[Spooks] Before the CIA, There Was the Pond

[L.T. Easterly]

This is neat! I had not heard of this find!


On Thu, Jul 29, 2010 at 12:15 PM, Al Fansome <al_fansome at hotmail.com> wrote:

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> July 29, 2010
>
> AP IMPACT: Before the CIA, There Was the Pond
>        By THE ASSOCIATED PRESS
>
> Filed at 10:39 a.m. ET
>
> NEW YORK (AP) -- It was a night in early November during the infancy of
> the Cold War when the anti-communist dissidents were hustled through a
> garden and across a gully to a vehicle on a dark, deserted road in
> Budapest. They hid in four large crates for their perilous journey.
>
> Four roadblocks stood between them and freedom.
>
> What Zoltan Pfeiffer, a top political figure opposed to Soviet
> occupation, his wife and 5-year-old daughter did not know as they were
> whisked out of Hungary in 1947 was that their driver, James McCargar,
> was a covert agent for one of America's most secretive espionage
> agencies, known simply as the Pond.
>
> Created during World War II as a purely U.S. operation free of the
> perceived taint of European allies, the Pond existed for 13 years and
> was shrouded in secrecy for more than 50 years. It used sources that
> ranged from Nazi officials to Stalinists and, at one point, a French
> serial killer.
>
> It operated under the cover of multinational corporations, including
> American Express, Chase National Bank and Philips, the Dutch-based
> electronic giant. One of its top agents was a female American
> journalist.
>
> Now the world can finally get a deeper look at the long-hidden roots of
> American espionage as tens of thousands of once-secret documents found
> in locked safes and filing cabinets in a barn near Culpeper, Va., in
> 2001 have finally become public after a long security review by the Central
> Intelligence Agency.
>
> The papers, which the Pond's leader tried to keep secret long after the
> organization was dissolved, were placed in the National Archives
>  in College Park, Md., in 2008 but only opened to the public in April.
> Those records plus documents obtained by The Associated Press in the
> past two years from the FBI, CIA and other agencies under the Freedom of
>  Information Act portray a sophisticated organization obsessed with
> secrecy that operated a network of 40 chief agents and more than 600
> sources in 32 countries. The AP has also interviewed former officials,
> family members, historians and archivists.
>
> The Pond, designed to be relatively small and operate out of the
> limelight, appeared to score some definite successes, but rivals
> questioned its sources and ultimately, it became discredited because its
>  pugnacious leader was too cozy with Sen. Joseph McCarthy and other
> radical anti-communists.
>
> The documents also highlight issues still relevant today: the rivalry
> among U.S. intelligence agencies that have grown to number 16, the
> government's questionable use of off-the-books operations with budgets
> hidden from congressional oversight, and the reliance on contractors to
> undertake sensitive national security work.
>
> Created by U.S. military intelligence as a counterweight to the Office
> of Strategic Services, the forerunner of the CIA, it functioned as a
> semiautonomous agency for the State Department after World War II and
> ended its days as a contractor for the CIA with links to J. Edgar Hoover's
> FBI.
>
> The organization counted among its exploits an attempt to negotiate the
> surrender of Germany with Hermann Goering, one of Adolf Hitler's
>  top military leaders, more than six months before the war ended; an
> effort to enlist mobster Charles ''Lucky'' Luciano in a plot to
> assassinate Italian dictator Benito Mussolini;
>  identifying the location of the German heavy water plants doing atomic
> research in Norway; and providing advance information on Russia's first
> atomic bomb explosion.
>
> There were other tangible successes, such as planting a high-level mole
> in the Soviet secret police and, in a major operation code-named
> ''Empire State,'' the Pond paid a group of dissidents behind the Iron
> Curtain with CIA funds to obtain cryptographic systems to break coded
> messages from Moscow.
>
> But it was Pfeiffer's successful escape that was among the most
> high-profile operations, garnering headlines, although the Pond's role
> was kept secret for years.
>
> McCargar, a State Department official who secretly was the Pond's agent
> in Budapest, had been ordered to find a way to get Pfeiffer and his
> family out of the country. The Hungarian was the leader of a small but
> increasingly popular anti-communist party that had made gains in August
> elections, and he had begun to get death threats.
>
> McCargar coordinated the escape with the help of fellow State Department
>  employee Edmund Price, also identified in the papers as working for the
>  Pond. But it was McCargar, armed with a pistol, who drove them from
> Budapest, past four road blocks. At one, a Russian guard asked to see
> what was in the four crates. McCargar bribed him with cigarettes.
