Effect of Spy Scandals : Public Awakens to Threat of Espionage, Officials Say

Three years after the biggest wave of spy cases in the nation’s history, U.S. counterintelligence officials say public awareness of foreign espionage remains at an all-time high.

Both the FBI and the Defense Department see the public’s increased concern as an unexpected benefit of such major espionage scandals as the John Walker-Jerry Whitworth spy case, the most damaging in U.S. history.

At military installations and hundreds of private defense companies throughout California, the biggest defense state in the nation, the lessons learned from the spy cases of the early 1980s are constantly repeated in briefings by U.S. counterintelligence agents:

- One of the biggest threats to U.S. security today is the American “volunteer,” the central figure in more than half of the nearly 100 civilian and military espionage cases of the last decade.

- Many of the most damaging spy cases of recent years could have been detected early if co-workers or shipmates or family friends had reported the obviously suspicious behavior they observed--from drug and alcohol abuse to sudden spending sprees.

- While the intelligence services of virtually every foreign country--both friendly and hostile--operate at times inside the United States, the biggest threat to the nation’s security remains the Soviet Union and its East European allies.

“In the majority of really bad cases, someone should have known that this was going on,” James H. Geer, the assistant director in charge of FBI counterintelligence activities, said in an interview in Washington.

“If there has been a positive side to that run of espionage cases, it was the awakening of the American people to the threat.”

Geer, like most U.S. counterintelligence officials, believes that the most serious espionage threats today are Americans willing to betray their country for cash and Soviet Bloc intelligence agents carefully trained in spotting them.

Under his direction, FBI counterintelligence agents throughout California now deliver hundreds of talks a year to defense workers who have access to secret and top-secret information.

Security Responsibility

The message is similar to one delivered recently by FBI Agent Rusty Capps to two dozen defense workers with top-secret clearances at Technology Applications Inc., a research facility in Camarillo.

“All of you are as responsible for our security as we are,” Capps told the group. “We want you to call us if you see something strange, or if you are approached by someone who appears to be too curious about what you are doing.

“You folks are the targets,” he added. “And the Soviets are very sophisticated. The recruitment happens over months and years. The Soviets aren’t obvious about it. They are very sophisticated. All of them go to the Soviet equivalent of the Dale Carnegie course.”

California, the hub of the U.S. aerospace and computer industries, produces about a quarter of the nation’s defense projects--from spy satellites to the stealth bomber, from microchips to nuclear missiles.

Since 1985, called “The Year of the Spy” because of Walker and other major spy cases, the United States has reduced the number of private companies working on classified projects from 14,300 to 12,300. Of those, 2,700 are in California.

Of the 112,000 top-secret security clearances held by U.S. civilians, about 35,000 belong to Californians. The same ratio--roughly 1 out of 4--applies to secret and confidential clearances.

Besides California’s huge industrial defense base, the FBI and other U.S. counterintelligence agencies must protect a vast military and military-production network ranging from the Navy’s Pacific base in San Diego to the Lawrence Livermore National Laboratory near San Francisco.

Just as the FBI regularly warns private industry about the potential hazards of espionage, Army, Air Force and Navy counterintelligence agents conduct almost daily briefings for military personnel throughout the state.

After the Walker case, both FBI and military counterintelligence budgets were increased. In the Pentagon’s view, the most significant increases were for the Naval Investigative Service, regarded as far behind Air Force and Army counterintelligence before the disclosure of Walker’s 17-year Navy spy career.

“The Navy was considerably below the others,” said John F. Donnelly, counterintelligence chief for the Defense Department. “We have, in essence, equal services now.”

Since the Walker case, the Navy has put particular emphasis on tightening security. The rules for destroying classified information have been toughened. Navy personnel with access to codes are regularly rotated, and their clearances are periodically reviewed. Searches of officers and crew members leaving ship are conducted more frequently. An emergency espionage hot line has been established.

Winston C. Kuehl, regional director of the Naval Investigative Service in San Diego, says the Walker case has made the issue of increased awareness especially important to the Navy. One result of the Walker case, he estimates, is that several relatively minor Navy spy cases in California have been unearthed in the last three years because of tips from Navy personnel familiar with Walker’s activities.

Special Attention

In investigative service briefings for Navy personnel throughout California, where the Walker-Whitworth conspiracy began and where it ended in 1986 with Whitworth’s conviction as a Soviet spy, the Walker case receives special attention.

At a recent briefing, Naval Investigative Service Agent Al Seib ticked off some of the warning signs of possible espionage involvement: “Foreign contacts. Unexplained affluence. Sudden personality changes. Alcoholism. Drug use. Nervousness on the job.”

Seib concluded with a sharp reminder of the damage done by Walker, who not only sold Navy codes to the Soviets, but also provided advance warning to North Vietnamese gunners of B-52 raids during the Vietnam War.

“We’re asking you to drop a dime on somebody you are suspicious about,” he said. “The bottom line is loss of human life. It could kill you in warfare. Lives were lost in Vietnam because of Walker.”

While the United States has significantly tightened security and taken steps to maintain a high public awareness of the espionage problem, officials say it is impossible to protect all the nation’s secrets from foreign spies and their American collaborators.

“Counterintelligence is in better shape now than at any point in recent years,” the Pentagon’s Donnelly said. “We were very weak between 1966 and 1975. One reason was that dissent during Vietnam diluted our counterintelligence efforts. Subsequent to that we started pouring money and people into the agencies.

