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Inside Man

Some say Steve Kappes knows how to run a spy agency, helping the CIA survive the chaos of the Bush years. But to others he’s the hidden hand in many of the nation’s intelligence failures.

Senator Dianne Feinstein was furious. Somebody was going to pay.

“I was not informed about the selection of Leon Panetta to be the CIA director,” the California Democrat said coldly, standing in a marble corridor just off the Senate floor.

It was January 6, 2009. Barack Obama’s team was reaching for the levers of the intelligence bureaucracy.

By God, she hadn’t gotten to be the first woman to chair the Senate Select Committee on Intelligence, a last bastion of old bulls, by being pushed around. And she sure wasn’t going to be rolled by the national-security guys around Obama, an Illinois politician who had shown almost no interest in foreign affairs during his four years in the US Senate.

Did they really want Leon Panetta, a former California congressman whose intelligence experience amounted pretty much to sitting in on CIA briefings as President Bill Clinton’s chief of staff?

And that was before Osama bin Laden and 9/11, before the Iraq weapons-of-mass-destruction fiasco, secret prisons, renditions, warrantless wiretapping, the invasion of Iraq, the war in Afghanistan, and waterboarding. And before the CIA was once again snarled in controversy, its officials hauled before oversight committees—like Feinstein’s—to explain missing torture videotapes.

Fine, Feinstein decided, you can have Panetta. But there’s a price. “My position has consistently been that I believe the agency is best served by having an intelligence professional in charge,” she told reporters.

A professional—not a politician. There would be no Panetta without a professional backing him up—and Feinstein had one professional in mind: Steve Kappes.

Who? Stephen R. Kappes, the spy agency’s deputy director, was a 27-year veteran of the CIA’s Operations Directorate, one of those who worked on “the dark side,” in the memorable characterization of Vice President Dick Cheney.

Kappes’s name, let alone his face, was unknown outside of Washington’s national-security matrix. And yet within days, official Washington would be treated to the spectacle of a CIA nominee repeatedly pledging to retain a heretofore-anonymous subordinate as the condition for getting the number-one job.

Kappes had earned the appreciation, if not the affection, of Hill Democrats in 2004 by embarrassing Porter Goss, the Florida Republican congressman and chair of the House Intelligence Committee whom President Bush had picked to tame the “liberal” CIA. Rather than fire a deputy who had clashed with one of the “Gosslings,” as Goss’s conservative aides were dubbed by the dark-side crowd, Kappes loudly quit. His deputy, Michael Sulick, followed him out the door.

They returned in 2006, when General Michael Hayden, who succeeded Goss, introduced Kappes to the assembled CIA employees as his new deputy. The staff gave him a standing ovation.

In the days leading up to Panetta’s confirmation hearing, Feinstein and other Democrats repeatedly called Kappes the agency’s indispensable man.

“Leon Panetta is an outstanding public servant, and I intend to support his nomination for CIA director,” Evan Bayh of Indiana, a member of the Senate Select Committee on Intelligence, said. “We should respect the judgment of President-elect Obama and his commitment to do what’s right for our country.

“At the same time,” Bayh continued, “I have very high regard for Steve Kappes. I’ve been in some extremely sensitive meetings involving matters of life and death and have been impressed by his competency. I hope we can convince both Mr. Panetta and Mr. Kappes to work together at the CIA for the sake of our country’s national security.”

Panetta was convinced—not that he had a choice. Even before he took the witness chair, he evoked Kappes’s name a half dozen times.

“If confirmed, I will have three immediate priorities,” he said. “First, along with my deputy, Steve Kappes, I plan to review all Agency operations … . I will have a full partner in Steve Kappes … . Few people in the United States government have as much intelligence experience as Steve … .”

And so on.

With that, Panetta was confirmed and dispatched to Langley with Kappes as his right-hand man. A door would connect their offices in the seventh floor executive suite overlooking the woods above the Potomac.

“A good spy has a face that a waiter would forget,” the late William Colby, the CIA’s chief in the turbulent, post-Watergate 1970s, once said.

