The Kremlin's Confidant, page 21
Karamanlis’s proposal was that the story be delivered to a reputable paper abroad. Its publication would be re-broadcast by the BBC Greek Service, after which it would be impossible to prevent it being carried by the media in Greece.
Martin flew to London and relayed Karamanlis’s request to Peter Preston of the Guardian, now editor of the paper. Preston asked for a day to consider the matter. Martin remembers him as then saying that the subject of CIA and MI6 operations was so sensitive that the Guardian would not touch the story and that the same was likely to be true for other UK newspapers. Interviewed in 2016, Preston’s own memory was that at the time the Guardian was caught up in its transfer from Manchester to London and he had to focus on this. Both agree that it was Preston who advised Martin to contact Philip Agee, a CIA whistle-blower, currently in London. Agee had worked for the CIA in South America and subsequently written about his experiences in Inside the Company: CIA Diary,2 the first such book on the murky side of the agency.
After his second meeting with Preston, Martin went to the London School of Economics where Agee was lecturing and, when Agee had finished, went up to him, explained what he had been told, and asked for his advice. Agee asked for a direct contact with the minister in Athens and for lists of current US holders of, and applicants for, diplomatic visas, which information, he said, was likely to be unclassified.
Martin passed this request to Athens. Soon afterwards, he received a large unmarked, buff-coloured envelope. Agee was lecturing at Exeter, and Martin drove there, met him at Exeter St David’s railway station, and delivered the missive, unopened. Such was the total of his involvement.
Agee took the matter seriously and decided to fly to Athens. Christopher Roper, a close friend of mine from Magdalene College, Cambridge, who had been asked to read the manuscript of Agee’s book and had met and liked Agee, put him in touch. Together with Christos Papoutsakis, publisher of the political fortnightly Anti, we drove around the town, working out behind which window was the CIA station chief’s office in the US Embassy, and discussing the Tameion Building, centre of the CIA’s operations. We scoured the US Foreign Service List and tried to piece together the CIA’s modus operandi. Philip duly published the names of various CIA personnel, including the name of the station chief, Richard Welch, with CounterSpy, the Washington magazine he had founded.
Six months later, as Welch returned home on 23 December 1975, three masked men blocked him as he arrived at his house in suburban Psychiko:
‘Mr Welch?’ a man asked in Greek. Welch opened the car door. He stood for a second and squinted at the figure in the shadows. Then came three shots from a .45-caliber pistol, one of which tore into Richard Welch’s heart … ‘He got out of the car because he thought it was a friend,’ said Welch’s widow, Cristina. ‘I rushed to him. But he was gone.’
So reads his obituary at Arlington National Cemetery.
Welch was buried at this resting ground for America’s warriors. The director of the CIA, William Colby, had contacted Richard Cheney, chief of staff of President Ford, asking for presidential approval to have Welch buried as a hero fallen in service to his country. Within two hours, the president had signed the necessary order. The air transport plane carrying Welch’s corpse from Athens circled Andrews Air Force Base for three-quarters of an hour in order to make a ‘live’ landing on the Today Show.
Anthony Lewis of The New York Times described the funeral as ‘a political device’ with ceremonies ‘manipulated in order to arouse a political backlash against legitimate criticism’. It came just as the Church Committee – the US Senate Committee to study intelligence activities – was moving to limit the CIA. The committee had carried out nine months of hearings on the structures of the US intelligence agencies, their operations, and alleged abuses of law, including plans to assassinate foreign leaders such as Patrice Lumumba of the Democratic Republic of the Congo, Rafael Trujillo of the Dominican Republic, the Diem brothers of Vietnam, and General René Schneider of Chile, as well as the plan, approved by President Eisenhower, to use the Mafia to kill Fidel Castro.
Colby and Cheney’s adroit use of the death of Welch stemmed the Congressional tide against the CIA, cutting the teeth of the fourteen-volume report it was to publish and frustrating the sole serious attempt so far to rein in the agency.
