Nuclear Security Panel Assails Energy Dept.

A high-level White House panel condemned the federal Energy Department on Monday as “a dysfunctional bureaucracy that has proven it is incapable of reforming itself” and called for the nation’s nuclear laboratories to be placed under separate management.

The panel, led by former Sen. Warren B. Rudman (R-N.H.), warned that the labs are still vulnerable to foreign espionage and said that the administration’s efforts to tighten security have been well intentioned but tardy and inadequate.

The panel’s blunt recommendations and vivid language--it accused the administration of “gilding a fig leaf” in its explanations for security lapses--put President Clinton in a ticklish position.

Energy Secretary Bill Richardson has heatedly defended his department’s response to the security problem and has publicly rejected the idea of putting the nuclear weapons programs in a new agency.

“We are making substantial progress,” Richardson said in an interview Monday evening. “I don’t believe you need another agency within an agency.”

In effect, Clinton must choose between the views of his Energy secretary--a longtime political ally--and the salty, opposing views of the expert panel he asked to look into the problem.

A White House official, speaking on condition that he not be identified, said Clinton has not decided on a position but may wait to see whether Congress insists on the changes the Rudman panel demanded.

“We will do whatever we have to do to ensure the national security is protected,” the official said.

Another White House aide said that the report stunned some officials. “It was breathtaking in its harshness,” he said.

The four-member Rudman panel, which will release its report formally today, was drawn from the President’s Foreign Intelligence Advisory Board, which counsels the White House on intelligence issues. Clinton asked the board to investigate charges that the Energy Department had failed to protect nuclear secrets after the disclosure that Wen Ho Lee, a scientist at the Los Alamos National Laboratory in New Mexico, was suspected of passing classified information to China.

The panel aimed withering criticism at the Energy Department bureaucracy and a mixture of praise and criticism at Clinton, Richardson and White House National Security Advisor Samuel R. “Sandy” Berger.

“Organizational disarray, managerial neglect and a culture of arrogance--both at Energy Department headquarters and the labs themselves--conspired to create an espionage scandal waiting to happen,” it said.

“The Clinton administration has reacted forcefully but it took pressure from below and outside the administration to get the attention of the leadership, and there is some evidence to raise questions about whether its actions came later than they should have,” the report said.

Richardson “overstated the case” when he said in May that U.S. nuclear secrets are now safe and secure, it added.

Despite the emphasis on tightening security, “a nefarious employee can still download secret nuclear weapons information to a tape, put it in his or her pocket and walk out the door,” it said.

The 68-page report cited several security lapses and instances of potential espionage that had not been made public before. But it offered few details, saying they must remain secret:

* In the late 1980s, listening devices were discovered in several Energy Department weapons-related facilities, but the department’s counterintelligence response was “grossly underfunded.”

* An Energy Department employee was dead for 11 months before department officials noticed that he still had four secret documents signed out.

* Sometime in the last four years, an illegal telephone wiretap was discovered at one of the nuclear labs. An employee confessed to installing it but was not prosecuted.

* In the last few weeks, panel investigators discovered that foreign citizens, including some from “sensitive” countries, still can connect their computers to the nuclear labs’ unclassified computer networks via telephone, without monitoring by the labs.

Clinton has said that he knew of no espionage during his administration, but an official involved in the panel’s investigation said that the president had been briefed on at least some of the instances.

“The paper trail would indicate that . . . he was informed,” said the official, who asked not to be identified. “Was he informed in detail? We don’t know.”

The report came to no conclusion about the case of Lee, who has not been arrested or charged, despite officials’ contention that he improperly removed secret data on nuclear weapons design from Los Alamos.

But it implied that the FBI and the Justice Department should have acted more aggressively to seek authority to wiretap the Taiwan-born American citizen, who remains the chief suspect in a major espionage investigation.

And the report criticized the administration for failing to investigate other possible sources for the leak of advanced nuclear warhead data to China.

“Despite the disclosure of information concerning seven warheads, despite the potential that the source or sources of these disclosures were other than the bomb designers at the national weapons labs and despite the potential that the disclosures occurred as early as 1982, only one investigation was initiated,” the report said.

At the same time, the report suggested that some assessments of the loss of nuclear secrets have been exaggerated.

It praised the congressional committee led by Rep. Christopher Cox (R-Newport Beach) for “getting the attention of the American public,” but added: “Possible damage has been minted [by the committee] as probable disaster; workaday delay and bureaucratic confusion have been cast as diabolical conspiracies. Enough is enough.”

The report included the management of the weapons labs in its indictment, saying that they were guilty of the same failings as the Energy Department. Two of the labs, at Los Alamos and Livermore, Calif., are run by the University of California under contract to the federal government.

But the official involved in preparing the report said that federal officials, not UC, should bear the principal blame.

“I think [UC and other contractors] are quite capable of running them so long as they get strong direction,” he said.

The report charged that the Energy Department actively resisted carrying out a 1998 presidential order to tighten security and is continuing to resist today.

“People over there, to this day, are trying to keep it from being fully implemented,” the official said.

That finding was a major reason the panel proposed putting the department’s nuclear weapons activities in a new agency--either a fully independent one or an autonomous agency inside the department.

Richardson continued to resist that idea Monday, saying it would create “a fiefdom within a kingdom of fiefdoms. . . . I don’t think it’s the right way to go.”

He said he still prefers his own reform proposal, the creation of a more powerful “security czar” inside the department.

But, in a slight bow to the panel, he suggested that he would be willing to accept a compromise.

“I’m ready to consider a new structure within the department,” he said. “If you wanted to put the nuclear activities under an undersecretary who reported to me, that might be OK.”

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Previous coverage of the China spy controversy and the entire Cox report is available on The Times’ Web site: https://www.latimes.com/chinaspy