Kappes’s face is mostly forgettable, and he shares another trait with Colby, who once parachuted behind German lines as an OSS agent in World War II: They’re the only two career clandestine officers to make it onto the spy agency’s second-highest rung.

But the oddest thing about the Kappes love fest on Capitol Hill was that it flew in the face of the repeated vow of the President-elect and the Democrats to make, as Feinstein put it, “a break from the past.”

“The past” had sunk Obama’s first choice for CIA director, John Brennan, even before he was nominated. As head of the CIA’s Counterterrorism Center in 2004–05, Brennan was maligned as too much a cog in the agency’s machinery of waterboarding and secret prisons.

By that standard, Kappes should have been even more toxic. As a senior official in the agency’s Directorate of Operations after September 11, 2001—first as deputy director and then director before the blowup with Goss—he had been involved in the activities that so many Democrats had denounced.

When Obama’s intelligence transition team had visited Langley, it had gotten a pitch from Kappes and other CIA officials to “retain the option of reestablishing secret prisons and using aggressive interrogation methods,” according to an anecdote buried in a Washington Post story.

“It was one of the most deeply disturbing experiences I have had,” David Boren, the moderate Oklahoma Democrat and former Senate Intelligence committee chair who led the transition team, told the Post.

“I wanted to take a bath when I heard it,” said Boren, now president of the University of Oklahoma, adding that “fear was used to justify the use of techniques that violate our values and weaken our intelligence.”

That made Kappes as unconfirmable as Brennan—perhaps more so. But Senate-committee Democrats were perfectly happy to have Kappes quietly run the agency for Panetta.

Evidently they still are, despite a string of embarrassments over the past year, from the CIA’s continuing failure to capture Osama bin Laden to conflicting accounts over what the agency told Congress about waterboarding, the conviction of 23 of its operatives on kidnapping charges in Italy, and a suicide bomber’s deadly penetration of the spy agency’s most important field office in Afghanistan.

The bombing of the CIA station in Khost, Afghanistan, on December 30 by a Jordanian double agent wearing an explosive vest was a heavy blow to an agency that has struggled to navigate the post-9/11 world. When the Jordanian was escorted into the CIA’s secret compound in Khost, he hadn’t been frisked, according to news accounts. The explosion killed seven CIA officers, including the chief of base, a mother of three who was the agency’s top expert on al-Qaeda.

Old CIA hands were appalled at the security lapse. One attributed the disaster to having left the arrangements in the hands of an intelligence analyst—a person who pores over reports at a desk—instead of an experienced field-operations case officer.

“Do you think we haven’t picked up bad guys in a car before in some very bad parts of town?” says a former paramilitary officer who ran operations in Beirut. “As soon as you get them in the back seat, you’re frisking them.”

Khost “was really ugly,” says Representative Pete Hoekstra of Michigan, ranking Republican on the House Intelligence Committee. Many in the intelligence community believe it to be the single worst attack in the agency’s history. And Kappes, suggests Hoekstra, has to take some responsibility for that.

“He’s running field operations, engaged in day-to-day activities,” says Hoekstra. “I heard Kappes personally briefed the President on the guy they were meeting in Khost. They thought they were meeting a rock star.”

Yet congressional Democrats continue to insist that Panetta and Kappes are doing great things. “They’re a very effective team,” says Bayh, who recently announced his retirement. “Leon brings a broad knowledge of policy, and Steve’s more of an operational guy, so he can run the very important day-to-day functions.”

Such a judgment may seem off-key, given the record. But to longtime intelligence insiders and cynics—perhaps one and the same—the deification of Kappes was predictable. He embodied the best and worst of the CIA’s leadership over the decades—bright, dedicated, and patriotic while also self-protective and unaccountable.

Kappes’s rise to behind-the-scenes stardom in the intelligence community is a lesson in how to maneuver in Washington: It’s one thing to be successful in the field; it’s more valuable to convince Congress you’re effective. “Kappes runs better ops on the Hill and with the White House than he ran human sources in the field,” a CIA veteran says in what turns out to be a consistent refrain.

“He’s the Teflon Don,” says a veteran of the CIA’s Operations Directorate, renamed the National Clandestine Service in 2005. “Nothing bad ever sticks to him.”

