Spy net may have doomed Scorpion before it set out

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Thursday, May 21, 1998

Spy net may have doomed Scorpion before it set out

By ED OFFLEY
SEATTLE POST-INTELLIGENCER MILITARY REPORTER

U.S.S. Scorpion: Mystery of the Deep
Shortly before the submarine USS Scorpion sank on May 22, 1968, killing its 99-man crew, U.S. intelligence officials learned that a group of Soviet warships operating in the Atlantic possibly knew that the sub was on its way to spy on them.

But the U.S. Navy did not know that the Soviets had the capability to learn in advance details of the the Scorpion's top secret mission. How did they get this capability? The Soviets had broken the U.S. Navy communications codes.

That Soviet Cold War victory remained a secret that U.S. intelligence experts would not learn for another 17 years. It has not been revealed publicly until now.

The Scorpion mission was compromised through a KGB intelligence operation that included Navy turncoat John Walker and the seizure of the American spy ship USS Pueblo.

U.S. intelligence officials told the Post-Intelligencer the seizure of the Pueblo was a direct consequence of Walker's espionage. The connection between the Navy spy and the doomed spy ship has been a closely held secret within the Navy and intelligence community in the 13 years since Walker's arrest.

Navy spokesman Cmdr. Frank Thorp declined comment on the possible connection between Walker and the Scorpion loss Tuesday, citing the classified nature of the reports.

However, the Navy 12 years ago conceded the severity of Walker's esponiage. The KGB-Walker operation was so successful it had the "potential, had conflict erupted between the two superpowers, to have powerful war-winning implications for the Soviet side," said Rear Adm. William Studeman, then the director of naval intelligence, in a 1986 affidavit.

The KGB-Walker espionage network began in March 1967, when Navy Warrant Officer Walker contacted the Soviet Embassy in Washington, D.C., and offered to spy for them. A career submarine communications expert, Walker had just transferred to Atlantic Submarine Force headquarters in Norfolk, Va. There, he worked as one of four supervisors in the high-security communications center where messages to and from submarines on patrol were processed. That was also the communications center for the Scorpion.

Walker offered to sell the KGB top secret "keylist" cards and maintenance manuals for cryptographic systems used by the Navy, according to his confession, made after his arrest in 1985.

The Navy at the time used a series of encrypting machines to change messages into a garbled set of letters that would be impenetrable to its adversaries. When received in another machine, the message would emerge as clear English.

The insurance system was a different keylist -- an additional code -- entered into the machine each day.

It was the system used by the Scorpion on its final mission.

Walker's delivery of the keylists provided the Soviets half the materials they would need to break the Navy codes. What was still needed was the encrypting machines.

On Jan. 23, 1968, 10 months after Walker first contacted the Soviets, on Jan. 23, 1968, North Korean military units captured the Pueblo in the Sea of Japan. Seized along with the ship and its 82-man crew were at least 19 cryptographic communications machines used to encode and decode Navy messages.

The communications gear on the Pueblo provided the Soviets the other half of the material they needed to break the codes. U.S. intelligence officials agree it allowed the Soviets to unlock the top secret messages sent over each communications device.

Four months later, the Scorpion sank during its spy mission in the Atlantic. The three encryption machines installed on the Scorpion were among the systems broken by the Soviets through the Pueblo seizure, according to declassified Navy records and intelligence officials.

In particular, the Soviets had obtained a model of the KW-7 "Orestes" two-way teletypewriter, the most modern encrypted communications machine for the Navy and other military services. More than 80 percent of the Atlantic Fleet ships and all of its submarines -- including the Scorpion -- relied on the KW-7 for secure messages in 1968, according to declassified Navy reports.

Seizing the machines from the Pueblo intact was relatively easy. A 1970 congressional hearing concluded the ship had failed to destroy much of its communications equipment before the crew was overcome by North Koreans who swarmed the vessel.

Don Bailey, then a 26-year-old communications specialist on the Pueblo, confirm in a recent interview that the equipment was seized by the North Koreans.

Bailey was operating a KW-7 teletypewriter in the last frantic hour before he and his shipmates were captured, sending messages to a shore station in Japan pleading for air support or other military help. Bailey said he and his shipmates failed to destroy the cryptographic equipment because the ship had not been given emergency-destruct explosives. The machinery was installed in hardened steel cases designed to prevent them from being damaged.

"I was busy trying to destroy everything I could," Bailey recalled. "But you can't beat it up with a sledgehammer; the way it was built, this can't be done." The machine he was operating was "pretty much intact when they got us."

Despite the loss of the equipment from the Pueblo, there was little concern then about the safety of coded communications, intelligence officials said. That was because the keylist system was assumed to be intact.

Only years later when Walker was captured did they learn that the keylist system had been compromised by the Walker spy ring.

Walker admitted to investigators after his 1985 arrest that he provided keylists for the KW-7 and two other communications coding machines used by the Scorpion during his first deliveries of classified material to the Soviets, according to officials familiar with his account.

And Walker later admitted the Soviets told him they had engineered the Pueblo incident as the result of his espionage, an intelligence official said. "The Russians had given him reason to believe he was responsible (for the Pueblo incident)," because the Russians were looking for the piece of the puzzle Walker had not provided -- the precise cryptographic equipment that used the keylists and operating manuals Walker had already begun delivering to them, the intelligence official said.

The KGB concluded the Walker spy ring was the most successful espionage operation in Soviet history, according to Vitaly Yurchenko, a senior KGB agent who defected to the United States in 1985.

Walker always maintained he started spying in 1968, but intelligence experts said they believe he misstated the date he began spying to avoid implicating himself in any Soviet operation that caused the loss of American lives. Experts who grilled Walker and compared supporting evidence of his treason concluded that Walker had actually begun spying for the Soviets immediately after he reported to Norfolk in March 1967.

Until his arrest 18 years later, in 1985, Walker and his accomplices earned several million dollars from the Soviets, U.S. officials have said. It was money that may have sealed the fate of both the Pueblo and the Scorpion.

In 1986, Walker pleaded guilty to espionage and is serving a life sentence in federal prison in Colorado.

Reporter Ed Offley has left the P-I since this series was originally published. His e-mail address as of August 2002 was ed_offley@yahoo.com

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