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Elizabeth Farnsworth has an update on the case of CIA agent Harold Nicholson, the most senior agent ever accused of spying for Russia.

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ELIZABETH FARNSWORTH: In Washington today, the State Department filed a protest with the Russian government for its attempted espionage against the United States. But in Moscow, officials dismissed the arrest of CIA agent Harold Nicholson as an internal American matter. Nicholson, a former station chief, is the highest-ranking CIA official ever to be charged with espionage. He allegedly sold information to Russian intelligence for $120,000. Now we get two views on the case from Walter Pincus, who covers intelligence for the "Washington Post, and David Whipple, a retired CIA official who is now executive director of the Association of Former Intelligence Officers. Thank you both very much for being with us. Mr. Whipple, what was Harold Nicholson's job in the CIA, or what were his jobs?

DAVID WHIPPLE, Former Intelligence Officer: Well, he had a series of jobs, just as all people in the operation directorate have. He started out--

ELIZABETH FARNSWORTH: In the operation directorate which you were also in as the clandestine part of the CIA.

DAVID WHIPPLE: The spooks, the spies, that's about it. And most people that serve abroad are with the operation directorate. So he did his early training, and then he went out as a what we call a case officer, an operations officer, and then he moved up the ladder, I think, rather rapidly because he was quite an effective operations officer. He was in several stations as an operations officer, and eventually he became a deputy chief of station, which is quite a very responsible job, and then in Bucharest, he was the chief of station.

ELIZABETH FARNSWORTH: And what was he doing in--let's say when he was in Southeast Asia and also when he was chief of station--what was he doing?

DAVID WHIPPLE: He was focused primarily on the Russian targets in those areas, trying to recruit them, trying to gain accesses to them, and this was his official duties. He, at the same time, worked against other targets, as we all did and all do. And then he moved back to this country and took a job training at the, what we call the farm, which is a training facility of the CIA, and then from that point of view, he moved over to the terrorism directorate, the terrorism center, where he was a subordinate official but at the same time working on the terrorist targets around the world.

ELIZABETH FARNSWORTH: So, Mr. Pincus, when he was overseas, he was trying to get Russians to turn. He was trying to turn Russians to get them to become counter-espionage agents, themselves, but they turned him. Do we know why? Is there any evidence why?

WALTER PINCUS, Washington Post: I think we'll have to wait to find that out. Based on the material that the FBI's released, it apparently happened just as he was about to return to the United States that, at least the FBI said, he got his first payment of $12,000.

ELIZABETH FARNSWORTH: But it seems to be for money, rather than for ideology, is that right?

WALTER PINCUS: Well, it seems to be for money. I think you have to wait and see. The Ames case was supposed to be for money too, but he had some other ideas. You don't just--

ELIZABETH FARNSWORTH: Aldrich Ames, the spy who sold the names, or who revealed the names of Russian spies, many of whom--most of whom were killed.

WALTER PINCUS: And who lasted for nine years.

ELIZABETH FARNSWORTH: Yeah.

WALTER PINCUS: Money appeared to be the initial part of it, but I think somebody selling out their country, particularly somebody working for the CIA, is a new open phenomena. Now how much of this occurred before we really don't know. How much of it is going on now we don't know, but two cases coming to the floor in two years I think is a problem.

ELIZABETH FARNSWORTH: Okay. I want to come back to that in a minute. Mr. Whipple, what did he selling? What was he giving?

DAVID WHIPPLE: What was he giving to the Russians?

ELIZABETH FARNSWORTH: Yeah. What was he selling to the Russians?

DAVID WHIPPLE: A series of things. He was giving--he was giving them information about the people he had been training. Specifically he'd been training more than one officer for service in Russia, so he, in effect, identified that person and then gave a biographic profile of that person. Then he identified all of the other people who were in training and who were destined to be assigned to Russia. He gave them also other materials which they--the Russians--were interested in which he didn't have easy access to, and he gained access through his--the internal CIA computer system, took materials off which he had no need to know, and passed those things on. Then he responded--and I see several indications that he responded to specific requirements. When the Russians wanted to know what we were thinking about Chechnya and the Russian rule there, he went after that information, even though at that particular time in his career he had no need to have that information.

ELIZABETH FARNSWORTH: And do we know how the CIA, Mr. Pincus, do we know how the CIA found out about it. Where did he trip up?

WALTER PINCUS: It looked like a combination of things happened. Again, depending on the FBI report, the first sort of indications seemed to be his polygraph, when he took his normal five-year polygraph and seemed to fail, that he showed some deception on question about, are you in contact with foreign intelligence services? This is actually the same question that tripped Aldrich Ames. He was given--Nicholson was given the same test three times, and on the third test, in December of ‘95, he actually was told to stop trying to pass it, trying to do things.

ELIZABETH FARNSWORTH: He was trying to breathe slow.

WALTER PINCUS: He was trying to breathe slow, but he was trying to talk his way out of it. A lot of that goes on in the polygraphing of CIA, but unlike the Ames case many years ago, where the notion of not doing well on the polygraph was not followed up, apparently in this case it was based on the new counterintelligence activities that they follow. And they started matching what he'd been doing in travel, with his money transfers, which is another new element put in after Ames, and they pieced it together over the early part of ‘96.