Over more than 20 years with the CIA, Kappes’s career has taken him through most of the world’s cold- and hot-war battlefields from India and Pakistan to Germany and Russia. But the journey of Kappes from secret agent to CIA superstar began in Libya.

In March 2003, leader Muammar Qaddafi signaled that he was ready to jump-start his on-again, off-again campaign to end his long diplomatic and commercial isolation, get off Washington’s list of terrorist states, and get back into the oil business with the West. Two years earlier, he’d dispatched one of his top operatives, Michigan State–educated Mousa Kousa, to a clandestine meeting in London with top CIA and British intelligence officials. Kousa carried with him the names of some of Osama bin Laden’s closest associates, including Ibn al-Sheikh al-Libi, a Libyan who would soon be the first major catch in the CIA’s pursuit of al-Qaeda. But with Qaddafi dragging his feet on final payouts over Libya’s 1988 downing of PanAm Flight 103 over Lockerbie, Scotland, negotiations stalled.

Then, with American and British troops massing to invade Iraq, Qaddafi decided it was time to talk again—in secret.

President George W. Bush and CIA chief George Tenet, desperate for intelligence on al-Qaeda, decided the time was ripe, too. But they wanted something big in return, a “deliverable,” as Bush put it: Qaddafi’s public renunciation of his nuclear, chemical, and biological weapons programs.

For the secret mission to Tripoli to work out the deal, they chose Steve Kappes.

By 2003, Kappes was deeply schooled in the dark arts. He had been station chief in Kuwait and Moscow. At a CIA station in Frankfurt, he had run highly sensitive operations targeting Iran’s nuclear-weapons program, and he had served in Pakistan, which sheltered its own nuclear-bomb effort. For the past year, as associate deputy director for operations, he had supervised some of the CIA’s most secret programs, from “extraordinary renditions”—kidnapping terrorist suspects abroad—to the agency’s secret foreign prisons to waterboarding and other “enhanced interrogation techniques.”

Then came Libya.

“Clearly, Kappes was a man who could keep a secret, and Bush gave him one: No one at State or Defense, not even Rumsfeld or Powell, should know about this major initiative,” Ron Suskind wrote in the Washington Monthly. Suskind’s account of the clandestine affair was one of a flurry of flattering articles about Kappes that began surfacing in the spring of 2006 as pressure was building to bring Kappes back to Langley.

The Libyan mission was a “lengthy dialogue, a delicate and subtle dance,” wrote Newsweek’s Mark Hosenball, quoting an anonymous former agency official. “And Steve handled it very well.”

Qaddafi did renounce his weapons-of-mass-destruction programs, allowing the Bush administration to claim that regime change in Iraq was already paying dividends elsewhere. After the Lockerbie claims were finally settled, diplomatic recognition came. The oil companies moved into Libya.

Washington, the story went, had eliminated a potential threat and gained an ally in the “war on terror.”

But on closer examination, some thought Qaddafi got the better end of it: His nuclear effort had never really gotten off the ground, intelligence sources say, despite the acquisition of millions of dollars of black-market equipment and supplies from Pakistani rogue nuclear scientist A.Q. Khan.

Qaddafi liked to buy stuff that was way beyond his scientists’ ken to assemble, a former top CIA official says.

Nor were Qaddafi’s other WMD programs much to write home about, according to the Monterey Institute’s Jonathan Tucker, one of the foremost WMD experts.

Libya’s chemical-warfare capability was “quite limited,” Tucker says. “Although Libya wanted to expand its chemical arsenal to include nerve agents, it did not have the materials, equipment, or know-how needed to do so. The nuclear program, however embryonic, was perceived as being of greater potential value, but after the interdiction of [A.Q. Khan’s] centrifuges en route to Libya, Qaddafi began to view his WMD programs as a security risk rather than an asset.”

None of that diminishes Kappes’s adroit handling of the mission: He “played a very important role—and played it well,” one close observer of the CIA says.

But others are not so impressed by Kappes’s reputation as a savvy operator.

