MEETING THE ESPIONAGE CHALLENGE: A REVIEW OF UNITED STATES COUNTERINTELLIGENCE AND SECURITY PROGRAMS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00530R000300620021-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 160
• Document Creation Date: December 23, 2016
• Document Release Date: January 2, 2013
• Sequence Number: 21
• Publication Date: October 3, 1986
• Content Type: REPORT

ititA-4-4
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99TH CONGRESS
2d Session
SENATE
REPORT
99-522
MEETING THE ESPIONAGE CHALLENGE:
A REVIEW OF UNITED STATES
COUNTERINTELLIGENCE AND
SECURITY PROGRAMS
REPORT
OF THE
. .
SELECT COMMITTEE ON INTELLIGENCE
UNITED STATES SENATE ,
OCTOBER 3 (legislative day, SEPTEMBER 23), 1986.?Ordered to be printed
U.S. GOVERNMENT PRINTING OFFICE
64-2680 WASHINGTON: 1986
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SENATE SELECT COMMITTEE ON INTELLIGENCE
[Established by S. Res. 400, 94th Cong., 2d Sess.]
DAVE DURENBERGER, Minnesota, Chairman
PATRICK J. LEAHY, Vermont, Vice Chairman
WILLIAM V. ROTH, JR., Delaware
WILLIAM S. COHEN, Maine
ORRIN HATCH, Utah
FRANK MURKOWSKI, Alaska
ARLEN SPECTER, Pennsylvania
CHIC HECHT, Nevada '
MITCH McCONNELL, Kentucky
ROBERT DOLE, Kansas, Ex Officio
ROBERT C. BYRD, West Virginia, Ex Officio
LLOYD BENTSEN, Texas
SAM NUNN, Georgia
THOMAS F. EAGLETON, Missouri
ERNEST F. HOLLINGS, South Carolina
DAVID L. BOREN, Oklahoma
BILL BRADLEY, New Jersey
BERNARD F. MCMAHON, Staff Director
ERIC D. NEWSOM, Minority Staff Director
DORTHEA ROBERTSON, Clerk
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CONTENTS: ,
Page
I. Introduction and Summary 1
A. Background 1
B. Organization of the U.S. Government to Meet the Hostile Intelli-
gence Challenge 3
C. Counterintelligence: Learning the Lessons of Recent Cases 4
D. Security Countermeasures: Defending on Many Fronts 6 ?
E. Budgetary Impact 9
F. Legislative Proposals 10
G. Respect for Individual Rights 11
II. The Hostile Intelligence Threat 12
A. Damage to National Security 12
B. Sources of the Threat 17
1. Soviet Union 17
2. Warsaw Pact and Cuba 18
3. People's Republic of China 19
4. Other Countries 20
C. Human Intelligence Techniques 20
1. Official Presence 21
2. Other Aspects of the Hostile Intelligence Presence 23
3. Recruited Agents 25
4. Soviet Methods of Recruitment 26
5. Technology Transfer 28
6. Active Measures and Disinformation 30
D. Technical Collection Operations 33
1. Interception of Communications 33
2. Other Forms of Electronic Surveillance 34
3. Penetration of Computer Systems 35
4. Imagery 36
E. Summary 37
III. Counterintelligence 38
A. Need for a Counterintelligence Strategy 39
B. Hostile Presence Limits 40
C. Counterintelligence Awareness Programs 45
D. Domestic Operations 48
1. Coverage of Establishments and Officers 49
2. Offensive Operations 50
3. Espionage Investigations and Prosecutions 52
E. Overseas Operations 56
F. Personnel Management and Training 56
IV. Security Countermeasures 58
A. A National Strategic Security Program 59
B. Personnel Security 65
C. Information Security 74
D. Communications, Computer and Emanations Security 80
E. Technical and Physical Security 85
F. Industrial Security 87
G. Congressional Security 90
V. Appendixes 97
Appendix A. U.S. v. Whitworth, Affidavit of RADM William 0. Stu-
deman and Declaration of John L. Martin 97
Appendix B. Defense Security Institute Analysis of the Harper Case 105
Appendix C. Defense Security Institute Analysis of the Bell/Za-
charski Case 112
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Appendix D. Defense Security Institute Analysis of the Cavanagh Page
Case 126
Appendix E. US. v. Zakharov, Affidavit for an Arrest Warrant and
Search Warrant; and Indictment 136
Appendix F. Forged letter from Herbert Romerstein to Senator David
Durenberger; actual letter from Romerstein to LTG Robert L
Schweitzer; and forged letter from LTG Schweitzer to President
Augusto Pinochet of Chile 142
Appendix G. Draft Senate Security Manual 146
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2d Session J SENATE
{ REPORT
99-522
MEETING THE ESPIONAGE CHALLENGE: A REVIEW OF
UNITED STATES COUNTERINTELLIGENCE AND SECURITY
PROGRAMS
OCTOBER 3 (legislative day, SEPTEMBER 23), 1986.?Ordered to be printed
Mr. DURENBERGER, from the Select Committee on Intelligence,
submitted the following
REPORT
I. INTRODUCTION AND SUMMARY
As espionage is ancient, so is counterintelligence. The Chinese
military theorist Sun Tzu stated the principle in the fourth century
B.C.: "It is essential to seek out enemy agents who have come to
conduct espionage against you. . . ." Today, over two rnillenia
later, the battle is still being waged.
A. BACKGROUND
At the beginning of the 99th Congress, the Select Committee on
Intelligence initiated a comprehensive review of the capabilities of
U.S. counterintelligence and security programs for dealing with the
threat to the United States from Soviet espionage and other hostile
intelligence activities. This decision was an outgrowth of eight
years of Committee interest in these issues. The review is also con-
sonant with the committee's mission to "oversee and make con-
tinuing studies of the intelligence activities and programs of the
United States Government, and to submit to the Senate appropri-
ate proposals for legislation and report to the Senate concerning
such intelligence activities and programs." Senate Resolution 400,
which established the Committee ten years ago, specifies that intel-
ligence activities include "activities taken to counter similar activi-
ties directed against the United States."
The Committee's review had barely begun when the arrests of
John Walker and two of his relatives began to make 1985 the
"Year of the Spy." In June, 1985, the Committee pledged that it
'Sun Tzu, The Art of War, trans. by Samuel B. Griffith, Oxford University Press (London:
1963), p. 148.
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would prepare a report to the full Senate at the earliest possible
time. In light of this Committee's ongoing efforts, the Senate decid-
ed not to create a National Commission on Espionage and Security.
On June 20, 1985, the Chairman of the Committee wrote to the
President, saying, "You and we share an historic opportunity?
both to dramatically improve U.S. counterintelligence and security
and to demonstrate how Congress and the Executive can work to-
gether to achieve progress in sensitive intelligence areas."
The ensuing fifteen months have generated an amazingly sus-
tained interest in counterintelligence and security on the part of
both policymakers and the public. There have been over a dozen
arrests for espionage, nearly all leading to guilty pleas or verdicts;
Americans and West Germans with sensitive information have de-
fected to the Soviet Union and East Germany; and Soviets with
sensitive information have defected to the West, and in one major
case then returned to the Soviet Union. Most recently, the Soviet
arrest of an innocent American journalist in retaliation for the
U.S. arrest of a Soviet U.N. employee has made it clear that coun-
terintelligence, while seemingly a peripheral element in superpow-
er relations, can even become the focus of U.S.-Soviet confronta-
tion.
The "Year of the Spy" was characterized by intensive Executive
branch attention to problems of counterintelligence and security.
Of particular note were the efforts of the Department of Defense
Security Review Commission, chaired by General Richard G. Stil-
well, USA (retired), and the Secretary of State's Advisory Panel on
Overseas Security, chaired by Admiral Bobby R. Inman, USN (re-
tired) and Executive branch steps to implement their recommenda-
tions. The Stilwell Commission led to significant progress in De-
fense Department personnel and information security policies, and
the Inman Panel led to restructuring of State Department security
functions and a major embassy rebuilding program around the
world.'
The Committee's efforts have encouraged, and have greatly bene-
fitted from, this sustained Executive branch attention to counterin-
telligence and security matters. The Committee received an un-
precedented level of cooperation from the President, the National
Security Council staff, the Intelligence Community Staff, and the
many departments and agencies with counterintelligence or securi-
ty functions. Executive branch experts and policymakers testified
in sixteen closed hearings on specific counterintelligence cases and
the current state of U.S. programs to counter hostile intelligence
activities. Scores of staff briefings and the provision to the Commit-
tee of many sensitive Executive branch studies enabled the Com-
mittee to compile the very best ideas and recommendations of
those in government, as well as suggestions from security experts
in industry. The Committee, in turn, evaluated those ideas and sub-
mitted a comprehensive set of recommendations for Executive
branch consideration.
The Intelligence Authorization Act for FY 1986 included a statu-
tory requirement that the President submit to the House and
Senate Intelligence Committees a report on the capabilities, pro-
grams and policies of the United States to protect against, detect,
monitor, counter and limit intelligence activities by foreign powers,
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within and outside the United States, directed at the United States
Government. The report was to included plans for improvements
that the Executive branch has authority to effectuate on its own,
and recommendations for improvements that would require legisla-
tion. To assist the Senate Intelligence Committee in its work, the
conferees on the Act requested an interim report developed in con-
sultation with the Intelligence Committees. This Committee, in
turn, prepared its own interim report, which it shared with the Ex-
ecutive branch last winter.
The many good ideas and recommendations that the Committee
obtained from Executive branch officials and studies had not yet
been implemented for two basic reasons: counterintelligence and
security had failed to receive sustained attention; and the ideas fre-
quently challenged established ways of doing things, cut across bu-
reaucratic lines of responsibility, or required substantial changes in
resource allocation. External events provided substantial impetus
for interagency attention to these issues. The Committee's efforts
and the Executive branch's cooperation are producing the inter-
agency decision-making that is required for progress.
The President began, responding to a request from the Commit-
tee, by designating the Director of Central Intelligence to represent
the Administration at a series of Committee hearings on counterin-
telligence and security programs and selecting a counterintelli-
gence expert on the NSC staff as liaison to the Committee. An
interagency mechanism under the Senior Interdepartmental Group
for Intelligence (SIG-I) supplied coordinated Executive branch reac-
tions to the Committee's interim report recommendations. This not
only helped the Committee, but also gave the Executive branch
itself the opportunity to address and decide these important policy
issues. The resulting positions were conveyed to the Committee in
the President's interm report and referred to an NSC staff commit-
tee for implementation.
The President's interim report and subsequent consultation be-
tween Executive branch officials and the Committee were thus of
great value in the preparation of the present Report. The Commit-
tee looks forward to receipt of the President's final report, which
will serve as an important benchmark of the progress achieved
thus far to strengthen counterintelligence and security capabilities.
The summary that follows is based upon the Committee's unclas-
sified public Report. The Committee's full Report to the Senate
contains substantial additional material, including findings and
recommendations that remain classified.
B. ORGANIZATION OF THE U.S. GOVERNMENT TO MEET THE HOSTILE
INTELLIGENCE CHALLENGE
The Committee's findings underscore a fundamental challenge to
the nation. The hostile intelligence threat is more serious than
anyone in the Government has yet acknowledged publicly. The
combination of human espionage and sophisticated technical collec-
tion has done immense damage to the national security. To respond
to the threat, the United States must maintain effective counterin-
telligence efforts to detect and neutralize hostile intelligence oper-
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ations directly, and defensive security countermeasures to protect
sensitive information and activities.
The Committee believes that, as a result of significant improve-
ments in recent years, the nation's counterintelligence structure is
fundamentally sound, although particular elements need to be
strengthened. The Executive branch and the Committee agree on
the importance of developing and implementing a coherent nation-
al counterintelligence strategy that integrates the work of the FBI,
the CIA and the Departments of State, Defense and Justice. Execu-
tive branch agencies are already drafting such a document. The
Committee expects this strategy to play a major role in its over-
sight of Executive branch counterintelligence efforts in the years to
come.
By contrast, defensive security programs lack the resources and
national policy direction needed to cope with expanding hostile in-
telligence operations. Personnel security policies remain fragment-
ed despite persistent attempts to develop national standards. Infor-
mation security reforms are long overdue. America faces vulner-
ability to hostile intelligence activities in the areas of communica-
tions and computer security, where counterineasures must keep
pace with increasing technological change. Consequently, in De-
cember, 1985, the Committee called for the development of a Na-
tional Strategic Security Program that would address these issues.
The Committee believes that a new and more permanent national
policy mechanism is needed to create this program and then to co-
ordinate and foster, the protection of information and activities
having the greatest strategic importance.
In recent months, the Executive branch has come to understand
the sense of urgency with which the Committee views the need for
an integrated strategic security program and an improved security
policy structure. An effort to develop such a security program is
now likely. The Director of Central Intelligence, in his capacity as
chairman of the Senior Interdepartmental Group for Intelligence,
recently revamped the security committee structure under the
SIG-I and called for greater participation in those committees by
policymakers, so that decisions could be reached on interagency
issues and policy initiatives.
The Committee believes that these changes are insufficient be-
cause they fail to bridge the gaps between the various security dis-
ciplines. Most Executive branch officials, although opposing further
changes at this time, do not dispute the likely need for them in the
future. The Committee will continue to push for more effective
policy review and formulation, for it believes that the national se-
curity cannot afford much more delay. This is especially true if the
current Administration is to leave as a legacy a workable security
policy system that will not have to be reinvented by each succeed-
ing administration. The Committee recommends that the eventual
new security policy structure be one that transcends current poli-
tics and policy and is codified in an Executive Order.
C. COUNTERINTELLIGENCE: LEARNING THE LESSONS OF RECENT CASES
The Committee has examined in detail each of the espionage
cases that have come to public attention in recent years, as well as
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the Yurchenko defection case and cases that remain classified. Al-
though this Report does not discuss individual cases in detail,
many of the recommendations in sections III and IV reflect lessons
learned through those cases.
The first lesson of these cases is the need for greater counterin-
telligence and security awareness. The Committee found insuffi-
cient tailoring of security awareness material to the needs of par-
ticular audiences?defense contractors, workers at government fa-
cilities, U.S. personnel stationed overseas, members of ethnic
groups known to be targeted by foreign intelligence services, con-
gressional staff and others. The usefulness of such material is illus-
trated by the fact th-A once the U.S. Navy began to improve its se-
curity awareness briefing's after the Walker case, co-workers of
Jonathan Pollard noted his unusual pattern of document requests
and alerted authorities.
The second lesson is the need for earlier involvement of the FBI
and the Department of Justice in cases of suspected espionage.
When offices or agencies have held back from bringing in the FBI,
events have often gotten out of control. When the FBI has been
alerted in time, their investigative resources and interview skills
have often led to confessions. When the Justice Department has
been involved at an early stage, cases destined for prosecution have
been built on more solid ground, resulting in numerous convictions.
The third lesson is the need for more attention and better access
to information on the finances, foreign travel and foreign contacts
of persons with sensitive information. The Committee found that
the FBI sometimes lacked access to financial and telephone records
in its counterintelligence investigations; that insufficient attention
was given to signs of trouble regarding former employees with sen-
sitive accesses; and that too few people were alerting office security
personnel or the FBI when they were approached by possible for-
eign intelligence officers.
The Chin, Pollard and Scranage cases have taught the clear
lesson that espionage services outside the Soviet bloc also engage in
illegal activities targeted at the United States, which must not be
tolerated. The Bell and Harper cases, among many, underscored
the need for controls on the activities of certain Eastern European
representatives and of U.S. companies controlled by the Soviet
Union or its allies. And the Zakharov case, like the Enger and
Chernyayev case eight years ago, reminds us that the KGB is will-
ing to use the United Nations Secretariat for intelligence cover.
The Edward Lee Howard case led to investigations and corrective
action in the CIA, just as the Walker case led to formation of the
Stilwell Commission and to additional steps by the U.S. Navy. The
FBI and the Justice Department are still absorbing the lessons of
the Howard case. The Committee will continue to monitor how well
all the agencies implement improvements in response to those les-
sons.
The defection and re-defection of Vitaly Yurchenko, which high-
lighted both the counterintelligence value of defectors and appar-
ent shortcomings in their handling and resettlement, also led to in-
ternal reviews and useful actions by the CIA to improve its han-
dling of defectors. The Committee believes that more must be done,
however, to change the basic objectives with which the U.S. Gov-
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ernment approaches defectors. We must accept the obligation to
help defectors succeed in, and contribute to, American society. Ex-
ecutive branch efforts to analyze and learn from the Yurchenko
case continue, and the Committee expects to see more progress in
this area.
The CIA has taken significant steps to improve recruitment and
career development programs for counterintelligence personnel.
The Scranage and Howard cases suggest that there was, and is,
substantial need for improvement in CIA counterintelligence, and
the Committee will continue to monitor CIA efforts. The military
services and the FBI are also beginning to improve their recruit-
ment and career development programs for counterintelligence,
but progress is uneven.
The Committee will continue to press Executive branch agencies
to incorporate into their operations improved counterintelligence
awareness and procedures. While agencies have moved in the last
year to remedy problems that were exposed in recent espionage
cases, they have been much slower to accept the painful need to
confront the implications of hostile intelligence successes. Atten-
tiveness to possible hostile knowledge of classified U.S. operations
must be increased, and analysis of the impact of known losses of
classified information must extend to the unhappy possibility that
operations or weapons systems will require modification. While
there is always a need not to let worst-case analyses paralyze our
military and intelligence services, the greater current danger ap-
pears to be a wishing away of the consequences of hostile intelli-
gence efforts.
D. SECURITY COUNTERMEASURES: DEFENDING ON MANY FRONTS
The National Strategic Security Program that the Committee
recommends will have to address a multitude of issues, cutting
across both agency and disciplinary lines. Thus, different agencies
have failed for years to agree upon the scope and methods to be
used in background investigations for Top Secret and Sensitive
Compartmented Information clearances; the result has been waste-
ful duplication of investigations. Military services, in particular,
have been permitted to establish far too many special access pro-
grams, all in the name of security but sometimes with lower securi-
ty standards than the regular programs maintain. Technical ex-
perts who run our nation's computer security programs have
poured additional funds into specially-designed hardware and soft-
ware to protect sensitive computer systems, while doing little to
combat the major personnel problem of assuring the reliability of
computer users with access to so much sensitive data. The various
agencies that deal with technical security issues have only recently
begun to forge effective cooperation on approaches to those issues.
And this country has a long way to go in the development of oper-
ations security practices to protect sensitive programs against hos-
tile intelligence collection activities.
This Report groups many security issues by discipline, but the
Committee feels strongly that many, and perhaps most, of those
issues will remain unresolved until a more effective security policy
structure is implemented. There is a need to upgrade security
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across the board, with improved recrutiment, improved training of
personnel ranging from security clearance adjudicators to poly-
graphers and technical security personnel, and upgraded job classi-
fications that reflect the increased importance and sophistication of
modern security specializations.
In the field of personnel security, the Committee found, as did
the Stilwell Commission, that insufficient attention was being paid
to the reinvestigation of those who already have security clear-
ances. Both the Defense Department and the intelligence communi-
ty now understand the importance of reducing the backlog in those
reinvestigations, and the Committee has worked to ensure that the
needed funds to accomplish this swiftly are provided in legislation.
One reason for recommending interagency agreement on a "single
scope" background investigation is the hope that funds thus saved
could be put to work on the pressing reinvestigation task, as well
as on upgrading Secret clearance investigations as recommended
by the Stilwell Commission. The Defense Department has reduced
the number of cleared personnel by some 900,000 persons?over
20%?thus also easing some of the clearance investigation costs.
There is a crisis of standards in sensitive governmental positions.
The Committee found no rigorous standards regarding the hiring of
persons who have committed felonies. Follow-up measures after
persons with admitted problems like past drug use are granted
clearances are poor or nonexistent. Even the most sensitive clear-
ances are granted to virtually anyone whose record does not con-
tain clear disqualifying factors, rather than being based upon a se-
lection process that chooses those persons most able to cope with
the pressures of sensitive access and security. In light of this, the
Committee has supported Defense Department efforts to develop
counterintelligence polygraph programs with the highest quality
controls, pursuant to the test program approved by the House and
Senate Armed Services Committees.
The Committee has found that the classification system is
unduly complicated and that it breeds cynicism and confusion in
those who create and use classified information. The Committee be-
lieves that a streamlined system, in which the Confidential classifi-
cation is eliminated and all information is either Secret or the
equivalent of Sensitive Compartmented Information, would be
much more workable despite the major changes and initial costs
that this would entail.
The Committee also found that authorized (but uncontrolled) dis-
closures and unauthorized leaks of classified information are so
commonplace as to imperil many sensitive programs and oper-
ations. Recent Executive branch efforts to investigate instances of
unauthorized disclosure of classified information and to punish
those responsible are a welcome development. The Committee calls
on the Executive branch to go further, however, and to adopt pro-
cedures governing authorized disclosures, so that there will be a
record of such disclosures?thus relieving the FBI of the need to in-
vestigate cases that are not real leaks?and so that those who origi-
nate classified information will have a chance to argue against its
release. There must be both firmness and order in the information
security system before it will gain the respect of the millions of
people who handle classified information.
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The Committee was pleased to learn of the National Security
Agency's many efforts to improve the communications security of
the U.S. Government. It supports NSA's plan for the development
and licensing for distribution of low-cost secure voice" telephone
equipment. In addition, the Committee has proposed Fiscal Year
1987 funding to improve communications security by beginning the
encryption of many domestic commercial communications satellite
links.
The Committee endorses the role of NSA in developing computer
security hardware, systems and standards for both the government
and segments of the private sector, in cooperation with the Nation-
al Bureau of Standards. The Committee recommends, however, in-
creased attention to personnel security aspects of protecting com-
puterized information. It supports State Department efforts to
place U.S. citizens in charge of the computers in U.S. embassies
overseas. The Committee believes that personnel with access to the
most sensitive computer systems should be included in personnel
reliability programs similar to those now being instituted for per-
sons with sensitive cryptographic access. And it believes that there
must be better analysis of information system vulnerabilities
before permission is given to put sensitive information in those sys-
tems.
The Committee was very concerned over serious deficiencies in
the security of U.S. facilities overseas, primarily those managed by
the Department of State. The bugging of typewriters in the U.S.
Embassy in Moscow graphically demonstrated both Soviet sophisti-
cation and U.S. vulnerabilities. Steps are being taken to combat
technical penetration efforts, ranging from the embassy rebuilding
program proposed by the Inman Panel to an equipment protection
program that was funded in the Diplomatic Security Act. The Com-
mittee supports these and other efforts, and it has worked to
ensure that agencies will work closely with each other to bring the
best expertise to bear on technical security problems.
The Committee has also found the industrial security system for
classified defense and intelligence contracts to be seriously defi-
cient, to an extent that warrants consideration of major changes.
The Committee recommends a pilot program to assign Defense in-
vestigative Service personnel to large sensitive contractor facilities
on a full-time basis. It proposes changing the Federal Acquisition
Regulations to make security a direct cost in contracts, rather than
an overhead cost that is inevitably subjected to corner-cutting. It
suggests greater incentives in contracts for security performance,
as well as a requirement that security officers be trained and gov-
ernment-certified. Many of the Committee's recommendations re-
garding personnel and information security will also have a direct
impact upon industrial security practices.
Attention to security requirements is also needed in Congress
itself. The Committee found that there was no centralized registry
of Senate personnel with clearances, little or no security awareness
material for Congress, and little understanding of how to protect
sensitive information that is provided to Member offices and com-
mittees. At the request of the Majority Leader, the Committee
joined with the Committee on Rules and Administration and the
Committee on Governmental Affairs in recommending that a
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Senate security office be established to develop and oversee imple-
mentation of standards and procedures in these areas. The Com-
mittees recommended that the security office be instructed to
survey the extent of clearances among Senate staff, to recommend
how the number of cleared personnel might be reduced, and to de-
velop a Senate security manual, the provisions of which would be
binding on all Members, Officers and employees of the Senate. The
Committee continues to work closely with Senate leadership on
these efforts, with a goal of creating a security office early in the
next session.
E. BUDGETARY IMPACT
The Committee's recommendations will not be cost-free. Some
savings would be achieved through streamlining the classification
system, adopting common standards for background investigations,
and implementing current national policies that lessen the require-
ment for TEMPEST protection of U.S.-based information-processing
equipment. But the Committee believes that the U.S. Government
has suffered for years from inadequate investment in security
countermeasures. ?
In the Intelligence Authorization Act for Fiscal Year 1987, the
Committee has proposed substantial increases in spending for secu-
rity in the intelligence community and in related Defense Depart-
ment programs. Among these initiatives are an additional $129
million for communications security, including the first year of a
five-year plan to encrypt sensitive domestic communications satel-
lite channels, and an additional $22 million to improve personnel
security in the Defense Department. In 1985, Committee members
proposed what became a $35 million supplemental appropriation
for improved technical security at U.S. facilities abroad. In 1986,
the Congress passed the Diplomatic Security Act and a supplemen-
tal appropriation providing funds for a massive program to up-
grade security at U.S. missions. This commitment is designed for
protection against not only terrorism, but also hostile intelligence
penetration.
The additional expenditures recommended by the Committee for
FY 1987 would amount to an increase in annual spending for coun-
terintelligence and security of at least $500 million above the fund-
ing level in FY 1985. This commitment must continue in the years
ahead, when further increases may well be required because of the
growing technical, communications and computer security vulnera-
bilities. From a larger perspective, however, the costs of improved
security will be offset by the gains to the United States in the over-
all U.S.-Soviet balance of military, intelligence, economic and polit-
ical capabilities. Soviet espionage successes have cost our country
or saved our adversaries billions of dollars. Just as our nation's in-
vestment in intelligence-gathering programs has a significant
payoff for national security, an increased investment in counterin-
telligence and security programs will help deny comparable advan-
tages to the Soviets.
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F. LEGISLATIVE PROPOSALS
The great majority of the Committee's findings and recommenda-
tions relate to administrative actions. Some needed actions do re-
quire, however, legislative authorization. In these cases, the Com-
mittee has either recommended or, often, already introduced the
needed legislation.
Members of the Committee have sponsored several pieces of leg-
islation in recent years to bring the hostile intelligence presence in
the United States under some control. The Committee recommends
that these be implemented so as to maintain a limit of 320 on per-
manently accredited Soviet embassy and consular personnel. The
Committee also found gaps in current legislation and recommended
three further steps: a legislated policy of equivalence between the
U.S. and Soviet U.N. missions (introduced by Senators Leahy and
Cohen as S. 1773); registration of commercial entities controlled by
Warsaw Pact governments (introduced by Senator Roth as S. 1900);
and extension of the Foreign Missions Act to include commercial
and other entities controlled by foreign governments (introduced by
Senators Durenberger and Leahy as S. 1947). All three proposals
have been attached to the Intelligence Authorization Act for Fiscal
Year 1987.
The FBI could benefit greatly from legislation in several areas.
