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196. Memorandum From Rob Roy Ratliff of the National Security Council Staff to the President’s Deputy Assistant for National Security Affairs (Scowcroft)1

SUBJECT

  • Reconstruction of “Hughes Affair” Events

Per our conversation this morning, I have reconstructed events as follows:

5 June 1974:

• The 40 Committee approved the operation at a meeting2 which included Mr. Sisco and Admiral Moorer. The subject was referred to higher authority, who approved the operation on 7 June.3

• A burglary took place at Hughes’ headquarters in Los Angeles.4

2 July 1974:

• It was learned for the first time that a memorandum referring to our project might have been among the papers taken in the burglary. A Hughes employee remembers seeing the paper in Los Angeles (but he also had access to it in 1970 when it was written). An inventory of papers after the burglary did not include the memorandum on our project. However, it may have been destroyed prior to the burglary.

• A Hughes official had been contacted and an attempt made to obtain money for the return of papers taken in the burglary. No men[Page 898]tion was made of the memorandum referring to our project. The extortioner abandoned his efforts.

10 July 1974:

• I was briefed on the above developments and briefed you on the same date. Mr. McAfee5 of INR at State was also briefed, and he subsequently briefed Mr. Sisco and Mr. Hyland.

• [1 line not declassified] “thinks” that he briefed Mr. Clements on the above developments, but is less certain in view of Mr. Clements’ lack of any recollection that he had been briefed. He did not brief General Brown, who had become C/JCS a few days before.

Late July 1974:

• I was briefed on additional information and relayed this information to you; however, it consisted only of elaborating details and did not confirm the whereabouts of the memorandum on our project.

September 1974:

• The Los Angeles police reported contact with an intermediary for an individual who claimed to have the papers from the Hughes burglary. The papers were described as dealing with Hughes’ relations with the Atomic Energy Commission, ITT in Chile, TWA, Air West, Hubert Humphrey, Teddy Kennedy, etc. No mention was made of CIA or our project memorandum.

CIA informed the FBI of the Los Angeles police report and the fact that the papers being offered for sale might include a sensitive paper dealing with our project.

• Subsequent developments point to these conclusions:

• The FBI told the Los Angeles police about our memorandum.

• The Los Angeles police told the intermediary.

• When under cover, FBI contact was made with the intermediary and the extortioner, the latter identified the contact as an FBI agent and told him that if the Government was so interested in getting the papers, then the Government should guarantee him immunity.

7 February 1975:

• The intermediary and the extortioner were advised that they were being brought before a grand jury to investigate involvement in an extortion attempt.

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8 February 1975:

• The Los Angeles Times article appeared, attributed to “reports circulating among local law enforcement officers.” The article said “reportedly” the extortioner “claimed one of the stolen documents revealed the Hughes’ organization involvement in the submarine retrieval at the request of the CIA.”

Late February 1975:

CIA obtained a statement of the grand jury statement of the intermediary. He described how the extortioner claimed that he had spent three hours culling the Hughes papers for items which might be sold to the media and had selected papers dealing with the subjects cited above. He did not include any reference to the memorandum dealing with our project.

In Summary

While we have taken prudent steps to consider all possibilities and to monitor developments, there is no confirmation that the memorandum which the Hughes official wrote in 1970 after his first contact with CIA still exists or that it was among those papers taken during the burglary.

From what we know now, it appears that the Los Angeles Times story does indeed stem from “local law enforcement officers” and can be traced to the CIA-to-FBI-to-Los Angeles police-to-the-intermediary revelations that CIA was interested in a memorandum which the extortioner might have which revealed CIA-Hughes discussions about recovery of a Soviet submarine.

  1. Source: National Security Council Files, Ford Administration Intelligence Files, MATADOR, 1975. Top Secret; Eyes Only. Outside the system. Sent for information.
  2. See Document 188.
  3. See footnote 3, Document 188.
  4. On June 5, 1974, the same day that the 40 Committee approved the mission, the Los Angeles headquarters of the Hughes-owned Summa Corporation were burgled. The burglars made off with cash and four containers of documents, perhaps including a memorandum from Hughes Tool’s Chairman of the Board Raymond Holliday to Howard Hughes, detailing the CIA’s secret plan to have Hughes Tool salvage the sunken Soviet submarine under the cover of conducting deep sea mining. The burglars subsequently tried to extort $500,000 from company officials in exchange for the stolen documents. The investigation into the burglary and the attempted extortion—involving the FBI, the CIA, the Los Angeles Police Department, and the Los Angeles District Attorney—ultimately led to the project’s cover being blown on February 7, 1975, when the Los Angeles Times published a story about it. (William Farr and Jerry Cohen, “U.S. Reported after Russ Sub,” Los Angeles Times, February 7, 1975, p. 1) A copy of Holliday’s memorandum, written prior to July 24, 1970 and reconstructed with the help of CIA agents following the burglary, is in the CIA, Executive Registry, Colby Files, Job 80M01009A, Box 16, MATADOR.
  5. William McAfee, Deputy Director of INR.