
The CIA and the FBI famously weren't talking to each other in the lead-up to 9/11. This is the story of why. Supervising producer Kara Jensen-McKenna tells Matt about a decades-long secret FBI operation underneath the streets of Washington which ended in one of the most extraordinary betrayals in American intelligence history. Listen to Matt on No One Saw it Coming on the ABC Listen App Follow If You're Listening on the ABC Listen app. Check out our series on YouTube: https://www.youtube.com/playlist?list=PLDTPrMoGHssAfgMMS3L5LpLNFMNp1U_Nq
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Sam
ABC Listen, podcasts, radio, news, music and more.
Alan Koehler
What's on the mind of the country's biggest, most influential and most innovative business leaders?
Sam
If we look at the long arc of history, you know what has driven the kind of big productivity shifts over time are improvements in general purpose technology.
Alan Koehler
You get to find out every Friday with me, Alan Koehler, as I sit down with the people influencing the markets, the economy and the ideas shaping our world.
Sam
Everything I've seen suggests AI could be in that category.
Alan Koehler
Find that's Business with Alan Koehler on the ABC Business Daily feed on ABC Listen or wherever you get your podcast.
Cara Jensen MacKinnon
This podcast was produced on the lands of the Awabakal and Gadigal people.
Sam
G'.
Cara Jensen MacKinnon
Day. Matt Bevan here. This is if you're listening. We've spent the last few weeks digging into Palantir, the data company that is powering everything from the US military to the CIA to Coles. Our first episode covered how the 911 terrorist attacks led to its conception and we talked about how it works. And in the next episode we're taking a look at the CEO Alex Karp, and where he wants the company to go. My supervising producer, Kara, has been helping with writing these episodes, which means that she has even more tabs open than usual. And she's got a story that she's somehow managed to keep from me entirely. It's about why the FBI and the CIA weren't getting along and as a result were not sharing their data, which was one of the key contributing factors to 911 being able to be pulled off without the terrorists being detected beforehand. I'm told it's a story that contains all my favorite elements, but that is all she's told me. Cara Jensen MacKinnon, hello.
Sam
Hello. How do you think you'd define your favorite elements of a story? Before we dive into this? What are you expecting to hear?
Cara Jensen MacKinnon
Honestly, Cara, I don't know that I've ever enjoyed hearing a story more than when you told me the story about the humanoid robot. And then we're sort of chugging along in the story and I'm going, oh yeah, it's an interesting story. And then the robot pulls out a gun. I like a story that involves a robot pulling out a gun. Really? I keep looking for that in every story. That's the main thing that I'm hoping for this week.
Sam
There may or may not be a gun in this.
Cara Jensen MacKinnon
I also have seen your current situation with tabs on your screen and it's not good, Cara. It's bad.
Sam
It's taken hundreds of thousands of tabs for me to pull together this brief. And so I'm excited to finally be able to close some of these tabs, because they're driving me insane.
Cara Jensen MacKinnon
Adair is listening. And, Adair, I want you to, while you're listening to this, get that picture of Cara's tabs and count how many there are and tell us at the end, because people will be mortified. Let's go.
Sam
Okay, so basically, the first episode that we did on Palantir kind of starts with this absolute breakdown in communications that's happened between the CIA and the FBI. They're not exchanging information. And as you've said, it was that kind of breakdown in comms that was one of the reasons that led to 911 happening. So I got interested in why that actually happened, why that eventuated, because there's a lot of weird anecdotes, one of which is that anytime the FBI would call the CIA for information, they would just leave the phone off the hook. Playing Another Brick in the Wall by Pink Floyd. They disliked each other so much that they were, like, just trolling all through the early 2000s. And I was like, why do they have so much beef? Like, they're on the same side. What's going on? And so to understand where the beef originated, we're going back to 1977 to a hill in Washington.
Cara Jensen MacKinnon
Oh, we're going that far back? All right.