The Committee has added provisions to the Intelligence Authoriza-
tion Act for Fiscal Year 1987 that would require banks and tele-
communications companies to comply with FBI requests for access
to customer records pursuant to duly authorized full counterintelli-
gence investigations. State privacy laws and fears of civil suits
have inhibited some companies from cooperating with the FBI in
recent years. The Committee is also prepared to introduce legisla-
tion to create a court order system, comparable to that which now
exists under the Foreign Intelligence Surveillance Act, to authorize
physical searches for couterintelligence purposes. This would avert
the need to rely on assertion of inherent Presidential powers in
this area and would make it easier to use material thus obtained in
eventual prosecutions.
The FBI has a problem in providing sufficient financial incen-
tives to its Agents who must work in New York City, which in turn
makes it difficult to retain counterintelligence specialists in that
Field Office for substantial periods of time. If the FBI determines
that legislation is required to address this problem, the Committee
is prepared to work with the FBI to develop a suitable legislative
approach.
The Committee recommends that the FBI and the Justice De-
partment develop improved means of prosecuting foreign intelli-
gence officers or agents who enter the United States illegally or
under non-official cover and who engage in intelligence support
functions without actually passing classified information. This
could result in legislative proposals in the next Congress.
Although the Committee has not recommended legislation re-
garding assistance to defectors, it is quite possible that the Perma-
nent Subcommittee on Investigations of the Committee on Govern-
mental Affairs will make such recommendations when it completes
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its inquiry into that matter. The Intelligence Committee expects to
work closely with the Permanent Subcommittee on this issue.
The Committee supports recent Defense Department efforts to
develop a counterintelligence polygraph program with strict qual-
ity controls, modeled on the Air Force's successful Seven Screens
program. The Committee recommends that the Armed Services
Committee either propose legislation to establish a permanent au-
thority for this polygraph effort or extend the current test program
under which DoD is operating and set a date by which the issue of
permanent authority will be decided.
Deficiencies in congressional security have prompted the Com-
mittee, in conjunction with the Committees on Governmental Af-
fairs and Rules and Administration, to propose that the Senate es-
tablish a Senate security office with responsibilities in the areas of
personnel and information security. The office would be established
by Senate Resolution.
The Committee has not recommended any legislation at this time
to deal with the unauthorized disclosure of classified information.
It believes that consideration of this issue should be postponed
until appeals are completed in the Morison case and the applicabil-
ity of the federal espionage statutes to leaks and other disclosures
has been decided. In addition, the Committee believes that there
are significant administrative steps that can and ought to be imple-
mented more quickly, in particular the adoption of procedures to
govern the authorized disclosure of classified information.
G. RESPECT FOR INDIVIDUAL RIGHTS
A free society cannot allow the fear of foreign adversaries to un-
dermine the constitutionally protected rights that define the true
character of our nation. This principle has guided the Committee
in its review of counterintelligence and, security programs. As
President Reagan stated on June 29, 1985:
[W]e can counter this hostile threat and still remain
true to our values. We don't need to fight repression by be-
coming repressive ourselves. . ". . But we need to put our
cleverness and determination to work and we need to deal
severely with those who betray our country. We should
begin by realizing that spying is a fact of life and that all
of us need to be better informed about the unchanging re-
alities of the Soviet system. . . . There is no quick fix to
this problem. Without hysteria or finger pointing, let us
move calmly and deliberately together to protect freedom.
The Committee's recommendations seek to strengthen U.S. coun-
terintelligence and security measures without violating constitu-
tional rights or upsetting the delicate balance between security and
freedom. A broad range of improvements can be made without ad-
versely affecting the rights of individuals, and the additional tools
needed for counterintelligence and security purposes can be made
subject to reasonable safeguards that minimize intrusion into the
privacy of American citizens.
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II. THE HOSTILE INTELLIGENCE THREAT
The hostile intelligence threat to the United States is severe, and
it confronts the Government and the American people with in-
creasingly serious challenges. The threat spans all types of intelli-
gence operations from traditional human espionage to the most so-
phisticated electronic devices. Every kind of sensitive information
is vulnerable, including classified government information, emerg-
ing technological breakthroughs and private financial transactions.
Foreign intelligence services also sometimes target the political
process, seeking both information and influence.
What has made the threat more vivid to the Congress and the
public are the many espionage cases that surfaced publicly in the
last few years. During 1984-86, twenty-five people have been con-
victed or have pleaded guilty to charges of spying against the
United States. Another person charged with espionage, Edward Lee
Howard, has defected to the Soviet Union; a Soviet employee of the
United Nations has pleaded "no contest" to espionage charges; and
several foreign diplomats have been detained and/or ousted be-
cause of their espionage activities. The upsurge in espionage pros-
ecutions began in the late seventies; and FBI Director William H.
Webster said in 1984 that the espionage cases that came to public
attention were "merely the tip of the iceberg." The Committee be-
lieves it is vital for the Senate and the public to be aware of the
full dimensions of the threat, technical as well as human.
A. DAMAGE TO NATIONAL SECURITY
National policymakers must recognize as clearly as possible the
extent and gravity of the damage to national security interests
caused by hostile intelligence operations. Based on the public and
classified record, the Committee has found the aggregate damage
in recent years to be far greater than anyone in the U.S. Govern-
ment has yet acknowledged publicly. The Committee has reviewed
the actual and probable injury resulting from 'recent espionage
cases, technical security compromises and technology transfer. The
inescapable conclusion is that the damage was immense:
U.S. military plans and capabilities have been seriously com-
promised;
? U.S. intelligence operations were gravely, impaired;
U.S. technological advantages have been overcome in some
areas;
U.S. diplomatic secrets were exposed to the scrutiny of our
adversaries; and
Sensitive aspects of U.S. economic life were subject to con-
stant Soviet monitoring.
Foreign intelligence services have exploited human and technical
vulnerabilities to penetrate some of the most vital parts of our de-
fense, intelligence and foreign policy structure, including many Ex-
ecutive branch agencies and the Congress. A sober examination of
the damage is essential to make rational decisions on policy initia-
tives and resources allocation for counterintelligence and security
programs.
In assessing the military damage, the Committee agrees with an
estimate by a senior FBI official that the espionage cases over the
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past several years have involved billions of dollars of actual and po-
tential damage to U.S. military programs. The cases primarily in-
clude John Walker and Jerry Whitworth, James Harper, William
Holden Bell, Thomas Cavanagh, Christopher Cooke and Ernest For-
brich.
Walker-Whitworth
Although the assessment in the Walker and Whitworth cases is
still incomplete, their information may have enabled the Soviets to
read some of the U.S. Navy's most secret messages to the fleet
from the 1960's to the time of their arrests in 1985 and also possi-
bly reduced the U.S. lead in anti-submarine warfare. The crypto-
graphic material passed by John Walker and Jerry Whitworth was
exceptionally harmful, because the Soviets could use it to decipher
encrypted U.S. Naval communications. Vitaly Yurchenko, the
Soviet KGB defector who later returned to the Soviet Union, told
U.S. authorities that the Soviets read over a million coded mes-
sages as a result.
(An official assessment of the damage, prepared by the Director
of Naval Intelligence and a senior Justice Department official, is
provided in Appendix A.)
Harper
In 1979-81 James Harper passed to Polish intelligence a huge
array of materials pertaining to the survivability of the Minute-
man missile system and to U.S. defenses against ballastic missile
attack. He obtained the information from a private firm doing con-
tract research for the U.S. Army Ballistic Missile Defense Ad-
vanced Technology Center in Huntsville, Alabama. Harper received
approximately $250,000 for documents whose loss Army experts
have rated as "beyond calculation." He also provided computer
data-base tape available through his contacts in Silicon Valley.
Harper's largest single delivery occurred in 1980, when he took
some 100 pounds of classified reports to Warsaw, where a team of
20 KGB experts flown in from Moscow declared them to be ex-
tremely valuable. KGB Chairman Yuri Andropov commended the
Polish intelligence unit handling Harper for its efforts. (An account
of the Harper case prepared by the Defense Security Institute is
provided in Appendix B.)
Bell
William Holden Bell was recruited by a Polish intelligence offi-
cer operating under commercial cover. As a project manager in the
Advanced Systems Division, Radar Systems Group at Hughes Inter-
national Corporation, Bell was responsible for development and
promotion of the radar fire control product line of tank vehicles.
From 1978 to 1981, Bell supplied Polish (and presumably Soviet) in-
telligence extensive classified documents on the Covert All-Weath-
er Gun System [CAWGS], a proposed tank gun using Low Probabil-
ity of Intercept Radar [LPIR] or "quite radar." LPIR uses a dis-
guised radar signal that is difficult for enemy targets to identify as
radar; an enemy is thus prevented from taking evasive action or
using the radar signal for directing return fire. (An account of the
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Bell-Zacharski case prepared by the Defense Security Institute is
provided in Appendix C.)
Cavanagh
The defense contractor case with the greatest potential for dev-
astating harm involved Thomas Cavanagh, an engineer at Nor-
throp Corporation. He was arrested in December, 1984, for attempt-
ing to sell classified documents on Stealth technology to the Sovi-
ets. The FBI intercepted his attempt, and FBI agents posing as
KGB officers made the arrest after giving him $25,000 for the docu-
ments. While no serious compromise actually occurred, FBI Direc-
tor Webster has said that Cavanagh's documents contained "the
core of the Stealth technology" which had "cost this country over
$1 million an hour to develop." (An account of the Cavanagh case
prepared by the Defense Security Institute is provided in Appendix
D.)
Cooke
Lt. Christoper Cooke, deputy commander of an Air Force Titan
missile crew, was charged with passing classified information to
the Soviets on U.S. strategic missile capabilities in 1980-81. While
the damage was serious, the charge was dismissed because Air
Force prosecutors had offered him immunity to find out if he was a
part of a larger spy ring (which he apparently was not).
Forbrich
Ernest Forbrich, a West German auto mechanic, was arrested in
1984 in Florida after buying a classified military document from an
undercover agent posing as an Army officer. Forbrich appears to
have been a conduit who passed U.S. military secrets to East
German intelligence, and he admitted selling documents to the
East Germans for 17 years. Forbrich traveled frequently to the
United States, contacting former U.S. military personnel who had
served in West Germany. Although he was convicted of espionage,
none of the former U.S. military personnel whom Forbrich contact-
ed was charged.
The espionage damage to U.S. intelligence over the past decade
has been as great as the harm to military programs. The cases that
surfaced in 1985?Howard, Pelton, Chin and Pollard?represent a
severe blow to U.S. intelligence, with Howard, and Pelton doing the
greatest harm because they compromised collection efforts directed
at high-priority targets in the Soviet Union. Other recent cases in-
volved FBI Agent Richard Miller, Army counterintelligence spe-
cialist Richard Craig Smith, and CIA employees Sharon Scranage
and Karl Koecher.
Howard
Edward Lee Howard, a former case officer dismissed by the CIA,
was accused of selling intelligence secrets to the Soviets and subse-
gut' ntly defected to Moscow. Howard probably gave the Soviets in-
formation on sensitive CIA operations in Moscow.
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Pelton
Ronald Pelton, a former communications specialist with the Na-
tional Security Agency from 1965 to 1979, was convicted in 1986 of
selling the Soviets information about a highly classified U.S. intel-
ligence collection project targeted at the Soviet Union. Other as-
pects of the damage caused by Pelton that did not surface at the
trial have not yet been completely evaluated.
Chin
Larry Wu-tai Chin gave the Chinese an inside view of U.S. intel-
ligence reporting on China and related topics for decades, first as a
translator for the U.S. Army and then as a translator and foreign
media analyst for the CIA. Chin was a "plant" who received intelli-
gence training before his employment by the Army in 1943. His re-
porting was highly praised by Chinese officials.
Pollard
Jonathan Jay Pollard, a civilian intelligence analyst with the
Naval Investigative Service, pleaded guilty in 1986 to the charge of
illegally passing classified documents to Israel. Pollard obtained a
wide array of intelligence reports on the Middle East for his Israeli
contacts.
Miller
FBI Agent Richard Miller injured the entire intelligence commu-
nity, not just the FBI, when he provided the Soviets in 1984
(through his Russian emigre lover Svetlana Ogorodnikova) a docu-
ment outlining overall U.S. foreign intelligence collection prior-
ities.
Smith
Richard Craig Smith, a former Army counterintelligence agent,
was charged in 1984 with selling information to Soviet agents in
Tokyo identifying U.S. double agents being operated against Soviet
intelligence. Smith was acquitted in 1986 after asserting as his de.-
fense that be had been working under the direction of CIA opera-
tives in Honolulu.
Koecher
Karl Koecher, a naturalized U.S. citizen of Czech origin, worked
as a translator for the CIA in the 1970s. He and his wife were ar-
rested in 1984 as they prepared to fly to Switzerland. By then, the
FBI had sufficient information to establish that Koecher was
trained and sent to the United States in the 1960s to work as a
Czech "illegal" and penetrate U.S. intelligence. Koecher was able
to give Czech intelligence everything he knew about such sensitive
CIA information as he was provided in his job as a translator.
Scranage
Sharon Scranage, a CIA operations support assistant in Ghana,
was convicted in 1985 of turning over classified information, includ-
ing the identities of CIA case officers and clandestine sources, to
Ghanaian intelligence officials.
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In addition to the damage to classified U.S. military and intelli-
gence programs, hostile intelligence services have acquired sensi-
tive technological data in the United States, Western Europe,
Japan and elsewhere. Soviet acquisition of U.S. technology has sig-
nificantly reduced the time it took the Soviets to develop new
weapons systems and field countermeasures to U.S. systems. A
recent example is the case of Manfred Rotsch, a Director of Plan-
ning for a prominent West German aerospace company, who was
arrested as a Soviet agent. Rotsch was in a position to transfer de-
tailed manufacturing information on Western weapon systems to
the KGB, and the case points up the vulnerability of U.S. advanced
technology released in coproduction or licensing programs. The re-
search and development cost savings to the Soviet Union from ille-
gal Western technology acquisition are believed to be enormous.
The Ministries of Defense Industry and Aviation Industry alone
are estimated to have saved half a billion rubles (roughly $700 mil-
lion at official conversion rates) between 1976 and 1980, although
that figure, probably reflects operating cost savings as well as R&D.
In the diplomatic field the recent discovery of bugged typewriters
in the U.S. embassy in Moscow exposed an operation of some dura-
tion. For years, the Soviets were reading some of our most sensitive-
diplomatic correspondence, economic and political analyses, and,
other communications.
More difficult to assess, yet with enormous danger to the United
States, is the Soviet interception of U.S. communications from col-
lection facilities throughout the world, including Soviet diplomatic
establishments in the United States and an extensive site at
Lourdes, Cuba. The Soviets could monitor many U.S. domestic tele-
communications channels, including most satellite links and cer-
tain ground-to-ground transmissions. While the risk to military se-
crets from poor communications security is widely understood, the
U.S. business community is also highly vulnerable.
Taken together, the damage to national security from espionage,
technology theft and electronic surveillance amounts to a stagger-
ing loss of sensitive information to hostile intelligence services. As
an open society, the United States already allows its adversaries
unfettered access to vast amounts of information that must be
shared widely so that our political system can function democrat-
ically and the process of free scientific inquiry can be most produc-
tive. Our openness gives hostile intelligence services the ability to
focus their efforts on those few areas of our government and socie-
ty where confidentiality is required.
The following discussion of the hostile intelligence threat to the
United States is designed to give the Senate and the American
people a better appreciation of the challenges we will continue to
face in the future. It is based upon an assessment prepared by the
intelligence community at the Committee's request. By understand-
ing the nature and scope of ongoing hostile intelligence efforts,
public officials and private citizens alike can better understand
why the Committee recommends increased emphasis on counterin-
telligence and security programs. There is much that the ordinary
citizen can do to strengthen the nation's defenses, especially if the
individual works for the federal government, a government con-
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tractor, or a high-tech industry or research program. The key re-
quirement is knowledge of the dangers.
B. SOURCES OF THE THREAT
Among foreign intelligence services, those of the Soviet Union
represent by far the most significant intelligence threat in terms of
size abilit and intent to act ainst U.S. interests. In fact, the ac-
tivities of the Warsaw ? act country an u an in e igence services
are primarily significant to the degree that they support the objec-
tives of the Soviets. The threat from intelligence activities by the
People's Republic of China (PRC) is significant but of a different
character, as explained below. The intelligence activities of North
Korea, Vietnam and Nicaragua pose a lesser, but still significant,
threat to U.S. foreign policy interests, although these countries
have only a limited official presence in the United States.
Many other countries?hostile, allied, friendly and neutral?
engage in intelligence operations against the United States. While
these activities cannot be ignored, they do not represent a compa-
rable threat. Nonetheless, in 1985, arrests for espionage included
U.S. Government employees who had passed classified information
to Israel and to Ghana.
I. Soviet Union
The KGB and the GRU are the two principal Soviet intelligence
organizations. The KGB (or Committee for State Security) main-
tains internal security in the USSR and, as a secret intelligence
service, collects intelligence and conducts covert political influence
operations (termed "active measures") abroad. The GRU (or Chief
Directorate for Intelligence) is the Soviet military intelligence orga-
nization and engages only in foreign intelligence activities.
In no other country in the modern world have intelligence and
security services played such a crucial, long-term role in sustaining
a government and controlling its citizens. In recent years, the KGB
has become a vital tool for protecting the Communist Party at
home and implementing its policies worldwide, especially through
energetic espionage and covert action operations both against
Western governments and in the Third World. (Covert action ef-
forts are coordinated with the International Department of the
Communist Party, which has lead responsibility for worldwide
Soviet "active measures," including propaganda and political influ-
ence operations.) Soviet military intelligence came into its own
during and just before World War II, and the GRU aggressively
supplements the KGB with espionage and massive technical sur-
veillance operations. The GRU coordinates and supports Soviet
SIGINT and overhead photography and trains foreign revolution-
ary cadres and insurgents. In the operational Soviet military,
"Spetsnaz" (Special Forces) units have an overseas role as special-
purpose commando forces capable of covert infiltration, sabotage
and assassination operations.
The highest Soviet collection priority is accorded to policy and
actions associated with U.S. strategic nuclear forces. Other high
priority subjects are key foreign policy matters, congressional in-
tentions, defense information, advanced dual-use technology, and
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U.S. intelligence sources and methods. The Soviets also target
NATO intensively, partly as a means to obtain U.S. foreign policy
and military information; recent arrests in West Germany and
Greece are indicative of the successes of the USSR in targeting
U.S. and NATO classified weapons systems.2 The Soviets heavily
influence the collection activity of the Cuban and Warsaw Pact
services, in effect expanding their own collection resources through
exploitation of the ethnic ties that other services can use in their
recruitment efforts, as well as the normally less stringent U.S. con-
trols on the activity of non-Soviet visitors and representatives.
The Soviets acquire much of the information they need through
non-clandestine means?diplomatic activities, trade representa-
tives, visitors, students, and other open inquiry. They carefully
select participants in exchange programs to maximize access to in-
formation of intelligence interest. The Soviet government also has
access to computerized U.S. and other Western reference systems,
to U.S. Government programs designed to facilitate legitimate dis-
semination of information, and to open literature ranging from
technical journals and industry publications to the news media.
Soviet collection efforts are further aided by the absence of effec-
tive U.S. Government controls over foreign visitors and indirect ex-
ports.
The Soviets aggressively screen information on Western technol-
ogy to avoid technological surprise and to improve their economy
and weapons systems. The methods used to acquire technology will
depend largely on the cost and the risk involved. It is likely that
increased controls on trade with the Soviets and on Soviet visitors
and official personnel will cause changes in Soviet collection tech-
niques. Thus, more use of clandestine methods to acquire technolo-
gy is likely when it cannot be obtained in other ways.
2. Warsaw Pact and Cuba
The intelligence services of Poland, East Germany, Czechoslova-
kia, Bulgaria, Hungary and Cuba not only serve their own national
interests, but also act as surrogates for Soviet intelligence. While a
member of the Warsaw Pact, Romania has looser ties to the Soviets
in the intelligence arena. Recent cases demonstrate the aggressive-
ness of the Warsaw Pact services. In 1983, an employee of the Bul-
garian trade office in New York was arrested for espionage based
on evidence that he bought a secret document on security proce-
dures for American nuclear weapons. The Bell and Harper cases il-
lustrated the effectiveness of Polish intelligence in penetrating U.S.
defense industry. East German agents arrested in the United
States over the past three years include a women courier in a KGB
espionage network and a prominent scientist attempting to recruit
American scientists.
The recent interagency report on Soviet Acquisition of Militarily
Significant Western Technology documents fully the relationship
between Soviet intelligence and the Warsaw Pact services. The
2 This Report concentrates upon the direct hostile intelligence threat to the United States and
does not include the counterintelligence and security implications for the United States of hos-
tile intelligence activities that target U.S. allies or alliances. The Committee will examine these
matters in its continuing oversight of U.S. counterintelligence and security programs.
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KGB, more than the GRU, relies on the collection capabilities of
the East German, Polish, Bulgarian and Czech services. The suc-
cess of the East European services can be attributed partly to the
Western misperception that their countries are less of a threat
than the USSR. East European nationals operating in most West-
ern countries have fewer (or no) travel restrictions and, in some
cases, find it easier to work in a Western cultural and commercial
environment. At the same time, however, the West also has easier
access to Warsaw Pact countries than to the Soviet Union. Reci-
procity considerations limit the West's ability to impose extreme
controls on East Europeans.
The Cuban DGI has long been under the direct influence of
Soviet intelligence. While in recent years the Cubans have empha-
sized operations against anti-Castro emigre groups and illegal ac-
quisition of embargoed U.S. technology and equipment, Cuban in-
telligence also targets U.S. Government plans and intentions, espe-
cially regarding Latin America. There are indications, dating back
many years, of Cuban support and training for Puerto Rican ter-
rorists and of propaganda operations to influence segments of
American public opinion.
3. People's Republic of China
The PRC has several intelligence services whose personnel are
represented among the approximately 1,500 Chinese diplomats and
commercial representatives located at some 70 PRC establishments
and offices in the United States. They also have some access to the
approximately 15,000 Chinese students and 10,000 individuals ar-
riving in 2,700 delegations each year. PRC intelligence also seeks to
exploit the large ethnic Chinese community.
The implications of PRC intelligence activities are markedly dif-
ferent from those of the Soviet Union and its surrogates. The forces
of the Warsaw Pact are arrayed against those of NATO; and the
Soviet Union's expansionist policy poses a current and continuing
global challenge to the United States and its allies. The PRC is not
now in strategic competition with the United States. Indeed, the
United States has fundamental interests in maintaining friendly
relations with the PRC and promoting its modernization, to include
selective upgrade of its military defensive capabilities. Intelligence
collection priorities of the two major communist powers reflect
their respective foreign policies. The Soviet intelligence services
have urgent requirements with respect to U.S. plans, intentions
and capabilities, as well as technology; the PRC services concen-
trate primarily on advanced technology not approved for release so
as to further PRC military and economic modernization in the
1990s and beyond.
Despite these differences, the PRC intelligence threat continues
to be significant. The evidence of PRC espionage in the Chin case
and from other counterintelligence sources justifies alerting Ameri-
can citizens to the current risks. The recent detention of a British
national employed by the New York Times as a reporter in China
reflects an increased emphasis by PRC intelligence and security
services on surveillence of foreign visitors. PRC efforts to cultivate
Chinese-Americans in scientific and technical fields should be rec-
ognized as including potential intelligence approaches, as long as
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the PRC continues to mount espionage operations against classified
U.S. programs and embargoed technology.
4. Other Countries
Other countries also conduct human intelligence operations in
the United States, both overt and covert. Their targets include
largely the same range of interests as those of the Soviets and the
PRC, including high technology and political, military and econom-
ic policies and intentions that might affect the particular country.
Among the common activities of foreign intelligence services in
this country are attempts to penetrate emigre communities. A
large number of expatriate political and emigre groups in the
United States are viewed as a threat by authorities in the former
homelands. From a national security viewpoint, these activities are
less significant than those of the USSR and its allies, although
they are clearly in violation of U.S. sovereignty and may have an
effect on the U.S. political system. Foreign intelligence services
also target ethnic groups in the United States, directly or through
front organizations, to influence U.S. decisions on foreign aid, trade
agreements and other issues where foreign governments have
strong interests.
Two recent incidents illustrate the threat from non-communist
governments. In 1984, a vocal opponent of the current regime in
Taiwan was murdered in California, and the Taiwanese govern-
ment later admitted that officials of its intelligence service were
implicated. Also in 1984, the South African military attache was
expelled from the United States for activities incompatible with his
diplomatic status. In 1978, the Committee issued a public report on
Activities of "Friendly" Foreign Intelligence Services in the United
States which examined, as a case study, South Korean operations
in the early-to-mid 1970s. The Pollard case has raised questions as
to whether the Israeli government, or significant elements thereof,
have engaged in more extensive espionage operations in the United
States. While the strategic threat in such cases in less than from
Soviet bloc or PRC operations, the harm to specific U.S. foreign
policy interests and legal safeguards is still substantial and unac-
ceptable.
C. HUMAN INTELLIGENCE TECHNIQUES
The hostile intelligence threat can be divided roughly between
the human side and the wide array of technical collection oper-
ations. The human dimension begins with the trained intelligence
officer, dispatched under official or nonofficial cover to operate
abroad. Intelligence officers recruit and handle agents employed by
foreign governments, industries, or political organizations; and
they "co-opt" other members of their own government and citizen-
ry for particular assignments. In general, hostile intelligence
HUMINT operations fall into the following categories:
"Legal" operations are conducted by intelligence officers
under official cover. The term does not mean "lawful," because
case officers recruit and handle espionage agents. The FBI esti-
mates that at least 30% of the 1,500 Soviet officials in the U.S.
are KGB or GRU staff officers. Reportedly, over 3,000 KGB of-
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ficers and approximately 1,500 GRU officers are posted outside
the Soviet Union.
"Illegals" are trained intelligence officers sent abroad, often
with false identities, who maintain no overt contact with their
government. The number of Soviet illegals and their activities
are very difficult to estimate.
"Co-optees" are officials or visitors tasked to do particular
tasks, such as spotting potential recruits or servicing drops.
Many Soviet officials are co-opted, as are many official visitors
and some emigres.
"Agents" are American or third-country nationals recruited
for current operational purposes or, in some cases, as "sleep-
ers" to be activated at a later date. Apart from the agents sur-
faced publicly in espionage or illegal export cases, the FBI has
numerous other suspected agents under investigation.
Despite the development of increasingly sophisticated technical
means of collection, the human -agent continues to be the-nthst im-
fitartant -key to satisfying a nation's intelligence needs. An intelli-
gence community study summarized the human threat in the fol-
lowing terms:
The Communist countries depend to a large degree on
their human collection networks throughout the world to
satisfy their U.S.-related intelligence requirements?re-
quirements ranging from acquisition of advanced technolo-
gy, location and determination of the quality of strategic
and conventional military forces, and assessment of U.S.
reaction to international political incidents, to discovery of
techniques used by U.S. counterintelligence.