In 1988–89, when Kappes was deputy chief of Frankfurt station, he was responsible for penetrating Iran’s virulently anti-US theocracy and its nascent nuclear program. By 1989, “virtually the entire US intelligence apparatus in Iran had been detected and successfully disrupted by the Iranians,” according to a little-noticed account corroborated in general terms by former US officials and other sources.

“This may be exaggerated, but there was little denying the scale of the CIA’s humiliation,” Mahan Abedin, director of research at the London-based Centre for the Study of Terrorism, was quoted as saying in 2007.

“This was exacerbated by details that some of the American spies had been ‘turned’ into double agents barely a few months after their initial recruitment,” Abedin said after analyzing official Iranian reports. “Some had been feeding their American controllers misinformation as early as the beginning of 1985.”

Another operation that Kappes approved blew up in the CIA’s face. It was run by Kappes’s friend Jeffrey Castelli; they had served together in their first overseas postings, in India and Pakistan.

Castelli was CIA station chief in Rome in 2003 when an agency team snatched an al-Qaeda operative known as Abu Omar off a Milan street and flew him to Cairo for interrogation. Italian antiterrorism police had had Omar (real name: Hassan Mustafa Osama Nasr) in their sights and were monitoring his phone in Milan when he was provisionally released by the Egyptians. They listened as he described his abduction from Milan by the Americans and said he’d been tortured.

Using the time and place of Omar’s kidnapping, Milan authorities—who had opened a kidnapping investigation—were able to pinpoint cell-phone calls along the CIA team’s escape route and trace them to their owners. That led them to the agents’ hotel-registration and car-rental records, including photocopies of their passports. As it turned out, they had used their phones for both business and personal use, calling spouses and girlfriends as well as CIA offices, in violation of every rule in the espionage handbook.

When police raided the home of the CIA base chief, Robert Lady, who had fled only hours before, they discovered boxes and computer files full of incriminating evidence, including surveillance photos of Abu Omar.

The Italian prosecutor got arrest warrants for the 26 Americans involved, all but one CIA agents. The affair, including a trial in absentia, turned into a cartoon of the “rogue” Bush administration—and CIA ineptitude.

Some operations officials, including Lady, had lobbied against the caper, arguing that Italian counterterrorism police were doing just fine against al-Qaeda in Milan. The Milan team had been warned against using cell phones by other CIA managers.

But Castelli had the bit between his teeth. So did Kappes, who as chief of operations would have given the ill-fated operation his seal of approval.

In the wake of the Milan disaster, Castelli, who was wanted on Italian kidnapping charges—he was eventually granted diplomatic immunity—was removed from Rome. Kappes put him on ice for a year at the Air War College at Maxwell Air Force Base in Alabama. A CIA accountability board lacerated Castelli in particular and his superiors in general for the Milan operation.

Castelli was already in bad odor for uncritically passing along, in 2002, a bogus document purporting to show that Saddam Hussein had sought to buy uranium for a nuclear bomb in Niger. So many inside CIA headquarters were astonished when, in 2008, Kappes picked Castelli to run the CIA’s New York station, one of the agency’s most prestigious appointments. Shock turned into protest, according to CIA insiders, forcing Kappes to drop the idea. Castelli soon retired. (Castelli has never responded to my messages asking for comment.)

Then there was the case of Khaled El-Masri, a German car salesman abducted by the CIA. Masri was picked up while on vacation in Macedonia in December 2003, flown to Afghanistan, and thrown into a secret dungeon, where he was interrogated and tortured for five months. Eventually he was released with no charges against him, flown back to Albania, and dumped onto a highway. In 2007, the Supreme Court let stand an appeals-court ruling that rejected Masri’s suit against the CIA, saying it posed a “grave risk” of damage to national security by revealing “state secrets.”

As with the Milan fiasco, warning signs were everywhere.

“From the start, the rendition team suspected that his case was one of mistaken identity,” Jane Mayer wrote in the New Yorker last year. “But the CIA officer in charge at Langley—the agency asked that the officer’s name be withheld—insisted that Masri be further interrogated.”

Even after it was determined that Masri’s German passport wasn’t a forgery and that he wasn’t the man the CIA was looking for, the officer in charge refused to release him, Mayer and others say.