Sam
Basically, in Washington, the Russians are sniffing around for a new location for their embassy. We're in Cold War politics. Everyone's distrustful of the Russians, obviously, but they kind of deserve to have their own embassy. And so the State Department's like, okay, guys, you can put your embassy up on top of that hill. They didn't tell anyone else. They didn't tell the FBI. They didn't tell the nsa. They said, you guys can have the Hill, so start building. The FBI and the CIA and the NSA got wind of this, and they were like, guys, we can't let them build this on the Hill because it will give them absolute capacity to have a direct line of sight to the White House. It's at this time where there had been double agents, had been bugging. They've been using sonar devices to be able to hear what's going on.
Cara Jensen MacKinnon
It's actually a massive coincidence that you're telling this story, because I am have recorded an episode of no One Saw It Coming with Mark Fennell that is about bugging inside the US Embassy in Moscow. Yes, we're sort of talking about this and how Distrustful they are, and that kind of thing in this same period. It's fascinating that we're back in this period. I'm excited about that.
Sam
So they had absolute form. They're kind of like, yeah, you can build it, but we'll obviously do every single thing we can to know every single thing that's going on in that place.
Cara Jensen MacKinnon
Yeah.
Sam
So. So they agree to let them build it, but then the FBI decides that in order to kind of keep tabs on what they're doing, they are going to purchase a house a couple of blocks away so they can live a fake life, but all the while observe what's going on 24 hours a day, around the clock.
Cara Jensen MacKinnon
Hang on. Where is this? Where is this embassy? I need to know where this embassy is.
Sam
The house that they've leased is 2619 Wisconsin Avenue. And the embassy is on, like, the embassy hill there.
Cara Jensen MacKinnon
Oh, yeah. Okay. So the embassy of the Russian Federation. There it is. It's very big.
Sam
It's a big one.
Cara Jensen MacKinnon
That's the house you want. It's right across the road.
Sam
So by day, they're kind of walking around checking out the embassy situation, and by night, they're kind of having a fake life in this house and also watching the embassy.
Cara Jensen MacKinnon
Okay.
Sam
They didn't exactly, at that stage have a direct line of sight to the embassy. So they got in contact with the construction workers and said, we're going to need you to cut down every single tree here so we can see exactly what's going on.
Cara Jensen MacKinnon
Okay.
Sam
They cut down the trees. They hid the sawdust. They're basically just staking this place out, watching it get built.
Cara Jensen MacKinnon
You can get away with destroying trees for a view if you're the FBI, but you know the trees that are blocking my view.
Sam
Exactly. All you need is a Russian embassy to move into Newcastle and you'll be able to knock down those trees.
Cara Jensen MacKinnon
Well, the Russian embassy are looking for a place. You and I went and looked at the Russian embassy in Canberra and the fact it doesn't exist at the moment. So look. Yeah, I mean, I could find some very specific spots the Russian embassy could go so that I could knock down some trees. That sounds great.
Sam
So they're living this kind of fake life in this house, watching this construction start, and they are not getting enough information. Basically, they're like, we've got the photographers, we're watching them do stuff, but we actually can't hear what they're doing. And so they conceive of this project called Operation Monopoly.
Cara Jensen MacKinnon
I've never Heard of Operation Monopoly.
Sam
They basically decide that they want to build a large, like, underground tunnel from the house to underneath the embassy to be able to bug it.
Cara Jensen MacKinnon
Oh yeah. This is where we get into the area that I love.
Sam
This is element number one. A huge tunnel.
Cara Jensen MacKinnon
Yeah. Woo. Yeah. It's worth noting though, just contextually for this time, the CIA and the FBI in the late 1970s, this is their lowest moment. Everybody hates them at this stage.
Sam
Yes.
Cara Jensen MacKinnon
All of the corruption of J. Edgar Hoover, all of the terrible programs of the CIA doing illegal tests on people, invading places, torturing people, all of that has all come out in the late 1970s through congressional inquiries after Watergate. People really do not like or trust these guys. And so they really want to win, I would have thought. And the way that they're going to do it is by reenacting the Great Escape. But they're getting into the embassy. Okay, great.
