CLASSIFIED section of report details CIA warning to FBI about Wen Ho Lee

Friday, August 31st 2001, 12:00 am
By: News On 6

WASHINGTON (AP) _ The FBI ``fumbled an extraordinary opportunity'' to recognize its Wen Ho Lee spy investigation was off the mark after receiving a CIA analysis in September 1997 that challenged the underpinnings of the probe, secret sections of a government report show.

Then-Director Louis Freeh was among the FBI officials who received the CIA report, according to unreleased chapters of the government report into the bungled spy probe reviewed by The Associated Press.

Freeh jotted notes on the CIA report and understood its implications, but he did not ensure that his subordinates understood the significance, the report suggested.

``This (CIA) report could have and should have caused the FBI to re-examine the predicate for the entire Wen Ho Lee investigation,'' wrote Randy Bellows, the prosecutor who conducted the review of the government's handling of the Lee matter. Instead, it took three more years before a reassessment was done.

FBI Assistant Director John Collingwood said Thursday night that Freeh was focused on other issues _ guarding against additional losses of nuclear secrets _ at the time the CIA assessment was offered in 1997.

``Because the investigation was stalled, Freeh was focused on preventing even greater damage to the weapons program and was fully engaged in helping the Energy Department establish a more vigorous counterintelligence effort,'' Collingwood said.

But Collingwood said the bureau recognizes now it should have discovered flaws in the investigation much earlier, and has made significant changes _ including those recommended by Bellows _ to ``avoid being in this position in the future.''

Bellows did not return repeated phone calls to his office seeking comment since the government released two heavily censored chapters of the report earlier this month.

AP reviewed parts of the report that have not been publicly released because they contain classified information or sensitive investigative information, such as the CIA assessment.

The still-secret chapters also reveal that Freeh in 1997 told the Energy Department that it should withdraw Lee's security clearance as a scientist at the Los Alamos nuclear weapons lab in New Mexico, given the suspicions he was a spy. However, Energy officials failed to heed the advice.

At a meeting in the fall of 1997, Freeh told Energy officials to take ``right off the table'' any concerns that pulling Lee's clearance might hurt the criminal investigation, according to notes of the meeting.

Lee in fact kept his clearance for many more months until investigators discovered he had transferred many of America's prized weapons secrets to unsecure computers.

Lee was held in solitary confinement for nine months and indicted on 59 felony counts alleging he transferred nuclear weapons information to portable computer tapes. He was never charged with spying, and denied giving information to China.

Under enormous criticism about the way Lee was misportrayed and treated, the case crumbled and the scientist pleaded guilty to just one felony count of downloading sensitive material in exchange for cooperating with the FBI.

Bellows credited Freeh with recognizing early on that ``Wen Ho Lee's continuing access to sensitive nuclear secrets was a problem that needed fixing immediately.''

The report also credited Freeh with pushing hard to repair serious flaws in the Energy Department's counterintelligence operation designed to detect nuclear espionage.

But it also raised the tantalizing question why the FBI, from the highest to the lowest levels, failed to redirect a misguided spy probe in 1997 when the secret CIA assessment indicated the original Energy Department information that caused investigators to focus on Lee was flawed.

The FBI was ``handed and fumbled an extraordinary opportunity to discover the fact that the administrative inquiry fundamentally mischaracterized the predicate for the investigation,'' one secret portion of the report states.

The CIA report was hurriedly prepared in summer 1997 at the request of President Clinton's national security adviser, Sandy Berger, to evaluate the accuracy of the Energy Department's assessment that Lee may have leaked to China secrets about America's prized W-88 nuclear warhead.

The CIA assessment disputed key elements of the Energy Department's findings, including the authenticity of a 1995 ``walk-in'' document suggesting China had secret information about the W-88 and the range of people who could have assisted China in such spying, the Bellows report said.

The report was faxed to the FBI on Sept. 11, 1997, and was included in briefing materials Freeh received as he familiarized himself with the case, the report said.

Freeh made notations on the CIA document indicating he understood the key issue _ that there was a ``fundamental contradiction between what DOE had told the FBI and what the CIA was telling the FBI.''

``But that point and its implications needed to be understood at a far lower level within the FBI,'' Bellows lamented.

The consequence, the report said, was that ``From May 30, 1996, until early 1999, the FBI investigated the wrong crime.''