Agee was intense, committed, a Catholic by upbringing and profoundly moralistic. He was motivated by a sense of outrage at the US falling short of its declared values. He would be accused of working for the KGB, though I never believed that he would leave one master to work for another. He had resigned from the CIA in 1968 and then faced the harassment and threats to his life which seem the lot of the whistle-blower. With his book, he had become a public figure. The Economist called the book ‘inescapable reading’. Miles Copeland Jr, a former CIA station chief in Cairo, said the book was ‘as complete an account of spy work as is likely to be published anywhere’ and ‘an authentic account of how an ordinary American or British “case officer” operates … All of it … is presented with deadly accuracy.’
Colby blamed the death of Welch on the article by Agee in the winter 1975 issue of CounterSpy, which had mentioned Welch’s name as well as that of other CIA officers active abroad. The next day, Colby backed off, blaming a more general climate of hysteria regarding the CIA which had led to the assassination. In retrospect, blaming Welch’s death on Agee seems unfair. Members of the CIA had warned Welch against moving into the residence of his predecessor, an address which was relatively well known. He had also been named in a number of European publications.
George H.W. Bush, who took over as CIA director from Colby a month after Welch’s murder, continued to maintain that, by publicly identifying Welch, Agee was responsible for his death. After his wife, Barbara Bush, repeated the accusation in her 1994 autobiography, by which time her husband had served as US president, Agee sued her for libel. In an obituary of Agee in 2008, the Washington Post reported that as part of a legal settlement, she agreed to remove the allegation from the paperback edition of her book.
Agee had been harassed by the CIA ever since his resignation from the agency and had become a figure of some controversy in Britain too. When Martin arrived to meet him in Exeter, he found the station ‘was crawling with too-obviously nonchalant characters who looked anything but genuine travellers’.
The article in CounterSpy and general publicity given to the CIA in Greece seem to have achieved Karamanlis’s aims. There is no evidence that the CIA diverted major activities to Athens during those years. By the time of the bombing of the US Embassy in Beirut in 1983, Andreas Papandreou was in power in Greece with a mandate to close the US bases – even if he did not do so – and a step-up in the CIA footprint was unthinkable. But Agee’s travails in Britain continued, with him eventually being deported in June 1977. Martin had, yet again, proved an irritant to the CIA.
Chapter 4
Mediterranean Mogul
‘Whenever we came to Malta,’ he said in some Levantine tongue, ‘I got the feeling. As if a great hush were on this sea and the island its heart. As if I’d come back to something my own heart needs as deeply as a heart can.’ … ‘But it is a deception. She’s an inconstant city. Be wary of her.’
V, Thomas Pynchon, J. B. Lippincott Company, New York,
1963. p. 457 of the Vintage 2000 edition.
Jean King
Learning the trade in Greece
Martin’s elevation to favoured trader of the Kremlin was a result of two factors: his success as a manufacturer of jeans and the serendipity of his main factory being based in Malta at a time when the island was high on Moscow’s radar screen.
His entry into this iconic industry had started in Greece, where, after being forced out of the Royal Navy, he had gone to help the textile business of the family of his wife, Kiki Tsatsouli. In 1969, her brother, Aris decided to start garment manufacturing, setting up a factory to make men’s clothing with licences from Van Gils, the Dutch firm, for suits and J & J Crombie of Scotland for greatcoats. As he was finalising negotiations with Van Gils, he saw a full-page advertisement in the country’s main economic paper by a foreign garment company wanting a distributor. Keen to know who his competitor might be, he applied. Three months later, he was called to a prominent trade-mark lawyer’s offices and introduced to Ezio Poli, the European distribution director of Levi Strauss.
Levi Strauss was riding high. In the 1940s, the US government had declared jeans an essential commodity for the war effort, available only to defence workers, making them a coveted item. The 1950s saw Levi Strauss spread the gamut from the cowboy fantasies of John Wayne to the bad-boy cachet of James Dean and Marlon Brando. In the 1960s, they embraced the counterculture and youthquake movements spreading from London, and crested the global wave of the idealisation of American culture. Adroit positioning put them far ahead of their main competitors, Lee Cooper and Wrangler. By 1970, when Martin joined Aris in Athens, they were one of the most-recognised brands in the world, number six in some lists, number three in others.
