Exclusive: Kappes Will Return as CIA Deputy

  • Share
  • Read Later
Back in 2004, Stephen Kappes left his job at the Central Intelligence Agency as Deputy Director for Operations after a personnel disagreement with then Director Porter Goss. But in the spy game, as in life, things can change quickly. Now Goss has resigned as director and Kappes, a respected CIA veteran, has agreed to return to Langley to serve under the new director, Air Force Gen. Michael Hayden.

It's been widely noted since Hayden's nomination was announced on May 8 that Kappes might return. But a public filing of the British security firm where Kappes has worked since April of last year, obtained by TIME, reveals that he indeed plans to rejoin the agency. A London filing by ArmorGroup International said flatly that "Steve Kappes, the Group's Chief Operating Officer since November 2005, will be leaving the Group in early June 2006 to accept the position of Deputy Director of the Central Intelligence Agency (CIA)." For his part ArmorGroup CEO Dave Seaton said in a statement. "Steve has been offered an excellent, senior position in the United States Government and so we wish him well in his new role."

Kappes' move could cost him close to a quarter of a million dollars in stock options, according to the company's annual report. That is because he would be forced to give up options on some 190,000 shares of stock in the company that that he appears to have earned, according to ArmorGroup's 2005 annual report; at today's prices those options would be worth some $240,000. But their real value for Kappes would depend on their strike price—the report indicates they're currently trading below this level—and their value when they would become exercisable beginning in 2008 and 2009. ArmorGroup chief administrative officer Christopher Beese declined to discuss how Kappes and ArmorGroup might dispose of his options, though it appears likely he will forfeit them. Kappes also received $50,000 in salary and benefits in the last two months of 2005, though his annual salary could not be learned.

The company disclosed Kappes' acceptance of the job in a London Stock Exchange regulatory filing Thursday, a day after Hayden was sworn in at the CIA. Beese said he believed Kappes was taken by surprise by Negroponte's announcement at the White House that he was recruiting Kappes to return to the CIA. The CIA did not confirm that Kappes' return has been finalized. "Director Hayden mentioned his intent to bring Steve Kappes back during his address to the workforce on Tuesday," says CIA spokeswoman Jennifer Millerwise Dyck. But Kappes would still have to clear the normal CIA and federal government employment processing and paperwork before actually starting the post.

Kappes, who served in the Marines before spending nearly 25 years in the CIA, is fluent in Russian and Farsi and served in the Agency's Frankfurt station running operations against Iran. He rose to become deputy director for operations just before George Tenet stepped down as CIA director in the summer of 2004. But Kappes resigned in November of that year in solidarity with his then-deputy, Michael Sulick, after Kappes refused a request to reassign Sulick several days after an angry run-in with Goss' chief of staff, Patrick Murray.

When Hayden's nomination was announced early last month, Director of National Intelligence John Negroponte said that he hoped to bring Kappes back as Hayden's deputy. Officials said this was a signal to CIA employees that the White House, DNI and a military general were not planning to impose their will randomly on the CIA but aim to continue reforming the Agency with the guidance of a respected veteran spook. At his confirmation hearing in mid-May, CIA Director Hayden praised Kappes, calling him "a guy who knows the business."