“People are being caught very early on in most cases these days. These cases aren’t that sexy, but they are not going to be the John Walkers of the 1990s.”

While Donnelly said tightened security in the military and private industry helps in the overall effort to minimize future espionage losses, he quickly added that the task is virtually impossible.

‘Vulnerable People’

“I think we’ve cut the major fat out,” Donnelly said. “But you don’t catch spies with background investigations. The purpose is to weed out the vulnerable people. We have so much technology in this country, it’s unrealistic to think we should be able to protect it all.”

While the absence of any major new espionage case in the last three years is cited as proof by some U.S. officials that the nation is doing a better counterintelligence job, others see developments in 1988 as the first early warning signs of apathy in the nation’s attitude toward foreign espionage.

The most dramatic of those was a 13% manpower cut this year for the Defense Investigative Service, the Pentagon branch responsible for all security clearances in private industry.

After pumping $25 million into the service in the first two years after U.S. espionage cases peaked in 1985, Congress sliced $9 million out of the defense agency’s 1988 budget and decided against any increases for 1989, stopping several new security programs cold.

Nowhere has the impact of those cuts been more visible than in California, home of 25% of the nation’s defense industry.

Thomas J. O’Brien, who resigned this summer as head of the service, is one of an increasing number of intelligence officials concerned that the public impact of the spy cases is already beginning to fade.

“Memories are short,” O’Brien said during an interview in Washington. “Three years after Walker, the monies are drying up. Coming into 1989, we’ll be losing the momentum we have built in the last two years.

“We’ve made tremendous strides in our security position since the spy cases,” O’Brien added. “I’m not saying we’re losing them all. But we certainly are in a period of significant retrenchment. We’re on a downward slant.”

After the Walker case, the Defense Department set up a commission that recommended 63 specific ways of tightening national security.

Most were implemented before this year’s cutbacks in spending, including key recommendations to reduce the number of security clearances and to institute five-year reviews of all top-secret clearances.

There were more than 4.8 million military and civilian security clearances at various levels--top secret, secret and confidential--throughout the country at the end of 1984. Since then, the total has been reduced to just under 4 million, a decrease of about 20%.

In addition to reducing clearances, both military counterintelligence agencies and the civilian-oriented Defense Investigative Service were authorized to begin periodic reviews of all Americans holding top-secret clearances and to toughen requirements for obtaining secret clearances.

In the past, O’Brien said, top-secret clearances were literally issued for life. Since the five-year review program was initiated, the Defense Investigative Service has uncovered no spies but has discovered a surprisingly high voluntary drop-out rate among those eligible to have their clearances continued.

“About 7% of the time the company tells us Mr. Jones doesn’t need a clearance. Even more significant is that another 9% of those holding top-secret clearances drop out during the process,” O’Brien said.

Drug, Alcohol Use

“I have to feel that some of those started feeling heat in the kitchen. I think they are dropping out because of using illicit drugs or alcohol and financial problems they don’t want discovered.”

This year’s budget cuts will slow the field investigations required for reviewing top-secret clearances, O’Brien said. They also will prevent the defense agency from expanding the record checks used in screening secret clearances to include past credit and job information.

“We were getting geared up to do that, but we haven’t been funded for it,” O’Brien said. “It would cost about $10 million.”

The impact of the budget cuts is even more pronounced in California than in other states because this is the only major defense state that charges the Defense Department for use of state criminal records in background checks, O’Brien continued.

One of the lessons of the Walker case, O’Brien said, was that FBI criminal records often do not include early criminal information contained in state police files that might alert authorities to possible character flaws in defense workers.

Past Convictions

In Walker’s case, for example, there was a teen-age burglary conviction that was overlooked when Walker was first given a security clearance.

“California charges us $16.50 per check,” O’Brien said. “I paid $850,000 to California last year, and this year we had to stop criminal record checks with the California Department of Justice because of our money problems and their refusal to give us access to their central repository in Sacramento.

“No other state charges the federal government for national security checks,” O’Brien added. “Their records are more complete. They might show a John Walker-type burglary, for example. To me it’s unconscionable.”

In July, the Defense Department appealed directly to the California Department of Justice to permit free security checks. Fred Wynbrandt, the department’s assistant director, said the state rejected the request.

“We could do it and charge somebody else more, but that would be unfair,” Wynbrandt said. “They were averaging 6,000 requests a month and our projection was that that would increase to 100,000 a year if we provided free access. We share their concerns about national security, but we are unable to provide those services free of charge.”

America’s Edge

Despite that setback in California and the most recent budget problems nationally, many counterintelligence officials believe that the United States still has at least a momentary edge over foreign intelligence forces in the aftermath of the spy wave.

“I think the permanent impact the spy cases had is the awareness that espionage is real, that we can be damaged,” said Greg Gwash, regional director of industrial security for the Defense Investigative Service in Southern California. “Before the Christopher Boyce case out here in 1977, you had to go back to the Rosenbergs in the 1950s to find a serious espionage case.”

Because of the urge for quick money that has marked most American spies of the last decade, however, Gwash shares the pessimism of other officials that another major spy scandal can be indefinitely postponed.

“I feel like we haven’t cleared that whole mess up,” he said. “What we’ve done is build a fence around ourselves. It’s not an impenetrable wall. Every day of the week somebody thinks of selling secrets to the Soviets. We don’t know who might be doing it this very minute.”

Times staff writer Dan Morain in San Francisco and Times research librarian Tom Lutgen contributed to this story.