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Posted at 11:00 AM ET, 04/ 6/2010

A case of retaliation at CIA

By Jeff Stein

Even spies get caught up in the struggle for promotions, demotions, pay raises and dismissals, just like their brethren in other federal agencies. The difference in the CIA is that personnel decisions are wrapped in secrecy, making it as difficult for employees as for outsiders to find out what’s really going on.
So it’s been with the long-running case of  “Peter B.,” a onetime deep cover counterterrorism agent for the CIA, who alleges he was unfairly fired back in 2002. He also alleges that the CIA intervened with agency contractors to get them to rescind job offers.
Peter B. asserts that the answer can be found in the coils of a spy case involving a State Department officer and a Taiwanese intelligence agent four years ago.
The State Department officer, Donald Keyser, pleaded guilty to charges less severe than espionage in 2006, which prosecutors sought to rescind when they discovered Keyser had lied to them about the extent of his relationship and the hoard of secret documents he kept at home.
But as Time magazine’s Adam Zagorin reported back then, the case “got even weirder” when investigators discovered that Keyser’s wife, a CIA officer by the name of Margaret Peggy Lyons, knew all about the classified documents her husband kept at home -- and even had some of her own.
And Lyons, as it turns out, was Peter B.’s supervisor.
He knew too much.

In his own sworn declaration to the court in February, Peter B. elaborated on his suspicions, which sounds like material for the next Matt Damon thriller.

“I believe that the work I was doing, and about to do, potentially risked exposure of the illegal activities of her husband, “ he declared, “and that defendant Lyons sought to eliminate me as a threat to her husband, and perhaps, her own actions. Thus, she took certain steps to disparage me, and to destroy not only my CIA craeer but my ability to pursue my chosen profession.”

He is demanding that the CIA restore his officer status and benefits and to have his case reviewed through due process.

Lyons “either acted illegally or outside of her scope of employment to retaliate against Peter B.,” his Washington, D.C., lawyer, Mark S. Zaid, alleges in court documents, reported here for the first time.

Moreover, Zaid maintains, Lyons’s part in the CIA’s dismissal of him was “of a personal nature, unlawful and/or retaliatory.”`

An airing of CIA and FBI files, Peter B. argued in his own declaration to U.S. District Court Judge Richard W. Roberts, would produce “relevant records about this theory.”

The CIA is seeking a summary dismissal of the case .

Lyons, who admitted to prosecutors in 2006 that she and Keyser had failed "to properly secure" her husband's secret material, subsequently went to work for the Directorate of National Intelligence. She could not be reached for comment.

Meanwhile, Peter B., who, unknown to him, was commended by CIA Director George Tenet for “services rendered for our country” at the same time in 2002 that Lyons was allegedly plotting to destroy him, is no longer alone in his fight with the CIA.

Rosemarie Hesterberg, a 40-year CIA veteran who managed agency counterterrorism operations against high priority targets from Oct. 2001 to Oct. 2005, stepped out of the shadows in late February to say she has information that could help him.

“I believe many individual(s) in this summary process have made decision based on false data/information …” Hesterberg told the court in a four-page statement on Feb. 26, “and therefore have tarnished the good name of the Central Intelligence Agency (whether deliberately or not) for reasons I still do not understand.”

“In that process,” Hesterberg continued, “the Agency lost a competent operational officer at a time crucial in the fight on terrorism, one that was totally unnecessary hence abusing CIA’s good name and good conduct towards its employees.”

By Jeff Stein  | April 6, 2010; 11:00 AM ET
Categories:  Intelligence  
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Are Keyes and Keyser the same person?

Posted by: lostinthemiddle | April 6, 2010 11:37 AM | Report abuse

I appreciate your first paragraph reminder that CIA personnel decisions and managers are as fraught with human emotion and red tape as the rest of federal government. Yet firing a spy is always a risky venture.

The Edward Lee Howard fiasco was, in many respects, an HR problem managed so poorly it ballooned into an intelligence disaster and, apparently, Howard's eventual murder in Moscow.

Posted by: hippolito | April 6, 2010 11:40 AM | Report abuse

Long ago during the cold war everyone in the CIA secretly went insane and now they are a bunch of inmates running the asylum and paranoia and counter-paranoia rule the day...they may even be residing in a neighborhood near you...

Posted by: Wildthing1 | April 6, 2010 2:00 PM | Report abuse

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