An analysis of hostile human intelligence operations against the
United States must address the role of the Soviet-bloc official pres-
ence in the United States; the non-official United Nations and "il-
legal" hostile presence; the recruitment of agents; the Soviet
Union's systematic technolog.y acquisition program; and covert po-
litical action operations (or "active measures").
1. Official Presence
The spearhead of the Soviet, other Warsaw Pact and Cuban in-
telligence collection effort is their official presence in the United
States. In 1985, there were about 4,250 diplomats, commercial offi-
cials and other representatives from Communist countries in the
United States, 2,100 of whom were from the Soviet Union and the
other Warsaw Pact countries. The Soviet Missions to the United
Nations in New York have approximately 275 accredited diplomats;
the Department of State has recently mandated a reduction in this
number to 170 by April 1988. The Soviets have 320 accredited per-
sonnel at their Embassy in Washington and Consulate General in
San Francisco, in comparison to the approximately 200 American
diplomatic personnel assigned to the Soviet Union. Additional Sovi-
ets come to the United States on temporary assignment, as do
American personnel to the USSR.
The FBI estimates that at least 30 percent of the Soviet bloc offi-
cials and representatives in the United States are professional in-
telligence officers of the Soviet KGB and GRU or one of the other
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East European intelligence services. Under diplomatic cover, Soviet
bloc diplomatic personnel accredited to the United States and to
the U.N. missions in New York have complete immunity from
criminal prosecution for espionage. (By contrast, Soviet nationals
employed by the U.N. Secretariat, such as Gennadiy Zakharov, do
not have such diplomatic immunity.)
Soviet bloc use of official representatives for espionage purposes
is well documented. In the Walker and Miller cases, Soviet officials
involved with handling American agents left the country shortly
after their agents were arrested. In other instances, successful U.S.
counterintelligence operations have led to the exposure of Soviet
officials engaged in clandestine communications with agents, such
as by servicing "drops." Soviet bloc intelligence officers under dip-
lomatic cover also seek to use overt contacts with Americans as an
opportunity to develop long-term relationships providing an oppor-
tunity to assess and exploit vulnerabilities for espionage recruit-
ment purposes. In one case in the early 1980s, a Soviet official who
attempted to recruit a Congressional staff member was expelled
from the country. The staff member had reported the approach and
cooperated with the FBI's investigation, which led to exposure of
the Soviet official's intelligence recruitment efforts.
The sheer volume of intelligence activity is increased by the
number of officials from other Communist countries in the United
States as well as the large number of establishments from which
they can operate. Soviet bloc and PRC establishments?government
offices and U.N. missions?are located in seventeen different cities.
The largest numbers are in New York (92), Washington (34), Chica-
go (11), San Francisco (9), Houston (9); and Newark (9). While most
officials are concentrated in New York and Washington, all but the
Soviets are allowed to travel almost anywhere they wish in the
country, subject to notice requirements and certain other condi-
tions under the Foreign Missions Act in the case of most 'Warsaw
Pact countries.
Within the Soviet services, GRU personnel are targeted primari-
ly against military and scientific and technical information, while
KGB personnel in its First Chief Directorate (foreign intelligence)
are assigned to one of four operational departments or "lines"?
Scientific and Technical (Line X), Political (Line PR), Counterintel-
ligence (Line KR), or Illegals Support (Line N). S&T personnel spe-
cifically target U.S. advanced technology. Often, clandestine collec-
tion of S&T information is preferred over buying or developing
technology because it is cheaper and provides ,the best short-term
results, although there is a risk factor in theft. KGB Line PR offi-
cers target governmental policy information and, frequently, seek
to advance Soviet objectives via contacts with persons of influence
or through covert activities. Certain Line PR officers focus specifi-
cally on the Congress. Line KR officers have the security responsi-
bility for preventing defections of Soviet personnel and particular
concern for penetration of the U.S. intelligence community, al-
though all lines are tasked with this important function as a
matter of general concern. "Illegals" support personnel comprise a
small group that helps maintain those networks.
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2. Other Aspects of the Hostile Intelligence Presence
The Soviet Union is effectively using U.N. organizations, particu-
larly the Secretariat, in the conduct of its foreign relations and as
a cover for the activities of Soviet intelligence officers and co-
optees. The United Nations employs, worldwide, approximately 800
Soviet nationals as international civil servants, with about 300 of
them in New York. Approximately one-fourth of the Soviets in the
Secretariat in New York are considered to be intelligence officers,
and many others are co-optees who have been told to respond to
KGB and GRU requests for assistance. The Soviet intelligence serv-
ices also use their developed agents in the United Nations to collect
information on U.N. activities; to spot, assess and recruit American
and foreign-national agents; to support worldwide intelligence oper-
ations; and to collect scientific and technical information on the
United States.
The KGB has succeeded in infiltrating its officers into the U.N.
bureaucracy, with some reaching positions of authority. The KGB
has held the position of Assistant to the Secretary General since
Viktor Lesiovskiy held the post under U Thant. The current Assist-
ant is a KGB China expert. The Soviets take full advantage of U.N.
personnel procedures such as liberal sick leave. This permits KGB
U.N. employees to be absent as often as they desire, enabling them
to carry out intelligence activities further abetted by the compara-
tive freedom of movement enjoyed by U.N. employees.
While the State Department has recently required Soviet U.N.
employees to give notice of unofficial travel outside the New York
area, they are not subject to the geographical off-limits restrictions
placed on Soviet diplomats in response to equivalent restrictions
placed on travel by U.S. diplomats in the Soviet Union. Little can
be done about the number of Soviets employed by the United Na-
tions in view of the large number of Americans similarly em-
ployed.3
There have also been reports of the U.N. Secretariat being used
for clandestine activity by Warsaw Pack officials. Currently, State
Department conditions for travel in the United States by U.N. Sec-
retariat employees from the Soviet Union still do not apply to U.N.
employees from other Warsaw Pact countries.
The hostile intelligence threat is further expanded by the
number of Soviet bloc commercial entities in the United States
that can be used as cover for clandestine collection activities. These
commercial establishments include the USSR's AMTORG and IN-
TOURIST, the Polish-American Machinery Company (Polamco),
and similar East German, Czechoslovak and other East European
entities. Through their legitimate business activities, intelligence
officers in those firms have access to Americans in business, indus-
try and government who are potential targets for agent recruit-
ment. A Czech, Pole or other East European is frequently able to
contact U.S. companies without arousing the suspicion that contact
by a Soviet official would occasion. The primary interests of hostile
collectors operating under commercial cover are economic data and
'For a more detailed discussion of the Soviets at the United Nations, see the Committee's
report on Soviet Presence in the UN Secretariat, S.Rpt. 99-52 (May, 1985).
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advanced technology. Altogether, nearly 70 U.S.-chartered corpora-
tions, although owned by Warsaw Pack countries, function legally
as U.S. corporations and thus are subject to few restrictions on ac-
quiring technologies. East Europeans employed by these firms are
subject to no travel controls or notice requirements.
In addition to the threat posed by their official establishments,
U.N. employees and front companies, hostile intelligence services
have infiltrated intelligence collectors into the United States
among the thousands of exchange students, commercial and cultur-
al visitors, tourists and ship crewmen who enter this country each
year. Some 2,000 Soviets come to the United States each year
under the auspices of the Soviet Academy of Sciences, the Ministry
of Trade, the State Committee for Foreign Economic Relations, and
other Soviet agencies. They collect not only overt information for
non-defense industries, but also classified and proprietary data, in
response to intelligence tasking on behalf of military research
projects. The number of U.S. universities and institutes subject to
focused Soviet efforts reportedly increased from 20 to over 60 from
the late 1970s to the early 1980s.
Soviet trade or scientific representatives travel to California
about four times a month in delegations ranging from two to ten
people, supplementing the 41-person staff of the Soviet San Fran-
cisco Consulate. It is reasonable to assume that, just as 30-40 per-
cent of the personnel in each Soviet establishment are intelligence
officers, the same percent of the personnel in a Soviet visiting dele-
gation are intelligence officers and/or co-optees. Thus, the Soviets
are able to target more intensively the 1,500 high-technology corn-
panies in the area known as "Silicon Valley," which constitute the
largest collection of electronics and computer manufacturers in the
United States.
In recent years, a number of intelligence agents of the USSR,
Cuba and other countries have been uncovered among the flood of
immigrants into the United States from Communist countries.
While not all of these agents are considered classic "illegals," in-
vestigations have determined that many have been sent with intel-
ligence missions.
The deep-cover "illegals" dispatched to the United States in the
emigre flow and through other means by Soviet bloc and PRC in-
telligence services represent a particularly perplexing problem be-
cause of their completely clandestine manner of operation. They
generally enter the United States under false identities with forged
or stolen documents. They often acquire U.S. citizenship, and they
have attempted to assume the appearance of ordinary Americans
having no connection with their home country and intelligence
service.
An example of a KGB illegal agent was disclosed publicly by the
FBI in 1981. Col. Rudolf Hermann (a pseudonym) had earlier been
identified and recruited to work as a U.S.-controlled double agent.
Hermann's 25-year career with the KGB had begun in the 1950s
while he was serving in the military of a Soviet-bloc country. His
initial training in espionage techniques such as secret writing and
cipher systems took place in East Germany. More advanced train-
ing was received in the Soviet Union.
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Before coming to the United States, Col. Hermann practiced his
intelligence skills in West Germany and Canada. He and his family
entered the United States illegally in 1968, and he established a
home and found work as a free-lance photographer. He did not di-
rectly collect classified information, but performed support func-
tions such as locating drop sites for other agents and spotting po-
tential recruits. He was also prepared to conduct more active col-
lection operations in the event of the expulsion of Soviet officials in
time of crisis or war. Col. Hermann's son had enrolled in an Ameri-
can college, under KGB orders, and was preparing to seek U.S.
Government employment, possibly in a sensitive position.
3. Recruited Agents
Visitors and emigres are no substitute for recruited agents inside
sensitive U.S. programs. The spy of the 1980s has been described as
a new breed, motivated more by greed than by ideology. However,
the cases uncovered in 1985 suggest more complex motivations; po-
litical beliefs, intrigue, and job dissatisfaction or alienation also
appear to have been reasons for engaging in espionage. Most Amer-
icans arrested for espionage in recent years actually volunteered
their services to the other side.
Soviet intelligence efforts include active programs outside the
United States against U.S. Government personnel and business-
men. Even those recruited agents who live in the United States are
frequently met in third countries to avoid U.S. domestic counterin-
telligence. Vienna, Austria, was used as the meeting place for John
Walker, Ronald Pelton and Edward Howard.
KGB residencies abroad target principally American embassy
employees with access to classified information. Other targets in-
clude American journalists, businessmen, and scientists who can
furnish sensitive technological information, as well as students
with job prospects in sensitive positions for long-range develop-
ment.
The widespread use of foreign nationals in U.S. embassies and
consulates compounds the problems faced by U.S. intelligence in
most hostile countries. Over 9,800 foreign nationals are so em-
ployed for a number of reasons, including cost considerations. De-
spite their value in dealing with local government organizations be-
cause of their language fluency and understanding of local customs
and regulations, their threat to the security of U.S. operations
must be recognized.
The employment of foreign nationals in U.S. establishments in
the Soviet Union and other Eastern European countries, as well as
in numerous other countries where the Soviet bloc has influence,
affords hostile security services the opportunity to conduct a varie-
ty of observations of U.S. personnel and technical penetrations of
U.S. facilities. The foreign nationals' personal observations are
used by the KGB to assess possible recruitment targets among the
American personnel (e.g., those with financial, family, alcohol, or
drug problems), as well as to identify U.S. intelligence personnel.
The U.S. Embassy in Moscow faces particular problems in this
regard. Soviet nationals operate the carpool, including making me-
chanical repairs and, until recently, operated the telephones,
cleaned the offices, and performed all the maintenance tasks in the
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embassy compound. Approximately 200 Soviets are employed at the
embassy, contrasted to fewer than a dozen Americans in the Soviet
establishments in Washington. The Soviets strictly limit the use of
local hires in their own embassies?apparently concerned that if
they can succeed, so could U.S. intelligence.
U.S. military installations and personnel abroad continue to at-
tract major Soviet intelligence interest, both to gain potential
access to military plans and to acquire sensitive technical data. It
is probable that third-country nationals are used to target U.S.
bases, just as they are at embassies. There are over 120,000 third-
country nationals employed at such installations; and 930 of these
have accesses, of which 371 are at the Secret level, to see certain
classified material.
4. Soviet Methods of Recruitment
A study by the Defense Security Institute outlines some of the
most common Soviet methods of recruiting and handling agents.
The agents who steal most of the U.S. classified information lost
through human espionage are not foreign nationals, legal or illegal,
but Americans already employed in sensitive positions who are re-
cruited, or who volunteer, to provide information to hostile intelli-
gence services.
Social occasions and situations are a favorite hunting ground for
Soviet bloc intelligence officers, such as diplomats or U.N. employ-
ees, on the look-out for potential recruits. So are restaurants, bars
and clubs in the vicinity of defense contractor facilities. The intelli-
gence officer looks for a combination of access to desired informa-
tion and some motivating factor or factors that might be exploited
for drawing a person into espionage. Ideological affinity is not fre-
quently encountered, although it is a desired inducement. Black-
mail is a last resort. The most common motivation is financial
gain, often combined with conscious or unconscious anger at the
employer.
In typical fashion, an intelligence officer proceeds with his culti-
vation of a prospect by stages, attempting to establish a pattern of
payment for seemingly harmless services. The aim is to avoid scar-
ing off the prospect with premature demands for classified informa-
tion. After classified material is passed, the officer may shift the
mode of communication from personal meetings to more secure
methods such as "dead drops"?that is, the placement of a package
in an inconspicuous agreed location where it can be picked up by
the recipient at a later time.
Recruitment of this sort is a process of salesmanship, almost of
seduction. Soviet intelligence officers vary in their skill, but some
possess the finesse to do an effective job of cultivation without
rushing the potential agent. Most of our information concerns the
least successful recruitment attempts, such as those reported by
persons who become FBI-controlled double agents. KGB training
documents, however, describe instances of successful recruitment
involving bribery of employees with sensitive access.
In one case cited in KGB training materials, an intelligence offi-
cer spotted a possible recruit while serving as interpreter for a
Soviet scientist visiting the laboratory of a private U.S. company.
The KGB account states that the scientist was aware of his inter-
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preter's intelligence function and actively assisted him in that role.
The intelligence officer's attention was drawn during the visit to a
young lab assistant who seemed poorly dressed. When the Soviet
scientist offered to provide copies of a number of his writings to the
head of the laboratory, it was revealed that this assistant was
studying Russian and could assist in translating the material.
On this basis the Soviet intelligence officer was able to cement
an acquaintance with the young worker during the deliberately
prolonged process of delivering the documents to the laboratory. As
suspected, the lab assistant was having financial difficulties. He
was married and attending graduate school and his job was a low-
paying one. The KGB officer developed a friendship with him over
the course of three months and then began requests for unclassi-
fied information in return for payment. Ultimately he persuaded
the lab employee to join him in the formation of a consulting firm
for the sale of scientific data, which the lab assistant would obtain
and the KGB officer would market. In furtherance of this business
venture, the lab assistant was persuaded to provide secret as well
as unclassified information.
This recruitment approach reflects both subtlety and ingenuity.
The prospective agent was never confronted with a stark proposal
to spy for the KGB, but was gradually drawn into such activity
through apparent friendship and an ostensibly legitimate business
arrangement. Similar techniques apparently were used by Genna-
diy Zakharov, the Soviet physicist employed at the United Nations
who was arrested on August 23, 1986, for buying classified docu-
ments from an FBI-controlled double agent whom he had attempt-
ed to recruit. See Appendix E for the indictment and an FBI affida-
vit filed in this case. The recruitment of William Bell, which also
used a consulting ploy, is described in Appendix C. The finesse with
which a good intelligence officer can draw a person into espionage
is a strong argument for informing the FBI when one is ap-
proached by foreign officials, as this Report recommends later.
Advice from counterintelligence experts can help to prevent trage-
dies.
Recruitment is more commonly accomplished on the basis of
positive inducement than by coercive approaches such as black-
mail, which are the last resort for the hostile intelligence service.
Blackmail produces the least satisfactory, because least willing,
sort of agent. But such methods are nonetheless used with some
frequency when preferable methods fail or are unavailable. This is
particularly true outside the United States, and especially in Com-
munist countries where hostile intelligence services control the
total environment. Entrapment through contrived circumstances
can easily be arranged. Sexual entanglements, currency exchange
violations and black market involvement are favorite recruitment
ploys. U.S. diplomatic personnel, among others, have been targets
of hostile intelligence services using these techniques.
Visitors with intelligence value are routinely approached by pro-
vocateurs with proposals of this kind, and ensuing arrests or
threats of arrest or exposure serve as leverage for enlistment in es-
pionage. For example, employees of U.S. firms with defense con-
tracts who visit the Soviet Union or Eastern Europe will be given
special attention and assessment for possible intelligence exploita-
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tion. Visa applications reveal where an American works, and falsi-
fication of such information is itself an offense that can be used
against an American visitor. Whether active recruitment is at-
tempted depends upon whether the American provides indications
of susceptibility to inducement or coercion. While travel to Eastern
Europe is not, for the most part, discouraged, those who go can
reduce their vulnerability by not doing or saying anything that
could be recorded or photographed for future reference in the ar-
chives of the KGB.
In the final analysis, however, the most dangerous agents of all,
who account for the greatest losses of the most highly classified in-
formation, are not those who are laboriously recruited, but those
who walk in the door of a Soviet embassy somewhere and volun-
teer information for sale. For the "walk-in" as for the recruited
agent, the motivating factors are usually greed or indebtedness
plus an additional element of grievance or disgruntlement. The in-
dividual usually is dissatisfied with his or her job or harbors some
grudge against his organization or both.
Some characteristic signs that may betray an agent at work, if
security people and co-workers are sufficiently alert, include:
Attempts to obtain information when there is no need to
know and excessive curiosity about what others are doing;
Unauthorized removal of classified material from work areas
or introduction of cameras or recorders into work areas;
Repeated overtime or unusual work hours not required by
the job; and
Unexplained affluence.
Indicators of espionage are, unfortunately, generally much more
noticeable in retrospect than during the course of the crime. In
many cases, it is difficult to distinguish the spy from an exception-
ally hard worker. But suspicious activities such as those listed,
combined with job dissatisfaction or other disgruntlement, would
certainly provide grounds for heightened attention to an individ-
ual's actions. It was sensitivity to such behavior, after receiving a
security awareness briefing in the wake of the Walker-Whitworth
arrests, that led Jonathan Pollard's co-workers to alert the FBI, re-
sulting in his arrest and conviction for espionage. This Report later
recommends both improved security awareness programs and, in
some areas, personnel reliability programs that incorporate peer-
group cooperation.
5. Technology Transfer
The Soviet drive to achieve technological equality with the
United States and other Western countries has led the USSR to
commit enormous resources to the acquisition of open-source infor-
mation, unclassified but proprietary information, and high-technol-
ogy equipment that the West has agreed not to export to the Soviet
bloc. Soviet intelligence services actively engage in these efforts in
addition to their pursuit of U.S. secrets. As a result, the Western
lead in many key technological areas has been reduced, with seri-
ous economic and military consequences for the United States.
Moscow has devised two programs to obtain Western technology.
The first, under the Military Industrial Commission (VPK) of the
Presidium of the Council of Ministers, seeks to obtain military and
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dual-use hardware, blueprints, product samples and test equipment
to improve the technical levels and performance of Soviet weapons
and defense manufacturing equipment. By adapting design con-
cepts from the acquired hardware and documents, the Soviets
reduce their own research and development costs. In the early
1980s, more than 3,500 requirements were levied by the VPK each
year, with about one-third being satisfied. Some 60 percent of the
most significant acquisitions were of U.S. origin, although not nec-
essarily collected in the United States. Nearly half of the up to
10,000 pieces of military hardware and 20 percent of the 100,000
engineering and research documents the USSR acquires annually
worldwide are used by the Soviets to incorporate Western technolo-
gy into their military research projects. Most of the documents,
about 90 percent of which are unclassified, contain patented or
copyrighted proprietary information and are illicitly obtained.
The GRU is believed to have satisfied considerably more VPK re-
quirements than the KGB. This success is attributed partly to the
GRU's greater scientific orientation and its wider variety of tech-
nology-related cover positions. The approximately 1,500 GRU offi-
cers serving outside the USSR have scientific and technological col-
lection as an integral part of their responsibilities. The KGB S&T
unit, Line X, has nearly 300 officers on foreign assignment operat-
ing under cover of Soviet embassies, trade and commercial organi-
zations, as members of exchange groups, and as employees of inter-
national organizations (the United Nations Secretariat, for in-
stance, as in the case of Gennadiy Zakharov).
The second program, managed by the Ministry of Foreign Trade
and the KGB/GRU, seeks, through trade diversions, to acquire rel-
atively large amounts of dual-use manufacturing and test equip-
ment for direct use on production lines. Xhis program attempts to
obtain export-controlled microelectronic, computer, telecommunica-
tion machine-tool, robotic, diagnostic and other sophisticated
e ment. This program also utilizes both legal and illegal means.
Major Soviet collection efforts are targeted at microelectronics
fabrication equipment and computers; nearly one-half of detected
trade diversions fall into these categories. The acquisition of much
of the information concerning these high-technology areas is not
particularly difficult. Information is often available to the public
(and, therefore, accessible to the Soviets and their surrogates) from
U.S. Government agencies.
The Soviets and their allied intelligence services have for many
years been regular attendees of scientific, technical and industrial
conferences in the United States and abroad. The Soviets consid-
ered some of the information obtained from these conferences to be
among the most significant contributions to their military projects.
The VPK identifies those having the most potential; in recent
years, these have included conferences assembled by several well-
known professional engineering societies.
In addition, the Soviet Ministry of Foreign Trade and academic-
related collectors contribute to Soviet exploitation of open-source
Western information. The Ministry of Foreign Trade has hundreds
of trade organizations and companies around the world. KGB and
GRU officers operating under cover of these establishments collect
large quantities of data openly, in addition to that derived from
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their covert operations. The Ministry, as an independent collector,
helped meet about 15 percent of all fully satisfied VPK require-
ments during the late 1970s and early 1980s. It specializes in ac-
quiring microelectronics, manufacturing equipment and communi-
cations dual-use products.
Equipment is obtained through the use of dummy firms, false
end-user certificates and falsifications of export licenses by the So-
viets and professional trade diverters whom they hire. Many ad-
vances in Soviet microelectronics have been made possible by the
illegal acquisition of equipment from the West. The result, accord-
ing to U.S. Government estimates, has been a marked reduction in
the Western technological lead from about 10-12 years a decade
ago to about half that today.
Richard Mueller, a West German citizen, has been involved in il-
legal technology acquisitions for the Soviets for more than a
decade. Using dummy and front firms, he has diverted advanced
computers and microelectronics equipment of significant value to
the Soviets. Mueller was the moving force in the 1983 attempted
diversion to the USSR of several Digital Equipment Corporation
VAX super mini-computers that would have assisted the Soviets in
computer-aided design applications for microelectronics fabrication.
6'. Active Measures and Disinformation
"Active measures" and "disinformation" are terms for Soviet
covert action operations designed to implement Soviet policy goals
by attacking U.S. policy and by promoting a positive image of the
Soviet Union. They are significant weapons in the Soviet strategy
tb discredit and deceive the United States and its allies. The Sovi-
ets' principal techniques include the use of front groups, agents of
Influence, media manipulation and forgeries. The nature and scope
of Soviet "active measures" was spelled out in detail in published
hearings before the House Permanent Select Committee on Intelli-
.gencein 1982 and before the Senate Foreign Relations Subcommit-
tee on European Affairs in 1985.4 Deputy Director of Central Intel-
ligence John McMahon testified that the Soviets have a $3-4 bil-
lion program to influence public opinion in countries throughout
the world. It combines all forms of overt propaganda and covert po-
litical action, including systematic disinformation efforts.
"Disinformation" is a convenient label to describe a variety of
techniques. The classic example is forged documents used to dis-
credit the United States or to supply proof of Soviet propaganda
claims. Another method is to recruit and pay agents in foreign
news media to slant their reporting and plant false stories. The So-
viets also secretly fund and control front organizations and individ-
ual agents to promote pro-Soviet or anti-U.S. positions. The Soviets
themselves use the term "active measures" to describe their covert
disinformation and political influence operations.
4 Soviet Active Measures, Hearings before the Permanent Select Committee on Intelligence,
House of Representatives ; July 13-14, 1982, U.S. Government Printing Office (Washington:
1982).
Soviet Active Measures, Hearing before the Subcommittee on European Affairs, Committee on
Foreign Relations, United States Senate, September 12-13, 1985, U.S. Government Printing
Office (Washington: 1985).
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It is also fair to say that most overt Soviet propaganda is also a
form of disinformation because of its systematic distortion of reali-
ty to advance Soviet interests. Whenever a prominent Soviet citi-
zen addresses a foreign audience, his or her remarks are likely to
reflect a calculated effort to influence the audience. The same is
true of Soviet print and electronic media.
Every country tries to sell its viewpoint. What distinguishes the
Soviet effort are the immense resources and systematic controls
that are employed. Two organizations develop and implement the
Soviet "active measures" strategy: (1) the International Depart-
ment of the Communist Party of the Soviet Union, which coordi-
nates foreign policy and propaganda objectives and now includes
most of the work of the Party's former International Information
Department; and (2) Service A of the KGB's First Chief Director-
ate, which conducts covert political influence and forgery oper-
ations. The CIA has estimated that if the United States were to un-
dertake a campaign the size of the Soviet "neutron bomb cam-
paign" of the 1970s, it would cost over $100 million.
Currently, there is evidence of a major Soviet active measures
campaign against U.S. development of the Strategic Defense Initia-
tive (SDI). The Soviets are making every effort to convince a world
?
audience that SDI will destabilize an already precarious superpow-
er armaments balance. In addition, Soviet active measures directed
at U.S. allies, such as in West Germany and Japan, are designed to
sow distrust of American policies and to intensify financial and
commercial rivalries with the United States by holding out the
promise of favorable terms to the business communities in both
countries. Such techniques are more subtle than blatant forgeries,
which may be less effective in furthering Soviet objectives in so-
phisticated Western countries.
Soviet active measures efforts are- focused primarily on Third
World countries. The Soviets appear to employ massive active
measures currently in South Asia, in an effort to depict the United
States as interfering in the affairs of India, Pakistan and Bangla-
desh. The media in all three countries have consistently carried
stories to this effect. One long-running disinformation ploy con-
cerns alleged attempts by CIA to aid separatist movements in
India, thereby splitting the country, supposedly to America's eco-
nomic advantage. Another frequent theme is accusations of CIA bi-
ological warefare efforts in the region. Discrediting U.S. intelli-
gence agencies, particularly the CIA, has long been an important
objective of Soviet active measures.