Masri went on a hunger strike, losing 60 pounds, until finally “skeptics in the agency went directly over the officer’s head to [CIA director George] Tenet, who realized that his agency had been brutalizing an innocent man,” Mayer wrote.

Despite all this, the woman in charge of the operation has been promoted—twice—by Kappes, according to Mayer and sources who corroborated her story.

Many observers note that in all the media exposés, congressional investigations, and finger-pointing over CIA renditions, secret prisons, and harsh interrogations, there’s nary a hint of Kappes’s involvement, despite his position as the deputy chief and later chief of operations during the first Bush administration, which put him—nominally at least—in charge of all of them.

According to some accounts, Kappes despised the rough stuff.

“I’ve worked with him, as have many of my colleagues,” says a former CIA undercover operative who wrote an acid, unapproved memoir of the agency in 2008 under the pen name Ishmael Jones.

“He would never have gotten anywhere near something as risky as terrorist interrogations,” the pseudonymous Jones maintains. “The low-level guys who conducted vital terrorist interrogations following 9/11, which then became a CIA public-relations nightmare, did so at the risk of their careers. Mr. Kappes stayed miles away from any of this and has suffered no recriminations.”

Kappes saw the interrogations as a distraction from the agency’s main mission, says one former colleague who, like almost everyone else interviewed, demanded anonymity in exchange for talking about Kappes.

“He wanted to get back to the basics,” says the colleague, “regaining control over our own house, to stop caving in to ambassadors and the FBI, the State Department and the military.”

Kappes declined to be interviewed. “The deputy director is, at least where the press is concerned, firmly old school,” says CIA spokesman Paul Gimigliano. “He does not give interviews, believing, when it comes to issues involving the agency, that the best spokesman is the director. Nor, given his status as a serving career intelligence officer, does he seek public attention. He simply does not see that as appropriate. If you want the limelight in Washington, a CIA career is not for you. That’s how he looks at it, and that’s how it should be.”

None of Kappes’s friends and family agreed to be interviewed for this article.

But Kappes does occasionally and informally talk off campus with favored journalists, one of whom says, “He had a reputation for being skeptical of things outside the basic role of the agency.” Foreseeing the trouble that waterboarding and secret prisons would stir up, Kappes “may well have decided, ‘Let this cup pass from my lips.’ ”

Yet Kappes has a reputation for micromanagement, right down to his recent insistence on selecting applicants for a two-person station. Therefore, says a former high-level official, Kappes had to know—and approve of—virtually everything that went on in the counterterrorism program after 9/11.

“All decision making in the Directorate of Operations flowed through the ADDO,” or assistant deputy director of operations, the position Kappes held when the war on terror ramped up in 2002–04, says a former top official during that era. “And he was specifically in a position of decision making and influence and persuasion… . So any decision or voice he gave to a particular point of view would have been, and was, given great consideration.”

“So if he was opposed to [waterboarding] and made his position known,” the former official adds, “that would have carried great weight. After all, not only was he ADDO, but don’t forget that at the same time he was carrying water for the White House on the Libya stuff and had a personal relationship, he claimed, with the President. So if he was able to do what he did on Libya, he should have been able to persuade the same decision makers with respect to enhanced interrogation techniques if he actually was opposed to them.”

It’s not likely Kappes was opposed to such programs, says a retired station chief who knows Kappes well: “He’s very jingoistic, very much a believer in American exceptionalism and the leading place the United States has in the world.”

Says John Sifton, a private investigator and attorney in New York who has carried out extensive research on the CIA’s secret programs for law firms and human-rights groups: “It strains credulity for him to say, ‘I didn’t know, I wasn’t involved.’ His denials would be like the Yankees pitching coach saying he didn’t know the playoffs rotation.”

“He became ADDO in the fall of 2002,” Sifton said, “just as the CIA was expanding its program for secret prisons and harsh interrogations and as it continued its renditions program with zeal.”

In at least one case, Kappes didn’t stay far away, sources say. According to an internal investigation, he helped tailor the agency’s paper trail regarding the death of a detainee at a secret CIA interrogation facility in Afghanistan, known internally as the Salt Pit.

