CIA’s post-Sept. 11 spy program falters

WASHINGTON – The CIA set up a network of front companies in Europe and elsewhere after the Sept. 11, 2001, attacks as part of a constellation of “black stations” for a new generation of spies, according to current and former agency officials.

But after spending hundreds of millions of dollars setting up as many as 12 of the companies, the agency shut down all but two after concluding they were ill-conceived and poorly positioned for gathering intelligence on the CIA’s principal targets: terrorist groups and unconventional weapons proliferation networks.

The closures were a blow to two of the CIA’s most pressing priorities after Sept. 11 – expanding its overseas presence and changing the way it deploys spies.

The companies were the centerpiece of an ambitious plan to increase the number of case officers sent overseas under what is known as “non-official cover,” meaning they would pose as employees of investment banks, consulting firms or other fictitious enterprises with no apparent ties to the U.S. government.

But the plan became the source of significant dispute within the agency and was plagued with problems, officials said. The bogus companies were located far from Muslim enclaves in Europe and other targets. Their size raised concern that one mistake would blow the cover of many agents. And because business travelers don’t ordinarily come into contact with al-Qaida or other high-priority adversaries, officials said, the cover did not work.

Summing up what many considered the fatal flaw of the program, one former high-ranking CIA official said, “They were built on the theory of the ‘Field of Dreams’: Build them, and the targets will come.”

Officials said the experience reflects an ongoing struggle at the CIA to adapt to a new environment in espionage. The agency has sought to regroup by designing covers that would provide pretexts for spies to get close to radical Muslim groups, nuclear equipment manufacturers and other high-priority targets.

But current and former officials said progress has been painfully slow, and that the agency’s efforts to alter its use of personal and corporate disguises have yet to produce a significant penetration of a terrorist or weapons proliferation network.

“I don’t believe the intelligence community has made the fundamental shift in how it operates to adapt to the different targets that are out there,” said Rep. Peter Hoekstra of Michigan, the top Republican on the House Intelligence Committee. The cover arrangements most commonly employed by the CIA “don’t get you near radical Islam,” Hoekstra said, adding that six years after the Sept. 11 attacks, “We don’t have nearly the kind of penetrations I would have expected against hard targets.”

Whatever their cover, the CIA’s spies are unlikely to single-handedly penetrate terrorist or proliferation groups, officials said. Instead, the agency stalks informants around the edges of such quarry – moderate Muslims troubled by the radical message at their mosques, mercenary shipping companies that might accept illicit nuclear components as cargo; chemists whose colleagues have suspicious contacts with extremist groups.

Agency officials declined to respond to questions about the front companies. “Cover is designed to protect the officers and operations that protect America,” CIA spokesman Paul Gimigliano said. “The CIA does not, for that very compelling reason, publicly discuss cover in detail.”

But senior CIA officials publicly have acknowledged that the agency has devoted considerable energy to creating new ways for its case officers – the CIA’s term for its overseas spies – to operate under false identities.

The vast majority of the CIA’s spies traditionally have operated under what is known as official cover, meaning they pose as U.S. diplomats or employees of another government agency.

The approach has advantages, including diplomatic immunity, which means that an operative under official cover might be kicked out of a country if he is caught spying, but won’t be imprisoned or executed.

Official cover is also cheaper and easier. Front companies can take a year or more to set up. They require renting office space, having staff to answer phones and paying for cars and other props. They also involve creating fictitious client lists and resumes that can withstand sustained scrutiny.

One of the CIA’s commercial cover platforms was exposed in 2003 when undercover officer Valerie Plame was outed in a newspaper column. Public records quickly led to the unraveling of the company that served as her cover during overseas trips, a fictitious CIA firm called Brewster Jennings & Associates.

Official cover worked well for the duration of the Cold War, when holding a job at a U.S. Embassy enabled American spies to make contact with Soviet officials and other communist targets.

But many intelligence officials are convinced that embassy posts are not useful against a new breed of adversaries. “Terrorists and weapons proliferators aren’t going to be on the diplomatic cocktail circuit,” said one government official familiar with the CIA’s cover operations.

After the terrorist strikes, the Bush administration ordered the agency to expand its overseas operation by 50 percent. The agency came under pressure from Congress to alter its approach and got a major boost in funding to expand the non-official cover program.