On the 16th of February this year, John H. Bothwell, a 59-year-old retired U.S. naval officer and former CIA agent, left his home in Bath, in southwest England, for what he said was a routine business trip to Vienna.

Since resigning from the Central Intelligence Agency in 1972, Bothwell, a short, silver-haired man with a deep suntan, has owned a maritime supply agency based in Athens. The Vienna trip was for a regular meeting with officials from one of his principal clients -- the merchant and fishing fleets of the Soviet Union.

Bothwell made it only as far as London's Paddington Station. As he stepped off the train, he was surrounded by officers from Scotland Yard's Special Branch. He was being arrested, the officers said, under Britain's Official Secrets Act.

As he was led toward a van destined for Paddington Green police station, Bothwell protested his innocence, telling the officers they must have the wrong man.

"We know all about you," the police replied.

Five days later, Bothwell was formally charged with violating Section 7 of the act -- "making arrangements for the communication to a person of information which is calculated to be or might be or is intended to be directly or indirectly useful to an enemy." His wife Anne was also arrested and held for questioning for one day at Paddington Green station before being released. Their homes in Athens and Bath were searched by Special Branch agents, who took away numerous papers that still have not been returned.

The case against Bothwell seemed to be ironclad. It had come from U.S. intelligence, which had obtained its information from a Soviet defector who had dealt personally with him.

Prosecutors indicated that "more serious" charges were to follow. British newspapers ran headlines like "Ex-Agent Held on Secrets Charge," and noted that Bothwell's arrest had triggered "a major security investigation."

Yet it now appears that the government here did not know as much about Bothwell as it originally thought it did.

Last Monday, after he had spent five weeks as a maximum security detainee in London's Wormwood Scrubs prison, and more than three months under restrictive bail, all charges against Bothwell were dropped. The government was ordered to pay his $7,500 in defense costs.

Prosecutor Michael Bibby explained to the judge that there was a "vital gap" in the government's case. Although Bothwell had admitted passing information to the Russians and arranging "dead letter drops" for Soviet pickup, Bibby said, the prosecution had been unable "to prove he prejudiced the safety of this country."

The government conceded that information Bothwell passed to the Russians was without security value and had been transmitted in order to "dupe" or "con" them. Much of that information, Bibby acknowledged, had come from published sources such as Time magazine and The Daily Telegraph newspaper in London.

"I serve my country for 30 years -- honorably, with citations," Bothwell said in an interview last week. "Then a Russian, somebody who clearly has an ax to grind, goes and accuses me. Thirty years of service go out the window, and they believe him."

The British government is not expected to take any further action against Bothwell. The FBI, which has interviewed a number of people connected with him in the United States, said in Washington that privacy laws prohibited any discussion of Bothwell.

The circumstances of his case here, however, provide some insight into the operations of intelligence services on both sides of the East-West divide. And, despite the dismissal of charges against him, differences of opinion remain about Bothwell himself, what he was up to in Athens, and why.

Bothwell's own explanation, offered during the interview last week in Bath, was that he had set up a "one-man intelligence agency" in Athens. Although out of government service, his seven years with the CIA, following a 22-year career as a naval officer, convinced him that he could extract information from his regular business contacts with Russian officials that could be valuable to the West. To gain the Soviets' confidence, and draw them out, he said, he pretended to be giving valuable information to them.

One U.S. official familiar with the case was skeptical. "Our experience with the Russians," he said, "is that they're not so easily conned." In clearing Bothwell, he noted, the British prosecution had said simply that it was "unable to establish" that he had harmed British security, leaving open the question of whether it still believed he had done so. This official said he remained convinced that there was more to the case than had yet surfaced.

Last April, three U.S. congressmen were given classified briefings on the Bothwell case by the CIA and the FBI. According to members of their staffs, Reps. Peter Kostmayer, Richard Schulze and Lawrence Coughlin, all from Bothwell's home state of Pennsylvania, came away from the sessions convinced there was substance to the charges against him.

Yet as the case went on, and particularly after Bothwell was cleared, one staff member concluded that he was "a bit of a Walter Mitty type" who seemed still to be playing at spy games long after leaving U.S. government service.

