When Holm, who was blind for a year, recovered, he went back into the field. In the ’70s, he ran cross-border operations into China from Hong Kong. In the ’80s, he recruited and “doubled” a KGB agent sent to spy on NATO in Brussels. Then, in 1995, just nine months before he was to retire, he made a mistake. As the CIA’s Paris station chief, he botched an operation spying on French trade strategy. The CIA was exposed, embarrassing the U.S. ambassador, Pamela Harriman.
The once venerated Holm became a pariah. When John Deutch, the CIA director, visited Paris, he did not stop in to say hello. The head of covert operations, David Cohen, did not return Holm’s phone calls. Demoralized, the old warrior retired after he was sharply criticized by the CIA’s inspector general, Frederick Hitz. This week Holm will receive a formal letter of reprimand. To the old boys in the clandestine service, this is a betrayal of one of the Company’s last true heroes. Since the cold war, the veteran spooks say, nothing has changed about spying. What’s changed is the penalty for getting caught. The Holm affair, as reconstructed by NEWSWEEK, illustrates the ambiguities of the CIA’s role after the collapse of the Soviet threat.
When the French exposed the CIA’s spy ring in Paris in January 1995, there were the usual expressions of shock. In fact, the French and the Americans have been spying on each other for years, even as they worked together to track communists and terrorists. The French have been very aggressive, especially at stealing American industrial secrets. In the late 1980s, a French spy in the U.S. Embassy routinely tipped off French intelligence on the travel plans of American businessmen, whose Air France seats and hotel rooms were then bugged. Meanwhile, French intelligence had three moles working at IBM. Finally, in 1993, CIA Director Jim Woolsey went public, warning that the CIA would fight back. “No more Mr. Nice Guy,” he said in a speech to business leaders in Chicago.
But the CIA had hardly been innocent. When Holm took over as Paris station chief in 1993, operatives were running a number of missions against the French, trying to steal military, aerospace and economic secrets. One American spy in particular worried Holm. She was a woman, working under deep cover. The woman, whose name remains classified, had a shaky history. In 1991 she had been called back from Paris to CIA headquarters in Langley, Va., for breaking a cardinal rule: she had failed to tell her superiors about a love affair with a foreigner described by one agency official as a “gigolo.” Worse, she had told her boyfriend about her double life and tried to employ him as a spy. Furious, some top officials wanted to fire her. But others feared she would sue for sex discrimination. To keep her on a tether, the CIA gave her a contract, but warned her not to return to Paris. Defiant, she headed to France.
In Paris, despite misgivings, Holm began using the woman as a spy again. She had recruited a very good source, an official close to Prime Minister Edouard Balladur and his inner circle. Holm was running the potentially compromised female agent with the approval of his bosses at Langley, and he understood certain imperatives. Facing budget cuts, the CIA was looking for customers. Without going into detail, Holm briefed Mrs. Harriman about the operations. Worried about the possible fallout from spying on an ally, the ambassador, NEWSWEEK has learned, protested to national-security adviser Anthony Lake, but Lake rebuffed her. The United States was in difficult trade talks with the French, and Commerce Department officials wanted to know more about French economic strategy.
But French intelligence had been on to the woman – and three other CIA operations–since at least ‘92. For years, they had been feeding false information to unwitting American spies. On Jan. 26, 1995, Interior Minister Charles Pasqua sprang the trap. He informed Mrs. Harriman that five CIA officers, including Holm, were being expelled–then leaked the story. Normally, spats between allies are handled quietly. But Balladur, facing elections, wanted to look tough on Washington.
Hitz, the inspector general, dispatched a team to Paris to determine what went wrong. Soon there was a leak to The New York Times fingering Holm, not his Langley superiors, for running a sloppy operation. There was outrage among the old boys: during the cold war, the agency generally kept its debacles to itself, except for extreme blunders like the Bay of Pigs. Many veterans blame Hitz for grandstanding for the press and Congress while secretly angling to become CIA director. The agency, typically, had no comment on the Holm affair. But one thing seems clear: Holm, who served for 35 years, stayed out in the cold too long. He misses the top-down loyalty of an earlier age. When CIA officers retire, their bosses traditionally give them a clock. Holm is still waiting for his.
