Is It Time To Panic?

ROMESH RATNESAREspionage, movies have taught us, is supposed to be sexy stuff. The rakish secret agent. A blond chanteuse. Cameras masquerading as bow ties. By those standards, the alleged perfidy pulled off by Wen Ho Lee was decidedly G-rated. FBI agents suspect that for more than a decade, while working as a research scientist at Los Alamos National Laboratory in New Mexico, Lee was surreptitiously downloading millions of lines of classified code from the lab's top-secret computer database and storing the codes on the hard drive of his personal office computer. The actual transfer between systems was pretty easy, requiring little more than the kind of drag-and-click computer moves that millions of deskbound Americans perform every day. It wasn't exactly grist for a white-knuckle thriller.But Lee was playing with blockbuster material. Known as legacy codes, the 100 or so calculations that he put on his hard drive contained a gold mine of nuclear secrets--reams of physics equations and weapon-test results and warhead designs--painstakingly amassed by the U.S. since the government began building atom bombs at Los Alamos a half-century ago. When Energy Department officials discovered in March that a mid-level scientist had copied programs from the prized database, they were chagrined. That the scientist was the Taiwanese-born Lee, the same one fired on March 8 amid fears that he might already have passed weapons secrets to the Chinese government, was doubly embarrassing. But the realization that the codes stored on Lee's computer could have found their way into scores of foreign hands, including those of the Chinese government, left U.S. officials dumbstruck. Holy s___, was what Energy Secretary Bill Richardson said when his counterintelligence chief told him of the data transfers in late March.

Republicans were using language even less polite last week when news of the possible heist landed in Washington. Congressional leaders were already fuming about disclosures, first made in the March 6 edition of the New York Times, that since 1996 the FBI had been trying to determine whether Lee had given Beijing classified information about the design of America's most advanced nuclear warhead, the

W-88, and that in spite of this possibility, Lee had remained at Los Alamos until he was fired on March 8. The Administration tried to sidestep criticism by insisting that any spying that had taken place had happened during Republican administrations. But that defense may not cut it this time around. Investigators suspect that Lee, 59, downloaded the bulk of the secret codes in 1994 and 1995. He was allowed to retain his high-level security clearance at the lab until late 1998, even while he was under FBI surveillance for the W-88 theft. Agents say they asked the lab to let Lee keep his job so he wouldn't get wise to their probe. Still, it was not until after Lee's dismissal from Los Alamos that anyone managed to check what was on his computer. As more details have emerged, it has sometimes seemed that the only thing more breathtaking than Lee's alleged deceit was how long the government took to ferret it out.

The Clinton Administration last week scrambled to contain the damage. Richardson admitted a colossal security breach but said there was no evidence that the Chinese or anyone else had actually obtained the nuclear data from Lee. (Through his lawyer, Lee has denied any wrongdoing.) On Thursday FBI chief Louis Freeh gave similar assurances in a private briefing for the Senate Intelligence Committee. But the Senators came out of the three-hour meeting irate. The most overheated Republicans compared Lee to Klaus Fuchs, the Los Alamos scientist who passed atomic secrets to the Soviets in the 1940s. Even Democrats raged. It's not even a close call, said Nebraska Democrat Bob Kerrey. This is an extremely serious national-security issue that was not given a sufficient amount of attention.

PAGE 1|||As agents combed computer records at Los Alamos, intelligence officials admitted that it might be impossible ever to determine whether Lee had passed the codes on to any foreign governments. Clearly, someone had checked into Lee's machine and accessed them. But, explained an intelligence official, it's not like going to a simple billing record. The material was accessed, but they don't know by whom. By him? By someone else? They don't know.

And what if the codes had slipped out? The fallout could put a sizable dent in the U.S.'s nuclear hegemony. The legacy codes are sets of equations that approximate how nuclear explosions work; they are modified as weapons tests are conducted to assess the potency of new designs. Coupling the codes with actual engineering specifications for warheads--like the W-88 designs China has already stolen--would give a foreign government a road map for replicating the American nuclear arsenal.

No Chinese general would rely on the validity of stolen designs alone to build and deploy new nuclear weapons. Instead the time-honed technical expertise found in the U.S. codes could allow savvy foreign scientists to measure the punch packed by weapons they already possess without actually testing them. It's a doozy for the Chinese, who may have pocketed U.S. secrets just before they signed the nuclear test-ban treaty in 1996. And then there are the nuclear wannabes from Pyongyang to Tripoli, to whom the Chinese might sell the codes. Warns Gary Milhollin of the Wisconsin Project on Nuclear Arms Control, based in Washington: This could facilitate nuclear-weapons development by China, or anybody else, without our knowing about it.

There remain mysteries surrounding Lee. The engineer first came to the FBI's attention in 1982, when an FBI wiretap picked up a phone conversation between Lee and another Taiwanese-born scientist who was under investigation for passing U.S. neutron-bomb secrets to the Chinese. The FBI then administered a polygraph test on Lee. He passed with flying colors. In the mid-'80s, he and his wife again appeared on the FBI's radar screen, when they approached the Albuquerque field office and volunteered to inform on visiting delegations from the People's Republic and on Chinese scientists in the U.S. The FBI dropped the Lees from its rolls in 1991. But in 1995 the CIA obtained a Chinese document showing that Beijing had classified details on the W-88. In response, the FBI in mid-1996 opened a criminal investigation at Los Alamos under the code name Kindred Spirit. In part because of the 1982 phone call, Lee was its principal target.

