Changing the Guard---Dusty Foggo is leaving the agency.

Changing the Guard
By Mark Hosenball
Newsweek

Monday 08 May 2006

While Bush's new CIA nominee preps for a tough nomination battle, agency No. 3 Dusty Foggo is leaving the agency.

By all accounts, Michael Hayden is one of the most knowledgeable and experienced intelligence officers currently working for the United States government. But the Air Force general - nominated today as President Bush's pick to lead the CIA - can expect to face a grueling round of confirmation hearings on whether he is a good candidate to take charge of the agency at a time when it is in turmoil and its mission is in question.

The upheaval at the CIA is unlikely to end anytime soon. Earlier today, the agency circulated an internal announcement that agency's third ranking official, Kyle (Dusty) Foggo, has decided to step aside. News of Foggo's departure inevitably will be overshadowed by the Hayden nomination, but its effects will continue to resonate within the agency. As NEWSWEEK first reported, the CIA's inspector general has been investigating whether Foggo helped steer agency contracts to companies run by Brent Wilkes, a defense contractor who was identified as an unindicted co-conspirator when former San Diego congressman and ex-Navy air ace Randy (Duke) Cunningham pleaded guilty in a Congressional bribery scandal. The CIA has acknowledged that its internal watchdog is investigating whether Foggo helped steer any contracts to Wilkes, an old friend. The inspector general was looking into at least one specific contract, worth between $2 million and $3 million, which a CIA base in Germany granted to a company run by a relative of Wilkes. At the time the contract was issued, Foggo headed the CIA base's logistics office, though he did not sign the contract.

Foggo has denied any wrongdoing, saying through agency spokespeople that any contracts he dealt with were “properly awarded and administered.” However, a source has told NEWSWEEK that Foggo had acknowledged to associates that he may have tipped off Wilkes that CIA contracts were coming up for bid - an activity which, according to the source, Foggo said was neither improper nor illegal. The source is close to a group of poker players who took part in a 1999 game arranged by Wilkes and attended by Foggo, Cunningham and a nine-fingered former CIA officer named Brant Bassett, who worked for Goss when the outgoing CIA chief was House Intelligence Committee chair. Foggo denies giving Wilkes any such tip-offs, according to another source close to the outgoing CIA official; Bassett and lawyers for Wilkes and Cunningham had no comment.

A counter-terrorism official said that Foggo was already planning his departure before outgoing CIA director Goss unexpectedly announced his departure last week. Meanwhile, Bush's decision to replace Goss with Hayden has raised questions among both Republicans and Democrats who questioned the wisdom of putting a military officer in charge of the civilian spy agency. Currently chief deputy to National Intelligence Director John Negroponte, Hayden's official biography shows he has spent much of his more than three decades of military service in intelligence assignments, including a two-year stint as Air Force attaché to the US Embassy in Soviet-era Sofia, Bulgaria. Before he helped Negroponte to set up the new intelligence czar's office, Hayden served both Presidents Clinton and Bush as director of the ultra-secret National Security Agency.

From its sprawling headquarters at Ft. Meade, Md, halfway between Washington and Baltimore, NSA runs a worldwide electronic eavesdropping network and is responsible for deciphering messages encoded by potential enemies and deploying unbreakable code and scrambler devices for US government agencies. While at NSA, in the wake of the 9/11 attacks, Hayden was instrumental in setting up and managing a super-secret NSA anti-terror program whose disclosure caused controversy earlier this year when The New York Times reported that the agency was eavesdropping on suspected terror contacts inside the United States without warrants from a special Foreign Intelligence Surveillance Court.

Hayden's role in creating and defending the warrantless wiretapping program, whose legality has been questioned even by prominent Republicans like Senate Judiciary Committee chairman Arlen Specter, is likely to spark the most heated debate during Hayden's Senate confirmation. For years after it was first established, Hayden and other intelligence officials, acting under orders from President Bush and Vice President Dick Cheney, limited briefings on the program to a “gang of eight” senior Congressional leaders (comprised of the majority and minority leaders of both Houses and the chairmen and ranking Democrats of the House and Senate Intelligence Committees). After Democrats and a handful of renegade Senate Republicans earlier this year threatened to open a full-scale investigation, however, the administration agreed to expand briefings on the program to more members of the intelligence committees.

