In 1961, when a KGB counterintelligence officer showed up at a CIA station in Helsinki, Jeanne Vertefeuille held the keys to the office safe. "Responsibility for office funds was part of my normal administrative duties," the former CIA officer writes in Circle of Treason, the book she co-authored in 2013, "and therefore I could get into the strongbox where we kept our money."
The intelligence officer and his family needed to get out of the country, fast, and they needed money for the plane tickets and travel expenses. "I immediately drove to the office, opened the strongbox, pulled out wads of currency without counting, and then proceeded as fast as I could to the airport," Vertefeuille writes. She sped to the airport, where she met the defecting officer and the CIA station chief, handed them the money, and sent them on their way to the United States.
Her takeaway, as a bureaucrat? "Needless to say," she writes, "my accountings did not balance that month."
Like every other business, clandestine operations have a budget and like every federal agency, that budget is examined by scores of government workers. But how do expenses work if you're a spy, doing secret work?
Much like other kinds of work, it turns out, with a few key differences. The nature of the business might mean that unexpected expenses come up and not all can be documented with receipts. But the people holding the purse strings back in the seat of government do want to know what the tax dollars they've committed are being spent on.
"We were very conscious of being accountable. These were taxpayer funds. They weren't to be spent frivolously," says Peter Earnest, a former CIA operations officer who's now the executive director of the International Spy Museum. "And that was enforced by a pretty bureaucratic accounting process."
It might be incongruous to think of spies having to account for expenses, like any old suit on a business trip, but in reality, people working for intelligence services do have to keep track of the money they're spending, file expense reports, and even hound their company (the Company, in this case) to reimburse them. "They're the same as the reports any businessman would submit after meeting a client," says Chris Lynch, former FBI and CIA counterintelligence officer and author of The C.I Desk. "Meals, miles, parking, small gifts, other expenses, receipts if they had them, some kind of 'certification' if they didn’t."
Information about expense reports for intelligence operations is somewhat hard to come by, both because it's mundane and potentially revealing. Spy memoirs don't spend a lot of time recalling the hours spent on filling out paperwork, but, on the other hand, boring paperwork, if it included line-by-line accountings of expenses, could show how an officer operates—and how lavishly he or she spends. The expenses for setting up an operation might include sourcing equipment, creating supply caches, arranging safe houses, and training people; one court case in Italy revealed records of U.S. intelligence officers staying at luxury hotels and spending as much as $500 a day eating out.
But some of the most intriguing expenses that intelligence operations rack up come from the requests of agents—the well-placed people that intelligence officers recruit to secretly pass along valuable information. Some agents simply want to be paid for their efforts. But some have much more unusual requests.
One of the main tasks of a case officer out in the field is to identify people who might be valuable assets, gain their trust, and convince them to clandestinely collect and share information. Often, this work starts with socializing. Cost might include: booze, food, and other enticements (pornography, in some places).
In his memoir, A Spy for All Seasons, Duane Clarridge, a former CIA officer who led the Latin American and European divisions, walks through the recruitment of a source. Clarridge identifies a possible agent, a man he calls Adamski. Since he's having trouble meeting up with Adamski, Clarridge starts by taking a mutual acquaintance for lunch and asking for help connecting. Clarridge doesn't pay this mutual friend—"I knew that any mention of compensation would be offensive to him," he writes—but he does give him small gifts. While trying to stage "accidental" meetings with Adamski, Clarridge rents a fishing boat, travels to a nearby tourist town, buys a gift (a piece of embroidery) for Adamski's wife, and helps him procure an abortion drug. Eventually, all these efforts led to Adamski agreeing to become an agent.
Recruiting agents, for Clarridge, was "addicting," he writes. But not all case officers relish this process. "As a general rule, case officers do not spend enough on cultivating agent candidates or liaison officials," Joseph Wippl, a former case officer who now teaches at Boston University, says. And, according to Clarridge, officers spending might depend, in part, on what they get out of it: "When case officers can't afford to go to lunch or dinner on their own because it's too expensive, they know they can still go out for a nice meal on Uncle Sam, since part of the business of developing somebody is taking him out for dinner," he writes. As bureau chief in Rome, Clarridge saw developmental activity go up when the dollar was weak—and drop again when the currency rallied.
Once an officer has recruited an agent, the question of compensation comes up. Agents have all sorts of motivations: sometimes they simply want or need money. But sometimes they have more complicated requests. In Clarridge's story, Adamski asks for ancient Greek coins, for a collection (although, as time passes, it becomes clearer that he's likely selling them off as a source of income). In other memoirs, CIA employees remember agents asking for wristwatches, crystal glassware, and pearls. Sometimes agents request items that are hard to come by where they live—sports equipment, for instance, from fishhooks, wading boots, and hand warmers to shotguns and ammunition. Agents might ask for toys for their kids, books, the latest gadgets, or prescriptions to hard-to-find medications. One agent asked for large quantities of ballpoint pens, which he was supposed to procure for his Soviet government office: he essentially just outsourced the task to the CIA.
These expenses had to be accounted for, too—even if they were simply cash payments.
"When I gave [an agent] their monthly stipend or whatever it was, they would sign for it," using a previously agreed upon name, says Earnest, the Spy Museum director. "I would have to submit that."
Besides this sort of work with agents, intelligence agencies like the CIA also run missions, and the expenses for those are bigger and less commonly seen on your average travel expense report. In his memoir, former CIA director William Colby describes the expenses of trying to influence, relatively early in the CIA's history, the outcome of an Italian election: The CIA handed over money to local political groups to publish propaganda, organizes rallies, and run voter registration campaigns. This added up. "Considering the amounts of money we were spending—at least relative to the CIA budget—it is not surprising that there was an almost constant demand by Washington for accountings on what we were accomplishing," he wrote. "There were many at headquarters who were suspicious that all we were doing was handing out our money in a free-wheeling happy-go-lucky way." And some operations, of course, involve even more serious expenditures, on, for instance, guns, ammunitions, and other military resources.
All these expenditures could be subject to internal auditing, and there is oversight. One director of Central Intelligence, Stansfield Turner, wrote that he defined certain kinds of actions that to be cleared with him: "payments to agents when they exceed certain dollar amounts; recruitments of foreign agents at Cabinet level or above; dispensing any lethal material…any operation where the risks were high and exposure could seriously embarrass the United States."
And, as Colby found, there wasn't much tolerance in Washington for flexible budgeting. "Once," he wrote, "I had been indiscreet enough to reply to a question about an item in a Southeast Asia appropriation that it was a 'slush fund' to meet future needs…the fund was eliminated from my budget by the examiner."
Of course, not all intelligence agencies necessarily operate the same way. Harvey Klehr, an Emory history professor who's studied the KGB, says that "in the 1930s and 1940s, there are occasional requests for more money—one KGB officer in LA asked for permission to buy a car, since no one in LA walked—but no indications that anyone filled out an expense report." The Comintern headquarters did want its employees to account for how their funds were spent, though. And Klehr says, when the KGB's predecessor agency found out it had been paying money to made up informants, it started requiring that more than one intelligence officer work with each source.
But, even more than people working in less sensitive operations, intelligence officers have a reason to responsibly report their expenses. "Another thing to keep in mind is: people in the clandestine service are periodically polygraphed," says Earnest. "And there are questions on there designed to uncover the fact that you had misused funds. That’s something the average citizen doesn’t go through."
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