>
> They arrived in Vienna, a hotbed of international intrigue, where the
> U.S. shared control with their allies, the French and the British, as
> well as the Soviets. Against this politically fraught backdrop, Pfeiffer
>  and his family were taken to an airfield and spirited away to Frankfurt
>  and on to New York. They arrived in the U.S. on Nov. 12 as heroes of
> the anti-communist opposition.
>
> One of the escapees, Pfeiffer's daughter, Madeline, told the AP she
> remembered sitting between her mother's legs in one crate and that she
> was given sleeping pills to keep her quiet.
>
> ''It is strange to realize that I have lived though this, and that my
> parents lived through this,'' said Madeline Pfeiffer, 67, now living in
> San Francisco. On the 50th anniversary of their flight from Hungary, she
>  said she sent McCargar a bottle of cognac -- what he and her parents
> drank after escaping. Two other dissidents were taken out with them.
>
> The head of the Pond was Col. John V. Grombach, a radio producer,
> businessman and ex-Olympic boxer who kept a small black poodle under his
>  desk. He attended West Point, but didn't graduate with his class because
> he had too many demerits, according to a U.S. Army
>  document. His nickname was ''Frenchy,'' because his father was a
> Frenchman, who worked in the French Consulate in New Orleans.
>
> The War Department had tapped Grombach to create the secret intelligence
>  branch in 1942 as a foundation for a permanent spy service. Grombach
> said the main objectives were security and secrecy, unlike the OSS,
> which he said had been infiltrated by allies and subversives. It was
> first known as the Special Service Branch, then as the Special Service
> Section and finally as the Coverage and Indoctrination Branch.
>
> To the few even aware of its existence, the intelligence network was
> known by its arcane name, the Pond. Its leaders referred to the G-2
> military intelligence agency as the ''Lake,'' the CIA, which was formed
> later, was the ''Bay,'' and the State Department was the ''Zoo.''
> Grombach's organization engaged in cryptography, political espionage and
>  covert operations. It had clandestine officers in Budapest, London,
> Lisbon, Madrid, Stockholm, Bombay, Istanbul and elsewhere.
>
> Grombach directed his far-flung operations from an office at the
> Steinway Hall building in New York, where he worked under the cover of a
>  public relations consultant for Philips. His combative character had
> earned him a reputation as an opportunist who would ''cut the throat of
> anyone standing in his way,'' according to a document in his Army
> intelligence dossier.
>
> In defining the Pond's role, Grombach maintained that the covert network
>  sought indirect intelligence from people holding regular jobs in both
> hostile countries and allied nations -- not unlike the Russian spies
> uncovered in June in the U.S. while living in suburbia and working at
> newspapers or universities.
>
> The Pond, he wrote in a declassified document put in the National
> Archives, had a mission ''to collect important secret intelligence via
> many international companies, societies, religious organizations and
> business and professional men who were willing to cooperate with the
> U.S. but who would not work with the OSS because it was necessarily
> integrated with British and French Intelligence and infiltrated by
> Communists and Russians.''
>
> On April 15, 1953, Grombach wrote that the idea behind his network was
> to use ''observers'' who would build long-term relationships and produce
>  far more valuable information than spies who bought secrets.
> ''Information was to be rarely, if ever, bought, and there were to be no
>  paid professional operators; as it later turned out some of the
> personnel not only paid their own expenses but actually advanced money
> for the organization's purposes.''
>
> The CIA, for its part, didn't think much of the Pond. It concluded that
> the organization was uncooperative, especially since the outfit refused
> to divulge its sources, complicating efforts to evaluate their reports.
> In an August 1952 letter giving notice that the CIA intended to
> terminate the contract, agency chief Gen. Walter Bedell Smith wrote that
>  ''our analysis of the reports provided by this organization has
> convinced us that its unevaluated product is not worth the cost.'' It
> took until 1955 to completely unwind the relationship.
>
> Mark Stout, a former intelligence officer and historian for the
> International Spy Museum in Washington, analyzed the newly released
> papers and said it isn't clear how important the Pond was to U.S.
> intelligence-gathering as a whole. ''But they were making some real
> contributions,'' he said.
>
> Matthew Aid, an intelligence historian and author of ''The Secret Sentry:
> The Untold History of the National Security Agency''
>  who has reviewed some of the collection, said there was no evidence the
>  Pond's reports made their way to decision-makers. ''I'm still not
> convinced that Grombach's organization was a worthwhile endeavor in
> World War II and even less so when it went off the books,'' he said.
