Friday, May 12, 2006

Career C.I.A. Figure Is at Eye of Scandal

The New York Times
Career C.I.A. Figure Is at Eye of Scandal

WASHINGTON, May 11 — In a scandal featuring a cast of characters with nicknames like Nine Fingers and Duke, a former C.I.A. undercover operative called Dusty has become a center of attention.

Kyle Foggo, who is the man known by friends and associates as Dusty — and who on Monday resigned his post as the third-ranking official at the Central Intelligence Agency — has become entangled in a widening investigation that has already brought down former Representative Randy Cunningham, a k a Duke. Investigators say they are examining what could be a larger pattern of bribery and government corruption.

Mr. Foggo is an agency veteran who spent two decades undercover in five foreign postings, including Tegucigalpa, Honduras; Vienna; and Frankfurt. In each case, he provided logistical support for intelligence gathering and covert operations. Porter J. Goss, who has resigned as C.I.A. director, plucked him from obscurity in November 2004 and elevated him to the position of executive director.

Mr. Foggo's past is the focus of multiple investigations, including a C.I.A. inspector general inquiry into whether he improperly awarded agency contracts to a longtime friend, Brent R. Wilkes, a military contractor whose companies have received nearly $100 million in government contracts over the years.

Mr. Foggo has not been formally charged with any misconduct, and his lawyer says his client has done nothing wrong. But apart from investigations by the F.B.I. and the C.I.A. inspector general, Mr. Foggo's appointment to the No. 3 post provided a window on what many at the agency saw as erratic management by Mr. Goss.

The arrival of Mr. Goss in September 2004 led to immediate clashes between senior career officers and the Congressional staff members that Mr. Goss brought with him, some of whom had previously served at the agency. Mr. Goss's chief of staff, Patrick Murray, and the other top aides came to be known derisively as the Gosslings.

The man Mr. Goss first selected to become the C.I.A.'s executive director, Michael V. Kostiw, had to turn down the job when it surfaced in the news media that he had resigned from the agency in the 1980's after being caught shoplifting bacon.

It was finger-pointing over who leaked word of Mr. Kostiw's shoplifting arrest that led to the resignation of several top officials in the agency's clandestine service. Among those who left were Stephen R. Kappes, the deputy director of operations, and his deputy, Michael Sulick. Mr. Kappes is expected to return as the agency's No. 2 if Gen. Michael V. Hayden is confirmed as the new director.

Days before Mr. Goss submitted his resignation, the C.I.A. director asked Mr. Foggo to step down as executive director, according to one intelligence official who was granted anonymity to speak freely about the circumstances of Mr. Foggo's departure. The official said that Mr. Goss had concluded that the inquires into Mr. Foggo's activities had become a distraction and had the potential to damage the agency's reputation.

Mr. Foggo, 51, has admitted attending poker parties throughout the 1990's that Mr. Wilkes held in a suite at the Watergate Hotel in Washington. The parties were primarily attended by C.I.A. officials and congressmen, and Mr. Cunningham, a California Republican, occasionally attended. Several news media accounts have reported that prostitutes frequented the parties.

But Charlie Wilson — the former Texas congressman who helped engineer the C.I.A. mission to arm Afghan rebels in the 1980's — said he attended two of Mr. Wilkes's poker parties, in 1994 and 1999, and that they usually ended by midnight and that he never saw prostitutes at the parties.

Mr. Wilson said that the gatherings were small affairs of seven or eight card players that always had ample supplies of Scotch, beer and Dominican cigars. "The only thing that took place there that was out of order was cigar smoking on a nonsmoking floor," Mr. Wilson said.

Mr. Foggo was one of many C.I.A. officials close to Mr. Wilkes. In May 2000, Mr. Wilkes paid Brant G. Bassett, a retired German-speaking C.I.A. official known as Nine Fingers, a $5,000 fee to travel to Germany for five days as a consultant on a business deal that Mr. Wilkes was negotiating with a German software engineer, according to a former agency official aware of the arrangement. The official was granted anonymity to speak about the business deal.

Documents revealing the $5,000 payment to Mr. Bassett from Mr. Wilkes first appeared on the Internet on Tuesday.

Mr. Foggo introduced Mr. Bassett to Mr. Wilkes in the early 1990's in Mexico City, the former official said.

Before ascending to the top tier of the agency, Mr. Foggo had spent his career in what was previously known as the directorate of administration, now called the directorate of support. It is responsible for running the business side of the agency, and its duties include buying supplies, renting offices and handling bookkeeping.

Before being picked by Mr. Goss to become executive director, Mr. Foggo ran a secret C.I.A. base in Frankfurt that supported operations in the Middle East and Africa. Since the 2001 terrorist attacks, as agency operations have expanded in the region, the volume of money and goods handled by the Frankfurt base has grown rapidly, intelligence officials say.

According to Mr. Foggo's lawyer, William G. Hundley, the C.I.A. is investigating whether during Mr. Foggo's time in Frankfurt he knowingly granted a contract to Archer Logistics, a Virginia company headed by a relative of Mr. Wilkes. Mr. Hundley said the contract was for delivery of bottled water to C.I.A. operatives in Iraq.

The lawyer said that while it was possible that his client had signed off on the contract, Mr. Foggo had no idea that Archer Logistics was associated with Mr. Wilkes.

Scott Shane and Paul von Zielbauer contributed reporting from Washington for this article.