China Spying Probe Botched, Senators Find

A federal investigation into suspected nuclear espionage by the Chinese has been riddled with incompetence, poor judgment and lackadaisical agents, according to a blistering, bipartisan report released Thursday that offers the most comprehensive account of the inquiry to date.

New details in the Senate report underscore the difficulty federal prosecutors could face in bringing espionage charges against fired Los Alamos National Laboratory scientist Wen Ho Lee or anyone else. And Energy Department and FBI officials said that the findings reinforce the need to beef up security and counterintelligence measures at the nation’s weapon laboratories.

Sen. Joseph I. Lieberman (D-Conn.), one of the report’s authors, called the 4-year-old federal investigation into how the Chinese allegedly obtained classified design information on U.S. nuclear warheads “a tragedy of errors.”

In a vexing combination of missteps, investigators focused too narrowly on Lee, excluding other possible suspects, while bungling efforts to determine whether Lee was in fact a spy, Lieberman said. “Either way, the way this investigation was conducted is inexcusable,” he added.

The Justice Department continues to pursue espionage-related allegations against Lee, a Taiwanese-born, naturalized U.S. citizen. But some authorities believe that, if Lee is prosecuted at all, it may be on the far less serious charges of violating lab security procedures by transferring classified nuclear data into a nonclassified computer system.

Lee has insisted that he did nothing wrong. The Times reported Sunday that Lee’s attorneys have told the Justice Department he transferred the data only to facilitate working with it. In a confidential document, they asserted that Lee “used considerable care” to protect the security of nuclear codes.

Lieberman and Sen. Fred Thompson (R-Tenn.), chairman of the Senate Governmental Affairs Committee, based their report on nearly 30 hours of closed-door testimony from officials at Los Alamos, the FBI and the Energy and Justice departments who were involved in the Lee investigation.

Their report is significant not only for its findings but also because it crosses political lines. While Thompson has been a dogged critic of Atty. Gen. Janet Reno, Lieberman has often defended her. Yet both agreed that the Justice Department, the FBI and the Energy Department must bear responsibility for mishandling the Lee case.

“The behavior here was so below the standard we should expect from public officials that some people ought to be held accountable,” Lieberman said at a news conference.

Officials at the three agencies largely accepted the criticism while noting that they already had taken steps to avoid similar mistakes and improve counterintelligence at weapon labs.

At the Energy Department, where reforms include assigning counterintelligence personnel to each lab, spokeswoman Brooke Anderson said that Secretary Bill Richardson “will soon be taking disciplinary action” related to the Lee case. Sources said that such action is being considered against department employees who failed to pass along vital information to FBI investigators.

Reno said in a statement that the report had raised important issues, which would be taken up by a team she created in May to review the case.

And at the FBI, where the Lee case has helped speed a broad revamping of counterintelligence operations, spokesman John Collingwood said that Director Louis J. Freeh “has reacted in a massive way to the shortcomings apparent from this case.”

Thursday’s report indicated that such measures are badly needed to prevent repeating missteps made in the Lee investigation, which it said was faulty from the start.

Once evidence surfaced in 1995 that the Chinese had obtained sensitive data on U.S. nuclear weapons, lab investigators quickly concluded that the information likely came from Los Alamos between 1984 and 1988. In fact, the report said, the information had been available at numerous other military and government sites since 1983.

That raises the possibility that investigators “wrongly focused” on Lee and that those leaking intelligence “are still out there, indeed probably still working for our government in jobs with access to the most highly classified information our government possesses,” Lieberman said.

But even as they focused almost exclusively on Lee, investigators missed critical opportunities to pursue information against him.

One FBI agent wanted access to Lee’s computer as early as 1995 but the effort was hindered by “a remarkable degree of confusion” between the bureau and the Los Alamos lab, the report said. The lab’s counterintelligence officer did not learn until earlier this year that Lee had signed a waiver consenting to the monitoring of some of his computer work.

Lieberman said he was infuriated by the “slow, casual pace of the investigation.”

In April 1997, five months after the FBI decided that it would need approval for a special foreign-intelligence warrant to search Lee’s computer, the bureau finally began drafting the request, the report said.

The FBI ultimately laid out 18 reasons for suspecting Lee, including his access to key nuclear data, the trips he and his wife took to China, their contacts with Chinese scientists here and abroad and the “deceptive answers” he gave authorities when asked about those contacts, the report said.

But in a rare step, the Justice Department refused to sign off on the warrant, saying that much of the evidence was circumstantial and “too distant in time” to establish probable cause that Lee was a spy.

Despite the gravity of the national security issues at stake, neither Reno nor Freeh intervened in the dispute. Instead, the FBI’s request was referred to a Justice Department official who had no experience in foreign-intelligence surveillance matters.

“The bureau was apparently content to take ‘no’ for an answer. It is equally remarkable that no Justice Department official apparently felt that this matter deserved any serious personal attention from the attorney general,” the report said.

Thompson said he was astonished by the lack of communication between the FBI and Justice and the low priority of the Lee investigation. “Reno was out of the loop on this,” he said.

Reno said Thursday that she remains convinced the warrant was not justified. She added that the department is taking steps to improve communication with the FBI.

As the Lee investigation continued through 1997, top FBI and Justice Department officials failed to revisit the request for a warrant, the report found. Indeed, one Justice official was so convinced the Lee request was dead that he destroyed his records on the matter.

The FBI first told the Energy Department in 1997 that there was no longer any investigative need to allow Lee to keep his position at the lab. But the report noted that it was not until 18 months later that he was fired from his job.

The dismissal came only after Lee failed a polygraph test last February, the report said. He was asked if he had ever passed computer codes or information on miniature nuclear warheads to unauthorized people.

Thompson noted that the report’s findings echo the miscommunications spotlighted three weeks ago in a report on the Justice Department’s investigation of alleged campaign finance violations. He said that he saw no evidence of any political conspiracy surrounding these missteps, but added:

“I am very troubled about this Justice Department and a pattern of baffling decisions and, in some case, clear incompetencies.”

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Previous Times coverage and background information related to the China spy controversy is available online at:

https://www.latimes.com/chinaspy