Sam
Like about 150, 200 meters underneath from this house to where the embassy will be built. And we're basically going to install eavesdropping equipment underneath the embassy before it's even been built. So we'll be able to hear what's going on. Didn't obviously have the in house capacity to dig this, so they had to hire construction workers. But then they also had agents posing as construction workers on the ground. Basically real workers and their own agents. And when the construction would finish, the construction workers would go, but the agents would go back to the house.
Cara Jensen MacKinnon
So they get to the end of the day, all the constructions workers, you know, get in their utes and head home. A couple of them finish their iced coffees and they go, oh, yes, you guys have a good night. I'm going to go and go to this townhouse literally across the street. Sure. Yeah, that's really subtle.
Sam
And go and like make their fake meals with their fake families.
Cara Jensen MacKinnon
They presumably had a lot of standing up at windows, peering beneath the venetian blinds with two fingers. Someone had to be doing that at all times.
Sam
So because they just hired normal construction guys, they weren't well equipped to build a large underground secret bunker tunnel. So there were almost instantly issues from water that would just pour through the sides of the walls. There were under Washington other tunnels that were used kind of by the White House at that time that they needed to avoid hitting.
Cara Jensen MacKinnon
What?
Sam
This is another thing that I've since discovered. We're not going to go into the other White House tunnels in this episode, but there are several other White House underground tunnels, like escape tunnels.
Cara Jensen MacKinnon
What is going on here, Cara?
Sam
They also had to deal with the disposal of the dirt that they were excavating from the tunnel. And so what they did with that was under the COVID of nightfalls, they would go and add the dirt to the piles of other dirt coming from the Russian embassy construction. So they would, like, take little barrows and empty it onto those piles and just make those piles slightly bigger each night.
Cara Jensen MacKinnon
What you're describing is exactly the Great escape. Okay?
Sam
Exactly. But they had barrows instead of. I mean, maybe they were carrying some in their pockets.
Cara Jensen MacKinnon
Yeah, yeah, yeah.
Sam
This is kind of going through the late 70s. We're into the 80s now. The tunnel is still getting built. It's costing an extraordinary amount of money, like millions and millions of dollars, and it's eating up a huge piece of the FBI budget. Then in the mid-80s, something happens that really ramps the requirement for knowing what's going on up. And that's basically that double agents that the CIA had had been compromised in inside the KGB and were executed. Oh, two big people were executed. A guy called Sergei Motorin and Valerie Martynov were executed, which was an absolutely huge loss for the CIA, US Intelligence. The CIA fully didn't understand why this was happening. They're like, what's going on? How do we lose our people? And the FBI says, okay, this tunnel's just ramped up in its requirement. We got to really start pouring literally all the money we have into this tunnel.
Cara Jensen MacKinnon
I can only assume at this point it must just be. Everybody at the FBI was just like me, how can we solve this problem? More tunnels.
Sam
Exactly. As they're digging the tunnel, they get word from inside the Soviet construction site that the Soviets are drilling holes 30 to 40ft under the ground looking for tunnels.
Cara Jensen MacKinnon
Of course they are.
Sam
And it's around this time that the FBI has a suspicion that there might be a mole telling them about the tunnel.
Cara Jensen MacKinnon
It's interesting because people will be able to hear in the episode that I do with Mark. But the same time as they're building this Russian embassy, the Americans are building their embassy in Moscow at the same time. It was like a deal. They came to a deal. You can have a new embassy, and we will have a new embassy. And the Russians were like, yeah, that sounds great, but we're going to build all of it on site. So we're going to, you know, bring all the construction materials to the site in small pieces and then put it together on the site. Whereas the Americans were like, prefab. Sounds good. And of course, the Russians in Moscow are doing absolutely everything they can to bug the American Embassy. And so they would assume presumably that the Americans would be doing that to them as well.
Sam
Exactly.
Cara Jensen MacKinnon
But this is a big site. That's a big area. They're building this thing. So they're going to have to dig a lot of vertical pits. But okay, I'm interested to see how it goes.
Sam
The FBI is like, somebody's telling them what's going on. So they bring in their counterintelligence team, which is led by a guy called Robert Hanson. Have you heard of this guy?
