Spyfail: Foreign Spies, Moles, Saboteurs, and the Collapse of America’s Counterintelligence

by Grant Smith Posted onOctober 20, 2023

James Bamford’s Spyfail ruffles all the right feathers.

Bamford is best known for his books The Puzzle Palace and The Shadow Factory, both about the National Security Agency. The NSA did not initially know whether to fete or undermine Bamford after he thrust the agency’s secretive activities, such as data mining Americans, into the spotlight.

The CIA is not as indecisive about Spyfail. The agency’s book review in Intelligence in Public Media charges Bamford does not make his case that American counterintelligence has failed, speculating this is due to a pro-Indigenous character flaw: “In his extensive accounts of these undertakings, Bamford’s pro-Palestinian views are striking.”

The Cipher Brief, a website with close ties to the CIA, also argues Bamford treats Israel unfairly: “All intelligence activities are not equally dangerous to U.S. national security…the author’s clear anti-Israeli biases – views abundantly evident in the book – detract from his argument.”

The discomfort expressed by intelligence agencies and aligned media outlets over Spyfail’s well-sourced evidence appears to be a subtle admission Bamford is right.

Exhibit A is the ongoing impunity of Hollywood movie producer and Israeli spy Arnon Milchan, who has long been engaged in espionage and weapons smuggling operations targeting the United States. Bamford chronicles Milchan’s early efforts to bolster Israel’s close ally, apartheid South Africa, via weapons dealing. Milchan also produced now-forgotten theatrical flops depicting exploited Black people as happy with their fate in apartheid South Africa.

Milchan also joined Israel’s Bureau of Scientific Relations (Lakam) spy agency to scour the U.S. for export-prohibited nuclear weapons technology. By the time Milchan joined Lakam, it had already stolen enough U.S. weapons-grade uranium to build a dozen atomic bombs from the compromised nuclear fuel processor NUMEC in Pennsylvania. Milchan’s shell company network illegally exported high speed switches from the U.S. to Israel that could provide the precisely timed pulses to trigger a nuclear detonation.

To do this, Milchan employed the hapless engineer Richard Kelly Smyth to create a front company called Milco International in Huntington Beach, CA. Milchan courted the failing businessperson by introducing him to stars and rising stars at his Hollywood soirees.

Smyth falsified export licenses for the triggers and other prohibited items, claiming they were similar, but not export-prohibited items. Smyth was incompetent and always managed to give away what he was doing to vigilant federal government authorities. Scapegoat Smyth, and not mastermind Milchan, was eventually criminally indicted in the United States. When Smyth desperately sought his help from prison and even dropped Israeli Prime Minister Binyamin Netanyahu’s name, Milchan ghosted him while working to stay ahead of the law.

While Bamford mentions the longstanding Netanyahu-Milchan relationship, he does not delve deeply into Smyth’s stunning revelation that Netanyahu also worked inside the trigger smuggling network at the Israel-based Milchan shell Heli Trading Company. Heli executed the nuclear trigger purchase orders directly from the Israeli Ministry of Defense.

The subsequent public fracture of the Milchan-Netanyahu relationship is among the important revelations of extreme current relevance in the book. Milchan pressured Netanyahu to compel U.S. Secretary of State John Kerry to reissue him a 10-year resident visa after lower-level State Department officials refused. Kerry eventually acquiesced to Netanyahu and issued the visa. This freed up Milchan, producer of blockbusters such as “12 Years a Slave” and “Pretty Woman,” to continue production of new hits such as “Ad Astra,” starring Brad Pitt and Tommy Lee Jones; “The Lighthouse”; and “Amsterdam.” Milchan, according to Bamford, allegedly dodges taxes in the U.S.

Netanyahu began asking Milchan for endless boxes of expensive cigars – code named “leaves” in corruption case filings against Netanyahu in Israeli court – as well as cases of $400 per bottle champagne, “bubbles” and other expensive gifts for his wife as payback for the visa favor. Bamford depicts this shakedown as relentless.

It is these Israeli corruption cases against Netanyahu, among other factors, that led the embattled leader to seek the judicial reforms that would give his coalition the power to shut down corruption cases. Netanyahu’s initiative has torn Israel apart, putting the country on the verge of civil war as protesters have flooded the streets seeking to preserve the court. It is important to recognize Israeli courts rarely produce justice for Palestinians.

Counterintelligence officials and other interested Americans who fully digest Spyfail will gain new insights into how the politicization of American counterintelligence produces media frenzies and official enemies that curiously seem to mirror Israel’s own, while inevitably failing to expose or debate Israel’s hugely damaging and longstanding covert intelligence operations against the U.S.

Yet another book review, this time in the New Republic, laments, “the Bush 43 administration quashed the FBI’s espionage investigation of Milchan because he was Bibi’s boychik, and [because] the U.S. government in its majesty quails at the wealth and influence of the Israeli lobby, despite the fact that its agents are conducting covert political warfare against Americans. The latter argument would make a good book, albeit a different book.”

That is true. To fully appreciate how Israel transcends U.S. counterintelligence efforts, one must understand how Israel seeded the foreign influence operation that now occupies Congress and meddles in U.S. elections on Israel’s behalf. My latest book, How Israel Made AIPAC: The Most Harmful Foreign Influence Operation in America, outlines this important history.

Both books make sound contributions regarding the overlapping subjects of Israeli spying and lobbying.

Grant F. Smith is the research director of the Institute for Research: Middle Eastern Policy (IRmep) and most recently the author of How Israel Made AIPAC: The Most Harmful Foreign Influence Operation in America, also available as a free serialized podcast on all major platforms.