FBI field agents in Albuquerque zeroed in on Lee's office computer and proposed a covert search of his hard drive. But because of laws against searches and seizures in the workplace, government officials can't rifle employees' computers or desks unless the workspace has been specifically marked with banners warning of possible searches. The computers at Los Alamos weren't tagged, so to execute a search, the agents had to apply for a formal warrant through the Justice Department.

|2||While that process was under way, other agents were growing increasingly frustrated by stonewalling lab managers at Los Alamos. The Energy Department contracts out day-to-day operation of the country's nuclear labs to the University of California and Lockheed Martin Corp. Security is something they don't even think about, says a retired FBI agent. To break the logjam, agents arranged for Freeh and CIA director George Tenet to receive a stunning briefing in 1997 on security lapses and suspicions of Chinese snooping at Los Alamos. The directors then told Energy Secretary Federico Pea that security was in need of an overhaul. The two also convened a committee of U.S. counterspies, which informed the National Security Council in mid-1997 that the labs needed tighter security and stricter vetting of foreign visitors. Clinton signed off on the proposal in February 1998.

By then the investigation of Lee had devolved into a bureaucratic Byzantium. The Albuquerque agents filed their warrant request with the Justice Department in July 1997. Officials there concluded that the FBI did not have sufficient proof that Lee posed a national-security threat grave enough to merit a raid on his computer. Exasperated FBI authorities appealed to Attorney General Janet Reno, but she wouldn't budge. Attempts to get more goods on Lee turned up nothing. Says a veteran counterespionage investigator of China's spy network: They're everywhere, but it's hard to catch them doing anything.

Lee's undoing came about not from conclusive evidence of his spying but from disclosure of the case late last year to Representative Christopher Cox's committee investigating allegations of Chinese spying. The committee informed the Administration that it would reveal China's alleged W-88 theft in its report. That put the pressure on Richardson. In February he ordered a polygraph of Lee, who failed it. On March 5, FBI agents confronted Lee and extracted permission to search his computer. Three days later, Richardson fired Lee and assured everyone the worst was over. It was not. On March 28, he got the mind-blowing news: not only had Lee downloaded the legacy codes onto his unclassified computer, but he also later tried to delete them from his hard drive. And someone using Lee's password had already accessed the codes. Richardson briefed Clinton the next day, got approval to shut down the nuclear labs for two weeks and vowed to can staff members who had impeded the investigation.

But nothing the Administration does now is likely to repair damage already done. Why didn't the FBI and doe monitor computer activity at Los Alamos more closely? Why did the Justice Department turn down the FBI's appeal for help? Freeh and former Energy Secretaries Pea and Hazel O'Leary are certain to be targets of the Cox panel's probe.

No matter what became of the legacy codes, the Clinton Administration stands to pay a heavy price. Republicans are lining up to hammer the White House for the mess. And since Clinton and Vice President Gore have pushed for closer U.S.-China ties, they are also likely to face charges of elevating politics and commercial interests over national security. After White House stonewalling on two other China-related investigations (the fund raising and the technology transfers), Republicans will assume the worst about the Lee case. Says Republican Senator Richard Lugar: This kind of thing is grist for the mill for endless investigations. With an election year coming up, Wen Ho Lee may prove to be the most dangerous man for Democrats on the campaign trail.

Reported by James Carney, Elaine Shannon, Mark Thompson, Karen Tumulty and Douglas Waller/Washington

||3|Dec. 4, 1978 Wen Ho Lee joins Los Alamos National Laboratory.

1982 The FBI intercepts a telephone call placed by Lee to another nuclear scientist, also born in Taiwan, who has been accused of giving China classified data on the neutron bomb.

1983-95 Lee transfers parts of the legacy codes--the mathematical blueprints used to design and test U.S. nuclear warheads--from the lab's classified computer system to his unsecured office computer.

June 3-7, 1986 Lee delivers an unclassified paper on nuclear weapons-related science at a symposium in Beijing with approval from Los Alamos officials.

1988 Lee delivers another unclassified paper in Beijing with Los Alamos approval.

1995 U.S. intelligence officials obtain a Chinese government document showing that China has stolen the design for the W-88 nuclear warhead, designed for Trident submarine missiles, above.

1996 The FBI launches an investigation of the W-88 theft. Agents focus on Lee and propose a covert search of his computer. But FBI headquarters and Justice officials say that the search requires a warrant.

July 1997 Department of Justice rejects the FBI warrant request, saying agents lack evidence that Lee is involved in espionage.

April 1997 Lee is transferred to a new job at Los Alamos National Lab.

March 5, 1999 The FBI confronts Lee, who had earlier failed a polygraph. He denies any wrongdoing but gives authorities permission to search files on his computer.

March 8 Secretary of Energy Bill Richardson, below, fires Lee from his Los Alamos job for failing to report contact with Chinese scientists and other security breaches.

March 28 Richardson learns agents found legacy code on Lee's computer. He briefs Clinton the next day.

April 2 Richardson orders the computer systems at three nuclear labs shut down for two weeks of investigation.

April 10 Investigation of Lee intensifies. FBI agents search Lee's home, above. Still lacking evidence of espionage, agents focus on making a criminal case against Lee for mishandling of classified data.

|||4Dec. 4, 197819821983-95June 3-7, 1986198819951996July 1997April 1997March 5, 1999March 8March 28April 2April 10