How Not to Catch a Spy

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BRUCE W. NELANThe government doesn't like to catch spies. Nabbing one tends to be embarrassing, seen as proof that the people in charge have been sloppy and lax on security. And it raises painful questions: How much damage has the spy done? Why wasn't he rooted out earlier? Who's making sure such pillaging of the country's vital secrets doesn't happen again? It's an unwinnable debate that no Administration wants to join.But it is this kind of scandal that hit the White House last week--and the fact that it involved China made the mess even harder to clean up. Bill Clinton has already been bruised by accusations that illegal Chinese contributions found their way into his 1996 campaign and that he was overeager to allow U.S. firms to sell high-end computers and satellite technology to Beijing. Now the soft on China shouts are louder than ever, boosted by claims from critics in both parties that top Administration officials delayed and soft-pedaled the investigation into alleged Chinese spying at Los Alamos National Laboratory in New Mexico, birthplace of the atom bomb.

The FBI's prime suspect is Taiwanese-born American scientist Wen Ho Lee, 59, who first began working in Los Alamos in the 1970s. A well-placed government source tells Time that Lee traveled to a 1988 seminar in Hong Kong and, with Chinese officials present, allegedly divulged sensitive information on the miniaturization involved in the design of America's most modern warhead, the W-88. In 1995 the CIA obtained a secret Chinese-government document that discussed details of the W-88. The document was dated 1988--the year the warhead went into production and a year in which Lee also visited Beijing. When intelligence analysts studied the data from nine Chinese nuclear tests from 1990 to 1995, they were chagrined to discover that the blasts involved a miniaturized warhead that was a near replica of the W-88. They also concluded, sources tell TIME, that China had acquired details of no fewer than five other U.S. warheads.

Still, according to a U.S. official, it was not until mid-1996 that investigators singled Lee out as a suspect, examined his travel and financial records, asked discreet questions about him and started monitoring his movements. Lee apparently had a habit of not locking up classified data. He's pretty sloppy, says a U.S. official. And he was reportedly defiant when investigators confronted him about the propriety of his Hong Kong seminar. But Lee was not fired, because the FBI and the Department of Energy, which runs Los Alamos, were still trying to build their case.

In August 1998 Bill Richardson took over Energy from Federico Peņa. Soon after, Richardson demanded that the FBI polygraph Lee. He passed, but Richardson suspended his security clearance and moved Lee out of sensitive areas. The Secretary then approved a security crackdown urged by Ed Curran, a former FBI counterespionage specialist hired the previous February to shape up Energy's counterintelligence program. About a month and a half ago, Richardson ordered Energy to polygraph Lee again--and the scientist failed. On Saturday, March 6, the New York Times broke an extensive story on the scandal, and the FBI swept in. They started questioning Lee gently on Saturday then turned up the heat. By 10 p.m. on Sunday, a U.S. official informs TIME, Lee announced, I'm not going to tell you anything, and I'm ready to go to jail. On Monday, Lee finally lost his job for allegedly breaking security rules: failing to report contacts with people from sensitive countries, failing to safeguard classified material and giving deceptive answers. So far, no criminal charges have been brought against him for his suspected offense.

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When the scandal broke, Clinton, Vice President Al Gore and Secretary of State Madeleine Albright all warned publicly that this episode must not interfere with constructive relations with China. They were so fast and voluble in defending their China policy last week that they skidded close to confirming the critics' accusation that they are more interested in a strategic partnership with Beijing than in facing up to their espionage problem.

I believe we acted swiftly, insists National Security Adviser Sandy Berger. I reject the notion there was any dragging of feet. That also sounded a bit odd, coming from an official who was first briefed on the likelihood of espionage at Los Alamos three years ago. Nor was this the first case of Chinese snooping at U.S. weapons labs. During the 1970s and again in the '80s, Taiwanese-born American scientists delivered to China the secrets of, first, the neutron bomb and then laser technology.

The shocker is not that china spies but that the U.S. took such a leisurely approach to countering China's successes. In early 1996 Berger was told about the case and encouraged the FBI to investigate, but he took no steps to increase security at Los Alamos. (I get similar briefings once a month, shrugs a White House official.) Only in July 1997, after another briefing on laxity at the labs, did Berger tell Clinton. Berger assigned an interagency group to draft tougher security rules for the labs; Clinton signed them in February 1998. The span of six months from briefing to directive, says a Clinton aide, is actually pretty quick.

Some White House sources blame the scandal on the culture of scientific sharing. Scientists think differently than people in the national-security business, and the labs were enormously porous, says an Administration official.

More important than whodunit is the question of how badly the leak damages American security. Some experts say China would eventually have miniaturized its nuclear weapons on its own. That's probably true, but now Beijing has apparently found a shortcut to the most modern technology. Smaller warheads mean Chinese missiles will be lighter, more mobile, easier to hide and able to hit multiple, longer-range targets.

Such missiles fit neatly into China's strategic plans for reclaiming Taiwan. Its military is modernizing fast, preparing to seize the island province by force if the government there opts for independence. In five or 10 years the People's Liberation Army could be equipped for the mission, and its new, hard-to-find nuclear missiles could be just the thing to deter the U.S. from stepping in. As a Chinese general once predicted to a senior Pentagon official, the U.S. will not intervene because it cares more about Los Angeles than Taipei. With the W-88 in stock, China could soon have the weapons to test its deterrence theory.

Reported by J.F.O. McAllister, Elaine Shannon and Karen Tumulty/Washington

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Warming up for his Washington trip, Zhu Rongji tangoed--and tangled--with Madeleine Albright on tough issues. Can China and the U.S. get in step?
--TIME Asia, March 15, 1999

China's moves into the disputed Spratly Islands raise fears that Beijing will seize military control of the South China Sea
--TIME Asia, March 8, 1999