The detainee froze to death after being doused with water, stripped naked, and left alone overnight, according to reports in the Washington Post and Los Angeles Times. He was secretly buried and his death kept “off-the-books,” the Post said.

According to two former officials who read a CIA inspector general’s report on the incident, Kappes coached the base chief—whose identity is being withheld at the request of the CIA—on how to respond to the agency’s investigators. They would report it as an accident.

“The ADDO’s direction to the field officer anticipated that something worse had occurred and so gave him directions on how to report the situation in his cable,” one of the former officials says.

“The ADDO basically told the officer, ‘Don’t put something in the report that can’t be proved or that you are going to have trouble explaining.’ In essence, the officer was told: Be careful what you put in your cable because the investigators are coming out there and they will pick your cable apart, and any discrepancies will be difficult to explain.”

As a result, the former official says, the Salt Pit officer’s cable was “minimalist in its reporting” on what happened to the prisoner. “It seems to me the ADDO should have been telling him, ‘Report the truth, don’t hold anything back, there’s an investigative team coming out, be honest and forthright. But that was not the message that was given to the chief of base by the ADDO.”

CIA spokesman Paul Gimigliano calls this account “shot through with errors and falsehoods.” He says, “It’s wrong—and it’s pathetic that someone would make such charges without the courage or decency to do so on the record. The agency’s past detention practices have been thoroughly and repeatedly reviewed, inside and outside the CIA. These greasy insinuations of a coverup are not only utterly off the mark; they’re totally below the belt.”

But the former official stands his ground: “Proof that it is an accurate recitation of the facts is the approach they take to confront it. They vaguely assert it has errors but don’t tell you what the errors are. They deny all aspects of it. Then they attack personally the sources. It’s their modus operandi: Admit nothing, deny everything, make counter-accusations.

“If they are so certain [of their version], then they should release the report and prove it. They can’t.”

The CIA’s Baghdad station was a mess from the start, according to sources.

In his book, The Human Factor: Inside the CIA’s Dysfunctional Intelligence Culture, Ishmael Jones offers a blistering depiction, saying it was bloated by hundreds of support personnel, many of whom, he writes, spent their days watching movies, playing games, and messaging friends on their computers. Intelligence-gathering outside the Green Zone was negligible. Only five or six officers spoke Arabic, the agency would later concede. Sex between officers and subordinates was common—sometimes blithely performed in view of surveillance cameras in the parking lot. The videos were passed around by superiors, he charges, before the most egregious miscreants were sent packing.

Baghdad station had been a problem, one way or another, since hanging out its shingle in April 2003, right after US-led troops rolled into the capital and toppled Saddam Hussein. Within months, thanks largely to missteps and miscalculations by Bush-administration officials—dissolving the Iraqi army, for starters—a Sunni/Shia civil war broke out. Al-Qaeda volunteers elsewhere in the Middle East and North Africa streamed in to be part of the bloody action.

The Bush White House didn’t like the negative tone of the first station chief’s assessments, and CIA director Tenet agreed to remove him. A highly respected Middle East hand, Gerry Meyer was forced out of the CIA altogether, according to an account by Ken Silverstein in Harper’s magazine. The second station chief’s “negative” reports led to his removal, upon which he became “a pariah” at the intelligence agency, according to reports.

Through all this, Kappes was deputy director of operations, the guy who makes the trains run on time.

Then came the third station chief.

Kappes had to be well acquainted with the problems in Iraq: Baghdad was the CIA’s biggest and arguably most important station when Kappes returned to the agency, now as deputy to CIA director Michael V. Hayden. And to agency managers who attended director Hayden’s daily 5 pm meeting, Kappes seemed to be the person in charge of day-to-day operations.

“Hayden was at one end of the table, and Jose [Rodriguez, head of the National Clandestine Service] was usually at the other end,” a CIA operations manager recalls. “Hayden was sort of presiding, but Kappes was the one you were talking to.”

Ilana Sara Greenstein, a CIA operations officer in Iraq during 2004–05, took her own complaints about problems in the Baghdad station to Hayden, who passed her off to Kappes.

“What I witnessed there was nothing short of disastrous, operationally and ethically,” says Greenstein, who won six CIA commendations and was cited by the US military command in Baghdad for work that “directly saved lives”—the only CIA staff employee to be so honored.

