3 Commerce Dept. Aides Fired for Leaking Data
The Reagan Administration, admitting that some of its security procedures have been lax, today fired three Commerce Department employees following an eight-month investigation into improper leaks of sensitive economic data.
All three worked in the department’s Bureau of Economic Affairs, which is the government’s main supplier of information tracking the economy.
The dismissals followed an investigation into the premature release last September of the GNP, the closely watched measure of total economic growth.
Commerce Secretary Malcolm Baldrige said two of the employees had used the data for personal financial gain while the third individual had passed inside information to another person who had profited from it.
30-Day Appeal Process
Baldrige said dismissal letters were sent to the three workers today but that they would remain on the payroll for at least 30 days during an appeal process. He refused to reveal their names.
He said no criminal charges will be filed because it is not illegal for government employees to profit from confidential economic data. However, he said the Administration would ask Congress to make such action illegal in the future.
“This type of leak is very dangerous,” Baldrige said at a news conference. “Individuals can make or lose a lot of money. Millions of dollars can change hands if someone has advance knowledge of certain data.”
Baldrige said two of the fired employees had contacted brokers either directly or indirectly to buy bond futures, which are contracts for purchase of bonds at a future date.
GNP Growth Estimate
The data that was leaked was the “flash” estimate of GNP growth for the July-September quarter, which came in at an annual rate of 2.8%, much lower than economists had been expecting.
The release of this information could be expected to spur a rally on the bond market since traders would believe that slower economic growth would lead to lower interest rates and thus higher bond prices. Someone with advance knowledge of the GNP report could make his purchases before bond prices went higher.
The inspector general’s report said that one Bureau of Economic Affairs employee made $300 by buying bond futures after learning in advance what the GNP figure would be. The report said he had admitted doing this “on more than one occasion.”
$50 for Tipoff
The report said another bureau employee told a friend who made a $783 profit by buying bond futures and that the employee had initially admitted to receiving about $50 of the profit.
Baldrige said he believed leaks of “sensitive economic data rank up there with national security data. Fortunes can be unfairly won or lost.”
The inspector general’s report was critical of the security procedures used before the September leak, charging that security at BEA offices was so lax that it would have been possible for visitors to pick up the numbers with “relatively little difficulty.”
Baldrige conceded that security had been lax but he said the Administration has put into effect new procedures to guard against premature release in the future.