>
> What it may have lacked in quality and influence, however, the Pond
> certainly made up with chutzpah.
>
> One of the outfit's most unusual informers was a French serial killer named
> Marcel Petiot, Grombach wrote in a 1980 book.
>
> The Secret Intelligence Branch, as he referred to the Pond, began
> receiving reports from Petiot during the war. He was a physician in
> Paris who regularly treated refugees, businessmen and Gestapo agents,
> but he also had a predilection for killing mostly wealthy Jews and
> burning their bodies in a basement furnace in his soundproofed house. He
>  was convicted of 26 murders and guillotined in 1946.
>
> Nevertheless, Grombach considered him a valuable informer because of his
> contacts.
>
> One cable discovered among the newly released papers appears to confirm
> the Pond was tracking Petiot's whereabouts. In the undated memo, the
> writer says Petiot was drawn by a Gestapo agent ''into a trap to be
> arrested by the Germans.'' Petiot was briefly arrested in 1943 by the
> Gestapo.
>
> Such sources were often feeding their reports to top operatives -- often
>  businessmen or members of opposition groups. But there were also
> journalists in the spy ring.
>
> Ruth Fischer, code-named ''Alice Miller,'' was considered a key Pond
> agent for eight years, working under her cover as a correspondent,
> including for the North American Newspaper Alliance. She had been a
> leader of Germany's prewar Communist Party and was valuable to the Pond
> in the early years of the Cold War, pooling intelligence from
> Stalinists, Marxists and socialists in Europe, Africa and China,
> according to the newly released documents.
>
> But it was the help from businesses in wartime that was essential to
> penetrating Axis territories.
>
> The Philips companies, including their U.S. division, gave the Pond
> money, contacts, radio technology and supported Grombach's business
> cover in New York. Philips spokesman Arent Jan Hesselink said the
> company had business contacts with Grombach between 1937 and 1970. He
> added that they could not ''rule out that there was contact between
> Philips and Grombach with the intention of furthering central U.S.
> intelligence during the war.''
>
> The Pond laid the groundwork and devised a detailed postwar plan to
> integrate its activities into the U.S. Rubber Co.'s business operations
> in 93 countries. It is unknown if the plan was ever carried out. The
> Pond also worked with the American Express Co., Remington Rand, Inc. and
>  Chase National Bank, according to documents at the National Archives.
>
> American Express spokeswoman Caitlin Lowie said a search of company
> archives revealed no evidence of a relationship with Grombach's
> organization. Representatives of the other companies or their successors
>  did not respond to requests for comment.
>
> The Pond directed its resources for domestic political ends, as well.
>
> In the 1950s, Grombach began furnishing names to McCarthy on supposed
> security risks in the U.S. intelligence community. By then, the Pond was
>  a CIA contractor, existing as a quasi-private company, and the agency's
>  leadership was enraged by Grombach's actions. It wasn't long before the
>  Pond's contract was terminated and the organization largely ceased to
> exist.
>
> The CIA withheld thousands of pages from the National Archives
> collection of Grombach papers, including eight rolls of documents on
> microfilm; the National Security Agency kept back devices used to send
> coded messages. The CIA also declined a Freedom of Information Act
> request by the AP detailing its relationship to the Pond, which the AP
> has appealed.
>
> Grombach wrote to the Hoover Institution Archives at Stanford University,
>  dated June 10, 1977, indicating most of his classified papers would go
> to the American Security Council Foundation, an anti-communist group
> that works on national security policy. Grombach died in 1982.
>
> Henry A. Fischer, the council's executive director, said safes at the
> 683-acre Longea Estate -- site of the council's former Freedom Studies
> Center -- were mistakenly removed by contractors hired to transfer the
> contents of its Boston, Va., library. He said he had been told by staff
> of the error when FBI agents were called to examine them. ''I have no
> idea what they were going to do with them.''
>
> FBI historian John Fox said only one safe was removed from the property
> by the contractors and drilled open, its contents turned over to the
> CIA, which informed the bureau about the discovery in December 2001. Fox
>  said the FBI recovered four other safes from the council and took them
> to Quantico to be opened. After an investigation, Fox said the remaining
>  documents were transferred to the CIA.
>
> ----
>
> Associated Press writer Toby Sterling in Amsterdam contributed to this
> report.
>
> ----
>
> Online:
>
> National Archives Research Catalog: http://www.archives.gov/research/arc/
>
> CIA ''Pond'' article: http://bit.ly/cx5VIX
>
> John Grombach obit, see p. 132: http://bit.ly/cOnWW5
>
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