In some cases Soviet active measures directly involve domestic
U.S. matters. During July, 1984, for example, the Soviets began a
widespread disinformation campaign to discredit the Los Angeles
Olympic Games and booster worldwide support for their boycott of
them. This campaign featured three forged documents purportedly
from racist groups, threatening Third World athletes with bodily
harm if they participated in the Olympic Games. Shortly after
their discovery, then-Attorney General William French Smith an-
nounced that the letters were KGB forgeries and part of a major
Soviet disinformation effort. It has been determined that these doc-
uments fit the pattern of other Soviet forgery operations and were
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part of the overall Soviet active measures campaign to discredit the
Reagan administration and its handling of U.S.-USSR relations.
A very recent forgery sought to implicate the Chairman of this
Committee. In August, 1986, U.S. news media received copies of a
forged letter purportedly from an official of the United States In-
formation Agency to Senator Dave ,Durenberger, purporting to dis-
cuss a proposed plan to exploit the Chernobyl nuclear power plant
disaster for propaganda purposes. Analysis of the forged letter re-
vealed that the letterhead and signature had been taken from a
copy of an entirely different letter from the USIA official to the
President of the Inter-American Defense Board. Ironically, the
USIA official's letter had alerted the President of the Inter-Ameri-
can Defense Board to an earlier forged letter, in Spanish, purport-
edly from the Board President to Chilean President Pinochet. The
circumstances of the earlier forgery indicated Cuban-Nicaraguan
involvment. (See Appendix F for copies of the forged letters and
the true letter.)
According to the CIA's 1982 assessment, it is sometimes hard to
judge the success of Soviet active measures because they "tend to
capitalize on and manipulate existing sentiments that are parallel
to or promote Soviet foreign policy objectives. Whenever a political.
movement supports policies that coincide with the goals or objec-
tives of Soviet foreign policy, the exact contribution of Soviet active
measures to that movement is difficult to determine objectively."
The CIA cites evidence that the Soviets themselves believe that
their efforts are worthwhile. They appear to consider the "neutron
bomb campaign" in Europe to be one of the most successful. On the
other hand, the more recent campaign against Pershing and cruise
missile deployment in Europe had much less impact. The FBI has
described Soviet operations in the United States, Moreover, as
"often transparent and sometimes clumsily implemented." The FBI
also states, "The American media is sophisticated, and generally
recognizes Soviet influence attempts."
As noted later in this Report, the U.S. Government has stepped
up efforts to expose Soviet disinformation and covert manipulation
worldwide. The State Department now regularly publicizes the
facts about Soviet forgeries and Soviet control of political organiza-
tions such as the World Peace Council, the Christian Peace Confer-
ence, and the 12th World Youth Festival.
The most sensitive aspect of the disinformation threat is Soviet
deception of U.S. intelligence as part of an attempt to confuse or to
manipulate the perceptions of U.S. policymakers. The Soviet mili-
tary doctrine of maskirovka and the KGB concept of dezinformat-
siya both emphasize the need for measures to mislead opposition
intelligence services and to create false perceptions that will influ-
ence Western policy and undermine strategic capabilities.
The U.S. intelligence community recognizes the danger of decep-
tion and has a community-wide program to assess systematically
the possibilities of successful Soviet efforts. The deception threat
has been a focus of the Committee's oversight in recent years, and
the Committee continues to support intelligence community efforts
to maintain vigilance in this area.
One major means of countering any Soviet deception efforts is to
leave our adversaries uncertain regarding the full extent of U.S. in-
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telligence collection capabilities. Steps to maintain the security of
U.S. human and technical intelligence capabilities make it much
more difficult for the Soviets to engage confidently or successfully
in deception efforts.
D. TECHNICAL COLLECTION OPERATIONS
Hostile intelligence services use the full range of intelligence-
gathering technologies to collect sensitive information from the
United States and our allies. Public discussion of technical collec-
tion methods is more difficult than the explanation of human intel-
ligence techniques, because we do not want to tell the Soviets just
how much we know about their operations. Countermeasures
against technical threats work best when the hostile service does
not recognize U.S. defenses and continues to conduct operations
that can be substantially neutralized. At the same time, however,
wider knowledge of the technical collection threat is essential to
develop better security awareness and to explain the need for
major resource investments. Technical threats include the intercep-
tion of communications, other forms of electronic surveillance, col-
lection of emanations from equipment, penetration of computer
systems, and photoreconnaissance.
I. Interception of Communications
The interception of electronic communications and deciphering
of machine-generated codes played a vital role in Allied intelli-
gence during World War II?although the methods of collection
were so sensitive that many aspects of these operations remained
secret for thirty years after the war. An Anglo-American team of
top mathematicians and cryptologists provided Allied commanders
with vital realtime intelligence on German and Japanese inten-
tions and plans. The interception of electronic communications and
the computer-assisted assault on crytographic systems remains a
central part of present-day signals intelligence.
The Soviet electronic monitoring effort represents a significant
worldwide threat to U.S. military and civil telecommunications.
This threat derives from large collection facilities that are operated
in the Soviet Union, as well as in other countries around the world,
such as Cuba. The Soviets also maintain a fleet of intelligence col-
lection vessels that operate worldwide?including off both coasts of
the United States. The latest of these vessels has been built from
the keel up specifically for this role, unlike earlier ships that were
reconfigured trawlers or other types of vessels. The Soviets also use
merchant ships and possibly commercial aircraft to perform collec-
tion operations against targets of opportunity.
A serious threat is posed by the Soviet intelligence collection fa-
cility located at Lourdes near Havana, Cuba. Established in the
mid 1960s, the site has steadily grown to its present size of about
2,000 technicians and is the most sophisticated collection facility
outside the Soviet Union.
Evidence of the seriousness of the threat to electronic communi-
cations was emphasized by the issuance in 1984 of National Securi-
ty Decision Directive No. 145, which concluded that "the compro-
mise of U.S. information, especially to hostile intelligence services,
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does serious damage to the United States and its national security
interests."
The technology to exploit U.S. electronic communications is
widespread, and many foreign countries use it extensively. Current-
ly, more than half of all telephone calls in the United States made
over any distance are vulnerable to interception. Calls that the
caller believes to be on less vulnerable circuits may be automatica-
ly switched to more vulnerable ones. The Soviet diplomatic facili-
ties at their Riverdale complex in New York City, at their consul-
ate in San Francisco and at their new Mt. Alto embassy in Wash-
ington all occupy high ground, thus providing superior opportuni-
ties for communications intercept. The "Silicon Valley" concentra-
tion of high technology centers and the government's sensitive fa-
cilities in Washington and New York are at risk of intercept be-
cause of these Soviet sites.
It is especially important for civilian agencies and the private
sector to understand the nature of the risk from Soviet intercep-
tion of their communications. The ' Defense Department and the
CIA have elaborate programs to inculcate communications security
awareness and to protect classified communications links. The mas-
sive Soviet surveillance efforts from Cuba and elsewhere demon-
strate, however, that the Soviet intelligence payoff from intercep-
tion of unsecured communications is immense. One reason is that
too many government officials and contractor employees discuss
classified matters on unsecure lines because of the difficulty and
expense of using currently available secure communications equip-
ment. Another significant problem is the Soviet ability to exploit
unclassified pieces of information that are relatively harmless in
isolation, but in the aggregate provide highly damaging insights
into U.S. capabilities. The Committee's classified Report contains
several examples of how both industrial and national security can
be harmed by such intercepts.
Public awareness of the hostile intelligence threat to domestic
communications is essential, because there are real limits to what
the U.S. Government can do to provide secure communications for
the private sector. Although this Report later discusses some gov-
ernment initiatives, the protection must depend on the willingness
of private organizations to invest in secure communications, not
only for their immediate self-interest, but for the larger interests of
the nation as a whole.
2. Other Forms of Electronic Surveillance
The Soviets have a long history of electronic attacks on the U.S.
Embassy in Moscow, dating back to the 1950s when a replica of the
Great Seal of the United States in the embassy was found to con-
tain an audio device. In the late 1970s, a Soviet antenna was found
in the chimney of the chancery. Additionally, Soviet and other hos-
tile intelligence services try to gain access to office or communica-
tions equipment in order to "read our mail."
The vulnerability of the U.S. Embassy in Moscow was drama-
tized vividly by the recent discovery of the technical compromise of
embassy typewriters. The typewriters were shipped to the Soviet
Union by unaccompanied commercial means, thus affording the So-
viets access to them. The compromised typewriters were used in
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the embassy for a significant period. What made this incident espe-
cially astonishing was that it occurred despite a similar discovery
in 1978, when security officers found that a shipment of IBM Selec-
tric typewriters destined for the U.S. Embassy had been shipped
from Antwerp to Moscow by a Soviet trucking line. The potentially
compromised equipment identified in 1978 was returned to the
United States before being placed in service. Unfortunately, the So-
viets again gained access to several similar IBM machines that
were not recognized for a substantial time as being compromised.
As noted earlier, foreign nationals with access to U.S. embassies
and other establishments abroad provide a means for hostile intel-
ligence services to make other electronic penetrations. Offices, resi-
dences and cars are all vulnerable to the planting of audio or video
devices by foreign nationals with access, legitimate or otherwise, to
the U.S. target.
Although all high technical threat U.S. diplomatic posts ? have
eliminated the authorized access of foreign nationals to the vicinity
of classified work areas, there remains a serious problem of
common walls with uncontrolled adjacent areas from which techni-
cal attacks and even physical entries can be mounted. Offices and
residences are also vulnerable to planted devices when access by
foreign nationals is not properly monitored and technical counter-
measures are not routinely employed.
In 1985, the Secretary of State's Advisory Panel on Overseas Se-
curity, chaired by Admiral Bobby R. Inman, provided to the Intelli-
gence Committees of the House and Senate a classified annex to its
report, covering, electronic and physical penetration of U.S. diplo-
matic facilities. The Inman Panel described the Soviet technical
surveillance effort as "a technologically advanced and sophisticated
program obviously supported by tremendous resources." The report
went on to describe scores of discoveries of Soviet and Soviet-bloc
technical exploitation of U.S. diplomatic premises. Noncommunist
host nationals have also been detected mounting technical penetra-
tions of U.S. missions.
The threat to office and communication equipment from the ex-
ploitation of unintended emissions is greater at U.S. facilities
abroad than in the domestic environment, where the risks and
costs of detection are considerably higher. Consequently, as noted
by the Stilwell Commission on DOD Security Policies and Practices,
the previously rigid requirements for expensive equipment shield-
ing have been modified to prescribe shielding only when inspection
verifies that a threat exists. There is, however, no question that
such a potential threat does exist at especially sensitive locations
in this country.
3. Penetration of Computer Systems
The hostile intelligence threat to U.S. computer systems is mag-
nified by the enormous growth in the number and power of com-
puters and the vast amount of data contained in them. The Gener-
al Services Administration has estimated that the number of U.S.
Government computers has increased from 22,000 in 1983 to over
100,000 in 1985. The increase in the number of computers in use in
industry, business and other private sectors has been equally stag-
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gering. Computers multiply enormously the information to which a
single individual may obtain access.
There is a real possibility that the Soviets may exploit these vul-
nerabilities. Computers and computer software are high-priority
items of both the VPK's and the Ministry of Foreign Trade's tech-
nology acquisition programs by legal or illegal means. The Soviet
and other Warsaw Pact intelligence services have also obtained in-
formation concerning the methods used in the West to provide
computer security, and constantly seek more knowledge. Over the
past decade, the Soviets have acquired over 300 different types of
U.S. and other Western computer hardware and software, which
has enabled them to develop the technical ability to penetrate at
least some U.S. automated systems. The Soviets are making a con-
certed effort to access state-of-the-art computers, including super-
computers.
The first Annual Report of the National Telecommunications
and Information Systems Security Committee, completed in Sep-
tember, 1985, emphasized the challenge of computer security in
both government and the private sector:
Future technologies, particularly the growth of desktop
computers, the increased local storage of data and the
widespread networking, will exacerbate existing security
vulnerabilities as well as create new ones. As this technol-
ogy has grown, the resources and awareness needed to
allow security technology to grow with it have not kept
pace. The use of traditional? COMSEC, physical security,
personnel security, and administrative security protection
techniques does not sufficiently protect the type of infor-
mation-sharing that is becoming increasingly common in
new automated information systems, especially distributed
processing and networked systems.
As storage costs decrease, the amount of data stored at
the mainframes increases, creating more appealing tar-
gets. As the uses of networks and remote access expand,
more and more users will have potential access to a broad-
er range of information. As end-users of computers contin-
ue to increase their technical competence and computer
literacy, the technical and management automated sys-
tems security task of protecting data and controlling users
has fallen even further behind.
The NTISSC Annual Report admitted that "the full extent of the
threat to and vulnerabilitis of automated information systems is
unknown." Specific cases of unauthorized access to government
computer systems have been detected and reported widely, includ-
ing cases of access to and manipulation of Defense Department
data in order to divert military equipment and weapons. There is
no reason to believe that hostile intelligence services or their
agents will ignore similar opportunities.
4. Imagery
The final category of technical intelligence collection is photo-
graphic or imagery intelligence?collection by means of overhead
vehicles against adversary installations. The history of this disci-
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pline dates to the use of observation balloons as platforms for pho-
tography during the Civil War and then use of aircraft for the
same purpose during the two World Wars. The use of U-2 aircraft
for imagery collection was extensively publicized in the 1960s.
Today U.S. and Soviet imagery intelligence is collected primarily
by satellite. The use of photographic satellites by both sides has
gained wide recognition in the context of verification of compliance
with arms control limitations.
Intelligence collection against the United States and U.S. inter-
ests worldwide using photographic means, or imagery, is carried
out principally by the Soviet Union (with some assistance from its
Warsaw Pact allies and Cuba). The Soviet imagery effort is mainly
conducted from spaceborne and airborne platforms. The continued
proliferation of Soviet satellites has given the USSR the concomi-
tant capability for increased photoreconnaissance of its most obvi-
ous targets?U.S. and NATO strategic and tactical military forces,
and crisis situations any place in the world. In addition to these
uses of photoreconnaissance, the Soviets employ it to conduct earth
resource surveys for economic and agricultural data.
Soviet spaceborne satellite reconnaissance capabilities are sup-
ported by the capability of military and civilian aircraft to collect
photographic intelligence. The potential value of airborne recon-
naissance conducted by the Soviet airline Aeroflot, which, in April,
1986, resumed operations to the United States, and by other
Warsaw Pact national airlines' flights remains of concern. These
Communist country overflights in the United States are under the
jurisdiction of an FAA committee.
The Soviets continue to pursue intelligence-related manned space
programs. In February, 1986, they launched a new type of modular
space station, the MIR, replacing the older SALYUT-type modules.
The MIR, as did the SALYUT, gives the Soviets the capability to
perform a number of functions in space, including the use of cos-
monauts to augment their other reconnaissance and surveillance
efforts. The apparent military usefulness of their manned space
program has been indicated in the Soviet announcement that
"earth surface surveys" have been conducted; however, no photo-
graphs were ever published.
The seriousness of the imagery collection threat posed by Soviet
and Bloc, overflights in the NATO area can be illustrated by two
examples. In March 1985, Norway banned or restricted Soviet and
Bloc passenger airplanes from several airports on the basis that
they were conducting electronic surveillance. Bulgarian aircraft
were specifically mentioned as having departed from scheduled
routes to overfly sensitive areas. In West Germany, some 1,500
Soviet Bloc overflights occurred in a three-month period in 1985, of-
fering a tremendous opportunity for both electronic and photo-
graphic reconnaissance.
E. SUMMARY
Until the espionage arrests and disclosures of technical security
compromises in 1985, the American people and most Government
officials did not fully appreciate the magnitude and intensity of the
hostile intelligence threat, despite previous espionage prosecutions
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and knowledge of the vulnerability of U.S. communications to
Soviet intercept operations. The barrage of revelations in 1985-86
has changed these perceptions, so that today there is a better rec-
ognition in Government and in the private sector of the continuing
efforts by hostile intelligence services to collect sensitive informa-
tion by human and technical means. There is also a greater aware-
ness of Soviet efforts to influence the political process through
"active measures" directed at countries throughout the world.
The Committee intends that this description and analysis of the
hostile intelligence threat serve as a benchmark against which to
measure further evolution of the threat in the years ahead and the
effectiveness of counterintelligence and security programs. It is
also important that the American people?especially responsible of-
ficials of private organizations in business and industry, science
and technology, and international affairs?remain aware of the
changing threat from foreign intelligence services. Such awareness
does not mean exaggerating the dangers or engendering an atmos-
phere of suspicion. Rather, it is part of a mature understanding of
the reality of U.S. relations with other countries in the world of
competing national interests. The political and military rivalry be-
tween the Soviet bloc and the West is a fact of life that requires
constant attention to ongoing and emerging Soviet bloc intelligence
operations.
The hostile intelligence threat is, of course, only half the equa-
tion. On the other side are U.S. activities to counter this threat:
counterintelligence, to uncover and to neutralize hostile intelli-
gence activities; and security, to protect against both known and
undiscovered hostile efforts by setting obstacles in the path of
anyone seeking unauthorized access to sensitive information, activi-
ties, equipment or facilities. The rest of this Report examines the
nature and effectiveness of those critical U.S. programs.
III. COUNTERINTELLIGENCE
An effective response to the foreign intelligence threat requires a
combination of counterintelligence and security measures. The
Committee believes it is important to distinguish between counter-
intelligence efforts and security programs, while ensuring that
both are part of a national policy framework that takes account of
all aspects of the threat. The best way to explain the difference is
to say that counterintelligence measures deal directly with foreign
intelligence service activities, while security programs are the indi-
rect defensive actions that minimize vulnerabilities. The FBI, CIA,
and the counterintelligence components of the Defense Department
have primary responsibility for operations and analysis dealing di-
rectly with foreign intelligence services. In addition, the Committee
and the Executive branch have included within the national coun-
terintelligence policy structure those diplomatic and regulatory
policies that control the numbers and movements of particular
countries' foreign intelligence service officers and co-opted agents
in the United States and at U.S. facilities abroad.
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1
A. NEED FOR A COUNTERINTELLIGENCE STRATEGY
By statute and executive order, counterintelligence functions are
divided among the FBI, CIA, and components of the Defense De-
partment. The FBI has the lead within the United States, while
the CIA is in charge abroad. The Defense Department, which deals
with threats to classified defense information worldwide, divides its
counterintelligence functions among the military services, DIA,
and NSA. No single official is responsible for the full range of
counterintelligence activities below the level of the President and
his National Security Adviser. Given these circumstances, there is
a constant risk of fragmentation and conflict among organizations
with different methods and priorities.
The Committee has found that communication and cooperation
among U.S. counterintelligence agencies have improved greatly in
recent years and are probably better today than at any time since
World War II. Nevertheless, more needs to be done to ensure that
agencies learn from each other's experiences and that progress
achieved in one area can have benefits for others. The issue is not
just communication and operational coordination to bridge jurisdic-
tional boundaries. Better long-range planning is also needed to
make optimal use of limited resources worldwide against well-orga-
nized and sophisticated adversaries.
Soviet bloc and PRC intelligence operations do not respect geo-
graphic boundaries. Thus, in many recent cases Americans who
committed espionage in the United States met their foreign intelli-
gence service contacts abroad. The targets and techniques needed
for counterintelligence success transcend agency jurisdictions. For
these and other reasons, the Chairman and Vice Chairman of the
Committee stated in October, 1985, that the Executive branch
should develop a national counterintelligence strategy that estab-
lishes national objectives and integrates the planning and re-
sources of each agency to achieve these objectives. The President's
interim report to the Intelligence Committees indicated agreement
with this proposal, and in fact the Executive branch is now prepar-
ing such a document.
The organizational structure is already in place, fortunately, to
develop a national counterintelligence strategy. Under the Nation-
al Security Council, there is a Senior Interdepartmental Group for
Intelligence (SIG-I) chaired by the Director of Central Intelligence.
Within that framework, an Interagency Group for Counterintelli-
gence (IG-CI), chaired by the FBI Director, develops national policy
recommendations and provides a forum for agreement on new ini-
tiatives. A small secretariat for the IG-CI has expert personnel
drawn from the FBI, CIA, and Defense Department. This staff eval-
uates the threat and recommends policy initiatives for counterin-
telligence and countermeasures improvements.
The IG-CI, assisted by its secretariat, is the proper place to de-
velop a national counterintelligence strategy. This structure en-
sures joint participation by the FBI, CIA and Defense Department;
and other interested departments and agencies (such as the State
and Justice Departments) are also represented on the IG-CI. Ulti-
mate responsibility for resolution of policy issues rests with the Na-
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tional Security Council, which has recently brought onto its staff
an experienced FBI counterintelligence specialist.
The President's interim report to the Intelligence Committees in-
dicates that the IG-CI has, in fact, been tasked to frame strategic
guidance of the sort proposed by this Committee. As noted earlier,
member agencies are now engaged in the drafting process.
Findings and Recommendations
1. Findings. ?The IG-CI has been chartered to frame national
counterintelligence objectives and an associated strategy (or master
plan) to further those objectives, and to submit the objectives and
plan for consideration by the SIG-I and thence the NSC. The Com-
mittee is pleased to learn that Executive branch agencies are ac-
tively drafting this document. This is a positive response to propos-
als presented by the Chairman and Vice Chairman in testimony
before the Permanent Subcommittee on Investigations in October,
1985.
2. Recommendation. ?The National Security Council should ap-
prove a statement of major counterintelligence objectives and a
strategy, i.e., a time-phased master plan, to attain those objectives.
The House and Senate Intelligence Committees should receive this
document. An effective oversight mechanism should be established
to ensure that major programs and associated budgets, legislative
proposals, and other key actions are validated against the master
plan, constitute judicious and operationally efficient allocation of
resources, and achieve all feasible synergism. There should also be
a process for continuing review and evaluation.
3. Recommendation. ?The National Foreign Intelligence Program
should provide for, and Congress should authorize, augmentation of
the staff that assists the IG-CI to ensure effective performance of
its expanded responsibilities regarding the development and imple-
mentation of the national counterintelligence strategy.
B. HOSTILE PRESENCE LIMITS
An effective national counterintelligence strategy should include
diplomatic and regulatory policies that control the numbers and
movements of hostile intelligence service officers and co-opted
agents in the United States and at U.S. facilities abroad. Each
year, in the formal classified justification for funds for its Foreign
Counterintelligence Program, the FBI advises Congress that, even
with increased resources, the FBI cannot cope with the hostile in-
telligence threat unless measures are also taken to reduce the
number of potential intelligence officers in this country. Where the
numbers cannot be reduced, controls on their movements can assist
the FBI in making better use of limited resources.
The Foreign Missions Act of 1982, which created a new Office of
Foreign Missions in the State Department, provided the authority
to exercise greater control over the activities of foreign officials in
this country. Although such control is normally exercised within
the framework of diplomatic reciprocity, the Act also facilitates ac-
tions to enhance U.S. security and counterintelligence interests.
Limits on numbers of foreign representatives allowed into the
United States are usually left to Executive branch discretion, but
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the Leahy-Cohen amendment in 1985 established a policy of equiva-
lence between the number of Soviet embassy and consular person-
nel in the United States and the number of U.S. embassy and con-
sular personnel in the Soviet Union. The 1985 Roth amendment
provided for regulation of travel by U.N. Secretariat personnel
from countries whose diplomats are subject to such regulations
under the Foreign Missions Act.
National Security Decision Directive (NSDD) 196, signed by the
President on November 1, 1985, established national policy objec-
tives for restricting and controlling the hostile intelligence pres-
ence and travel in the United States. In addition to implementing
the Leahy-Cohen and Roth amendments, the Administration has
imposed Foreign Missions Act travel regulations on representatives
of Warsaw Pact countries whose intelligence services act as Soviet
surrogates, has begun reducing the number of Soviet representa-
tives in the United States, and has supported extension of Foreign
Missions Act controls to commercial and other entities used by hos-
tile intelligence services in this country. Consistent with these
Presidential objectives, Committee Members introduced legislation
to establish a policy of equivalence for the size of the U.S. and
Soviet Missions to the United Nations (Leahy-Cohen), to broaden
the scope of the Foreign Missions Act to cover commercial and
other entities controlled by foreign governments (Durenberger-
Leahy), to require registration by commercial entities controlled by
Warsaw Pact governments (Roth-Nunn), and to require imposition
of Foreign Missions Act travel regulations on representatives of
Warsaw Pact countries (Roth-Nunn).
The 1985 Roth amendment has been implemented by imposing
travel restrictions on U.N Secretariat representatives/employees
from the Soviet Union, Afghanistan, Vietnam, Libya, Iran and
Cuba. The State Department's Office of Foreign Missions Travel
Bureau Service has been required for use by U.N. Secretariat per-
sonnel from East Germany, Czechoslovakia, Bulgaria, and Poland.
Most recently, it was publicly announced that effective October 1,
1986, the Soviet Missions to the United Nations will be required
gradually to decrease their size from 275 to 170, to be accomplished
by April, 1988.
In 1986, the Committee received three reports on Executive
branch efforts to control the hostile intelligence presence. The first
was a report on the respective numbers and treatment of officials
from countries that conduct intelligence activities in the United
States contrary to U.S. interests and the numbers and treatment of
U.S. officials in those countries. Under the Leahy-Huddleston
amendment of 1984, this requirement covers the Soviet bloc, Cuba,
China, and any other nation designated on the basis of the threat
posed by its intelligence or terrorist activities. The second was a
report from the Secretary of State and the Attorney General on
plans for implementation of the policy of substantial equivalence
between U.S. and Soviet embassy and consular personnel pursuant
to the Leahy-Cohen amendment of 1985. The third was the annual
report of the State Department's Office of Foreign Missions, which
regulates many aspects of the treatment of foreign government es-
tablishments and officials in the United States.
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These reports reflect uneven progress in limiting the hostile in-
telligence presence in the United States. While the planned reduc-
tion in the size of the Soviet U.N. mission is an important step for-
ward, the intent of the Committee in recommending the Leahy-
Cohen amendment was also to reduce the number of Soviet embas-
sy and consular personnel in the United States. The plan for imple-
mentation of diplomatic equivalence does not achieve that objec-
tive. Instead, there is a potential for actually increasing the
number of Soviet embassy and consular personnel in the United
States if the State Department carries out its plan for a Soviet con-
sulate in New York and permitting a U.S. consulate in Kiev. Ac-
cording to the plan received by the Committee, the number of
Soviet diplomatic and consular officials will increase from 320 to as
many as 350, depending on the number of Americans sent to Kiev.
Current plans call for thirty U.S. officials in Kiev. Apart from the
merits of the need for so large an establishment in Kiev, the Com-
mittee believes that at a minimum the Soviets should be required
to staff their New York consulate within the 320 ceiling on overall
representation in the United States. The State Department should
plan accordingly to staff the U.S. embassy and consulates in the
Soviet Union within a comparable 320 ceiling.