Most of the growth was in the US. The company started manufacturing in Europe only in the 1960s, but had built up a colourful collection of distributors. Those for France, Ariel Frankel and Maurice Jablonski, had graduated from selling second-hand jeans obtained from US troops at a stall in one of the Marchés aux Puces in Paris by flying to Levi Strauss’s newly opened East Coast office in New York and putting $50,000 cash on the table. Charles Borenstein, the distributor for Belgium, used to drive around Brussels in an ostentatious open Ford Mustang with his pets beside him, a spotted cheetah and a black panther, both uncertainly tame; Martin remembers they would nibble his shoes during meetings, another visitor to Borenstein’s office that they ‘smelt awful’.
Levi Strauss’s man in Portugal, Moshe Broder, had convinced the company’s Brussels’ team that he would succeed by arguing that it would be easy compared with his last venture, selling war planes to the Katangan rebels of Moise Tshombe. Spain had been a dark spot on their map as somebody else had registered their trademark – until some enterprising ally arranged a break into the Madrid trademark office and corrected matters. Levi Strauss’s own Europe staff, thrusting young folks in their twenties headed by a US Korean War pilot, matched such figures for style.
Aris Tsatsoulis persuaded Levi Strauss’s Poli that he was the man to distribute their products in Greece – and here Martin’s Democratic Defence links may have played a role. The company’s trade-mark lawyer there was Eleni Filia, the wife of Martin’s colleague-in-arms. But that cut both ways. Some months before his meeting with Tsatsoulis, Poli had arrived in Athens with an impressive array of samples. Returning to his room at the Hilton Hotel from a meeting with Filia, Poli found his bags had been ripped apart. The police were sure that the lawyer was her imprisoned husband’s route to the foreign press – as she was, but in ways not involving Poli – and were checking Poli out. Whatever, the urbane and self-confident Tsatsoulis won over Poli. The Tsatsoulis family was granted the Levi Strauss distributorship. It seemed like a licence to print money and, as Aris focused on his new manufacturing venture, Martin became increasingly involved.
From 1970, they had the sole rights to import Levi Strauss’s products, and selling proved no problem. They built a successful franchise selling everything they could get from the company, but things did not go smoothly. ‘We would order blue jeans and get yellow ones,’ Tsatsoulis remembers. Martin recalls that theft was the main problem, with up to half of shipments from Holland being stolen en route. They decided that the way forward was to make their own supplies. At this point, Levi Strauss had only given one manufacturing licence, to the Ben Gurion family in Israel, but this did not deter Martin.
In early 1974, he visited Brussels and won the support of Levi Strauss’s European headquarters for his pitch. The initial reaction from San Francisco was a flat refusal, according to Michael Welsh, then the company’s Director of Market Development in Brussels and later a British Conservative Member of the European Parliament. Martin then made an appointment in San Francisco with the fourth- and fifth-generation family members running the company, Walter A. Haas Jr, Executive President, and his son, Robert.
Byron Veras, an industrial engineer working at ICAP, a Greek financial house, describes the meeting as follows:
Bob Haas was a no-nonsense man. He listened very carefully to our proposal and project. He did not say yea or nay at that first meeting, but the next day he was all bubbly. He had obviously done his homework, which might have been to research who the hell we were and whether we had enough financial clout. He was very positive and we just sailed.
There may be poetic licence in Veras’s tale, recounted in 2015 at his home in Monemvasia in the Peloponnese, as Martin insists that he went to the meeting alone and that Veras and his associates only became involved after he had the licence.
The 1974 oil crisis was on and Levi Strauss did not want to invest. In Europe, they were still recovering from the strains of 1973 when the company’s European operation lost $12 million through focusing on outmoded straight-legged jeans as opposed to the flared and bell-bottomed jeans sought in the market. But the company agreed to give Martin a five-year licence, guaranteeing to purchase 85 per cent of his output. The licence came with the requirement to follow a rigid code of conduct described by Haas executives as ‘the Holy Grail’. Martin remembers that he was told by Bob Haas that he was the only businessman they had met whose integrity matched that of his father, and that this was the foundation of their partnership.