Cara Jensen MacKinnon
No.
Sam
If you imagine just like a normal man in your brain, that's what this guy looks like. I've got a photo of him here.
Cara Jensen MacKinnon
I'm not sure that that's a real photo. I think you've just asked AI to generate picture of FBI man.
Sam
He looks like. If you were to do like a composite image of a face, it looks like what the base version of a composite before you started adding features to it is. So this guy is like a highly respected, big dog FBI, serious guy. He's very religious. He wears apparently the same suit every single day. He has multiple versions of the same black suit. That's how boring he is, but well trusted. He's been working in the Russian counterintelligence team for some time. So he's the best guy to bring in to help figure out what the heck's going on.
Cara Jensen MacKinnon
Yep.
Sam
Basically an adult has entered the room. Meanwhile, this construction is still going. They're getting more intelligence that the Russian construction people are doing crazy things like X raying the steel coming in. They're disassembling and they're reassembling the window frames that are coming in. Yes, they're building the entire building with actual thick marble slabs so that sound devices don't work. And so they're thinking like, these guys probably know what's up.
Cara Jensen MacKinnon
They're doing all the things to stop the Americans. Doing exactly what they're doing exactly. To the American Embassy in Moscow.
Sam
So it gets to 1994. The embassy then becomes occupied after the collapse of the ussr.
Cara Jensen MacKinnon
Yeah. So the Soviets never actually get to use it, do they?
Sam
No. No. So the Russians are moving in, and then the counterintelligence team finds a mole.
Cara Jensen MacKinnon
Oh.
Narrator/Archive Voice
Nine years of betrayal.
Cara Jensen MacKinnon
$2.5 million in payments from Moscow. The highest ranking mole ever discovered within the CIA.
Sam
There's a mole in the CIA by the name of Aldrich Ames who was arrested in 1994.
Cara Jensen MacKinnon
That name rings a bell.
Sam
Aldrich Ames and his wife Rosario entered guilty pleas to conspiracy to commit espionage. And tax fraud. Thus ending the criminal prosecution in the most damaging spy case in the history of this country. So this guy was basically a double agent. He was kind of leaking a lot of information from the CIA to the Russians at that time for a lot of money. And so the FBI was like, phew, okay, we've got our guy. Let's keep building this tunnel. Now we need more information.
Cara Jensen MacKinnon
The country that we are trying to spy on has disappeared. Yes, but we will continue.
Sam
But we're gonna keep going.
Cara Jensen MacKinnon
We're gonna finish the tunnel.
Sam
They keep digging, but they're not getting anything. Their devices aren't working. Something's going on. So the FBI starts to think, okay, there's another mole here. Even though they've called off the hunt for the last mole.
Cara Jensen MacKinnon
I wonder what gave them the idea that there were so many moles.
Sam
We're literally digging a tunnel.
Cara Jensen MacKinnon
For some reason, I keep thinking about moles.
Sam
So at this stage, the counterintelligence team thinks they've got their guy. It's a guy called Ramon Garcia. And so they say to him, okay, let's do this kind of sting operation where we'll give this guy some documents and we'll have him drop them in this park where we think is where he goes all the time so we can catch him red handed. And so they're sitting there, they've got this stakeout situation. They're waiting for Ramon to show up. And the guy that shows up is Robert Hanson.
Cara Jensen MacKinnon
What? Yeah, the generic everyman. The man who is leading the mole hunt.
Sam
That's right.
Narrator/Archive Voice
Robert Hanson was a counterintelligence expert. Over 15 years, it's alleged he gave up technical information, dozens of classified documents, and betrayed three double agents.
Cara Jensen MacKinnon
The criminal conduct alleged represents the most traitorous actions imaginable against the country governed by the rule of law.
Narrator/Archive Voice
He lived with his wife and six children. Children. In a modest house in North Virginia. There was no sign outwardly of the diamonds in cash worth US$1.4 million that investigators say he received as payment. Most recently, he was working out of FBI headquarters. But officials say he volunteered to be a spy in a letter written in October 1985, and that he operated under the codename Ramon. Months of surveillance revealed a number of clandestine contacts and that he routinely checked FBI records to see if he was being investigated.
