U.S.A.

A scandal in spookdom

MICHAEL POSNER July 27 1981
U.S.A.

A scandal in spookdom

MICHAEL POSNER July 27 1981

A scandal in spookdom

As C.S. Lewis once observed, “Everything is a subject on which there is not much to be said.” The influential British poet and novelist was surely not thinking about the Central Intelligence Agency (CIA), home base for American espionage, but the remark is strangely appropriate. On the face of it, there is a good deal to be said about the CIA—its personnel, analyses, objectives, operations and effectiveness. But in fact so little is publicly known in all of those areas that discussion is soon reduced to idle speculation or—more fittingly—silence.

It is with such caution that one ought to approach the agency’s current controversy—last week’s resignation of its deputy director of operations, Max Hugel, and the imperilled fortunes of the CIA director himself, William Casey. Hugel’s hasty departure—he had been in the job less than two months—followed the publication of a Washington Post story alleging that, during 1974 and 1975, the former army intelligence officer manipulated trading in the stock of Brother International Corp. (Bí), a company he headed. He did so, the Post charged, by feeding insider knowledge of his firm’s economic performance to McNeil Securities, the Wall Street brokerage house retained to promote Bí stock. Later, Hugel allegedly arranged for a business associate to place five separate orders to purchase 15,000 Bí shares so as to give the illusion of investor interest in the company. When the 1974 recession sharply devalued share prices on the exchange and put many Wall Street houses in jeopardy, Hugel indirectly funnelled $131,000 (U.S.) into McNeil Securities to keep it afloat. None of these activities, it is claimed, were revealed to other Bí shareholders.

Much of the Post’s information came from Thomas McNeil, the co-owner of the securities firm, who tape-recorded several 1974 conversations with Hugel. Although Hugel has denied any wrongdoing, the tapes do appear incriminating. And few members of the American intelligence community were saddened to see Hugel’s resignation. The deputy director’s job is considered the most important post in spookdom, overseeing the entire range of clandestine operations, and Hugel was judged singularly unqualified for the position. He was apparently chosen—and rushed through the CIA’s usually exhaustive screening process—at the express request of Casey, on the grounds that he needed someone he knew and trusted. Inevitably Casey’s own judgment came into question. Those doubts were aggra-

vated by two judicial rulings last week which cited the 68-year-old former chairman of the Securities Exchange Commission as having knowingly misled would-be investors in the now-defunct Multiponics, Inc., of which he was a director.

At week’s end, the select committee on intelligence was probing the legal charges against Casey. If nothing more embarrassing is turned up, Casey will probably be allowed to stay on. He is a close confidant of Reagan’s and at one stage helped direct his presidential election campaign. Officially, he is said to retain Reagan’s confidence, but that can be withdrawn at very short notice.

MICHAEL POSNER