Major General Reinhard Gehlen headed the Foreign Armies East section of the Abwehr, directed towards the Soviet Union. Gehlen had begun planning his surrender to the United States at least as early as the fall of 1944. In early March 1945 a group of Gehlen's senior officers microfilmed their holdings on the USSR. They packed the film in steel drums and buried it throughout the Austrian Alps. On 22 May 1945 Gehlen and his top aides surrendered to an American Counter-intelligence Corps [CIC] team.
After the War, the United States recognized that it did not have an intelligence capability directed against the Soviet Union, a wartime ally. Gehlen negotiated an agreement with the United States which allowed his operation to continue in existence despite post-war de-nazification programs. The group, including his immediate staff of about 350 agents, was known as the Gehlen Organization. Reconstituted as a functioning espionage network under U.S. control, it became CIA's eyes and ears in Eastern Europe and in the Soviet Union.
Hundreds of German army and SS officers were released from internment camps to join Gehlen's headquarters in the Spessart Mountains in central Germany. When the staff grew to 3,000, the Bureau Gehlen moved to a twenty-five-acre compound near Pullach, south of Munich, operating under the innocent name of the South German Industrial Development Organization. In the early fifties it was estimated that the organization employed up to 4,000 intelligence specialists in Germany, mainly former army and SS officers, and that more than 4,000 V-men (undercover agents) were active throughout the Soviet-bloc countries.
Under Operation Sunrise, some 5,000 anti-communist Eastern European and Russian personnel were trained for operational missions at a camp at Oberammergau in 1946, under the command of General Sikes and SS General Burckhardt. This and related initiatives supported insurgencies in areas such as Ukraine, which were not entirely supressed by the Soviets until 1956. Operation Rusty encompassed gathering positive and counterintelligence information concerning the activities and organizations of an Intelligence Service and activities of various dissident German organizations. The operation involved close coordination and cooperation with foreign and other US intelligence organizations.
The Gehlen Organization played a role in the creation of the "missile gap," providing CIA with reports on Soviet missile developments, supposedly based on contacts with German scientists captured by the Russians at the end of the war.
But by the mid-1950s it became increasingly apparent that many of the assets of the Gehlen Organization were in fact controlled by Soviet intelligence. Dozens of operations, hundreds of agents, thousands of innocent civilians had been betrayed, many at the cost of their life.
In 1948 contact was established with a supposedly anti-Communist Polish underground organization known as WIN. The group provided evidence of actions conducted against Soviet troops, and provided secret documents to Western intelligence. WIN was provided with money, weapons, equipment and intelligence data. But by 1952 people entering Poland to help WIN were disappearing and its information was becoming less reliable. Late that year the underground was suddenly disbanded and a radio broadcast by the Polish Communist government demonstrated, in detail, that WIN had been created by the Soviet secret police and had received Soviet help in deceiving the West. The documents provided had been disinformation, the program had been financed with Western money, and the episode had distracted from other efforts to undermine the Polish regime while it was consolidating power.
In April 1956 control of the Gehlen Organization shifted to the newly-sovereign West German Federal Republic as the BND (Bundesnachrichtendienst, or "Federal Intelligence Service"). Gehlen remained chief of the West German Intelligence service until he retired in 1968.