This view of Bothwell coincides with one presented by the U.S. embassies in London and Athens, where he has been known for years. In both places, there are longstanding files on Bothwell and official memories that describe the ex-CIA man as "a flake" and "a big talker" of little substance whose persistent offers of "important" information on Soviet activities were consistently declined. But sources said that the embassies' views of Bothwell were not taken into account during the investigation, which apparently was handled by U.S. and British intelligence services.

Solicitor Elizabeth Roscoe, a member of Bothwell's defense team, said last week that she considered him "a patriot," who has suffered for merely trying to help his country. With his reputation and his business now in tatters, she said, Bothwell is considering civil action against the British government for false arrest and malicious prosecution.

Bothwell himself gave no such indication. "I don't want to give the impression that I'm bitter about British justice," he said. "I'm here in England voluntarily, and if I were to sit around slamming this country, they could say, 'Well, why don't you leave?' "

But he is less forgiving of his own countrymen, he said. Bothwell acknowledged that Western intelligence officials might legitimately have jumped to the wrong conclusion about his activities in Athens. Still, he said, if they had questions, all they had to do was ask him.

It was the Russian defector, he said, who conned the United States into thinking Bothwell was a spy. "I'm the one who encouraged him to defect," he said, "and look where it got me."

On Feb. 14, two days before Bothwell's arrest, Victor Gudarev, a diplomat at the Soviet Embassy in Athens, defected to the United States. Later, it was reported from both Washington and Athens that his embassy job in charge of the Russian merchant fleet was a cover for Gudarev's real assignment as a colonel in the KGB, the Soviet intelligence service.

In his diplomatic capacity, Gudarev had had frequent meetings with Bothwell since he arrived in Athens in 1983. According to reports following his defection, Gudarev told U.S. intelligence that Bothwell had regularly provided information to him about the West. At one point, Gudarev apparently said, Bothwell drew for him a sketch of what was alleged to be a U.S. military installation in Athens.

Gudarev's revelations were passed on to the British government. Bothwell rarely travels to the United States, and espionage is not an extraditable offense. It apparently was believed that a case could be made against him in London based on the fact that the Americans and the British share a common enemy in the Soviet Union.

For several days after his arrest, Bothwell was not allowed to make any outside contact, including with his lawyer, his embassy or his wife.

Anne Bothwell accompanied her husband to the interview last week with The Washington Post because, she said, her husband is a "gregarious man" who likes to talk and sometimes forgets to whom he is speaking. She was particularly concerned, she said, that he not discuss his work for the CIA.

Details given by Bothwell of his life were independently confirmed by the U.S. Navy in Washington and with family members. The CIA declined comment.

Bothwell spent 22 years with the Navy, captaining three submarines and reaching the rank of commander before retiring in 1965 because of "personal problems" involving his first wife's dislike of Navy life. In 1963, however, the Navy sent him to a one-year course at the Army War College, in Carlisle, Pa. It was there, he said, that he met the CIA officials who recruited him after he left the military at the age of 39.

During a three-year stint at CIA headquarters in Langley, Bothwell said, he was sent on various "outside assignments" involving "irregular methods of conducting 'para-naval' warfare." In 1968, he said, the CIA sent him to Athens, setting him up in business as a shipping supply agent.

"I had a cover," he said. "I kept well clear of the U.S. Embassy."

The crux of his "business" was serving as a middleman, or agent, to supply merchant and fishing ships away from their home bases. Among his clients was the Soviet fishing fleet. Sailing the lucrative fishing grounds off South Africa for months at a time, the Soviet ships needed a go-between to arrange for the purchase of supplies and repairs from South African ports.

The Soviets and South Africans, Bothwell said, "hate each other with equal animosity. But the Russians need the South Africans, and Russian dollars are as green as those from Washington. They would both talk to me."

Beneath his business cover, Bothwell said, his job for the CIA was to provide a constant flow of information about Soviet merchant and fishing fleet movements.

In 1972, with his then-wife still objecting to government employment, Bothwell said he left the CIA "on good terms." But he stayed in Athens, continuing with the business that had been his CIA cover. "It seemed like the thing I could do best was what I was already doing," he said. The Soviets provided "good, solid, steady business," often amounting to making arrangements in South Africa for at least one Soviet ship per week.

Soon after leaving the CIA, Bothwell divorced his wife, with whom he had nine children, and married Anne, a British divorce'e living in Athens. With his government pension, and some income from Anne, there was more than enough to live on.