The Committee supports the State Department's plan to reduce
the Soviet work force at the U.S. Embassy in Moscow. This plan
would also allow the staffing of a small consulate in Kiev within
the 320 ceiling and still permit some reduction in Soviet embassy
and consular positions in the United States. Such reductions could
be made, for example, by refusing to allow the Soviets to replace
officials expelled from the United States for espionage-related ac-
tivity. Further reductions should be possible as the Americans who
replace Soviet employees learn to do their jobs more efficiently.
Apart from issues of numerical equivalence, the State Depart-
ment through the Office of Foreign Missions has made considerable
? progress in imposing more effective controls. In addition to regulat-
ing the travel of Soviet bloc representatives and U.N. Secretariat
personnel, the Office of Foreign Missions (OFM) is requiring Soviet
bloc embassies to secure prior OFM approval of purchases or leases
of property for housing as well as business purposes. A Soviet re-
quest to construct a new apartment building in their existing com-
pound in Riverdale, New York, has been denied because it is
deemed excessive to Soviet housing needs. On May 28, 1985, the So-
viets were advised that their procurement within the United States
of building equipment, materials, or services for the remaining con-
struction work at their Mt. Alto site in Washington, D.C., must be
arranged through OFM. In response to a Soviet request to expand
its recreational facilities at Pioneer Point, Maryland, OFM has told
the Soviets they must abide by the same terms and conditions ap-
plied to construction on the site of U.S. Embassy recreational prop-
erty in-Moscow.
The Committee believes the OFM program is one of the most im-
portant recent counterintelligence initiatives, and is recommending
legislation to broaden OFM's authority to impose travel controls on
certain Soviet bloc-controlled businesses located in the United
States. The Committee also supports OFM's plans to require Soviet
bloc missions to lease residential units from OFM, to purchase tele-
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communications goods and services through OFM, and to use OFM
banking services. OFM's effectiveness will be enhanced by the Ad-
ministration's decision to give Ambassador status to its current Di-
rector. (By law, his successor will have such status.) The Committee
supports the decision to make this appointment, so as to strengthen
the Director's ability to deal with foreign representatives.
The need to combat the hostile intelligence presence must also be
taken into account in developing policies and regulations for ex-
change programs. There is clear evidence that some exchange visi-
tors are used for clandestine intelligence purposes. While foreign
policy considerations may dictate greater openness between the
United States and certain countries, they must be balanced against
the counterintelligence risks. The President's interim report to the
Intelligence Committees states that efforts are made to do this.
Overseas, the hostile presence problem has three separate dimen-
sions. The first is employment of Foreign Service Nationals (FSNs)
at U.S. diplomatic missions. While most attention has been focused
on the large number of Soviet nationals employed at our Embassy
in Moscow, similar concerns arise in other countries. The Inman
Panel on Overseas Security recommended reducing the number of
FSNs at embassies in other Warsaw Pact countries and segregati-
ing them from sensitive areas and positions in other missions. The
State Department has developed a plan to reduce the number of
FSNs in Moscow to 95 and to begin such reductions elsewhere.
The Committee supports both the Moscow effort and the modest
FSN reductions planned in Eastern Europe. The Administration re-
quested $6.3 million for FY 1986 and $28.3 million for FY 1987 to
meet the costs of such staffing changes; the urgent supplemental
appropriations bill met $12.0 million of that need. The Committee
urges the State Department to reprogram the remaining needed
funds, especially if construction funds appropriated in the urgent
supplemental cannot be fully expended in FY 1987.
A second aspect of the problem is the employment of over
120,000 foreign nationals at U.S. military installations. Close to
1,000 of these personnel have access to some classified information;
roughly 370 have access to some Secret material. The Stilwell Com-
mission recommended stricter personnel security safeguards in
such cases, and consideration should also be given to reducing the
military's reliance on foreign nationals, who are much more likely
to be recruited by a foreign intelligence service than are U.S. per-
sonnel. The Committee recognizes that status of forces agreements
limit the hiring of U.S. citizens to perform unclassified work at
overseas bases, but the number of foreign national employees with
authorized or unauthorized access to classified information can and
should be reduced to the minimum feasible level. The Committee
supports the tighter investigation requirements for foreign employ-
ees that have been recommended by the Stilwell Commission.
The State Department plays a key role in developing and imple-
menting these policies and in ensuring that they take into account
other U.S. foreign policy objectives. Components of the State De-
partment vary in their understanding and appreciation of counter-
intelligence concerns. It is important to provide better training and
other information on the foreign intelligence threat to State De-
partment officials. While the State Department is not a counterin-
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telligence agency, its officials should be kept fully apprised of the
threat so they can be better prepared to support Foreign Missions
Office and other policies designed to implement a national counter-
intelligence strategy.
Findings and Recommendations
4. Recommendation.?Recent Administration initiatives and leg-
islation (Leahy-Cohen amendment, Roth amendment) should be im-
plemented in a manner that places effective limitations on the
numbers and activities of hostile intelligence service personnel in
the United States and takes into account our foreign policy and in-
telligence collection efforts. The limit of 320 on permanently ac-
credited. Soviet embassy and consular personnel should not be in-
creased, and the State Department should plan to staff the U.S.
embassy and consulates in the Soviet Union so as to require some
reduction in Soviet embassy and consular personnel in the United
States.
5. Recommendation.?Congress should enact legislation establish-
ing a policy of substantial equivalence between the size of the
Soviet and U.S. missions to the United Nations in line with the Ad-
ministration's plan to reduce the size of the Soviet U.N. Mission.
11. Recommendation.?Congress should strengthen the authority
of the Office of Foreign Missions to regulate commercial and other
entities controlled by foreign governments and require registration
of commercial entities controlled by Warsaw Pact governments.
7. Recommendation.?The Committee supports efforts through
the Office of Foreign Missions to enhance U.S. counterintelligence
effectiveness, including new initiatives to require Soviet bloc mis-
sions to acquire residential property, telecommunications services
and equipment, and banking services through OFM. The Commit-
tee also supports the granting of Ambassador status to the current
OFM Director.
8. Recommendation.?Policies and regulations for exchange pro-
grams with other countries should take counterintelligence con-
cerns into account.
9. Recommendation.?The State Department should reprogram
whatever funds are needed to supplement the $12.0 million appro-
priated through FY 1987 to implement plans to replace a substan-
tial number of Foreign Service Nationals with Americans at U.S.
missions in the Soviet Union and other high-risk countries. The De-
fense Department should reduce the use of foreign nationals with
access to classified information at DoD installations abroad, and
Congress should appropriate sufficient funds to replace them with
Americans. Funds for this purpose should be requested in the FY
1988 budget, and DoD should determine what changes may be re-
quired in mandated military ceilings overseas.
10. Finding.?In conjunction with the CIA, FBI and DoD counter-
intelligence components, the State Department should have a pro-
gram of formal training sessions, briefings and intelligence report-
ing arrangements to provide more and better information to State
Department officials on the foreign intelligence threat and U.S.
counterintelligence requirements. The Committee notes with pleas-
ure that progress is being made in this area.
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C. COUNTERINTELLIGENCE AWARENESS PROGRAMS
One key to a successful counterintelligence strategy is thorough
analysis of the hostile intelligence threat and communication of
the results to those who need to take countermeasures. Current ef-
forts range from the FBI's Development of Counterintelligence
Awareness (DECA) program for briefing defense contractors to the
improved assessment of Soviet deception, disinformation and active
measures. Informing the public, industry and other government
agencies can have a direct payoff, as in the case where a student at
Columbia University , contacted the FBI about a Bulgarian ex-
change visitor after seeing a TV documentary on espionage that de-
scribed conduct similar to that of the Bulgarian. The student's
report led to an FBI offensive double agent operation resulting in
the arrest of a Bulgarian intelligence officer. At a classified level,
U.S. counterintelligence agencies must work with a great variety of
government programs and security officials to provide tailored in-
formation and analysis.
On November 1, 1985, the President issued NSDD-197 requiring
each U.S. Government agency to establish a security awareness
program for its employees, including periodic formal briefings on
the threat posed by hostile intelligence services, and to provide for
the reporting of employee contacts with nationals of certain foreign
powers. These programs are to be tailored to the sensitivities of
particular work and designed so as not to intrude into employees'
privacy or freedom of association.
According to the NSC staff, department and agency heads have
responded positively and have given high priority to this enter-
prise. The State Department contact reporting directive, which has
been provided to the Committee, serves as a good model because it
specifies reporting procedures clearly and identifies those countries
that require the greatest attention. Civilian agencies without ex-
tensive national security responsibilities also appear to be taking
this policy initiative seriously.
The Committee strongly supports this policy and is recommend-
ing that a similar security awareness program be established for
the U.S. Senate. The Committee has used the State Department's
new program as its model.
The Larry Wu-tai Chin case highlighted the threat posed by Chi-
nese intelligence operations. As indicated in section II of this
Report, however, the PRC intelligence threat differs greatly from
the Soviet one. These differences require development of new coun-
terintelligence approaches geared to the special characteristics of
the PRC threat. In particular, the FBI should develop specialized
threat awareness briefings geared to the unique problems posed by
PRC operations. At the same time, FBI threat awareness programs
do not?and should not?leave the implication that lawful associa-
tion with or assistance to Chinese technical and scientific research-
ers is a sign of disloyalty to the United States.
Another aspect of counterintelligence awareness is the knowl-
edge by agency security officials of when to bring a matter to the
attention of a U.S. counterintelligence agency. In the Edward Lee
Howard case, CIA security officials failed to alert and involve the
FBI in a timely fashion. The CIA has taken steps recently to guard
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against a recurrence of this problem. The FBI should continue to
work closely with security officials of all U.S. Government agencies
to ensure that they understand its requirements and guidelines. A
good example is the Pollard case, where the Naval Investigative
Service Command brought in the FBI at an early stage. The Com-
mittee is pleased that the Navy has given a commendation and a
monetary award to the official who was responsible for bringing
the FBI into the Pollard case promptly when certain questionable
behavior was observed.
The lessons of the Howard and Pollard cases should be extended
to all departments and agencies that handle highly sensitive infor-
mation. Interagency procedures for reporting suspicious conduct to
the FBI should be strengthened. Moreover, the Howard and Pelton
cases demonstrate that former employees with grievances or finan-
cial problems can compromise our most sensitive national security
programs. Individuals who choose to work in positions as sensitive
as those occupied by a Howard or a Pelton should expect to be held
to a higher security obligation than personnel with access to less
sensitive information. Therefore, the FBI should be informed when
employees with access to extremely sensitive information resign or
are dismissed under circumstances indicating potential motivations
for espionage. The decision as to whether the circumstances justify
investigation in varying degrees should be made by the FBI, in
light of its counterintelligence experience, not by the employing
agency. Interagency procedures should be established to address
borderline cases.
Threat analysis functions are shared among U.S. counterintelli-
gence, foreign intelligence and security agencies. Development of
an effective national counterintelligence strategy, as well as a com-
prehensive and balanced set of security measures, requires central-
ized assessment of the threat posed by all forms of collection?tech-
nical as well as human. Since 1981, an interagency staff has com-
piled assessments of the hostile intelligence services threat and
U.S. countermeasures, based on inputs from throughout the Gov-
ernment. The Committee has found these assessments to be in-
creasingly valuable and is pleased that they continue to have high
priority.
National assessments are no substitute, however, for high-quality
threat assessments tailored to meet more specific needs. The Com-
mittee is pleased to learn that progress is being made regarding
one such need for tailored material that was highlighted in the
most recent interagency assessment.
DoD counterintelligence agencies have taken the lead in analyz-
ing the threat to particular military installations and activities.
The Committee supports increased efforts in this area, especially to
assess the threat to highly sensitive research and development
projects and to make the findings available to the officials responsi-
ble for security countermeasures. In recognition of the importance
of this function, the Stilwell Commission has recommended, and
the Secretary of Defense has directed, that the Defense Intelligence
Agency establish a Multidisciplinary Counterintelligence Analysis
Center as a service of common concern for DoD to meet the coun-
terintelligence analytic requirements of the Defense Counterintelli-
gence Board and the various DoD components. DIA should have
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the task of ensuring that other agencies' threat assessments are re-
sponsive to security and program management needs of DoD com-
ponents. Efficient allocation of limited security resources depends
on careful evaluation of the threat.
Special attention is required for two aspects of the hostile intelli-
gence threat that directly relate to U.S. foreign intelligence analy-
sis: deception; and "active measures," including disinformation, for-
genes and other political influence operations. Hostile intelligence
services conduct these operations in addition to their collection ef-
forts.
An interagency committee and a community-wide intelligence
analysis office are both active in the analysis of deception efforts.
Pursuant to the Committee's classified reports accompanying the
Intelligence Authorization Acts for FY 1985 and FY 1986, a small
interagency staff has been assigned to the analysis office.
In recent years, with the help of the intelligence community, the
State Department has stepped up efforts to expose Soviet "active
measures," such as forgeries and Soviet control of political organi-
zations and conferences abroad. The Committee supports recent ini-
tiatives to improve intelligence support for U.S. efforts to counter
these Soviet activities.
The State Department and other appropriate agencies should do
more to disseminate the results of such analyses to opinion leaders
and policymakers worldwide. Recent steps to increase the effective-
ness of the Active Measures Working Group, which is chaired by
State/INR, are welcomed by the Committee. The Working Group
has briefed U.S. embassies on its role, encouraged the formation of
embassy committees to monitor and combat Soviet active meas-
ures, and arranged for both classified and unclassified guidance to
be provided to the field on specific cases. These efforts should be
supported and fully staffed by the relevant agencies, especially the
State Department. The Committee is pleased that a new office has
been established recently in State/INR for this purpose.
The FBI prepares reports and testifies before Congress on efforts
in the United States by the Soviets and other designated countries
to influence public opinion and government policy through "front"
organizations and other covert operations. For example, in 1986 the
Committee received a classified FBI report on "Trends and Devel-
opments in Soviet Active Measures in the United States," which
updated a previous study prepared in 1982. The FBI report reviews
covert Soviet political influence operations directed at U.S. public
opinion and policymakers. The Committee regularly requests fur-
ther counterintelligence information from the FBI on such oper-
ations. The Bureau should continue to report these assessments in
a manner that provides the necessary facts about hostile intelli-
gence activities and that fully respects First Amendment rights.
Findings and Recommendations
11. Recommendation. ?All elements of the U.S.- Government
should give high priority to implementation of the policy requiring
security awareness briefings and the reporting of contacts with na-
tionals of designated countries. A similar procedure should be
adopted for U.S. Senate personnel.
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12. Recommendation. ?The Howard case demonstrates the need
for strengthening interagency procedures for bringing possible espi-
onage cases to the FBI's attention in a timely manner. The FBI
should also be informed when employees with access to extremely
sensitive information, such as Howard and Pelton, resign or are
dismissed under circumstances indicating potential motivations for
espionage.
13. Recommendation.?The FBI should develop threat awareness
briefings tailored to the special characteristics of the PRC espio-
nage threat. Such briefings should alert American citizens to the
risks of giving assistance to PRC nationals who may have espio-
nage assignments, while respecting the freedom to associate with
lawful scientific and technical research.
14. Finding.?Significant efforts are underway to improve coun-
terintelligence threat analysis, including publication of regular
interagency assessments of the hostile intelligence services threat
and U.S. countermeasures and the establishment in DIA of a Mul-
tidisciplinary CI Analysis Center to meet DoD threat analysis re-
quirements in conjunction with other DoD components. The Com-
mittee is also pleased to note that there has been progress in the
effort to provide tailored analyses of the hostile intelligence threat.
15. Recommendation. ?The relevant interagency intelligence
analysis office should coordinate and sponsor analytic efforts on
Soviet deception, disinformation and active measures. The State
Department and other agencies should increase dissemination of
information about Soviet active measures abroad. The FBI should
continue to be responsible for reports on active measures in the
United States by hostile intelligence services and should cooperate
with interagency analytic efforts. Reports on active measures in
the United States that are prepared by agencies other than the FBI
should be prepared in coordination with the FBI and/or the Attor-
ney General.
D. DOMESTIC OPERATIONS
Counterintelligence operations in the United States differ from
such operations abroad, because the environment is generally more
favorable. U.S. counterintelligence has greater resources, easier
access to the target, and public attitudes favorable to citizen coop-
eration. While legal requirements place constraints on surveillance
techniques and investigative methods, those limits are vital for
maintaining our free society and (with exceptions discussed below)
do not inhibit necessary counterintelligence efforts.
Domestic operations can be divided into the following categories:
surveillance coverage of foreign government establishments and of-
ficials; offensive operations to recruit agents-in-place and defectors
or to control double agents; and espionage investigations and pros-
ecutions. Many of the strategic requirements for domestic oper-
ations are unique, especially with respect to surveillance of estab-
lishments and officials and the investigation and prosecution of es-
pionage cases. Other requirements have more in common with
overseas operations, particularly with regard to penetration of hos-
tile services, handling of defectors and double agents, and analysis
of the bona fides of sources. Unique features of overseas operations,
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as well as personnel management and training programs that cross
geographic divisions, are treated in later sections of this Report.
1. Coverage of Establishments and Officers
The foundation for domestic counterintelligence is systematic col-
lection on a foreign country's official representatives in the United
States. Such collection may be technical or human.
Recent cases have shown the vital importance of comprehensive
coverage of Soviet bloc embassies and consulates as a means of de-
tecting offers to sell U.S. secrets. Pelton, Cavanagh, Jeffries and
others made their initial contacts with the Soviets by contacting an
establishment. Skilled counterintelligence work is required in such
cases, and frustrations may be unavoidable. The Pelton case is an
example in which it took years to achieve a positive identification.
The stratgegic importance of covering certain foreign establish-
ments and their employees justifies continuing resource invest-
ments to upgrade the FBI's surveillance capabilities. The Commit-
tee has supported such investments over the years and continues to
do so.
In this connection, the importance of the contact reports dis-
cussed earlier in this Report cannot be overemphasized. While gov-
ernment regulations can require federal employees to report con-
tacts with possible foreign intelligence officers, a free society must
rely on the voluntary cooperation of private citizens to advise the
FBI of approaches and other contacts by such officials. Frequently
the FBI requests citizens to report this information about particu-
lar individuals, based on surveillance of a contact. The FBI's DECA
briefings, which are designed to encourage such contact reports
from defense contractors and their employees, have now reached
over 15,000 contractor employees. FBI and other intelligence com-
munity officials have used speeches and public appearances to em-
phasize the importance of public cooperation.
The American people have a legitimate concern that their gov-
ernment should not intrude upon their lawful associations with for-
eign officials and their First Amendment right to exchange ideas
with visitors from abroad. For that reason, the FBI operates under
guidelines established by the Attorney General and internal FBI
policies overseen by the Committee that are designed to respect the
free exercise of constitutional rights. As Director Webster stated in
a recent speech:
We certainly don't have enough Agents to keep track of
every citizen of this country nor do we want to investigate
the activities of lawful organizations without predication
for doing so. Rather, our focus?indeed our strategy?must
be on the intelligence operatives themselves and the iden-
tification of those who have come here with intelligence
commissions. By building a spiderweb throughout the
United States that focuses on them rather than on our
own citizens, we make it much more difficult for those who
would betray our country by surreptitiously supplying na-
tional secrets to foreign intelligence officers. I believe that
in a free society this is the only way we can function with-
out turning ourselves into a police state.
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The existence of those safeguards should give the public confidence
that cooperation with FBI counterintelligence not only serves the
national interest, but is consistent with respect for constitutional
rights.
Findings and Recommendations
16. Recommendation. ?Congress should continue to fund in-
creases in FBI surveillance capabilities.
17. Recommendation. ?American citizens in all walks of life
should be encouraged to assist U.S. counterintelligence efforts by
providing information to the FBI, either upon request or when they
are approached by possible foreign intelligence officers.
2. Offensive Operations
A major element in counterintelligence is offensive operations,
especially efforts to recruit agents-in-place within hostile intelli-
gence services and to induce defections from those services. The
strategic payoff of agents and defectors can be immense, as demon-
strated by the exposure of Edward Lee Howard and the successful
prosecution of Ronald Pelton.
The greatest area of concern is the handling of defectors, as
dramatized by the Yurchenko case. According to a CIA survey,
most of the defectors resettled in the United States with CIA assist-
ance are basically satisfied with their treatment. Nevertheless, a
significant minority have problems that require special attention
on a continuing basis.
In the aftermath of the Yurchenko re-defection, the CIA has un-
dertaken a comprehensive review of its practices for handling de-
fectors. Deputy Director of Central Intelligence Robert M. Gates
summarized the CIA's conclusions and corrective actions at his con-
firmation hearing on April 10, 1986:
There were organizational deficiencies. We have made
organizational changes so that a single individual and a
single organization are accountable and are in charge of
the entire process for defectors. Another element that we
have changed . . . is to ensure that the same person is ba-
sically the principal case officer for a defector with conti-
nuity, so that a defector isn't facing a whole new set of
people all the time and there is somebody there that he
gets to know and that he can depend upon and that under-
stands him and understands his concerns, and can identify
when he is going through a particular psychological
crisis. . . .
Mr. Gates also called it "imperative" to assign individuals who
speak the same language as a defector so that someone is available
to talk in his or her own language; he did not know, however,
whether the CIA has actually been able to implement this ap-
proach.
The actions taken and under consideration by the CIA reflect a
constructive effort to upgrade the defector program and respond to
the lessons of the Yurchenko case. They need continuing high-level
support, both in the CIA and in other agencies. The Committee will
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continue to assess the CIA improvements along with other ap-
proaches.
The Executive branch continues to examine the broad question
of how defectors might best be welcomed, assisted and utilized. A
private organization formed to assist defectors, the Jamestown
L. Foundation, has recommended major changes in the defector han-
dling program. The Committee intends to follow this issue closely
in the coming year and looks forward with great interest to seeing
the results of Executive branch deliberations.
The Committee considers it of the utmost importance that our
nation's goals in welcoming and assisting defectors be more clearly
enunciated and boldly implemented. Too often, the only operative
goals have been the national security benefits that result from de-
briefing a defector; the defector's personal security against attacks
by his or her country's security services; and enabling the defector
to survive without continuing U.S. Government intervention. Other
goals must be added to that, list: to encourage achievement in
American society consonant with the defector's talents and accom-
plishments; and to assist the defector in making a continuing con-
tribution to the United States. While the Executive branch has
taken steps to administer its current defector program more effec-
tively, it must also effect this important change in attitude and
commitment.
The Permanent Subcommittee on Investigations of the Senate
Committee on Governmental Affairs has begun a major study of
the U.S. Government's handling of defectors and other refugees
from the Soviet Bloc. This study will focus particular attention on
the contributions that defectors can and do make to American soci-
ety and on the need to encourage that process. The Intelligence
Committee supports this PSI study and is cooperating with the
Subcommittee in its effort to inform the public regarding the needs
of defectors and of the agencies that assist them.
Perhaps the greatest risk in a strategy of penetrating hostile
services is that the agent-in-place or defector may be a double
agent, pretending to be recruited by or escaping to the United
States but actually controlled by a hostile counterintelligence serv-
ice. Disputes over the bona fides of sources have plagued the U.S.
intelligence community in the past. Such differences are sometimes
unavoidable, but they should not disrupt interagency cooperation.
Counterintelligence is not an exact science. The important thing is
not to rely on a single source without careful testing and corrobora-
tion of his information. In this regard, the Committee has sought
and received assurances that intelligence officials are alert to the
risk of over-reliance on the polygraph.
The FBI, CIA, and DoD counterintelligence components have
made extensive use of double agents, as evidenced in the recent Iz-
maylov and Zakharov cases. Last June, the Soviet air attache, Col.
Vladimir Izmaylov, was expelled after being apprehended by the
FBI. On August 23, Gennadiy Zakharov, a Soviet physicist working
for the United Nations, was arrested and charged with espionage.
Both Soviets had been maintaining clandestine contact with indi-
viduals who were cooperating with the FBI.
There is a clear need for these operations to be carefully man-
aged. Counterintelligence managers must also review operations to
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ensure that they have not been compromised. The Committee
found Executive branch officials sensitive to these and other issues
raised by double-agent operations.
The most difficult counterintelligence task is countering the use
of "illegals," that is, hostile intelligence service officers who oper-
ate under deep cover rather than official cover. Some "illegals"
may be used primarily for performing espionage support functions
(e.g., clearing drops). The FBI and the Justice Department should
consider improved ways to prosecute "illegals" for such espionage
support activity.
Findings and Recommendations
18. Finding.?In the aftermath of the Yurchenko re-defection,
the CIA has made improvements in its procedures for handling de-
fectors. The Committee will continue to review the implementation
of those procedures to ensure that needed resources and personnel,
as well as continuing high-level support, are provided. The Admin-
istration has commissioned an independent assessment of the CIA
defector resettlement program, and the results will be provided to
the Committee.
19. Recommendation.?Objectives for the defector resettlement
program must include encouraging the fullest possible achievement
in American society and assisting defectors to make a continuing
contribution to the United States. The Committee strongly sup-
ports the efforts of the Permanent Subcommittee on Investigations
of the Senate Governmental Affairs Committee to focus public at-
tention on the contributions that defectors can make to American
society and on the need to enhance their ability to make such con-
tributions.
20. Finding.?The Executive branch has reassured the Commit-
tee regarding the risk of over-reliance on the polygraph in testing
sources and defectors and has demonstrated sensitivity to issues
concerning the mangement of U.S.-controlled double-agent oper-
ations.
21. Recommendation.?The Justice Department and the FBI
should work together to develop improved ways to prosecute "ille-
gals" who perform espionage support functions. If further legisla-
tion is needed, the Justice Department should so inform the Con-
gress.
3. Espionage Investigations and Prosecutions
Espionage investigations that may lead to criminal prosecution
raise delicate issues of interagency cooperation and balancing of in-
terests. Some senior officials support impostition of the most severe
penalties on an individual found to have engaged in espionage on
behalf of a hostile foreign power. Law enforcement objectives may
conflict, however, with counterintelligence requirements and other
national security interests.
Espionage cases involving non-Soviet bloc countries raise foreign
policy issues, because of the desire of the United States to maintain
good relations with particular governments. In the recent Pollard
and Chin cases, however, the Executive branch has demonstrated
its willingness and ability to investigate and prosecute espionage
by agents acting on behalf of friendly countries?in these cases,
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Israel and China. The Committee fully supports enforcement of the
espionage laws, without regard to the foreign country involved.
This policy does not necessarily conflict with other U.S. objectives
requiring good relations with such countries, so long as it is applied
even-handedly. The United States should make clear to every coun-
try that it will not tolerate violation of our espionage laws and that
it will investigate the intelligence operations of countries that con-
trol or permit the commission of espionage in or against the United
States on their behalf. The Committee is pleased with recent assur-
ances of State Department cooperation with enforcement action
whenever evidence of espionage is presented.