Kappes eventually sent “an aide” to debrief her, Greenstein says, in late 2006 or early 2007. They met for three hours. “I raised serious concerns,” according to Greenstein.

But months went by without any follow-up, she says. Meanwhile, agency officials began to take “adverse actions” against her. “Months later, the agency took more serious actions against me,” she says, declining to be more specific. She was sure it was “retaliation” for her complaints.

“It was pretty bad,” she says, and she was ready to quit. But friends and coworkers urged her to talk to Kappes before she went. “He’s rational, he’s reasonable,” they said.

She made an appointment. When the hour came, she walked into his assistant’s office, only to be told the meeting had been canceled. She says she was told “we could not meet again for the foreseeable future.”

Greenstein quit in 2008. A graduate of the University of Virginia Law School, she now works as a lawyer in Washington, representing former and current CIA personnel.

And the Baghdad station chief? Promoted to run the Counterterrorism Center.

Firing him “would have been the shot heard ’round the world. The message would have been zero tolerance,” says an operations officer who asked for anonymity because “I do not want my criticism of CIA to start being interpreted as a personal vendetta against one guy.”

To his knowledge, he says, Kappes “has not dismissed any case officer for misconduct.”

Except, perhaps, when his hand was forced.

In January 2009, news broke that the CIA station chief in Algiers, Andrew Warren, had been sent packing by the American ambassador after two local women charged him with date rape.

Senate Intelligence Committee chair Dianne Feinstein said she first heard about the incident on ABC News. Panetta was left to grovel before her panel in an open hearing.

“Current management’s decision not to notify Congress of the case when it came to light last October was incorrect,” he said.

Current management? That would be Kappes.

Four months had passed since Warren, who was still on the payroll, was kicked out of Algiers. Senator Orrin Hatch, the Utah Republican on the panel, needled Panetta on whether rape charges against a station chief in a pivotal Muslim country amounted to the kind of incident the CIA was duty-bound to report under the oversight rules.

“My understanding is that first information about this actually came to our attention some time back in October,” Panetta responded. “And I think that was the time to have briefed Congress.”

A spy-agency spokesman had been quoted saying Warren hadn’t been fired yet because of “due process.”

“I think that was wrong,” Panetta said. He “should have been terminated.”

In March, he was. Warren is being prosecuted by the Justice Department.

Intelligence sources speculated that Warren had been protected by Kappes, who as deputy director of the CIA and a former DO chief would have approved his appointment as station chief. By some accounts, red flags had been flying around Warren, a Muslim convert, for years, because of his penchant for recruiting sources in bars during tours in Cairo, Kuwait, and Iraq.

No one charged Kappes with mishandling the situation. Nor was he called out when a scandal flared up last spring while Senate overseers were still steaming over Warren: Kappes’s executive assistant was arrested for credit-card fraud.

Steven Levan, 48, a 16-year CIA veteran, held a far more sensitive position at the agency than was revealed in initial news reports, which described him as a “case agent.”

As recently as the summer of 2008, Levan “was sitting on the seventh floor as a key aide,” a former CIA official told me when the case broke. “Before that he was a chief of station,” or top CIA representative, in an unidentified foreign country.

A former Army officer, Levan “had apparently been anointed by someone as a rising star, because he was given a number of pretty sweet assignments,” the former official said. “The last time I saw him, he was in one of the high-visibility staff-aide positions which are usually reserved for folks expected to move on into top echelons.”

Veteran CIA operatives I talked to at the time were mystified as to how Levan was able to swindle the spy agency out of $107,000, according to court documents, by misusing credit cards issued under false identities. Sources claim he was using the money to support a mistress.

How does Kappes survive, even flourish?

Brian Kelley, a CIA counterintelligence specialist, points to a ceremony at CIA headquarters on October 19, 2007. A standing-room-only crowd had gathered to honor Kelley, who’d lived a nightmare for almost two years after the FBI accused him of being a Soviet mole. The real one, as it turned out, was the FBI’s own Robert Hanssen.