Congressional sources familiar with those briefings, who asked not to be identified because of the sensitivity of the subject matter, say that some of the senators - including Democrats - who have received recent briefings on the NSA anti-terror program have largely been persuaded that the NSA has not been abusing its technology and authority to conduct sweeping witch hunts against American dissidents, war critics or Bush administration opponents. But sources familiar with the expanded briefings say that other senators who attended have not yet been convinced by arguments, advanced by Hayden and other officials, that the NSA activity is legal under existing law.

Hayden also is likely to be questioned about previous testimony he gave to Congress about the NSA's authority to eavesdrop on people inside the United States. When Hayden was questioned about the NSA's powers during an October 2002 hearing before the Joint Senate-House intelligence committee inquiry into the 9/11 attacks, he said that once people - including, he said, Osama bin Laden - set foot on US territory, they were protected against warrantless eavesdropping by the post-Watergate Foreign Intelligence Surveillance Act. Hayden now may well be questioned about that testimony, whose accuracy has been questioned by some administration critics. He may also be questioned by Senate Democrats about what they perceive to be his zeal in defending administration rationales for the NSA domestic surveillance program. In a letter to the administration earlier this year, Sen. Jay Rockefeller, top Democrat on the Senate Intelligence Committee, questioned whether Hayden had gone too far in supporting the White House public relations campaign to defend the NSA anti-terror effort.

Congressional investigators are also likely to review Hayden's oversight of NSA efforts to develop and acquire huge and expensive new surveillance and data management systems. According to several sources, during Hayden's tenure at NSA, Congress took away the agency's authority to make major purchases of new equipment on its own; instead, Congress required that big ticket NSA items had to be bought through officials at Defense Department headquarters in the Pentagon. Officials familiar with NSA operations said that the problem that resulted in Congress stripping the NSA of its major acquisitions authority was not all Hayden's fault: as one official described it, Hayden fought with an “entrenched” purchasing bureaucracy at NSA over major acquisitions, and was “not winning the fight.” Even if other bureaucrats were principally responsible for the management problems, however, the official noted that Hayden was in charge of NSA at the time.

In an exhaustive investigation published in January, the Baltimore Sun, the NSA's hometown newspaper, also raised questions about the NSA's management, during Hayden's tenure, of a major classified project called Trailblazer. This project was supposed to modernize the agency's entire system for processing and sorting out “Signals Intelligence” reports - raw, and later, evaluated intercepts of messages collected by the NSA's worldwide eavesdropping network. One intelligence expert told the Sun that Trailblazer was “the biggest boondoggle going on now in the intelligence community.” An intelligence official familiar with the program told NEWSWEEK that Congressional investigators now believe that much of the money that was poured into the program was wasted, and that Hayden's successor at NSA has now “abandoned” significant elements of Trailblazer.

A spokesman representing Hayden's current employer, the intelligence czar's office, said all questions about Hayden's tenure at NSA should be addressed to NSA. NSA had no immediate response to a set of questions e-mailed to their public affairs office.

Apart from questions about his handling of specific legal, management and financial issues while working for NSA, and, more recently, the intel czar's office, the debate over Hayden's confirmation is likely to cover broader questions about the role of the CIA under the post 9/11 reformed intelligence set-up. Outgoing CIA director Porter Goss had declared that one of his principal objectives was to rebuild, after years of decline, the agency's ability to recruit and handle human informants abroad, particularly informants who had inside information on difficult targets, such as tightly-knit terror groups. Hayden's principal experience is in managing and supervising complicated “technical” collection systems, such as spy satellites and eavesdropping stations.

The genial and collegial Hayden will also face an uphill struggle restoring CIA morale, including in the CIA's elite Operations Directorate, renamed the National Clandestine Service by Goss. Goss and his aides, apparently operating with White House encouragement, drove out a number of highly-regarded veteran spies and managers, sometimes replacing them with lesser known, or even controversial agency figures like the soon-to-depart Foggo.

At a press conference today discussing Hayden's nomination, Negroponte indicated that the "leading candidate" to become deputy CIA director under Hayden was Steve Kappes, who headed the agency's vaunted Operations Division when Goss arrived but quickly left after a confrontation with the outgoing CIA chief's Praetorian Guard. Kappes's return to the agency could be a major morale booster.

-------