For many years U.S. counterintelligence officials assumed that
information acquired by intelligence techniques could not be used
for law enforcement purposes because of legal obstacles and the
need to protect sources and methods. The Foreign Intelligence Sur-
veillance Act and the Classified Information Procedures Act have
made espionage prosecutions somewhat easier, although other diffi-
culties still remain. These problems include the use of certain in-
vestigative techniques, the need for more expertise in handling sen-
sitive espionage matters, and requirements for better cooperation
among and within agencies.
One of the principal differences between espionage investigations
and other criminal cases is the overriding need for secrecy to pro-
tect counterintelligence sources and methods. That is why Presi-
dents have asserted claims of "inherent constitutional power" to
authorize the use of intrusive techniques with Attorney General
approval rather than a judicial warrant. That is also why Congress
has established a special secure court order procedure under the
Foreign Intelligence Surveillence Act and exempted counterintelli-
gence from the law enforcement procedures for access to bank
records in the Right to Financial Privacy Act. U.S. counterintelli-
gence officials have consistently contended that ordinary judicial
procedures do not provide adequate security in dealing with hostile
intelligence services. In normal criminal cases the objective?either
immediate or long-term?is always prosecution in open court.
Counterintelligence operations have other objectives that may be
more strategically important, such as learning the methods of the
hostile service.
Federal law does not adequately take account of such differences
in several areas. The FBI has found that the counterintelligence
exemption in the Right to Financial Privacy Act is insufficient to
obtain access to bank records when financial institutions refuse to
cooperate on a voluntary basis. Consequently, the FBI is requesting
legislation to give U.S. intelligence agencies the authority to re-
quire financial institutions to provide access to records. Unlike the
law enforcement procedures under the Right to Financial Privacy
Act, neither a court order nor notice to the subject of the records
would be required. The FBI has a strong case for replacing the cur-
rent voluntary system with a law that provides mandatory access
for counterintelligence purposes within a framework of Attorney
General guidelines and congressional oversight to provide safe-
guards against abuses. The Committee, therefore, has included leg-
islation to address this need in the Intelligence Authorization Act
for Fiscal Year 1987.
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There is a similar problem with access to telephone and other
telecommunications records. Paradoxically, it is easier in some
states to wiretap an individual than to get the phone company to
provide access to his or her billing records. For security reasons,
the law enforcement alternative of a grand jury subpoena is usual-
ly impractical; and the Foreign Intelligence Surveillance Act does
not cover access to records. As with bank records, the FBI is asking
for legislation that provides mandatory access for counterintelli-
gence purposes to such telecommunications records as telephone
billing records. The Committee has incorporated such legislation in
the Intelligence Authorization Act for Fiscal Year 1987.
A third gap in federal law concerns physical searches. The For-
eign Intelligence Surveillance Act (FISA) authorizes a special court
composed of Federal District Judges to grant orders for electronic
surveillance to meet counterintelligence requirements, but the Act
does not apply to physical search. The FBI supported broadening
the Act to cover searches as part of the intelligence charter legisla-
tion considered by the Committee in 1980, but the only provisions
of the charter to be enacted were the congressional oversight au-
thorities. Pursuant to Executive Order 12333, the Attorney General
authorizes warrantless searches for counterintelligence purposes.
The absence of a statutory court order procedure creates at least
two problems. First, as with bank and telephone records, there is
no authority to require cooperation from private parties. Second,
the Federal appeals court in the Truong case ruled that evidence
derived from a warrantless counterintelligence search may not be
used in court if the search occurs after the Government decides to
prosecute. Neither problem exists for wiretaps and other forms of
electronic surveillance under the Foreign Intelligence Surveillance
Act, which provides a court order procedure to secure the coopera-
tion of private parties and permits the use of information for law
enforcement purposes with appropriate security.
In light of this situation, the Committee recommended in 1984
that legislation be developed to establish statutory procedures com-
parable to FISA for physical search. The Committee is prepared to
develop and introduce such legislation in cooperation with the Ex-
ecutive branch.
The President's interim report to the Intelligence Committees
comments, "It is imperative that FISA be retained as it now
exists." The Committee similarly endorsed FISA in 1984, finding
that it has resulted in "enhancement of U.S. intelligence capabili-
ties" and also "contributed directly to the protection of the consti-
tutional rights and privacy interests of U.S. persons." The Commit-
tee believes that physical search legislation can be achieved, with
Executive branch support, without endangering FISA.
Espionage investigations and prosecutions would also be more
successful if greater expertise and resources were brought to bear
in certain areas. Since 1985 the Army has reorganized its counter-
intelligence efforts and instituted a specialized training program to
develop greater expertise at the field level in espionage investiga-
tions.
The espionage prosecutions in 1985 and 1986 demonstrated the
importance of early consultation with Justice Department attor-
neys in developing tactics that reconcile intelligence and law en-
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forcement interests. In the Pelton case, close cooperation between
NSA, and the FBI, and the Justice Department resulted in a con-
viction with minimal disclosure of sensitive information. In the
Sharon Scranage case, the combined efforts of the CIA, the FBI,
the Justice Department, and the State Department produced a
strategy that successfully led both to two convictions and to the ex-
change of the Ghanaian official convicted in the case for several
prisoners in Ghana and their families.
The Committee understands that such consultation is now being
instituted in a more timely manner than often occurred in the
past. ? This welcome coordination requires that the Justice Depart-
ment, in turn, have a sufficient number of attorneys trained and
experienced in handling the unique problems in these cases. The
Committee is especially concerned that those attorneys learn how
to maintain controls on the release of sensitive information. De-
partment attorneys should also work with U.S. counterintelligence
agencies in potential espionage cases to ensure that their methods
are as consistent as possible with successful prosecution. In this
regard, the Justice Department's Criminal Division has begun to
build a cadre of experienced personnel and to provide additional
training to United States Attorneys.
The Howard case, which is discussed in some detail in the Com-
mittee's classified Report, revealed serious shortcomings in CIA
performance relating to espionage investigations. The Committee is
pleased to learn that the CIA has taken steps to correct problems
pinpointed in investigations by? its Inspector General and an inter-
agency group. The Committee will monitor the implementation of
those changes.
Issues relating to the handling of the Howard case by the FBI
and the Justice Department have also been pinpointed and are the
subject of continuing consideration. The Committee expects remedi-
al actions to be taken, as appropriate, and will continue to follow
this matter.
Findings and Recommendations
22. Recommendation. ?The United States should not tolerate vio-
lation of our espionage laws by any country and should investigate
the intelligence operations of countries that control or permit the
commission of espionage in or against the United States on their
behalf. The Committee is pleased to learn on their behalf. The
Committee is pleased to learn that the State Department has
pledged to cooperate with enforcement action whenever evidence of
espionage is presented, and the Committee supports efforts to set
up a mechanism for regulatory interagency consultation on cases
that might warrant action.
23. Finding?The Foreign Intelligence Surveillance Act contin-
ues to be considered by U.S. counterintelligence agencies to be
highly beneficial to their efforts. They strongly favor retention of
FISA as it now exists.
24. Recommendation. ?Congress should enact legislation to give
the FBI the authority to require financial institutions and telecom-
munications carriers to provide access to records, with notice re-
strictions comparable to FISA. Any such authority should be limit-
ed to counterintelligence matters, governed by the current Attor-
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ney General's guidelines, and accompanied by improved provisions
for congressional oversight.
25. Recommendation. ?Congress should enact legislation compa-
rable to FISA to authorize physical search for intelligence pur-
poses, so as to reduce legal uncertainties in counterintelligence in-
vestigations that have prosecution as one of their objectives.
26'. Recommendation. ?U.S. counterintelligence agencies should
continue to emphasize, as standard procedure, consultation with
the Justice Department at an early stage in potential espionage
cases. The Justice Department should provide increased training to
Criminal Division attorneys and U.S. Attorneys concerning the
prosecution of espionage cases, including the need to protect sensi-
tive information relating to such cases.
27. Finding. ?The CIA has taken some steps that are likely to
improve counterintelligence investigations and prosecutions, in the
wake of investigations of the Howard case. The Committee will
monitor implementaton of those improvements.
28. Recommendation.?The FBI and the Justice Department
should take actions, as appropriate, to remedy shortcomings ex-
posed by the Howard case.
E. OVERSEAS OPERATIONS
Strategic counterintelligence objectives abroad differ from those
in the United States not only because of the different environment,
but also because of the added requirements for counterintelligence
support in intelligence collection programs. The Committee wel-
comes recent CIA initiatives to improve both its counterintelligence
efforts and its career opportunities in counterintelligence.
The Committee's classified Report discusses further issues re-
garding CIA and Department of Defense counterintelligence activi-
ties overseas.
The investigation of espionage by U.S. civilian and contractor
personnel abroad raises jurisdictional questions. The Committee be-
lieves that the FBI should be called in and should work closely
with agency security officials from the outset.
Findings and Recommendations
29. Finding. ?The CIA has begun initiatives to improve its coun-
terintelligence efforts.
30. Recommendation. ?U.S. agencies abroad should continue to
obtain the timely advice and assistance of the FBI in cases of possi-
ble espionage by civilian and contractor personnel.
F. PERSONNEL MANAGEMENT AND TRAINING
Counterintelligence is not the main function of any of the organi-
zations responsible for U.S. counterintelligence programs. The
CIA's primary task is collection and analysis of political, economic
and military intelligence; the FBI is a law enforcement organiza-
tion; and each of the service counterintelligence organizations is
part of a larger criminal investigative or intelligence agency. This
is one reason why there have been less specialized training and
fewer incentives for careers in counterintelligence. Personnel are
recruited for law enforcement or intelligence positions generally
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and are usually not assigned to counterintelligence until they have
experience in other fields. The advantage of this practice is that
personnel can develop their basic investigative or intelligence skills
in less sensitive areas before taking on more important counterin-
telligence duties. The disadvantage is that specialization and career
advancement in counterintelligence may be discouraged because of
the organization's emphasis on other functions.
Every agency is taking steps to upgrade counterintelligence
training, but the results thus far have been uneven. More should
be done to encourage agencies to share their experience with suc-
cessful methods. While each agency operates in a different environ-
ment and with different internal regulations, joint discussion of
such topics as the nature of the threat from particular hostile serv-
ices and the techniques for offensive operations and counter-espio-
nage investigations could be very useful. This would also make
more efficient use of expert personnel who assist in other agencies'
training. In the CIA and the military services, better training in
agency guidelines is also needed.
In the aftermath of the Miller case, the Committee has taken a
close look at FBI personnel management policies for counterintelli-
gence. At the Committee's request, the FBI prepared a study re-
viewing the impact of FBI personnel policies on the Foreign Coun-
terintelligence (FCI) Program in order to determine how the FBI
may more effectively recruit, select, assign, train, promote, and
retain Special Agents for counterintelligence matters. The FBI
study indicated a need for improvements in several areas.
The FBI confronts unusual personnel management problems be-
cause of the large hostile intelligence presence in New York City,
where the cost of living has discouraged FBI Agents from seeking
assignments or pursuing careers. Unlike State Department person-
nel, FBI Agents in New York do not have a special housing allow-
ance to defray the cost of living in town. The Committee believes
that action is needed to improve benefits and incentives in New
York and is prepared to develop legislation that may be needed for
this purpose.
Another manpower issue is the limited number of FBI senior
grade positions in the counterintelligence field, as compared to po-
sitions as Special Agent in Charge of a field office and comparable
headquarters positions with primarily law enforcement duties. The
Committee supports efforts to change this situation, including
funds requested in the FY 1987 budget to increase the number of
senior grade counterintelligence positions at FBI Headquarters.
The Committee also supports the FBI policy requiring that all new
Special Agents in Charge of field officers who have not previously
served in a full-time counterintelligence position must receive FCI
training.
The Committee intends to continue its review of FBI counterin-
telligence personnel policies as part of a broader ongoing study of
intelligence community personnel issues.
DoD counterintelligence components have similar problems and
should develop appropriate revisions in personnel policy to encour-
age specialized counterintelligence career development. In all the
DoD counterintelligence units, as well as the FBI, greater efforts
are needed to recruit and retain the best possible personnel.
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Findings and Recommendations
31. Recommendation.?More should be done to encourage agen-
cies to share their experience with successful CI methods and to
make more efficient use of expert training personnel.
32. Recommendation.?Additional measures should be taken to
improve benefits and incentives for FBI Agents in New York City,
including any legislation needed to give the FBI comparable au-
thority to the State Department.
33. Finding.?The FBI is planning to increase the number of
senior grade counterintelligence positions at FBI Headquarters.
The Committee supports these efforts.
34. Recommendation.?While each counterintelligence agency
must recruit to satisfy its unique needs, greater attention should be
given to determining specialized qualifications required for person-
nel to meet each agency's CI needs as distinct from law enforce-
ment or foreign intelligence needs.
35. Recommendation.?DoD counterintelligence components
should continue to develop appropriate revisions in personnel
policy to encourage specialized counterintelligence career develop-
ment.
IV. SECURITY COUNTERMEASURES
In 1984-85 the Executive branch conducted seven in-depth stud-
ies of security policies and practices for protecting classified infor-
mation and activities against hostile intelligence collection. The
Committee has reviewed findings and recommendations from all of
these studies, as well as observations and proposals made by other
Congressional committees, by witnesses at the Committee's closed
hearings, and by experts inside and outside the Government.
Taken together, these reports and recommendations raise grave
questions regarding U.S. security programs to protect sensitive in-
formation from our adversaries.
The Walker case disaster and the bugging of typewriters in our
Moscow embassy were compromises that waited years to be uncov-
ered and that illuminated significant weaknesses in the nation's se-
curity. There have been wide disparities in policies and standards
for personnel, information, technical and other security measures.
Serious imbalances in resource allocation have existed, and in some
areas inadequate resources have led to serious gaps in protection.
Research and development to improve security has been haphazard
at best.
Since the late 1970s, the Committee has worked with the Execu-
tive branch and the intelligence community to strengthen counter-
intelligence throughout the Government, so that the FBI, CIA and
DoD counterintelligence components could deal more effectively
with the hostile intelligence threat. Until 1985, however, neither
this Committee nor any other congressional body had taken a simi-
larly comprehensive look at the defensive security countermeas-
ures that surround the core of classified information and that are
supported by counterintelligence. The Committee's closed hearings
in the fall of 1985 were the first systematic Congressional review of
security programs since the 1957 report of the Commission on Gov-
ernment Security established by Congress (with Senator John Sten-
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nis as its Vice Chairman). Although the Committee is encouraged
by many of the steps now being taken to remedy serious deficien-
cies, the continuing fragmentation of security planning and policy
requires a substantial reorganization of the way the Government
handles its many security programs. Congress has a similar duty to
put its own house in order; and the Committee has specific recom-
mendations for that purpose as well.
The Committee has addressed security countermeasures at two
levels. First is the national policy level, where government-wide
initiatives and programs are developed, approved and overseen.
Many of the most serious security weaknesses result from the lack
of an effective, national policy that gives high priority to security
programs and ensures comprehensive and balanced planning. The
second level is the numerous separate security disciplines, which
each have their own problems that must be solved within a coher-
ent national policy framework. These disciplines include informa-
tion security, personnel security, communications security, comput-
er security, emanations security (TEMPEST), technical surveillance
countermeasures, physical security, industrial security and oper-
ations security. Their variety itself clearly indicates how difficult it
is to pull together the necessary expertise and reconcile the inter-
ests of different agencies and programs?intelligence, military, dip-
lomatic, industrial, research and budgetary. Nevertheless, the
effort must be made if we are to reduce the likelihood of future
compromises that repeat the multi-billion dollar damage of the
Walker, Pelton, Howard, Harper and Bell cases or the incalculable
harm from interception of our communicatins and technical pene-
tration of U.S. facilities.
We would not wish to mislead; in any foreseeable environment,
U.S. security countermeasures programs can provide no absolute
guarantees against compromises and losses. Our goal is a signifi-
cant improvement in security, a further limiting of the damage
that is wreaked by those compromises and losses. Our belief is that
more effective, but not unduly intrusive measures can accomplish
this objective.
A. A NATIONAL STRATEGIC SECURITY PROGRAM
In December, 1985, the Committee recommended to the National
Security Council that the Excutive branch develop a comprehen-
sive and integrated National Strategic Security Program to coordi-
nate and foster the protection of sensitive information and activi-
ties from the efforts of hostile intelligence services. The purpose is
three-fold.
First, such a program would give greater visibility, higher priori-
ty and increased attention of senior officials to security counterme-
sures. Frequently, security programs have neither an influential
voice in government departments and agencies nor adequate fund-
ing and career opportunities. Security must be recognized by the
Executive branch and Congress as a crucial underpinning to the
other basic functions?military, intelligence and diplomatic?that
safeguard national security.
Second, the reason for such a program is to provide a coherent
structure to address and overcome security deficiencies. As dis-
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cussed in the following sections, these problems include underfund-
ing of essential programs, significant gaps in research, inadequate
training and career development, insufficient management ac-
countability, uneven national policy guidance, interagency conflicts
over new initiatives, and failure to ensure necessary linkages
among security disciplines.
Third, the establishment of such a program and structure should
provide long-term continuity and consistency through succeeding
Administrations. The changing of NSC structures from one Admin-
istration to the next does not fill the pressing need for continuity
and consistency of policy. When a National Strategic Security Pro-
gram has taken shape, therefore, the essential features should be
promulgated by the President in a formal Executive Order.
At the Committee's closed hearings in late 1985, senior officials
were asked to discuss how U.S. counterintelligence and security
countermeasures policies are established and coordinated at the na-
tional level. The answer for counterintelligence was clear: responsi-
bility is focused on a single NSC committee process (the Interagen-
cy Group for Counterintelligence (IG-CI) and the Senior Interde-
partmental Group for Intelligence (SIG-I)), with support from an
interagency staff which assists the NSC staff in coordinating policy
initiatives and overseeing their implementation. Much progress has
been made in developing a coherent process for counterintelligence
policy. The same cannot be said for security countermeasures,
where responsibilities have been widely diffused and the Executive
branch has only begun to develop a coherent policy review struc-
ture.
The DCI testsified that the SIG-I is "the principal forum where
the national perspective can be brought to CI [counterintelligence]
and CM [countermeasures] policy," with countermeasures handled
by an Interagency Group (IG-CM) chaired by the Deputy Undersec-
retary of Defense for Policy. At the same time, however, the DCI
acknowledged the existence of "other Executive branch policy rec-
ommending and implementing entities such as the DCI Security
Committee, the National Telecommunications and Information Sys-
tems Security Committee, the SIG for Technology Transfer, etc."
While the DCI said the SIG-I system has " the capability for and
mission for ensuring proper national-level coordination of all CI
and CM matters," this has not in fact been the case for security
countermeasures.
Recently, the DCI, acting in his capacity as Chairman of the
SIG-I divided the Interagency Group for Countermeasures into sep-
arate groups for Technical matters (IG-CM(T)) and for Policy and
other non-technical issues (IG-CM(P)). The new IG-CM(T), headed
by the Assistant Secretary of Defense for Command, Control, Com-
munications and Intelligence, is intended in part to serve as a
bridge between the intelligence world of the SIG-I and the world of
the National Telecommunications and Information Systems Securi-
ty Committee (NTISSC). The NTISSC is chaired by the same Assist-
ant Secretary and has a presidential mandate under NSDD-145 to
develop communications, computer and emanations security policy
for the whole government.
The DCI also abolished the DCI's Security Committee (SECOM),
which had been a working-level intelligence community group out-
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side the IG-CM but covering some of the same issues. The two new
IG-CMs are to have subcommittees that will handle many of the
former SECOM functions, but with more senior members than was
the case with SECOM, so that subcommittee members can actually
commit their agencies to act upon group recommendations. Staff-
ing is to be achieved through an up-graded interagency staff.
These structural changes are very welcome signs of the serious-
ness with which the Executive branch is approaching the need to
improve the security policy process. The Committee does not be-
lieve, however, that they go far enough in establishing a forum in
which all the many security interests can be surfaced and recon-
ciled. It is uncertain, moreover, whether the IG-CM subcommittee
will be sufficient improvements on the SECOM structure to over-
come the bottlenecks that too often have stifled progress on securi-
ty issues. The Committee continues to believe, therefore, that a
comprehensive National Strategic Security Program must be devel-
oped, through whatever structures the Executive branch finds best
suited to that task.
In recommending establishment of a comprehensive National
Strategic Security Program, a Committee does not intend to create
a "czar" or to take from individual agencies their responsibility for
implementing national policies that affect their work. If there is no
national policy, however, there is no standard against which to
hold each department accountable. If national policies, are frag-
mented, outdated or unbalanced, security becomes subordinated to
other departmental priorities and interagency disputes. This has
occured far too often in recent years. Later sections of this Report
give examples: the inability to reach agreement on a "single scope"
background investigation for Top Secret and SCI clearances; the
proliferation of special access programs without sufficient controls
and standards; the imbalance in resources between expensive tech-
nical safeguards and the personnel and information security meas-
ures needed for effective computer security; and, at least until very
recently, interagency conflicts over how to deal with some techni-
cal security issues.
As important as it is to remedy these problems, the greatest
value of a National Strategic Security Program should be to pro-
mote innovative solutions to new and emerging hostile intelligence
threats. This requires collaboration with counterintelligence en-
cies to identity such threats) as well as recruitment an raining of
corhquality sec-U/711F specialists with wide-ranging operational, tech-
nical, analytical, and managerial skills. At the core must be a com-
filament at top management levels within each department and
agency to setting clear security objectives, providing adequate re-
sources, and devising effective oversight and inspection procedures
for holding managers and commanders accountable for their per-
formance. This commitment will be forthcoming only if Congress
and the President make clear they expect it and establish their
own systematic means to assess government-wide progress in meet-
ing national goals.
A National Strategic Security Program should provide policy di-
rection and oversee implementation for all security disciplines:
Personnel security;
Information security;
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Communications, computer and emanations security;
Technical surveillance countermeasures;
Physical security;
Industrial security;
Operations security. -
To assist the NSC, a single body shoud be assinged responsibility
for policy planning and analysis of all aspects of security counter-
measures for protection of sensitive information against hostile in-
telligence efforts. It should ensure effectivecoordination among the
other interagency forums that address particular problems. It
should have the task of putting together for the NSC and the Con-
gress a fully balanced and coordinated government-wide program:
A senior official should be designated to testify on the National
Strategic Security Program before the appropriate Congressional
committees.
During 1985, the CIA and the State Department took significant
steps to achieve the same objectives on a departmental level. The
CIA reorganized and expanded its Office of Security.to integrate' all
its security functions. Similarly, as recommended by the Inman
Panel on Overseas Security, the State Department established a
new Diplomatic Security Service with higher status and wider re-
sponsibilities, including a high-priority effort to upgrade technical
security. The Stilwell Commission has recommended a similar
action by the Defense Department, stressing "that all security dis-
ciplines have as their fundamental purpose the protection of classi-
fied information and must be applied in a fully balanced .and co-
ordinated way." The Committee urges that resources be allocated
to enhance security policy and oversight in the Office of the Secre-
tary of Defense (OSD), so as to make-the policy-level integration of
the various security programs in DoD a viable option.
A significant aspect of the National Strategic Security Program
should be to assist the NSC on resource priorities. The current
budgetary arrangements are fragmented and inadequate. To con-
sider ways to improve the resource allocation process, the Commit-
tee held a closed hearing on June 4, 1986, on principal security pro-
grams outside the NFIP, as well as those in the CIA Office of Secu-
rity. The ultimate goal of the Committee is to have each depart-
ment and agency identify its security resources by function and
program and include these resources in their congressional budget
justification submissions. The National Strategic Security Program
should give the NSC and Office of Management and Budget a simi-
lar opportunity to evaluate the resource priorities of these and
other security countermeasures programs.
Another high priority for the National Strategic Security Pro-
gram should be an assessment of requirements for research and
analysis, especially on personnel security and the interfaces be-
tween personnel, communications and computer security. The
greatest imbalance in security resources is between costly projects
on technical safeguards and the meager efforts to look into person-
nel security issues. Not until January, 1986, was DoD able to get
the necessary concurrences for a modest personnel security re-
search program in DoD to be administered by the Navy. Current
arrangements for intergency assessment of security research needs
have been insufficient to identify and promote aggressive and bal-
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anced government-wide efforts, even though particular agencies
have taken valuable initiatives in areas of concern to themselves.
Special emphasis should also be placed on commander and man-
ager responsiblity for security within their respective organiza-
tions. The recent action of the Deputy Secretary of Defense order-
ing the incorporation of security management as a criterion in
military and civilian performance and fitness reports is a step in
right direction. Such a requirement should be extended govern-
ment-wide and apply to all contractors as a condition for inclusion
on a bidders list. Other realistic sanctions are needed, as well as
greater consistency in the government and among contractors on
the severity and application of such sanctions as fines, relief for
cause, debarment and suspension, for knowing or negligent securi-
ty violations both by managers and by subordinates. The National
Strategic Security Program should supply the necessary policy di-
rection.
Security normally ranks well below other careers in most agen-
cies; the National Strategic Security Program must change the
status of the security profession. Security specialists should match
other professionals in terms of their qualifications, training, com-
pensation and career opportunities. There should be an independ-
ent evaluation of the recruitment, training, pay, status, profession-
al development and retention of federal security officers in all de-
partments and agencies. As recommended by the Information Secu-
rity Oversight Office and the Stilwell Commission, the OPM job
classification standards for security should be revised immediately
to ensure comprehensive and accurately graded descriptions of
modern security disciplines.
One of the common themes in all recent studies of security coun-
termeasures?the Information Security Oversight Office (IS00)
task force, the Stilwell Commission, and the Inman Panel?is the
need for better training not only for security professionals, but also
for managers and other officials having security responsibilities. In
the near-term, the quality of training for new security personnel
must have special attention. Through the government, security ini-
tiatives are providing funds for new personnel. Agencies should be
held accountable for ensuring that the most qualified personnel are
recruited and that their training meets high standards.
The National Strategic Security Program should establish gov-
ernment-wide security training objectives for managers, security
professionals, personnel security clearance adjudicators, and indus-
trial security officiers. Minimum levels of training and certification
should be established for industrial security personnel, clearance
adjudicators, and other positions requiring consistent standards.
Because the Defense Investigative Service and the Defense Security
Institute (DSI) have crucial roles in the development and imple-
mentation of security training programs and industrial security
generally, an expanded government-wide training role for DSI
should be considered. The Information Security Oversight Office
has made a similar recommendation. DSI could serve as a national
security training and education center serving all federal depart-
ments and agencies. Consideration should also be given to forming
under. DSI an interagency group, with counterintelligence agency
participation, to develop and review effective security awareness
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educational material and techniques. Given the concentration of
sensitive facilities on the West Coast, establishment of a perma-
nent West Coast security training facility for government and con-
tractor personnel should be considered.
One of the most challenging and difficult tasks that a National
Strategic Security Program must address is the development of co-
herent and effective policy for operations security (OPSEC). OPSEC
has many definitions amoung the various departments and agen-
cies. It can include the implementation and assessment of U.S. ef-
forts to frustrate hostile intelligence collection. Another element is
the careful design of particular unclassified activities or informa-
tion to keep hostile intelligence services from putting together bits
and pieces of information to detect classified missions or the pres-
ence of sensitive installations.