Martin and his co-investors – a group put together by the Tsatsoulis family (42 per cent), ICAP (42 per cent) and the National Investment Bank for Industrial Development (ETEBA) (16 per cent) – decided to base their operations in the southern Peloponnese. It was a decision based partly on sentiment – the Tsatsoulis family came from the area – and partly on hard sense: Kalamata qualified for development support grants.
Veras found a disused warehouse at the port. They started recruiting senior management, with the local mayor having to warn them that interviewing female applicants in their hotel room could be misunderstood. Levi Strauss sent production experts and trained the new Greek management at its plant at Arlon in the Ardennes region of south-east Belgium. Veras describes going there and being shown a device Levi Strauss had developed for testing applicants’ dexterity. This involved putting pegs into a wooden board. He and the other new managers tried. ‘We were told that all of us would have been rejected.’
Production at the Kalamata warehouse started at the end of the year. The factory specified by Levi Strauss was their standard configuration for a pilot operation, with an initial staff of 300, and 50 sewing machines. Welsh, who had earlier been responsible for setting up the Levi Strauss in Whitburn, Scotland, recalls the look of horror on the faces of the American plant engineers when the local archimandrite insisted on sprinkling the machines with holy water. The factory quickly reached its target production of 10,000 pairs per week. But with success came problems.
Denim, the hard-wearing cotton cloth used in jeans, accounts for over half a jean plant’s operating costs, and good fabric sourcing was critical. This was particularly true for Levi Strauss which used a heavier cloth than its competitors, a triple X denim woven from seven-count thread and weighing 14.5oz per square yard, about twice the weight of the cloth used in most jeans sold today. At the time, denim was scarcely produced in Greece. Martin and Tony Lykiardopoulos of ICAP persuaded the Accas Brothers of Hellenic Fabrics SA (Ellenikí Iphantourgía) in Thessaloniki to switch a new production line from corduroy to denim fabric. ‘They did not have the know-how so we arranged for Cone Denim of North Carolina to send experts. They started producing a wonderful fabric,’ Lykiardopoulos told me in Athens in 2015.
The new company was welcomed by the local community in Kalamata for giving women a chance to earn money and develop their and their families’ lives. The staff were highly motivated, belying the area’s reputation for indolence, and Martin claims that it developed the highest efficiency levels of any Levi Strauss factory in Europe. Sales rocketed. Within a year, it had virtual command of the Greek market. As Veras says, ‘We had 800 points of sale throughout the country. It was enormous, it was a goldmine.’ But then the partners fell out. There are conflicting versions of what went wrong.
Veras remembers that the company’s rapid growth had stretched its finances. At that time, banks did not give credit to traders so the company sold to shops on ninety-days’ credit, being paid with promissory notes which it discounted at the banks. This left the company exposed. Lykiardopoulos proposed that the company should also set up its own retail outlets, pointing out that the company was making a low margin while its distributors were working on a profit margin of 17–30 per cent. Veras objected, arguing that it should not compete with its own customers. Three months later, he found out that some shareholders had gone ahead with setting up their own retail outlets. Martin’s version of this tale is in line with Veras’s. He says that one of his staff told him that a number of shops had been opened in contravention of a specific prohibition in the Levi Strauss Code of Conduct and that, by arrangement with a factory manager, one-third of factory production was being delivered to these shops without any payment. This enabled the shops to generate a huge income, while defrauding the other shareholders and the tax authorities.
Martin reported the situation to Levi Strauss in San Francisco who arranged for a visit to Greece by their chief security officer in Brussels, Tom Dibble, a former Special Branch officer, together with a lady from Levi Strauss’s internal audit department in San Francisco. Martin says that, after their visit, Dibble telephoned him to say that his allegations were proven. Dibble told Martin that he could count on his support in dealing with the diversions of income and in ensuring that the Haas Code of Conduct was respected. Martin recalls Dibble saying that it was unthinkable that the Haas family, who were famous for their probity, would tolerate the situation continuing. He said that Levi Strauss had always abided by his recommendations and that Bob Haas would visit Greece to attend a special board meeting.
