Inquiry: FBI China Spy Case Flawed

WASHINGTON -- The FBI investigation of a Taiwanese-American weapons scientist was plagued with errors, poor judgment and delays that probably doomed the case, two senators said in releasing a report on the three-year inquiry into the theft of nuclear secrets by China.

The report by the Senate Governmental Affairs Committee said the scientist, Wen Ho Lee, signed a waiver allowing his computer to be searched, but top FBI officials and Justice Department lawyers did not learn of it until this year.

As a result, the FBI and the Justice Department wrangled for three years over whether a search could be conducted. When the computer was finally examined earlier this year, it was found that Lee had shifted thousands of super-secret weapons codes into an unsecured computer system.

"The government's investigation was not a comedy of errors, but a tragedy of errors," Senator Joseph Lieberman, the committee's ranking Democrat, said.

Committee Chairman Senator Fred Thompson, a Republican, said the investigation was "beset by communications failures and poor judgment," and that Attorney General Janet Reno for the most part "was out of the loop" despite the issue's importance.

Lieberman agreed that Reno, who was briefed informally about the Lee case in August 1997, should have been more involved. Thompson said he found it "remarkable" that FBI Director Louis Freeh didn't call Reno to settle the dispute over the search of Lee's computer.

Reno acknowledged the Senate report "raised several important issues" about the handling of the Lee investigation. She said she wished the issue of examining Lee's computer had been brought to her attention after it was reviewed by senior department officials.

Nevertheless, she said, she still believes the decision not to seek permission from a special court to examine the computer "based on the information presented at that time was the right one." She said the concern was to "balance the needs of national security against an individual's civil liberty."

Meanwhile, House of Representatives and Senate conferences approved as part of a final $288.8 billion defense spending bill the creation of a semi-autonomous agency within the Energy Department to deal with nuclear weapons programs, including weapons labs.

The National Nuclear Security Administration would be under the energy secretary but would largely control its own budget. The White House had expressed concerns about aspects of the reorganization, raising the possibility of a veto. However, it was unclear late Thursday whether those issues were resolved.

The bill still needs final approval in Congress.

Energy Secretary Bill Richardson has said he would go along with a new agency, but only if it did not weaken the authority of the energy secretary and leave security and counterintelligence responsibilities outside the agency.

Lee, a naturalized U.S. citizen who was born in Taiwan, was fired last March on security grounds. He had been under investigation by the FBI since 1996 on suspicion that he provided China with secret information about the sophisticated W-88 nuclear warhead, a mainstay of America's nuclear arsenal.

His transfer of computer codes was not discovered until after he was dismissed on March 8.

Not charged with any crime, Lee has emphatically denied giving nuclear secrets to China or anyone else. In a recent television interview, he complained he had been singled out because of his ethnic background. The investigation into Lee's activities continues.

The Senate report provided some details on how Lee was targeted by the FBI in 1996, and for the first time disclosed that the agency had other suspects but never pursued them.

When informed in 1995 that W-88 warhead secrets probably had been obtained by China, the FBI used a so-called "matrix analysis" that focused on anyone at Los Alamos, where the warhead was developed, anyone who had traveled to China and anyone who had contact with Chinese scientists visiting the lab in New Mexico.

Wen Ho Lee met all three criteria f and also raised other concerns f investigators told the Senate committee in two closed sessions.

But Lieberman said the failure to cast a wider net to other facilities and not to investigate the other Los Alamos suspects hurt the FBI's case.

The FBI was particularly interested in Lee and his wife, Sylvia, who also had worked at the Los Alamos lab. Both had gone out of their way to make contact with visiting Chinese delegations. And Lee twice previously had caught the FBI's attention, the report said.