluated the
report as containing some false statements, some dubious but unverifiable data
and some true information which could have been obtained from the press or from
refugees and returned prisoners of war.
Conclusions
9.

Whatever the reason for the checks, the fact remains that they did result in
avoiding wasted time and effort by American intelligence personnel, as well as in
preventing the incorporation of worthless material into U.S. intelligence files.

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