Saturday, November 27, 2010


In June 1940 Federal Bureau of Investigation director J. Edgar Hoover produced his plan for a new clandestine intelligence agency, the Special Intelligence Service, to operate across Latin America to counter any threat from the Nazis. Its mission was to combat “financial, economic, political, and subversive activities detrimental to the security of the United States.” President Franklin D. Roosevelt gave his secret approval on
24 June. Hoover’s choice to head the SIS was Assistant Director Percy E. Foxworth. However, Hoover’s determination to exercise his right to be the only civilian intelligence-gathering organization to operate in Latin America led to some extraordinary conflicts with the Office of Strategic Service’s (OSS) Gen. William Donovan.
The SIS concentrated on Brazil, Argentina, Chile, and Mexico, where there were large expatriate German communities, but was able to establish overt offices in Rio de Janeiro and Buenos Aires when Brazil cut diplomatic relations with the Axis in February 1942 and Argentina did so in 1944. Altogether about 360 SIS agents operated across Latin America, and by the end of the war, the FBI had appointed official legal attachés (legats) to liaise with the authorities in nine countries where they were openly declared as the FBI’s representatives based at the U.S. embassy.
The SIS in Brazil, headed from May 1941 by Jack West and then William J. Bradley, operated under difficult, shifting circumstances, but eventually identified Josef J. Starziczny as LUCAS, the organizer of a major Nazi spy ring whose radio transmissions to Hamburg had been intercepted by the Allies. Also caught up in the same organization was Albrecht Engels, code-named ALFREDO, who was the director of a Brazilian power company and another key figure in the Abwehr’s operations across South America.
In Chile the SIS, headed by legat Robert W. Wall since August 1941, with Dwight J. Dalbey operating undercover, gathered information about a transmitter that was traced to a farm outside Quilpue, near Valparaiso, and directed by the German air attaché, Maj. Ludwig von Bohlen, code-named BACH. By the time Chile severed relations with the Axis in January 1943, the radio had been silenced.
The SIS continued to operate until June 1946 when President Harry Truman’s National Intelligence Authority, chaired by Dean Acheson, transferred responsibility for all overseas intelligence gathering to the newly created Central Intelligence Group (CIG). However, the transfer was far from smooth, with Hoover taking offense
when the CIG’s chief, Gen. Hoyt S. Vandenberg, sent a team of former FBI special agents to negotiate with his assistant to the director for investigations, Edward A. Tamm. Hoover was furious, causing an embarrassed Adm. William D. Leahy to send a memorandum to Vandenberg recommending that “ex-FBI men now in the CI Group should certainly not be used for such contacts” and even that “to avoid offending Mr. Hoover we should not hereafter, without specific approval in each instance by the Authority, employ any persons who at any time separated themselves from FBI.”
Hoover’s rage at losing the SIS knew no bounds. The SIS supervisor for Mexico and Central America, William C. Sullivan, recalled that “he gave specific instructions to my office and all offices abroad that under no circumstances were we to give any documents or information to the newly established Central Intelligence Agency.”
As well as being disappointed at the loss of his SIS, Hoover also knew, from the cryptographic source code-named BRIDE (later better known as VENONA), that the OSS had been heavily penetrated by Soviet spies, and that several suspects had been accepted onto the new CIA’s staff. A measure of Hoover’s distrust of the CIA is the fact that the new agency was not informed about the existence of VENONA until 1954.
The Special Intelligence Service was formally closed on 31 March 1947, by which time the FBI had undertaken security surveys on more than 150 industrial plants and utilities and opened files on 887 espionage suspects in the region, of whom 389 had been arrested and 105 convicted. A total of 281 propaganda agents had been exposed and 60 arrested; 30 saboteurs had been identified and 20 arrested; and 222 smugglers had been identified, with 75 arrested and 11 convicted. Altogether 24 clandestine radio stations were monitored, and 30 sets seized, at a cost to the FBI of the loss of four SIS agents, killed in three separate plane crashes in South America. During the course of the war, Hoover sent 2,600 individual reports to the White House, the overwhelming majority of which concerned Latin America, but none of this was enough to persuade the Truman administration that the FBI required an overseas presence beyond the legats already established in the embassies in Rome (Stanley R. Russo), Paris (Horton R. Telford), Ottawa (Glenn H. Bethel), London (John A. Cimperman), and Mexico City.
The SIS was a brief, wartime experiment in the collection of intelligence, and its reach was extensive, far beyond its official brief of Latin America. At various times SIS personnel were stationed in Lisbon (Ivan W. Newpher), Manila (Nicholas J. Alaga), Madrid (Frank G. Siscoe), Casablanca (Joseph E. Thornton), and Tokyo (Alex M. Hurst).