Justice Dept. Seen Fighting to Prosecute Israeli as Spy

Justice Department officials investigating evidence of Israeli espionage in the United States are resisting State Department objections to seeking the indictment of a senior Israeli air force officer who is believed to have directed spying, a government source said Saturday.

The dispute continues despite strong public denials Friday by both departments that they differ over the inquiry into Israeli espionage, said the source, a knowledgeable official who declined to be named.

The Israeli officer, a reported candidate for a top position in that nation’s air force, was said to have directed Israel’s U.S. espionage contacts, including the only persons charged in the affair so far, former civilian U.S. Navy analyst Jonathan Jay Pollard and his wife.

Sources said Pollard had offered evidence of widespread Israeli spying in the United States as part of plea-bargain negotiations that could be concluded this week.

State Department officials were said to fear that an indictment would wreak political and diplomatic damage on the coalition government of Prime Minister Shimon Peres, in part because the officer’s rank would indicate high-level Israeli knowledge of the spying operations.

In Washington on Saturday, the Israeli Embassy issued a denial of reports of widened espionage activities here, calling such reports “baseless.”

Reasserting an established Israeli position, embassy spokesman Yossi Gal called the Pollard affair “an unauthorized deviation from the clear-cut Israeli policy of not conducting any espionage activity whatsoever in the United States, or activities against the United States.” He reiterated earlier Israeli assurances that the secret intelligence unit in Washington “has been disbanded and the head of the unit relieved of his duties.”

Meanwhile, the statement said, the Israeli government reiterates that “full cooperation regarding the Pollard affair has been and is continuing” and “restates its commitment in this matter.”

In Jerusalem, an Israeli Foreign Ministry spokesman refused to confirm or deny reports that the Justice Department has given Israel evidence, based on Pollard’s testimony, of a broader espionage network involving other Israeli officials.

Deceit Alleged

However, a U.S. government source said, Justice Department investigators have concluded that the Israeli government has deceived them as to the scope of spying operations in the United States ever since a U.S. inquiry team went to Israel last December and returned praising that nation’s “full cooperation” in their investigation.

At that time, U.S. officials said they were satisfied that Pollard was an unauthorized Israeli agent acting against government policy.

The question of public charges against Israel has arisen, the government source said, because “Pollard provided sufficient evidence . . . to indicate the Israelis lied” during the American inquiry panel’s December visit.

The government source said that, despite the unqualified Israeli denials, U.S. officials have concluded that the Israeli espionage network here was “serious business.”

The official added that the network “apparently” involves Americans other than Pollard and his wife, Anne Henderson-Pollard.

That as well as other evidence is said to have persuaded Justice Department officials to favor at least a partial public airing of the Israelis’ alleged transgressions, despite acute embarrassment to their government.

That airing could come in an indictment of the air force officer, as well as in any plea-bargain agreement with Pollard that is filed in court.

Seen as Symbolic

Still, the government source said, the indictment itself would be largely symbolic. The officer has left the United States, and the Reagan Administration would not further embarrass Israel by seeking to extradite him for trial.

Such an indictment would meet the letter of a veiled warning on espionage issued by President Reagan last Nov. 30, a week after Pollard’s arrest, in which he pledged “to root out and prosecute the spies of any nation.”

“We’ll let the chips fall where they may,” Reagan said then, in what was viewed as a reference to allegations of Israeli spying.

The Israelis have hinted that their U.S. spy operations were the unauthorized work of a “renegade” espionage office, known as LEKEM, confined to a low-level science bureau in the Defense Ministry. The bureau since has been disbanded, as Israeli officials noted in their statements Saturday.

But sources have said the planned indictment and evidence that Justice officials seek to make public as part of a plea-bargain agreement would demolish the Israelis’ contention that the espionage was limited and unauthorized.

Forced to Backtrack

Israeli officials have been forced several times to backtrack on denials of spying since the Pollards’ arrests last November.

Pollard, seized as he tried to crash his car into the Israeli Embassy in Washington, was later accused of delivering secret U.S. military documents to the Israelis.

His wife was charged with possession of national security material, a lesser offense. She has been accused of aiding her husband’s spying and planning to turn over a classified document to the Chinese.

The Israelis first denied any link to Pollard, but later expressed “shock and consternation” at his arrest and said he was a rogue spy recruited in violation of official policy.

Times staff writers Ronald J. Ostrow and Doyle McManus contributed to this story.