Cara Jensen MacKinnon
Diamonds and cash.
Sam
No, he did it for diamonds.
Cara Jensen MacKinnon
There's the robot pulling out the gun. Thank you very much, Kara. Well done. One of my favourite parts has got to be that he kept searching himself up on the internal system. Are they onto me yet?
Sam
I know.
Cara Jensen MacKinnon
Nope.
Sam
He's leading the investigation into himself.
Cara Jensen MacKinnon
That is incredible.
Sam
He did it for diamonds. Classic bad guy move.
Cara Jensen MacKinnon
Oh, man. It's never good when they show up at your house and there's big sacks of diamonds there. No, that's never a good sign.
Sam
So he was arrested on 18 February 2001. He had been spying for the KGB since 1985. So they started the tunnel in 1977. He came on board to investigate the mole. In 84, he was basically involved in the tunnel project and leaking it the entire time. He'd also leaked many, many other documents. And then he was given 15 consecutive life terms without parole. And he died two years ago after being in solitary confinement basically the whole time.
Cara Jensen MacKinnon
Wow.
Sam
And so he was charged in July 2001, and because it ended up being that he was instrumental in the capture of those two CIA double agents by the Russians and their execution, the CIA was really annoyed at the FBI. And for that reason, they weren't answering their phone calls or take. And they were playing Another Brick in the Wall by Pink Floyd whenever they called. Through July, through August, and through September 2001.
Cara Jensen MacKinnon
Oh, no.
Sam
Yeah.
Cara Jensen MacKinnon
Wow. That's extraordinary. One of the most amazing things about it is that, you know, he starts spying for them in the 80s, apparently voluntarily.
Sam
Yes.
Cara Jensen MacKinnon
That's very odd. That's not how it usually goes. Usually some Soviet agent comes and sort of befriends somebody or gathers some sort of kompromat on them or approaches someone and is like, looks like you could use a bit of money to get your son through private school or whatever. Whereas this guy is apparently, greetings to you. I am interested in being a double agent for you.
Sam
Basically what happened was that he was in the FBI counterintelligence, then he was moved to Russian counterintelligence, and he thought, this actually sounds pretty good. He had six kids at the time and was struggling to keep up with mortgage payments. And so with the Russian contacts he made, he was getting basically an entire wage from the KGB as well as his FBI wage. And he did that for a year. And then his wife found him writing a letter to an agent, and because he had had an affair, she thought he was having another affair. And then he said, nope, no affairs here. I'm just obviously writing a secret letter to my other friend that I can't tell you about. And so because he almost was caught, he stopped and then started again about a year later. I think he picked it up again and then did it for 20 years. Wow. The normalist man. And for diamonds.
Cara Jensen MacKinnon
Yeah.
Sam
I just don't understand how you come back to your house with, like a sack full of diamonds and just explain where your diamonds came from. And it was only in 2001 where like this many people at the FBI even became aware of this tunnel.
Cara Jensen MacKinnon
Yeah.
Sam
Because it had been secret the whole time.
Cara Jensen MacKinnon
And so the tunnel didn't get finished.
Sam
Tunnel was not finished. It cost hundreds of millions of dollars. And didn't. That's infrastructure for you. I don't know how it works. And it didn't result in one piece of intelligence coming from that embassy.
Cara Jensen MacKinnon
I want to know if someone's bought that house since. Here we go. Zillow. Let's have a look. You know what? It's for sale right now.
Sam
Okay, Cara. Oh, my God. Okay.
Cara Jensen MacKinnon
It's for sale for US$3.4 million. 6 beds, 7 baths. 4,824 square feet. Unfinished tunnel under the Russian Embassy. Connected to basement.
Sam
Important.
Cara Jensen MacKinnon
Yeah. Multi hundred million dollar tunnel under the basement.
Sam
Do we have an if you're listening, budget?
Cara Jensen MacKinnon
You may recall, Cara, that for this last week's episode, we, you know, needed a whole bunch of marbles. I didn't have sufficient marbles. And so I had to go up to the shops and. $36 worth of marbles jars and a flat surface to tip them onto. And am I getting reimbursed for that? Do not think so.