The CIA could never make up for what had happened to Kelley, his former wife, his children, and even his parents, all of whom were hounded by an FBI version of Inspector Javert until a KGB defector turned over a file that led to Hanssen.

But Kappes would lead the way. When he took the podium, he apologized to Kelley and his family and awarded him the CIA’s Distinguished Career Intelligence Medal. The room swelled with applause.

Kelley was bowled over. “For my family and my friends who suffered greatly as a result of what the FBI did, Steve’s remarks were very cathartic,” he says. “It helped put an end to a very painful time in all of our lives. So many innocent people suffered, and it was only after Steve and the others spoke that the real healing process started. Needless to say, Steve is a revered figure for my family.”

It was simple, Kelley says: Steve Kappes is a standup guy.

A devout Catholic, Kappes attends Mass daily at a church where the parish priest is a former State Department security officer. But Mass is more than a rote ritual to Kappes, Kelley says.

“He’ll engage me in conversation about St. Augustine or Thomas Aquinas—Catholic theology and so forth,” Kelley says over lunch at Amphora, a CIA haunt in Northern Virginia.

Kappes doesn’t have his head in the theological clouds, Kelley says. He’s still a Marine through and through, having commanded—appropriately enough—the Corps’s Silent Drill Platoon, headquartered on DC’s Eighth Street, Southwest, before joining the CIA in 1981. And he remains an active supporter of the Marines.

Nor does he sequester himself in the seventh-floor executive suites. “He’s a walk-around manager. He says hello, remembers your name, eats in the cafeteria,” Kelley says. “He cares about people.”

Fellow students from Ohio’s Athens High School, where Kappes graduated in 1969, remember him the same way. His father coached football, and his mother gave swimming and skating lessons. Steve played football at Athens and went on to become a three-year letterman as center and long snapper at Ohio University under his father, the line coach.

“He was really pleasant to everybody, he wouldn’t snub people,” fellow student Juanita McLead says. “But his whole family is like that.”

“I remember going to ‘sock hops’ and seeing Steve dance and laugh, just having a good time,” says Lili Richey Willard, who was a year behind Kappes at Athens. “Everyone loved him.”

“I was very proud when I found out what Steve is doing these days,” Willard adds. “He would excel at any profession he chose.”

Decades later, by many accounts, Kappes still has the sweet touch.

“He often came to the Hill in a way that was very unusual for senior CIA officials, in a personal capacity,” says Eric Rosenbach, a staff member on the Senate Intelligence Committee from 2005 through 2007.

“He would come to see a senator, privately, just to answer any questions they had. In other words, he wouldn’t just leave it to briefing the committee.”

“I was always left with the impression he was a straight shooter,” adds Rosenbach, now research chief at Harvard’s Belfer Center for Science and International Affairs.

Pete Hoekstra, the ranking Republican on the House Intelligence Committee, scoffs at such characterizations. “I understand that Mr. Kappes is capable, well qualified, and well liked,” the Michigan congressman wrote President Bush in 2006 after hearing reports that Kappes was returning to the CIA. “I am heartened by the professional qualities he would bring to the job, but am concerned by what could be the political problems that he could bring back to the agency.”

Hoekstra had rolled out a Republican litany against Kappes and the DO, that they had “intentionally undermined the administration and its policies” in fighting against Porter Goss’s changes. Then he charged that Kappes and his deputy “were developing a communications offensive to bypass the Intelligence Committees and the CIA’s own Office of Congressional Affairs.” An end run—a covert op—around the Republican-controlled panels, Hoekstra charged.

“One can only speculate on the motives, but it clearly indicates a willingness to promote a personal agenda,” he says. “Every day, we suffer from the consequences of individuals promoting their personal agendas.”

Hoekstra, now running for the Republican nomination for governor of Michigan, says, “All of the fears of him coming back are what we’re experiencing today. We’re not getting briefed, but the Democrats are getting all the information they need.”

Panetta, for his part, says he couldn’t be happier with his deputy—the man Congress decreed he must accept as part of running the agency. “Steve is the absolute professional, a leader of great skill and integrity,” the CIA director said in a statement. “He’s the best in the business and I count on him for his advice, counsel, and friendship.”

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