Equally important is the assessment of government practices out-
side the national security field that could help or hinder hostile in-
telligence collection efforts. The recently established National Op-
erations Security Advisory Committee of the IG-CM(P) has taken
several valuable initiatives in restricting public availability of sen-
sitive data.
A 1985 interagency assessment identified serious OPSEC weak-
nesses. The National Strategic Security Program should develop
government-wide OPSEC objectives and ensure that relevant agen-
cies have the necessary resources and programs to achieve these
goals. Just as sensitive military units take care to ensure that
changes in routine activity will not provide our enemies indications
and warning of their operations, so must agencies and contractors
involved with sensitive agencies or programs incorporate OPSEC in
their overall security philosophy and programs.
These are some of the government-wide security issues that
should be addressed by a National Strategic Security Program.
Others are detailed in the sections below on personnel security; in-
formation security; communications, computer and emanations se-
curity; technical and physical security; and industrial security.
Findings and Recommendations
36'. Recommendation.?The Executive branch should develop and
implement a comprehensive National Strategic Security Program
which would provide:
. a. NSC-approved objectives and policy direction;
b. A broad master plan faithful to the objectives and policies,
and both based upon and prioritized in light of the threat;
c. Close coordination of implementing programs;
d. Assessment and allocation of resource requirements for all
areas of common concern?such as, but not limited to: R&D;
computer security; TEMPEST and personnel security; and core
training for technical security countermeasures;
e. Oversight of implementation of national policy; and
f. A review of total resources planning.
This program, although within the NSC, should be structured so as
to provide long-term continuity and consistency through succeeding
Administrations. Accordingly the program and the essential struc-
ture for its maintenance should be promulgated by the President in
an Executive Order.
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37. Finding.?Recent IG-CM changes promulgated by the DCI, al-
though not sufficient, in the Committee's view, to solve the prob-
lem, are a welcome sign of the seriousness with which officials are
addressing the need to improve the security process.
38. Recommendation. ?The Defense Department should enhance
its security policy and oversight capabilities in the Office of the
Secretary of Defense so as to ensure integration of policies for the
various DoD security programs
3.9. Recommendation. ?The National Strategic Security Program
should evaluate security countermeasures resource priorities for
the NSC and OMB on an annual basis. Security resources should
be identified by function and program in departmental and agency
budget justifications. The Administration and the Congress should
consider additional ways to ' implement a more coherent budget
process for security programs.
40. Recommendation. ?The National Strategic Security Program
should assess requirements for research and analysis on security
countermeasures to promote aggressive and balanced efforts gov-
ernment-wide, especially on personnel security.
41. Recommendation. ?The National Strategic Security Program
should emphasize commander and manager responsibility for secu-
rity, including government-wide application of the recent DoD
action to incorporate security, into performance evaluations and de-
velopment of more realistic and consistent policies for disciplinary
sanctions.
42. Recommendation.?The National Strategic Security Program
should commission an independent evaluation of the recruitment,
training, pay, status, professional development and retention of fed-
eral security personnel. Relevant OPM job classifications should be
revised and modernized.
43. Recommendation. ?The National Strategic Security Program
should establish government-wide security training objectives and
should require minimum levels of training and certification for in-
dustrial security officers, clearance adjudicators, and other posi-
tions requiring consistent standards.
44. Recommendation. ?The National Strategic Security Program
should consider phased assignment of national responsibilities for
security training to the Defense Security Institute (DSI), with an
interagency group including representation from U.S. counterintel-
ligence agencies to develop security awareness materials. DSI
should establish a West Coast annex.
45. Recommendation. ?The National Strategic Security Program
should develop government-wide operations security (OPSEC) objec-
tives and ensure that relevant agencies have the necessary re-
sources and programs to achieve those goals.
B. PERSONNEL SECURITY
The most important barrier to the hostile intelligence threat and
the growing willingness of Americans to divulge classified informa-
tion for financial gain is a sound personnel security program. Un-
fortunately, recent Executive branch and congressional studies
have identified significant weaknesses in U.S. Government person-
nel security practices. Many of the issues raised by the Report of
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the Commission on Government Security in 1957 remain unre-
solved today, particularly the need for national policy guidance and
oversight. The Stilwell Commission, the DoD Industrial Security
Review Committee (formed after the Harper espionage case), the
Permanent Subcommittee on Investigations of the Senate Govern-
mental Affairs Committee, other interagency assessments, and in-
vestigations of agency performance prompted by recent espionage
cases have all addressed deficiencies, inconsistencies and ineffec-
tiveness in the administration of personnel security policies and
programs. Development of a more coherent and effective personnel
security policy should have the highest priority in a National Stra-
tegic Security Program.
The Stilwell Commission, while finding the DoD security pro-
gram "reasonably effective," made the following critique:
Clearly there is room for improvement. Many people are
cleared who do not need access to classified information.
Background investigations yield relatively little derogatory
information on those being cleared, and under the existing
adjudication process, far fewer still are actually denied a
clearance. Once cleared, very little reevaluation or reinves-
tigation actually occurs, and relatively few indications of
security problems are surfaced. The principle that a
cleared individual is authorized access only to that infor-
mation he "needs to know" is generally not enforced.
The Commission attributed these problems to insufficient resources
and the desire not to let security interfere with mission accom-
plishment.
The Committee endorses vigorous implementation of most of the
Stilwell Commission's recommendations on gaining and maintain-
ing access to classified information and on detecting and investigat-
ing security violations. They should be reviewed at the NSC level
and adopted for government-wide application. In summary, the
Commission proposes:
For Secret clearances, better background checks, an eventual
reinvestigation system, and better workplace controls (docu-
ment logs and briefcase searches).
For Top Secret information, many more reinvestigations,
more polygraphs primarily for reinvestigations, better work-
place controls (a personal reliability program and a ban on
one-man access), and a special crypto-access compartment.
More inspections and management responsibility.
Not issuing clearances for information to personnel who re-
quire only access to the workplace.
Measures to reduce the number of clearances and streamline
security requirements for contractors, including a billet system
to cut the number of Top Secret clearances, justification for
each contractor clearance (with periodic rejustification for
overseas positions), and a single scope for Top Secret and SCI
background investigations.
To free resources to cover other costs, the easing of reinstate-
ment procedures for contractors whose clearances lapse for a
short time and the routine granting of interim Secret clear-
ances while initial investigations are conducted.
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These recommendations reflect the most comprehensive and de-
tailed analysis of DoD personnel security requirements that has
been conducted in decades. Nevertheless, in some respects they fall
short of meeting current needs.
The first requirement is resources. Personnel security is serious-
ly underfunded, especially in comparison to the technical programs
for communications and computer hardware and software. Redress-
ing this imbalance should be one of the highest priorities for a Na-
tional Strategic Security Program. Congress added $25 million for
the Defense Department in FY 1986 to reduce the backlog of inves-
tigations and, especially, of reinvestigations of persons with Top
Secret clearances. The Committee has recommended, and the
Senate has passed, an additional $22 million authorization and 358
positions for FY 1987 to accelerate implementation of Stilwell Com-
mission recommendations, primarily regarding more detailed inves-
tigations for Secret clearances. Intelligence elements have also reg-
ularly fallen short of meeting periodic reinvestigation goals be-
cause of inadequate funding. This is true as well for the FY 1987
budget. The basic problem is that persoOnel security has had rela-
tively low priority in the Executive branch budget process. The
Committee welcomes recent testimony by the DDCI that the CIA
will give much higher priority to reinvestigations.
Nowhere is the adage "penny wise, pound foolish" more apt, yet
even the Stilwell Commission had to confront serious resource con-
straints. Its goal is to reduce the DoD backlog of reinvestigations
for persons holding Top Secret clearances to manageable levels
within four years and to conduct periodic reinvestigations of all
persons holding Secret clearances and above by 1995. Efforts to
reduce the number of positions requiring background investigations
can alleviate some of the pressure, but the technological sophistica-
tion of modern military systems and the need for widespread access
to intelligence products requires that large numbers of DoD person-
nel have at least Secret-level clearances. On the civilian side, the
work of Departments such as State, Energy, Justice and Treasury
will continue to require that many employees have background in-
vestigations and reinvestigations.
Over the years, resource constraints have prevented any serious
consideration of field investigations for Secret clearances, which
have been based on name and fingerprint checks of law enforce-
ment and counterintelligence files. Some of the most sensitive in-
formation in the U.S. Government is classified at the Secret level,
and sustained passage of Secret information to hostile countries
would do grave damage to national security in many areas. The
Harper case is a good example where compromise of a substantial
amount of Secret information from a defense contractor's office did
great harm. The current requirements for Secret clearance investi-
gations are too low, and the proposals for wider checks are too
modest.
At a minimum, the investigative requirements for a Secret clear-
ance should include, in addition to file checks: a credit check; in-
quires to present and past employers; more documentation of iden-
tity; other field inquiries on recent life history; and a subject inter-
view. The key is the interview, to surface issues that may merit
further investigation. This recommendation requires a substantial
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increase in manpower and funds, but the cost is reasonable in light
of the Soviet bloc intelligence emphasis on acquisition of Secret-
level technological data.
Overall, the Stilwell Commission goal of eliminating the reinves-
tigation backlog within four years should be extended government-
wide and to contractor employees. In addition, a government-wide
plan for Secret clearances should be developed and submitted to
the Committee, with a target of implementation in less than the
ten years proposed by the Stilwell Commission. A government-wide
funding plan to achieve all these objectives should be submitted to
Congress as soon as possible.
Another resource problem results from the resistance of some au-
thorities to modification of Top Secret and SCI background investi-
gation requirements that Defense Department officials have con-
cluded are not cost-effective. Because the Defense Investigative
Service, CIA and OPM have different policies on the scope of those
investigations, it is not unusual for individuals, particularly in in-
dustry, to have two or more background investigations in the same
year for Top Secret and SCI access. Moreover, some agencies
appear unwilling to simplify their background investigation proce-
dures in the light of cost-effectiveness studies. While the Commit-
tee has not attempted to evaluate alternative procedures in detail,
it strongly recommends that a uniform policy be established to
achieve less costly and more timely background investigations and
clearances and to eliminate redundant investigations.
Another factor that should guide development of a "single scope"
investigation is the high priority for reinvestigations. Recent espio-
nage investigations indicate that none of the current approaches to
initial clearance is infallible. Espionage-related issues rarely sur-
face during initial background checks. Streamlining the procedures
for initial investigations would release manpower for use in meet-
ing the five-year reinvestigation requirement that all agencies
agree should apply to Top Secret and SCI Clearances.
The Committee also believes that a "single scope" background in-
vestigation for Top Secret and SCI clearance should include an in-
depth interview of each subjrett-by a trained and experienced secu-
rity officer. The record indicates that such interviews are often ef-
fective in surfacing issues not uncovered by a field investigation
that bear on the ability of an individual to handle sensitive infor-
mation.
Several Stilwell Commission proposals_cleserNe speciatemphasis.
A reliability clearance for persons needing access to a site, but not
to classified information, would underscore the importance of
"need to know." There are no figures on the number of people with
clearances where the intent is solely to determine their reliability.
Included in this category are guards, char force, maintenance per-
sonnel, etc. Implementation of this measure would set the stage for
carrying out such other measures as a "billet control system" de-
scribing which positions require access to classified information.
This action will help revive the need-to-know rule by drawing a
clear distinction between clearance for one purpose and clearance
for other purposes.
The Committee shares a concern, expressed initially by the Per-
manent Subcommittee on Investigations, about the potentially seri-
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ous risks in issuing security clearances to foreign-born individuals
whose background cannot be verified adequately. The Stilwell Com-
mission's proposal for use of the polygraph in such cases is compa-
rable to the FBI's policy of polygraphing foreign nationals em-
ployed for specialized purposes. Agencies must guard against over-
reliance on the polygraph, of course, especially when independent
corroboration is so difficult to obtain. Other approaches tailored to
particular agency needs should also be considered. A government-
wide minimum standard is needed, however, in order to ensure
cross-agency acceptance of clearances.
One Stilwell Commission recommendation that should be recon-
sidered is the proposal for one-time, short duration (read on, read
off) access by cleared personnel to the next higher level of classified
information when necessary to meet operational or contractual ex-
igencies. Given the vast differences between investigative standards
for Secret and Top Secret, there is too great a risk in giving an in-
dividual with only a Secret clearance access to Top Secret informa-
tion. If the requirements for Secret clearances are substantially up-
graded, this proposal could be reconsidered as a means to conserve
security resources. As the Stilwell Commission recognized, adminis-
trative oversight is essential to ensure that repeated read on, read
off access does not become a loophole for semipermanent access.
Several areas of concern not mentioned by the Stilwell Commis-
sion deserves serious consideration. One is the need for relevant
data on persons who leave positions with Top Secret or sensitive
compartmented accesses. Pelton, Howard and, for the most part,
Walker committed espionage after each had lost his clearances.
Walker's greed and his aberrant conduct as a private investiga-
tor could have alerted a Navy system tasked to continue oversight
of individuals with previous high clearances. No such system effec-
tively exists. Pelton's bankruptcy should have served as the indica-
tor for further NSA review, particularly in view of Pelton's access
to very sensitive information. Had Howard's travels and finances
been known, the FBI might have been brought into that case much
sooner.
?The Executive branch should consider requiring as a precondi-
tion for clearance, that those who receive access to the most sensi-
tive information agree to permit, for a period of years after their
clearance ends, access to relevant financial and foreign travel
records. In practice, for example, this would mean that agency se-
curity officials could access credit bureau information on former
employees, as DoD agencies are now doing on background investi-
gations and reinvestigations pursuant to the Stilwell Commission's
recommendation.
Such a system could be abused if not clearly limited to persons
with access to especially sensitive information and properly admin-
istered under stringent safeguards for privacy and civil liberties. It
would be important to establish clearly, for example, that the ex-
amination of these records would not imply suspicion regarding a
person. Another useful safeguard might be to limit the information
gained from these records to an employee's security file unless the
Director of Security certified that it warranted the attention of an-
other office or the FBI. Other minimization procedures, perhaps
based upon those in the Foreign Intelligence Surveillance Act,
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could also be applied. In addition to providing better means to
detect suspicious behavior, records access procedures could enable
security offices to respond in a timely and helpful fashion to evi-
dence of financial problems among personnel whose recent sensi-
tive accesses would make them lucrative intelligence targets.
The Committee recommends that the Executive branch study the
possibility, in consultation with appropriate congressional commit-
tee and civil liberties experts, of a program of expanded post-access
foreign travel reporting obligations and/or agency access to rele-
vant financial and travel records. The Committee believes that
such a program, if combined with proper safeguards and limited to
those persons whose access to the most sensitive information clear-
ly warrants special measures, might be acceptable from a civil lib-
erties standpoint. A similar view has been expressed by a ranking
ACLU official at a recent conference sponsored by the Congression-
al Research Service of the Library of Congress.
Another initiative, relevant to the role of a National Strategic
Security Program in fostering and coordinating research, is exami-
nation of the value of psychological testing in the security clear-
ance process. Some authorities contend that such testing can help
identify persons disposed to disregard their obligations for the sake
of self-gratification. Any use of psychological testing, however,
should take full account of the need for test reliability, trained per-
sonnel to interpret results, and protection of individual rights. Psy-
chological testing can supplement, but not replace other screening
devices.
The Stilwell Commission urged the Secretary of Defense, al-
though not in a formal recommendation, to press for revival of the
interagency effort chaired by the Justice Department in 1983-84 to
draft a new Executive Order on personnel security. While drafting
such an order may be a lengthy process and must not be an excuse
for inaction on the specific national policy issues discussed above, a
new Executive Order would make an important contribution to
better personnel security. Such an order should provide a formal
Presidential mandate for minimum government-wide standards
and procedures that incorporate the essential elements of national
policy on key topics, with details to be spelled out in an implement-
ing directive that can be updated periodically in light of experience
and research. Second, it should establish an office similar to the In-
formation Security Oversight Office to provide the kind of policy
guidance and oversight of implementation that ISOO has supplied
for information security. The absence of such an office makes it ex-
tremely difficult for the National Security Council to address per-
sonnel security policy issues government-wide. Third, a new Execu-
tive Order should focus exclusively on policies and procedures for
access to classified information and to facilities where classified in-
formation is maintained. Experienced Justice Department officials
believe that such an order would make it easier to defend in court
decisions to deny or remove security clearances.
More extensive and timely background investigations and rein-
vestigations, with streamlined government-wide standards and pro-
cedures, must feed into an adjudication system with rigorous but
realistic criteria for granting or denying clearances. There is cur-
rently no uniform requirement to deny a clearance to a person who
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has been convicted of a felony or has admitted to conduct which
constitutes a felony under state or local law. There is no require-
ment for follow-up inquiries in cases where clearances are granted
to persons admitting problems like drug use. (The FBI has ex-
pressed particular concern about this problem in contractor facili-
ties, where habitual drug users have posed real threats to sensitive
research and development programs.) There is no government-wide
requirement for training of persons who adjudicate security clear-
ance cases. (Only one agency currently has a formal adjudicator
training school and individual services tend to have too few adjudi-
cators to justify their own training programs.) The lack of training
and experience among adjudicators causes delays and inconsisten-
cies within and among agencies.
Agency and interagency investigations of such recent espionage
cases as Edward Lee Howard and Jonathan Pollard have highlight-
ed serious flaws in agency hiring, assignment and termination
practices. The CIA and DoD have moved to rectify problems, and
there will probably be interagency consideration of adopting simi-
lar corrective measures. The CIA and other agencies have also
become more sensitized to the risks inherent in decisions to give
sensitive assignments to persons with a history of personal prob-
lems. While there is a balancing need not to do away with neces-
sary managerial flexibility, these corrective steps are basically
much needed and long overdue.
Underlying these specific problems is a general attitude that the
purpose of the clearance process is simply to wed out those individ-
uals most obviously likely to pose a threat to security. Wider back-
ground checks will have little impact if the results are not used ef-
fectively. Especially for Top Secret clearances and for the most sen-
sitive Secret clearances, the policy should be reversed. Clearances
should go to individuals whose records demonstrate a clear apti-
tude for security. That is, their background and personal qualities
should show a high sense of responsibility?not just the absence of
proved disqualifying factors. At the same time, denial of such
highly sensitive clearances should not affect the ability to pursue
careers in other areas.
A final personnel security issue is the use of polygraph examina-
tions as part of the initial clearance process or in reinvestigations.
Since 1983, the Committee has followed closely the various at-
tempts in the Executive branch to widen use of polygraphing for
personnel security purposes and congressional efforts to control
such practices by statute. The Committee has consistently support-
ed the approach taken by the Senate Armed Services Committee in
approving a personnel screening polygraph test program for the
Defense Department. That test program is limited to counterintelli-
gence-related questions and has very stringent quality controls and
safeguards for individual rights. The same limitation, controls and
safeguards should apply to any expansion of polygraphing in other
departments and agencies. The National Strategic Security Pro-
gram should ensure full coordination of departmental policies and
practices for this purpose.
The Committee is concerned about the tendency to place an over-
reliance on the polygraph, thereby allowing apparent passage of an
examination to validate the reliability of an individual who may be
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intent on espionage. Other concerns are the persistent underfund-
ing for implementation of some high-quality polygraph programs
and the risks that incompetent or improper use of the polygraph
may harm the careers, reputations or well-being of loyal Ameri-
cans. Adequate research on personnel screening polygraph prac-
tices is also lacking.
An essential prerequisite for any wider polygraph program in
DoD or other agencies is a significant upgrading of the national
polygraph training school managed by the Army. This training pro-
gram should be the focal point for development of a government-
wide approach to personnel security polygraph examinations, in-
cluding equipment requirements, question format, quality controls,
and use of individuals as training subjects. A model that should be
studied is the Air Force Seven Screens program, which is described
in a recent report to the Senate Armed Services Committee. This is
a screening program that uses only counterintelligence-related
questions and is designed to establish and maintain strict quality
controls and respect for individual rights. The establishment of an
Oversight and Review Committee and the conduct of regular in-
spections are especially valuable features of Seven Screens that
should be considered for use in other polygraph programs. The
Committee is pleased that other sensitive DoD programs are adopt-
ing the Seven Screens approach.
The Stilwell Commission recommended that Congress replace the
current statutory authority for a limited DoD "test program" with
permanent legislation authorizing the use of polygraph examina-
tions for personnel screening with counterintelligence-related ques-
tions for DoD personnel. Any such legislation should incorporate
standards for quality control and respect for individual rights and
should provide a means whereby those standards can be enforced.
DoD has prepared draft legislation for this purpose. The legislation
deserves serious consideration in the next Congress, after thorough
review of the current test program. If Congress does not yet have
sufficient test data to decide this issue, then the current test pro-
gram should be extended for a specific period, at the end of which
a decision on permanent authority will be made.
The DoD-proposed polygraph legislation would apply only to the
most sensitive positions and would include both quality control and
oversight requirements. The Secretary of Defense and the Armed
Services Committees would agree in advance to an annual numeri-
cal ceiling on examinations to be given, and no adverse action
could be taken soley on the basis of polygraph results except with
approval at the highest levels in special circumstances. In review-
ing this proposed legislation, Congress should consider the adequa-
cy of DoD policy oversight and inspection arrangements to ensure
consistent implementation and quality control for all DoD compen-
ents. As recommended elsewhere, this requires augmentation of
OSD security policy staff personnel. An oversight and review com-
mittee comparable to SEVEN SCREENS should also be considered.
The difficulties with expanding the use of polygraph examina-
tions in DoD and other departments suggest a need for caution at
the national policy level. There is widespread misunderstanding
about the use of polygraphs for personnel security screening with
CI-related questions and strict quality controls. While a uniform
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national policy for access to certain types of highly sensitive data is
desirable in theory, more needs to be done to explain the proce-
dures and safeguards to federal employees, the Congress and the
public and to compile data on employee reactions to such examina-
tions before a government-wide policy is implemented.
Findings and Recommendations
46. Finding. ?Defense Department adoption of Stilwell Commis-
sion recommendations is a major step forward. The Committee has
supported additional funding in FY 1986 and 1987 to accelerate im-
plementation of recommendations regarding clearance investiga-
tions.
47. Recommendation. ?The National Strategic Security Program
should ensure substantially increased funding for personnel securi-
ty in all relevant departments and agencies. A Government-wide
plan should be submitted to Congress to achieve the following
goals: (a) elimination of the reinvestigation backlog for Top Secret
(including SCI) within four years; and (b) implementation within
less than ten years of a program for intensified investigation and
reinvestigation for Secret clearances.
48. Recommendation.?Agreement should be reached as soon as
possible on a "single scope" background investigation for all Top
Secret and SCI clearances. The uniform policy should provide for:
(a) less costly and more timely background investigations and clear-
ances; (b) highest priority for meeting the five-year reinvestigation
requirement; and (c) a subject interview in all cases.
49. Recommendation.?Government-wide adoption should be con-
sidered for the Stilwell Commission recommendations to prohibit
the practice of requesting security clearances solely to provide
access to a controlled area, where there is no need to know or even
to be exposed to classified information. Reliability investigations
should still be conducted in such cases, with standards equal to
those proposed by this report for Secret clearances.
50. Recommendation. ?More effective means should be estab-
lished for investigating and clearing immigrant aliens and foreign
nationals overseas who are granted access to classified information.
51. Recommendation.?Implementation of the proposal for one-
time, short duration access by cleared personnel to the next higher
level of classified information should be postponed until Secret
clearance requirements and investigations are upgraded and the
IG-CM(P) has reviewed the issue.
52. Recommendation. ?The Executive branch should study the
possibility, in consultation with appropriate congressional commit-
tees and civil liberties experts, of a program for requiring those
who receive access to the most sensitive information to agree to ex-
panded post-access foreign travel reporting obligations and/or
agency access to relevant financial and travel records. Such a pro-
gram would need to be clearly limited and to incorporate proper
safeguards regarding the use of the information obtained.
53. Recommendation. ?The National Strategic Security Program
should increase personnel security research, including expanded re-
search and evaluation on the wider use of psychological testing in
the clearance process, taking full account of individual rights, as
well as the implications of recent espionage cases.
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54. Recommendation.?The President should issue a new Execu-
tive Order on personnel security. The order should provide for gov-
ernment-wide minimum standards and procedures and a policy
oversight office similar to the Information Security Oversight
Office. It should focus exclusively on personnel security programs
regarding access to classified information and to sites where classi-
fied information is maintained. Drafting of this order should not
delay action on other recommendations.
55. Recommendation.?The National Strategic Security Program
should improve the adjudication process for granting or denying se-
curity clearances, with more rigorous standards regarding persons
who have committed felony offenses; follow-up measures where per-
sons with admitted problems like drug use are cleared; and a gov-
ernment-wide requirement for training of adjudicators. For the
most sensitive positions, a "select in" policy based on demonstrated
aptitude for security should be adopted in place of the current
"select out" policy based on the absence of proved disqualifying fac-
tors.
56. Finding. ?Agency and interagency investigations of recent es-
pionage cases have highlighted flaws in hiring, assignment and ter-
mination practices. Recent corrective efforts in CIA and DoD and
proposed government-wide consideration of similar measures
should be very useful. The Committee will continue to monitor
these efforts to achieve needed corrective action without destroying
necessary managerial flexibility.
57. Recommendation.?The national Strategic Security Program
should ensure full coordination of departmental policies and prac-
tices for the use of polygraphing in personnel security screening so
as to maintain stringent quality controls and safeguards for indi-
vidual rights, to prevent over-reliance on this technique, to provide
for necessary research and funding, and to improve understanding
of the procedures.
58. Recommendation. ?Congress should consider permanent legis-
lation authorizing DoD to use polygraph examinations for person-
nel security screening with CI-related questions, based on the most
recent DoD proposal. If a decision cannot be reached in 1987 be-
cause of insufficient test data, then Congress should extend the
current test program for a fixed period.
5.9. Recommendation. ?The other Stilwell Commission recommen-
dations on personnel security should be implemented vigorously in
DoD with augmented OSD policy oversight, and they should be re-
viewed at the NSC level for adoption government-wide.
C. INFORMATION SECURITY
In December, 1985, the Committee submitted to the National Se-
curity Council a series of recommendations on information securi-
ty, in response to a request for input on proposals developed by the
Information Security Oversight Office (IS00). In addition to calling
for a National Strategic Security Program, as discussed above, the
Committee urged immediate implementation of the ISOO proposals
with strong, public endorsement of the President and the principal
members of the National Security Council. The ISO() proposals
would establish new information security policies for curbing over-
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classification and over-distribution, improving classification man-
agement, enforcing the need-to-know principle, and improving secu-
rity awareness and investigations of unauthorized disclosures. The
Committee recommended that senior executives and program man-
agers be held personally responsible for effective implementation of
these policies.