ELIZABETH FARNSWORTH: Do you have anything to add to that?

DAVID WHIPPLE: Yes, I do. A couple of inside things. Chechnya is the one key thing. To begin with, the opponent service, the Russian service is the SVR, which is the new service taking the role of the old KGB, now they in a liaison, interchange of information with the CIA, asked a particular question about Chechnya and asking--

ELIZABETH FARNSWORTH: Because they were involved in this war in Chechnya?

DAVID WHIPPLE: That's right. And it was a perfectly reasonable question. Now, incidental, what the agency answered, but in finding the papers and in looking through his documents, they found that he was after exactly the same information. So you put the two together and see that the Russians did not get a satisfactory to their question when they went through the liaison channel, and they wanted him to check through records to find out what the true story is. There are many other indications that he was--for instance, on the polygraph--and you were discussing that a second ago--the Russians and several foreign services believe that there are ways of beating the polygraph, the lie detector, and one way of doing that is to breathe heavily and unevenly while the polygraph is being given. This is not true, and Americans know that this is not true, and that's not the way to beat the polygraph, but he was doing that, and he was detected doing that during some of the polygraphs that Mr. Pincus was speaking of. This is a clear indication that they had coached him on how to beat the polygraph, particularly in the course of three failures which he had on the polygraph. So this is another indication inside.

ELIZABETH FARNSWORTH: Now, Mr. Pincus, you said that the fact that they followed up on that and tried to match it with other behavior shows that some of the--does this show that some of the reforms put into effect after Aldrich Ames was arrested and convicted are working? That's what Mr. Deutch, head of the CIA, and Mr. Freeh, the head of the FBI, said yesterday when they announced this. They said, look, this shows that our reforms are working. WALTER PINCUS: It does show that the investigative reforms are working. What it doesn't show--and probably the problem that I think people have to look at now is that his spying apparently began at the height of the publicity over the introduction of these new ways but also at the height of the Ames case, you find somebody who was in the process of having a good career deciding to sell out, and it really raises questions within this agency, which has grown extremely large, and which has a bureaucratic nature to it, whether they have lost at some level the loyalty, the sense of purpose, the sense of service that's existed over the years up to now.

ELIZABETH FARNSWORTH: Because at the same time as Aldrich Ames, the publicity was coming out that he'd done this horrible thing this other very high level CIA agent is beginning the same kind of espionage.

WALTER PINCUS: Decides to enter the same kind of career.

ELIZABETH FARNSWORTH: What do you think about that, Mr. Whipple?

DAVID WHIPPLE: I think we're missing the point here. I think, one, very strenuous reforms were made after the Aldrich Ames case.

ELIZABETH FARNSWORTH: To try to prevent this.

DAVID WHIPPLE: To prevent this. And this meant that intrusive type of desecrations of privacy, for instance, were allowed. You could go in and investigate people, which I think is quite proper, but more importantly, the age-old sort of stand-offness between the FBI and the CIA was not allowed to continue. And the two were brought together, and there was strong pressure put on, and all of a sudden, we had an era of a very close cooperation between the two services, which meant that all of the information available to the CIA and their own employee was made available to the FBI, who then were able to use all the techniques at their command to investigate the culprit. This means that this is a harbinger of good for the future, and this is a very positive achievement of this whole case.

ELIZABETH FARNSWORTH: But what about Mr. Pincus's point that this shows that there's some kind of different spirit in the CIA?

DAVID WHIPPLE: I don't think that's necessarily true. There are always people, occasional cases, all the way through my 35 years, which not to the extent of being traitors but people who were dissidents in one way or another, and were not necessarily strong believers in the whole of the system, and, therefore, they did things which in the end were injurious to CIA. Now, I don't mean to compare those things with what has just happened, with the two cases, as Mr. Pincus has pointed out, but at the same time, if you have Americans, a large number of Americans, you're going to have different attitudes and opinions.

ELIZABETH FARNSWORTH: And very briefly, the U.S. and Russia are still at each other's throats, at least in another world of intelligence?

DAVID WHIPPLE: No. I think--

ELIZABETH FARNSWORTH: He was trying to do the same thing that they've done to him.

DAVID WHIPPLE: Well, spying has gone on from the beginning of time. You are going to have to expect that spying is going to go on. All nations do it, both the friendly nations and unfriendly nations. I don't this is going to affect really in a reasonable way the relations between Russia and the United States. I think that everybody realizes that there are such things in government as policy makers. Policy makers ask questions. Sometimes you can get the answers by asking open questions of people from other countries. Sometimes you can get it from open sources. Sometimes you cannot. Then it's necessary to go the clandestine route. To go the clandestine route is the job of people like I was and like he was--

ELIZABETH FARNSWORTH: Well--

DAVID WHIPPLE: This means, in effect, they're going to have to go and steal the secrets to satisfy the requirements to questions that come from policy makers.

ELIZABETH FARNSWORTH: Well, thank you both very much for being with us.

DAVID WHIPPLE: You're welcome.

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