Sam
Absolutely not.
Cara Jensen MacKinnon
So I'm not sure that we can afford three and a half million dollars for the spy house across the road from the Russian embassy. But it is tempting.
Sam
Well, if anyone's listening and wants to make a contribution, there's a bedroom and bathroom in it for you.
Cara Jensen MacKinnon
Access to pool through tunnel in the Russian embassy.
Sam
Exactly.
Cara Jensen MacKinnon
That's fantastic. We do have Adair here with the tab. Count how many tabs you had open. It's taken her seven tabs open at the time that we started recording. That is horrifying. Adair also says, I can't believe this is my job. She says, tonight my brother the nurse will probably at some point ask me, what did you do today? And I will have to tell him about this. What a great story. Thank you very much, Cara.
Sam
Thanks for having me.
Cara Jensen MacKinnon
On Thursday, we'll have the second part of our Palantir series. This one's about the singularly strange man calling the shots at Palantir CEO Alex Karp. We'll look at who he is, what he believes, and whether he can be trusted with the extraordinary amount of power that governments and corporations are handing him. If you want something to tide you over. Until then, my chat with Mark Fennell on his podcast, no One Saw It Coming, is available to listen to right now. It's basically this story, but in reverse. It's about a brazen Soviet scheme to infiltrate the American ambassador's residence in Moscow. Not with a tunnel, but with a brilliant listening device. It's honestly vaguely spooky that these two episodes both came out in the same week. It's a weird coincidence. Anyway, you'll love it. I'll catch you back here on Thursday, Sam.
Host: Matt Bevan (with Cara Jensen MacKinnon & team)
Date: May 11, 2026
This episode dives into an outrageous and little-known story from the Cold War: the FBI's multi-decade, multi-million-dollar attempt to tunnel under the Russian Embassy in Washington, D.C. Host Matt Bevan, aided by supervising producer and researcher Cara Jensen MacKinnon, explores why the FBI and CIA failed to cooperate before 9/11, and how Operation Monopoly (the tunnel project) typified their mutual distrust. The story covers spycraft misadventures, corrupt agents, and culminates in the revelation that America’s top counterintelligence officer was himself a Soviet spy, leaving listeners with a jaw-dropping cautionary tale about bureaucratic infighting and espionage gone wrong.
“Anytime the FBI would call the CIA for information, they would just leave the phone off the hook. Playing Another Brick in the Wall by Pink Floyd. They disliked each other so much that they were, like, just trolling all through the early 2000s.” – Matt, 03:25
“They basically decide that they want to build a large, like, underground tunnel from the house to underneath the embassy to be able to bug it.” – Matt, 07:14
“We're literally digging a tunnel. For some reason, I keep thinking about moles.” – Cara, 16:00
“The guy that shows up is Robert Hansen.” – Matt, 16:35
“What? Yeah, the generic everyman. The man who is leading the mole hunt.” – Cara, 16:35
“He's leading the investigation into himself.” – Cara, 17:45
“He did it for diamonds. Classic bad guy move.” – Matt, 17:49
“Tunnel was not finished. It cost hundreds of millions of dollars. And didn’t… result in one piece of intelligence coming from that embassy.” – Matt, 20:50
“Unfinished tunnel under the Russian Embassy. Connected to basement.” – Cara (reading listing), 21:16
The tone is light, cheeky, and approachable, blending dry humor with serious reportage. Matt and Cara’s banter keeps the espionage story human and relatable, while their astute observations and willingness to poke fun at bureaucracy (and themselves) make the podcast as entertaining as it is informative.
In summary:
This episode uncovers the real-life spy-vs-spy hijinks of the FBI’s failed attempt to eavesdrop on the Russians—not by digital hacking, but by literally digging a tunnel, only to be undone by their own counter-intel chief-turned-Soviet mole. Listeners leave with a newfound appreciation for the absurdity—and tragic consequences—of interagency rivalry and human fallibility in intelligence work.