ONE DOUBLE AGENT'S TALE: "HE SAVED AMERICAN LIVES"

Gennadi Varenik was a KGB major working in Bonn under cover as a correspondent for TASS, the Soviet news agency, when he was suddenly recalled to Moscow in November 1985. Four months earlier, Aldrich Ames had told the Soviets that Varenik was spying for the cia. He was charged with that crime, tried and executed. This was a murderous tragedy, mentioned briefly in David Wise's book. It also represented a significant setback for the U.S. TIME's investigation of the Varenik case over the past three months reveals that he was one of the most promising KGB double agents the cia ever recruited.

In the seven months before he was caught, Varenik, code-named GTFITNESS, provided American intelligence with detailed information about 170 agents and operations of the KGB and the GRU (the Soviet military intelligence arm). He tipped off the cia that the Soviets had a plan to create anti-German sentiment in the U.S. by planting explosives in bars and restaurants frequented in Germany by American service members (Varenik's role in the KGB scheme was to find places where the explosives could be hidden). "Gennadi," says one insider, "saved American lives."

Varenik was a KGB brat--the son of a KGB colonel--and a graduate of the Andropov Red Banner Institute, which trains intelligence agents. He spent a year working at the TASS offices in Moscow preparing for his cover job. His first contact with the cia came a year after his arrival in Germany in 1981. A colleague introduced him to a CIA officer, and for more than a year, each believed he was cultivating the other as a possible double agent. Varenik abruptly broke off discussions in 1983, but the cia had passed him a secret telephone number.

In March 1985, Varenik called from a pay phone. There was an arrangement that he call back in an hour. When he did, he set up a meeting with a CIA case officer in a Bonn-area hotel. A dark, quiet man, 32 at the time, Varenik described his situation. He had used $3,500 from the KGB station's operational funds for personal expenses, and an auditor was expected shortly from Moscow. Moreover, he owed another $3,500 to colleagues. His second daughter had just been born, but he was flat broke and couldn't even pay his rent. Worst of all, Varenik had learned that a German he had recruited to spy for the U.S.S.R. was in fact a double agent working for German intelligence. Could the CIA, he asked, help fake a recruitment that would put him in the good graces of the KGB?

His internal KGB pseudonym was Lothar, he said, and he was a Directorate "S" staff member serving as a case officer for "illegals," Soviet agents working in Germany who did not have diplomatic covers and so were not protected by diplomatic immunity. In addition, he attempted to recruit agents, mostly among German university students and members of the German peace movement. Varenik described the discord and tensions in the local kgb station and decried the petty politicking and corruption. He was clearly fed up with the existing Soviet system, and he was repelled by the idea of bombing Americans. He was not primarily motivated by ideology, however; he simply saw no way out of his financial problems. He was not a big spender, had no alcohol problems and was happily married. But the kgb paid miserly salaries, and Varenik didn't fabricate expenses like his colleagues.

In the ensuing months, Varenik talked with CIA agents at hotels and later at a CIA safe house. If he wanted to meet, he would make a chalk mark on a utility pole that was on his route home from the TASS office. The CIA paid him $3,000 a month. He also received small gifts-a German encyclopedia, for example. He was prolific: his reports fill four drawers in a CIA safe. He described "false flag" operations in which KGB agents recruited Germans while pretending to be South Africans or Israelis.

Of particular interest to CIA officials were his revelations about an operation called Ryan, the KGB's efforts to set up a system to determine if the Americans were drawing up plans for a surprise nuclear strike. One of Varenik's tasks was to recruit agents near NATO airfields who could report if the number of flights increased suddenly. Varenik also told the CIA about the KGB's areas of keen interest--NATO weaponry, especially aircraft, for example, and computers and data handling.

At Varenik's last meeting with the cia, everything seemed normal. He had recently returned from home leave in Moscow, and there were no signs of trouble. But two days later, he was recalled, ostensibly to discuss a new assignment. Four days after that, his wife Raisa and their two children were hustled out of Bonn after being told that they were being given a new apartment in Moscow. En route to the airport, Raisa realized she'd forgotten her passport. When she returned to the apartment, she saw that it had been ransacked by the kgb. Varenik didn't have time to alert the CIA before he left, and the first the Americans knew of trouble was when he missed the next scheduled meeting. The CIA had given Varenik secret writing materials and a Moscow emergency telephone number. He never used them. It is claimed that he confessed all at his trial.

Almost 10 years later, his wife, who never knew of Varenik's contacts with the Americans, still doesn't believe he was a double agent. "My husband was a man of crystal clarity who loved his country passionately," she says. "He was absolutely incapable of committing any treachery against his family and homeland." Like Aldrich Ames, he was capable of such things. Unlike his betrayer Aldrich Ames, he paid for it with his life.

-With reporting by John Kohan/Moscow