In 1978, when his two children with Anne were ready to enter school, the Bothwells decided to move to England. They set up a home in Bath, with Bothwell commuting frequently to Athens to take care of the maritime business.

Victor Gudarev was one of a series of Soviet officials Bothwell had dealt with over the years. "I would meet him maybe every month . . . to go over invoices," Bothwell said. Most of the meetings took place in tavernas in Piraeus, Athens' port, a point that later was questioned by Special Branch interrogators suspicious that the meetings did not take place in official surroundings.

"Nobody meets in an office in Piraeus," Bothwell said he responded.

Gudarev, he said, "was curious about America." As they came to know each other better, "Victor" would ask about how the U.S. Congress worked and why the Defense and State departments so often disagreed. "I used to call on my Civics 101 course," Bothwell said. Sometimes, Gudarev would pull out a copy of Time magazine and ask for interpretation of an article.

Similar descriptions of KGB tactics -- flattering appeals to superior knowledge of the West, earnest disagreement -- are found in other accounts of would-be and actual Soviet spy recruits. According to convicted Norwegian spy Arne Treholt, his initial meetings with Russian diplomats took place at "glorious lunches where we discussed Norwegian and international politics."

But Bothwell said he assumed Gudarev had an intelligence function beyond his official duties at the embassy. Such things, he said, are always assumed in Athens. While his conversations with Gudarev may have led the Russian to believe Bothwell was a promising recruit, Bothwell said he played along simply to gather information about the Soviets that he could turn over to the American Embassy. Whenever Gudarev would ask for information about a certain topic -- the European Ariane rocket program, U.S.-Japanese trade -- Bothwell, while providing information gleaned from magazines and newspapers, would write the subject down in his diary. His intention, he said when confronted with his diary list by the Special Branch, was to supply the information to Washington during "regular meetings" with the U.S. naval attache' in Athens so that the Americans "would know what the Russians were interested in."

About 18 months ago, Bothwell said, he wrote a 30-page paper based on his observations of the Russians. He said he titled it "Changes in Behavior Patterns Among Soviet Officials." It was subtitled, in a literary allusion he said he was pleased with, "How Red Was My Valley."

Eventually, Bothwell said, Gudarev began to talk about "dead letter drops," places where Bothwell could leave information for him when they were unable to meet. Nothing was ever left for Gudarev, and besides, "there was nothing to drop," according to Bothwell, who insisted he had had no access to classified information since he left the CIA in 1972.

Asked whether Gudarev knew he had worked for the CIA, Bothwell said he did not think so. "He didn't know it from me," he said.

Gudarev's defection to the United States was preceded by that of another Athens-based Soviet diplomat, Embassy First Secretary Sergei Bokhan. Shortly after this event, Bothwell said, Gudarev asked him what he thought of Bokhan's decision. "I said, 'It looks like a wise career choice,' " Bothwell recalled.

How would Bokhan be received by the Americans, Gudarev asked. "I'm sure courteously," Bothwell replied. Then, he said, he asked Gudarev why he didn't think of defecting himself.

"I was kidding," Bothwell recalled. "But the last couple of times I saw him, I said it again. 'Victor, why not let them set you up with a nice little drug store in Montana?' "

At one point, Bothwell said, Gudarev asked where a potential defector would turn himself in to the Americans. Bothwell suggested the U.S. Officers Club, located in a downtown Athens hotel. Helpfully, he sketched "the entrance, the exit and the bar" on a napkin, Bothwell recalled. Gudarev kept the sketch, and Bothwell said last week that he next saw it when Special Branch officers produced a copy of it during his interrogation.

His final meeting with Gudarev, Bothwell said, took place last October, after which Bothwell left for several months in Britain. According to news reports that the CIA would not confirm, Gudarev has received a new identity and is living somewhere in the United States.

Last week, Bothwell said he believed that while he was trying to "con" Gudarev, Gudarev probably had been conning his KGB superiors about his U.S. recruit -- Bothwell. After his defection, he said, Gudarev seemed to have equally conned his new masters at the CIA with the same information.

Anne Bothwell is intense in her defense of her husband. "We didn't lose one friend" during his ordeal, she said. "That in itself speaks for my husband."

Their friends, she said, probably thought "the same thing I thought at first. I said, 'Oh, he's done something stupid, or said something silly.' " But as for being a spy for the Soviets, "it would be so out of character," she said.

"He would never do anything like that. Especially to America."