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Terror Watch: Undoing Goss's CIA Purge

As controversial CIA Director Porter Goss exits the agency, NEWSWEEK has discovered new details about a purge of top agency operatives shortly after Goss's arrival in 2004. A bitter secret feud over a Clinton-era counterintelligence case was apparently a major motivation behind the loss of those seasoned intelligence veterans, sources say. Gen. Michael Hayden, President Bush's nominee to replace Goss as CIA chief, has signaled that when he is confirmed by the Senate, probably later this week, he intends to appoint one of the principal victims of the feud, former CIA operations chief Stephen Kappes, as deputy CIA director—a move that is regarded inside the intelligence world as a final insult to Goss and his inner circle.

The secret feud revolves around how CIA management, led by former director George Tenet, handled a 1999 counterintelligence problem that arose as a result of the Clinton administration's bombing of Belgrade to oust Serbian dictator Slobodan Milosevic. Though the counterintelligence investigation ended years ago, egos and reputations were so deeply bruised that participants on both sides of the dispute (who spoke to NEWSWEEK anonymously because the matter is still considered sensitive) still fume when discussing the case. The CIA declined to comment on the matter.

After President Clinton ordered the bombing of Belgrade to begin in the spring of 1999, the American Embassy in the Serbian capital was evacuated of all personnel, including the entire CIA station. Before leaving the building, allegedly in haste, CIA officers were supposed to destroy all secret documents. Current and former intelligence officials called this procedure a "burndown" or "burnout." When they believed they had burned everything, CIA officials left the Belgrade embassy, but not before locking the heavy vault door at the entrance to the office suite that housed the CIA station.

American diplomats and CIA officials didn't return to the embassy until around nine months later, after the U.S. bombing of Belgrade stopped. When they opened the vault door into their suite, however, CIA officials were alarmed to discover that some secret documents had not been destroyed. Instead, they were found left lying either behind desks and file cabinets or in open sight, depending upon which version of the story is being told. According to some accounts, the unburned material included papers or microfiche identifying undercover informants—the kind of information that is among the most sensitive of all secrets the CIA is supposed to protect.

The agency launched a big investigation to determine whether any of the secret papers had been compromised. The inquiry was led by Kappes, the man who headed the counterintelligence office of the CIA's operations directorate. This group—which Goss renamed the National Clandestine Service—is the CIA branch principally responsible for recruiting informants and stealing secrets from foreign governments and groups believed to pose a threat to U.S. interests.

Kappes's investigation, which former intelligence officials familiar with the matter describe as exhaustive, determined there was no evidence that any classified materials had been compromised. According to the sources, the investigation found no evidence the door to the vault sealing CIA offices from the rest of the embassy had been tampered with; "counters," which logged the number of times the vault had been opened and shut, showed no evidence that the door had been opened during the months the embassy was vacant.

CIA security experts could find no other evidence of intrusion. The only way a hostile power could have gotten into the CIA offices, said one official who worked on the case, was to have torn down the wall to the CIA station, entered the CIA offices, copied any unburned secret documents, put them back in place and reconstructed the office's outer wall—all without leaving any trace.

But when the House Intelligence Committee, chaired at the time by Goss, a Florida GOP congressman and one-time CIA spy, was informed about the investigation, senior staffers who ran the committee for Goss became highly suspicious. For a start, according to an official familiar with the Goss camp's views, Goss's aides believed the CIA had inordinately delayed informing Capitol Hill about the counterintelligence investigation. According to this account, the CIA did not inform the committee of the problem until weeks after it was first discovered.

Goss's aides pressed the CIA for more information, but the agency continued to insist there was no evidence that any secrets in Belgrade had been compromised, according to sources. Goss's aides were unsatisfied with the agency's responses, however, and came to believe, according to a source in the Goss camp, that the agency was "stonewalling."

As a result, Goss's House committee staff launched their own investigation into the incident, complete with field trips to Europe. According to a source familiar with the committee probe, the Goss team concluded that there were unspecified "anomalies" indicating that as many as three foreign intelligence services—including the Serbs and the Russians—had gotten inside the abandoned CIA station, copied the unburned CIA files, and then cleaned up any evidence of intrusion so brilliantly as to make their presence undetectable.

The CIA group, led by Kappes and his superiors, continued to maintain there was no evidence of any intrusion. The more the CIA argued this, however, the more Goss's aides began to suspect a cover-up. At the very least, said a source close to Goss's team, the House investigators wanted the CIA to acknowledge the possibility that secrets in Belgrade might have been compromised.

The CIA continued to insist there was no security breach; officials pointed out that it was virtually impossible to "prove a negative," namely to prove 100 percent that no sinister forces got into the Belgrade CIA station. Goss's aides pressed for the CIA to fire or discipline the CIA's station chief in Belgrade, but Kappes, heading the CIA's internal investigation, refused. Goss's team grew more and more irate at the agency's attitude. Eventually, Goss's aides persuaded him to sign a secret letter cutting the CIA's counterintelligence budget by $3 million; this was intended as a deliberate rebuke to the agency's handling of the Belgrade incident and its aftermath, according to former and current intelligence officials familiar with the matter. But CIA management, under Tenet, ignored the budget-cut order, and the agency eventually returned to business as usual, with no officials being fired over the Belgrade incident (or nonincident, depending on whom you believe).

Goss's aides continued to seethe at what they perceived to be Clintonite dissembling by Kappes and other permanent CIA officials. After the Senate in 2004 confirmed Goss as Tenet's permanent replacement as CIA director, Goss brought with him to the CIA at least two former congressional aides who had worked on the Belgrade investigation; one of them, Patrick Murray, became Goss's chief of staff. Almost immediately the Goss staffers, most of whom had worked years earlier at the agency but left after truncated careers, encountered friction with career agency officials, who derisively began referring to the Goss's aides as "Gosslings."

Within weeks of the Gosslings' arrival at CIA headquarters, Murray got into an argument with Kappes—who by then had been promoted to head the entire Operations Directorate—and his chief deputy, Michael Sulick (who also worked on the Belgrade investigation). The argument became so heated that Murray ordered Kappes to fire Sulick. When Kappes refused, both he and Sulick, regarded as two of the agency's most skilled field operatives and espionage managers, left the agency. "It was his decision to leave," Kappes's father, Bob Kappes, told NEWSWEEK.

But a source close to the Goss team said that because of the bitterness over Belgrade, a fierce clash between Kappes and the Gosslings was perhaps inevitable. Also driven from the agency soon after the Gosslings' arrival was the CIA's No. 3 official, Executive Director A.B. (Buzzy) Krongard, who had defended agency handling of the Belgrade investigation, and other senior CIA operatives connected to the case.

Two weeks ago, Goss suddenly announced he was stepping down as CIA director, amid only lukewarm praise from President Bush and other officials regarding how he managed the agency. By the end of this week, Goss and most of his coterie of Gosslings are expected to have left CIA headquarters for good.

Shortly after the White House announced the president's intention to nominate General Hayden to succeed Goss as CIA chief, John Negroponte, the national-intelligence czar whose office was set up by Congress after 9/11 to better coordinate the activities of the CIA and other spy agencies, announced that he wanted Kappes, who has been working in London for a private security firm, to come back to CIA headquarters as Hayden's deputy. Kappes's father told NEWSWEEK last weekend that his son would only take the job if he was not going to be treated like a "political pawn." So far, indications are that Kappes will get the assurances he wants and will be joining Hayden in the CIA director's seventh-floor executive suite in the relatively near future.

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