Although the ISOO proposals are an excellent agenda for near-
term actions, the Committee made several other recommendations
for long-term decisions. First, there is a fundamental problem with
the classification system because of its complexity. The Committee
recommended consideration of a two-level system, based essentially
on the current Secret standard and the Sensitive Compartmented
Information model used in the Intelligence Community. A two-tier
system offers a better chance of enforcing the need-to-know princi-
ple and reversing the natural incentives to over-classification.
The Confidential classification should be dropped, with such in-
formation either kept unclassified or protected at the Secret level.
The initial decision should be whether the information requires
protection -in order to prevent substantial harm to identifiable na-
tional security interests.
The classification threshold should reflect a policy that classifies
information only where truly necessary to maintain the national
security. The report on Scientific Communication and National Se-
curity, issued in 1982 by a panel of the National Academy of Sci-
ences, warned that undue controls can "weaken both military and
economic capabilities by restricting the mutually beneficial interac-
tion of scientific investigators, inhibiting the flow of research re-
sults into military and civilian technology, and lessening the capac-
ity of universities to train advanced researchers." The 1985 inter-
agency report on Soviet Acquisition of Military Significant Western
Technology reiterated the warning that restricting access to scien-
tific data "may also inhibit the United States' own national re-
search effort." As stated recently by former DIA Director Eugene
F. Tighe, "[IN the U.S. security system for handling classified mate-
rial is to be useful, only data that are critical to the United States'
status as a political, economic and military power should be classi-
fied." The assumption should be that information is unclassified,
unless there is a specific reason for maintaining secrecy.
The higher of the two classification standards should focus on
the much smaller universe of data that require special protective
measures above and beyond the normal safeguards for classified in-
formation. As is the case with intelligence data designated SCI,
classification at the second level should be based on a full analysis
of the risks of compromise. Such analysis should ensure that spe-
cial protective measures are imposed only where necessary and are
not diluted by applying them too widely. Careful analysis should
also provide the elements for more effective security briefings that
help senior policy-makers as well as lower level employees under-
stand the consequences of a security breach.
Executive branch officials have noted that many bilateral and
multilateral national security agreements are linked to the current
system, and that the handling of Confidential-level foreign materi-
al at the Secret level will require some investment. The Committee
recognizes that this change must be gradual. It is confident, howev-
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er, that the declassification of many U.S.-generated documents that
do not merit serious protective efforts will result in significant
overall savings that can be devoted to better protection of Secret
and Top Secret information.
Another concern is that a higher classification threshold would
make more documents accessible to people who request them,
either directly or under the Freedom of Information Act. However,
unclassified information of a sensitive character can be marked
"For Official Use Only" to maintain a policy of not releasing such
materials routinely or in response to non-FOIA requests. Concern
about FOIA, moreover, should not dictate classification manage-
ment policy, which should be geared to the most efficient protec-
tion against hostile intelligence access to truly important secrets. If
a case can be made that specific types of unclassified, but sensitive,
information should be exempted from the FOIA, Congress should
consider appropriate legislation as has been done for certain kinds
of Defense Department technical data. This would be in keeping
with the report on Scientific Communication and National Securi-
ty, which called for development of specific criteria to determine
whether unclassified scientific research should be protected by
means short of classification.
The other information security recommendations sent to the
NSC by the Committee addressed the problem of disclosure of clas-
sified information to the news media. The Committee is especially
concerned about leaks that compromise sensitive intelligence
sources and methods. The Committee emphasized the ISO() recom-
mendation that more effective, unclassified educational materials
be developed to explain the damage caused by unauthorized disclo-
sures. The more important recommendation was for new proce-
dures for authorized disclosure of classified information to the
news media.
The Committee recommended that the NSC confront the perva-
sive practice of authorized disclosure of classified information on
background, without permitting attribution to the source. By exec-
utive order, the President should require each agency to establish
procedures to be followed whenever an official authorizes the dis-
closure of classified information to the news media or in any other
public forum. The procedures should apply not only to formal state-
ments for attribution, but also to disclosures on background. They
should require that a decision be made to declassify the exposed in-
formation or that a record be maintained for purposes of account-
ability when authority is exercised or granted to disclose informa-
tion that remains classified. The procedures should require consul-
tation with the agency that originated the information and written
designation of the officials in each agency who are authorized to
communicate classified information to the media, either in person
or through an authorized representative.
Some Executive branch officials oppose such procedures as likely
to open the floodgates for "authorized leaks." Others want strict
enforcement of a policy that any classified information disclosed to
the media be officially declassified. The Committee strongly encour-
ages adherence to a policy that officials speak on the record to the
maximum extent. Nevertheless, there may well be valid reasons for
retaining a background briefing's classified character. Any serious
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effort to address the problem of leaks must face the realities of
press-government relations. More leak investigations may accom-
plish little, moreover, so long as authorized background disclosures
continue to divert investigators from cases in which administrative
discipline, dismissal or legal action is possible. Policies that ignore
"authorized leaks" simply reinforce the climate of cynicism that
has fostered disrespect for security. ?
In addition to the recommendations submitted to the NSC in De-
cember, 1985, the Committee has several other information securi-
ty recommendations. Many proposals of the Stilwell Commission on
managing and controlling classified information should be consid-
ered government-wide. These include recommendations to:
Require, rather than simply permit, challenges to classifica-
tions believed to be improper.
Require a higher minimum degree of accountability for
Secret documents.
Impose better controls over reproduction equipment used to
copy classified information.
Initiate long-term action to develop technical or mechanical
controls over unauthorized reproduction.
Reduce unnecessary retention and storage of classified docu-
ments.
Prohibit employees from working alone in areas where Top
Secret or similarly sensitive materials are in use or stored.
The Stilwell Commission recommendations on special access pro-
grams and on National Disclosure Policy for transfers of classified
information to foreign governments are particularly important.
The proliferation of special access programs is testimony to the
failure of the current security system. ISOO Director Steven Gar-
finkel testified that -"a number of these programs are probably un-
necessary," and the Stilwell Commission reported that some actual-
ly afford less security protection than ordinary classification re-
quirements. This situation reflects the fact that, too often, there is
no real analysis of the hostile intelligence threat to special access
programs or of the reasons why normal security standards and pro-
cedures offer inadequate protection. As the Stilwell Commission
comments:
[A]lthough the sole rationale for the creation of Special
Access Programs under Executive Order 12356 is to pro-
vide enhanced security, there is sometimes too little scruti-
ny of this determination at the time such programs are
created. Unless an objective inquiry of each case is made
by the appropriate authorities, the possibility exists that
such programs could be established for other than security
reasons, e.g., to avoid competitive procurement processes,
normal inspections and oversight, or to expedite procure-
ment actions.
The Stilwell Commission's proposed policies, standards and con-
trols for special access programs should be adopted government-
wide. The development of minimum security standards for all DoD-
established special access programs, which was recommended by
the Stilwell Commission and has now begun, should end the temp-
tation to use SAPs as a way to avoid normal security requirements.
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The assignment of Defense Investigative Service personnel to work
full-time at major contractor facilities may reduce the likelihood of
problems like those recently revealed at Lockheed regarding pro-
tection of information on stealth technology.
Executive Order 12356 on National Security Information should
be modified, moreover, to place more controls on the establishment
of special access programs and to give the MOO Director greater
authority to conduct oversight and ensure accountability of special
access programs. A revised executive order should designate the
Secretary of Defense as the sole official entitled to create or contin-
ue defense-related, non-intelligence special access programs. There
should also be a comprehensive, one-time review and revalidation
of all existing special access programs and associated contracts,
with each department and agency reporting the results to the
ISO() Director who should make an independent assessment for the
NSC.
The Committee believes ISO() has made a valuable contribution
to better information security, but its small size (10 professionals)
unduly limits its ability to conduct oversight inspections and other
in-depth evaluations. ISOO's staff should be expanded to include a
permanent element to inspect agency practices at all levels of com-
mand and management. While ISO() cannot replace internal in-
spections, it should do more to ensure the effectiveness of agency
inspections by sampling on a periodic basis. 'SOO should also work
closely with the Defense Security Institute to implement the gov-
ernment-wide policy (proposed by IS00) requiring seminars and
training courses for all levels of commanders and managers, in gov-
ernment and industry, to understand information security policy
and procedures, especially classification management.
Classification management training should focus, in part, on the
fact that the only valid national security reason for classifying in-
formation is that a hostile element whose goal is to damage the in-
terests of the United States should not have use of the information.
Throughout the government, most classification judgments are
made by the "proponent," i.e., the originator or functional manager
responsible for the substance of the information. Few classification
authorities consider or have a good knowledge of how a hostile ele-
ment, government or otherwise, would use a particular piece of in-
formation to damage U.S. national security interests.
An informal query of government and industrial managers by
Committee staff tends to validate the report that managers are
often deficient in their knowledge of classification management re-
quirements and procedures. The proliferation of classified docu-
ments and the need for greater security has sprawned an entire
dictionary of special classification markings and control systems.
The rise of these special markings and control systems has tended
to generate a false sense of security and also to confuse those who
do not fully understand their meanings. ISO() and the DCI should
undertake a thorough reassessment of these practices with a view
to simplifying the special markings systems.
Special markings help to enforce need-to-know restrictions by
warning a reader what accesses are required to read a document.
Equally important, however, is a need for clear assignment of re-
sponsibility for determining whether someone has a requirement
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for access to information about a particular program. ISOO should
review current directives and regulations to ensure that such re-
sponsibilities are pinpointed and that compliance is audited regu-
larly.
Finally, the Committee does not believe that legislation to en-
hance criminal enforcement remedies for unauthorized disclosure
of classified information would be appropriate this year. After com-
pletion of the appeals in the Morison case, a reassessment by both
Congress and the Executive branch might be in order. The Commit-
tee does, however, support continued investigation of unauthorized
disclosures within agencies and by the FBI for purposes of adminis-
trative discipline as well as criminal prosecution. When Depart-
ment of Justice guidelines for leak investigations are reviewed pur-
suant to ISOO's proposal, they should be revised to reflect this
policy. Polygraph examinations should also continue to be used in
leak investigations on a voluntary basis in accordance with proce-
dures followed in other types of criminal investigations.
Findings and Recommendations
60. Recommendation.?The Executive branch should immediately
implement the Information Security Oversight Office (ISOO) pro-
posals, with strong public endorsement by the President and the
principal members of the National Security Council.
61. Finding.?The complexity of the current information security
system has led to overclassification, employee confusion and igno-
rance, inability to protect all the information earmarked for protec-
tion, and, at least at times, cynical disregard for security.
62. Recommendation. ?The Executive branch should consider
simplifying the classification system by establishing two levels,
eliminating the current Confidential classification. This streamlin-
ing should be preceded by consultation with other countries with
whom the United States shares security classification agreements.
63. Recommendation.?An Executive Order should be promulgat-
ed requiring each agency to establish procedures governing author-
ized disclosure of classified information to the news media, includ-
ing background disclosures of information that remains classified.
Such procedures should require records for accountability, consul-
tation with originating agencies, and designation of officials au-
thorized to disclose classified information to the media.
64. Recommendation. ?The Executive branch should review the
Stilwell Commission proposals on. managing and controlling classi-
fied information for possible government-wide implementation as
part of the National Strategic Security Program.
65. Recommendation.?Executive Order 12356 should be modified
to require greater controls on special access programs and to give
the ISOO Director greater authority to oversee such programs. The
Secretary of Defense should have sole authority to approve defense-
related, non-intelligence special access programs. The whole gov-
ernment should conduct a comprehensive review and revalidation
of all existing special access programs and associated contracts,
with an independent assessment by the ISOO Director. Such re-
views should be repeated on a periodic basis.
66. Recommendation.?ISOO's staff should be expanded to in-
clude a permanent inspection element. ISO() should work with the
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Defense Investigative Service to implement improved training
courses on information security and classification management.
ISOO and the DCI should also reassess special markings with a
view to simplification. 'SOO should ensure that agencies designate
individuals/positions with responsibility for determining need-to-
know access.
67. Recommendation. ?The Executive branch should postpone
consideration of new criminal penalties for unauthorized disclosure
until after the appeals in the Morison case. The Committee sup-
ports continued internal agency and FBI investigations for pur-
poses of administrative discipline as well as prosecution, including
use of voluntary polygraph examinations under criminal investiga-
tive procedures. Justice Department guidelines for leak investiga-
tions should be revised to reflect current policy of using adminis-
trative sanctions when prosecution is not pursued.
D. COMMUNICATIONS, COMPUTER, AND EMANATIONS SECURITY
The rapid expansion of electronic systems and equipment capable
of very high-speed transmission and storage of large volumes of in-
formation offers striking capabilities and opportunities for the
United States, particularly in the areas of national defense and in-
telligence. Equally striking are the security vulnerabilities of such
systems, for which Executive branch efforts to develop and imple-
ment countermeasures are in their embryonic stage. The Defense
Department and NSA have been given the lead in developing na-
tional policy for security countermeasures against hostile intelli-
gence efforts to intercept communications, penetrate computer sys-
tems, and monitor the emanations from communications and infor-
mation processing equipment.
Traditionally, communications security meant the encryption of
classified communications and the maintenance of discipline to
ensure that classified information was not discussed on open lines.
In the 1970s, two weaknesses with this approach came to be recog-
nized. First, it was discovered that the Soviets had a massive capa-
bility to intercept communications that could be exploited for sig-
nificant intelligence value, even if the discussions were unclassi-
fied.
The second factor was the inherent human weakness of govern-
ment and contractor officials, at all levels, who inevitably fail to
follow strict security rules. The inaccessibility or inconvenience of
secure phones, and the ease of slipping into or "around" sensitive
topics, meant that security briefings and penalties were simply not
adequate to prevent discussion of classified information on open
lines.
Congressional concern about communications security has in-
creased with growing public awareness of the threat. In 1985, Con-
gress enacted Senator Moynihan's proposal that the FBI submit a
report to Congress on the measures needed to counter the Soviet
surveillance threat to domestic communications. This report was
submitted in June, 1986, but was limited to the FBI's counterintel-
ligence support role without discussing steps being taken or
planned by the National Security Agency's Information Security
Directorate to deny the Soviets access to domestic communications.
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The NSA communcations security program is described in detail
in the annual budget justification submitted to the Intelligence
Committee for the first time in 1985. NSA has recently initiated a
major program to upgrade communcations security by developing a
low-cost, user-friendly secure telephone system. NSA's leadership
in working with private industry to develop such a system may
lead to a significant security breakthrough. NSA's plans to work
with the private sector by licensing use of essential cryptographic
techniques in equipment marketed to the public are unprecedent-
ed, and the Committee is satisfied with the efforts to take all equi-
ties into account. The Committee supports NSA's plans for secure
telecommunications equipment, including the idea of making the
equipment available to the private sector; it recommends attention
at the highest levels to the need for agencies outside the traditional
national security arena to join in this program as appropriate. The
Committee will continue to exercise budgetary and policy oversight
of NSA's communications security program.
In this regard, the NSA is concerned that current plans do not
fully respond to the threat to long-distance communications re-
layed over satellite links and intercepted from sites like the one in
Cuba. While the low-cost secure equipment developed under NSA's
leadership may solve much of the problem for government agencies
and private firms that can afford the cost, many organizations are
much less likely to be able to pay the price. Efforts to neutralize
the Soviet intercept operations that damage national security
should not depend so heavily on the marketplace. Senator Moyni-
han, former Vice Chairman of the Intelligence Committee, has pro-
posed a $1 billion program to encrypt all domestic communications
satellite links. The Committee has asked for and received a five-
year NSA plan to protect the most sensitive links that the Soviets
could exploit to damage U.S. security interests. This less expensive
proposal is to encrypt all dedicated channels leased by federal gov-
ernment agencies, by private firms with government contracts, and
by private firms that communicate large financial transactions and
economic forecasts. The Soviet could exploit these unclassified links
by piecing together information that, taken in aggregate, is highly
damaging to the United States. In the Intelligence Authorization
Act for FY 1987, the Committee recommends an increase of $129
million for the communications security program above the funds
requested by the Administration. More than half of this increase is
to begin implementation of the domestic satellite protection plan.
Another threat comes from hostile intelligence efforts to monitor
emanations from equipment and/or electrical lines. This problem
generally bears the label Tempest, from the term used for the
costly shielding and equipment design measures sometimes needed
to ensure against compromising emanations. Improvements are
being made in definition of the threat and the most cost-effective
countermeasures. The initial security standards developed by the
Defense Department and the Intelligence Community were based
primarily on the theoretical possibility of compromise. A 1983
interagency assessment of actual and probable threats led to re-
finement of the threat assessment, since the current threat appears
much greater abroad than in the United States. The bulk of Tern-
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pest expenditures, however, is still being made in the United
States.
On June 27, 1986, the General Accounting Office completed a
review of domestic DoD and military service adherence to national
Tempest policy for the House Committee on Government Oper-
ations. The GAO concluded that more than a year after the issu-
ance of the new January, 1984, Tempest policy, the services all con-
tinued to follow their older internal Tempest guidance.
The GAO is of the view that the imposition of "Tempest counter-
measures on industry should be controlled from a central point
within DoD." Also in order to minimize unnecessary Tempest-relat-
ed expenditures, the report recommends that the Secretary of De-
fense require all DoD components to conduct Tempest evaluations
before implementing Tempest countermeasures in the United
States to protect non-SCI information. Both the Stilwell Commis-
sion and an interagency body have recommended increased efforts
to relate more closely the extent of the Tempest protective effort in
the U.S. to the identified hostile collection threat. The expenditure
of funds and effort for unnecessary Tempest protection clearly
shows the need for better threat analysis and interagency collabo-
ration in developing the communications and computer security as-
pects of a National Strategic Security Program.
The Committee sees a similar imbalance in resource allocation in
the computer security field. Testimony at Committee hearings indi-
cates a disparity in resources between the technological and human
sides of the computer security problem. The overwhelming empha-
sis today is on increasing expenditures for development of more
secure equipment and software, rather than on the personnel and
information security measures needed to deal with the human side
of the problem. The DCI testified that personnel security is "the
most important part of any effective security program," yet the
Computer Security Center at NSA and the interagency computer
security committee (under the National Telecommunications and
Information Systems Security Committee chaired by the Assistant
Secretary of Defense for C3I) have focused mainly on hardware and
systems design.
The Stilwell Commission, citing the estimate that redressing the
damage from the Walker-Whitworth case could cost several billion
dolars, went on to warn:
Given the range of density of information housed in major
DoD computer-based systems, the possibility of remotely
accessing terminals over great distance, and the difficulty
of detecting exploitation by a trusted person, it is entirely
conceivable that a computer-wise traitor could cause cata-
strophic loss of resources and military advantage.
The security officer for one of the larger military logistics comput-
er systems sites expressed the same concern to Committee staff.
The Committee is also concerned about the apparent use of a DoD
computer system in a scheme to divert parts to Iran.
The trusted-person threat to computer security is not limited to
the Defense Department. The State Department has a problem due
to the fact that many embassy computer system managers and op-
erators are foreign nationals. In light of the sensitivity of even un-
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83
classified State Department systems, Members of the Committee
sponsored an amendment to the Diplomatic Security Act to protect
funding for State Department initiatives to replace those personnel
with U.S. citizens.
Because of the seriousness of the computer security threat, the
Committee urges consideration of the option suggested in a 1985
interagency assessment: "The only recourse may be for the United
States to exclude from these data bases the types of science and
technology information that are likely to be used against U.S. in-
terests." The National Strategic Security Program should ensure
that the computer security and information security communities
jointly develop procedures requiring analysis of computer system
vulnerabilities before sensitive material is approved for storage in
those systems.
Given the gravity of the personnel security problem, the Nation-
al Strategic Security Program should address the need for more
stringent controls on personnel with access to sensitive computer
data bases. As a result of the Walker-Whitworth case, special
"crypto-access" controls have been approved for personnel with ex-
tensive access to classified cryptographic information. Similar con-
trols should be considered for access to the most vital data bases
and networks. Furthermore, such positions should have top priority
for institution of personnel reliability program measures, as recom-
mended by the Stilwell Commission for DoD personnel involved in
especially sensitive programs.
One reason for the apparent imbalance in attention to technolog-
ical and human aspects of the computer security problem may be
the national policy structure that separates communications and
computer security from other security functions. In 1984 the Presi-
dent issued NSDD-145, which made NSA the "national manager"
for communications and computer security under a new National
Telecommunications and Information Systems Security Committee
(NTISSC) chaired by the Assistant Secretary of Defense for C3I.
NSDD-145 was an important effort to update national policy, be-
cause it recognized the close connections between computer and
communications security. The Committee endorses the assignment
of NSA, working through its National Computer Security Center,
to conduct research and develop computer security hardware, sys-
tems and standards not only for DoD, but also for the federal civil-
ian establishment and segments of the private sector. The National
Bureau of Standards Institute for Computer Science and Technolo-
gy is cooperating with NSA in transmitting research results
throughout the government and to private industry. These efforts
should increase.
Computer security is, however, one of the best examples of why a
still broader national policy structure is essential to ensure full at-
tention to all aspects of security counter-measures. While NSA has
unique technical capabilities, computer security priorities should
be addressed as part of the National Strategic Security Program to
ensure that research efforts and resource allocation respond to the
most serious actual and probable threats. (Another reason for a
framework spanning current jurisdictional divisions is that TEM-
PEST issues relate closely to technical surveillance countermeas-
rues, as discussed below.)
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Recently, fears have been expressed regarding a "big brother"
role in NSA's growing involvement with the civilian and private
sectors. The Committee believes that NSA is best equipped to de-
velop technical measures needed to remedy serious vulnerabilities
in a timely manner. The Committee also recognizes that both the
Executive and Legislative branches must continue to exercise over-
sight to ensure that the Government does not impose technical so-
lutions that impinge on individual privacy, civil liberties or public
confidence.
To improve congressional oversight of resource allocation, pro-
gram priorities and privacy concerns, the Committee instituted a
review of the NSA communications and computer security budget
requests beginning with FY 1987. The House Intelligence Commit-
tee began this practice last year, and the funds were included for
the first time in the Intelligence Authorization Act for FY 1986.
While these NSA programs are not part of the National Foreign
Intelligence Program and thus are within the concurrent jurisdic-
tion of the Armed Services Committee, they also fall under the In-
telligence Committee's general mandate in Senate Resolution 400
for oversight of measures taken to protest against the hostile intel-
ligence threat.
Findings and Recommendations
68. Recommendation. ?The National Strategic Security Program
should ensure that NSA's plan for low-cost, secure voice telephone
equipment is implemented by all government agencies, contractors
and offices involved with national security information and other
technological, political and economic information of significant
value to adversaries.
69. Finding.?A program for encryption of domestic commercial
communications 'satellite links that would be the most lucrative
targets for hostile interception of private communications is a
worthwhile supplement to the secure phone program. The Commit-
tee has recommended FY 1987 funding to begin this program.
70. Recommendation. ?The National Strategic Security Program
should enforce current national TEMPEST policy for all govern-
ment agencies, so that decisions to buy TEMPEST equipment are
based on the best counterintelligence estimates of actual and prob-
able threats.
71. Recommendation. ?The National Strategic Security Program
should place greater emphasis on personnel, physical and informa-
tion security aspects of computer security, including research ef-
forts, and should establish relative priorities for all aspects of com-
puter security countermeasures.
72. Finding. ?Because U.S. embassy computers and word process-
ing systems may contain sensitive information, Committee Mem-
bers sponsored an amendment to the Diplomatic Security Act to
protect State Department funds to place U.S. citizens in charge of
embassy computers.
73. Recommendation. ?The computer security and information
security communities should review and improve current proce-
dures for analysis of information system vulnerabilities before sen-
sitive material is approved for storage in such systems.
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74. Recommendation. ?Given -the gravity of the threat, high pri-
ority should be given to strict personnel security controls, compara-
ble to the reinstituted crypto-access program and incorporating
personnel reliability programs, for persons with extensive access or
potential access to sensitive computer systems.
75. Recommendation.?The National Strategic Security Program
should provide for national-level review of communication, comput-
er and emanations security resource requirements, with NSA con-
tinuing to be responsible for development of technical measures
and standards needed to remedy vulnerabilities. The Committee
will continue to oversee the level of effort and to ensure that tech-
nical measures are not imposed in a manner that impinges on indi-
vidual privacy, civil liberties or public confidence.
E. TECHNICAL AND PHYSICAL SECURITY
In June, 1985, the Committee heard detailed testimony on the
bugging of typewriters at our Moscow embassy and other Soviet
technical surveillance operations. This testimony vividly demon-
strated the Soviets' strong technical surveillance capabilities and
U.S. vulnerability to sophisticated electronic penetration and eaves-
dropping techniques. Shortly thereafter, the Inman Panel on Over-
seas Security submitted to the Committee a compartmented annex
to its report to the Secretary of State, showing that the technical
security threat is a formidable challenge. The Inman Panel
stressed fundamental problems for the State Department and rec-
ommended both a reorganization of State Department security op-
erations into a new Diplomatic Security Service and a massive re-
building program for overseas missions. The Moscow embassy dis-
covery and the Inman Panel report have reawakened the intelli-
gence community and the State Department to the threat of hostile
technical surveillance.
The Committee recognized after the June, 1985, hearing that
U.S. technical surveillance countermeasures (TSCM) had been seri-
ously underfunded in recent years. Consequently, the Committee
proposed what became a $35 million FY 1985-86 supplemental ap-
propriation to enhance security countermeasures at U.S. facilities
abroad.
The physical security lapses that allowed Soviet access to State
Department equipment and the low funding for technical surveil-
lance countermeasures are matters of grave concern to the Com-
mittee. As a result, the Committee accompanied its proposal for a
supplemental appropriation with a request for a comprehensive
long-range plan for upgrading technical security at U.S. facilities
abroad. The outlines of such a plan are beginning to take shape.
The Committee is pleased to note the cooperation and progress
achieved in this area by Executive branch agencies in 1986. The
best way to marshal their energies is, however, to establish a Na-
tional Strategic Security Program that can take all interests and
disciplines into account. Current interagency mechanisms will ben-
efit from being incorporated in this broader and more formal
framework. This recommendation is consistent with an interagency
assessment that emphasizes the necessity for total protection of in-
formation and telecommunications equipment and with the testi-
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mony of CIA's Security Director that "the best security will be
achieved through a program that integrates technical security with
other security disciplines."
Many agencies play R&D or operational roles in detecting and
denying technical penetration by hostile intelligence services. Ade-
quate TSCM planning must do more than just provide an organiza-
tional framework and philosophy. It should outline explicitly the
vulnerabilities, requirements, objectives, responsibilities, resources
and schedule for short and long-term R&D, training, personnel, in-
spection and other needs. The Committee looks forward to this
level of effort in the future.
Implementing the Inman Panel recommendations, the State De-
partment has established a new Diplomatic Security Service so as
to give those who manage its security functions higher status, in-
creased resources and a greater voice in Department management.
State has also developed a $285 million construction plan to build
more secure facilities in Eastern Europe. The State Department is
establishing programs, moreover, to ensure that all information
processing equipment sent abroad is under strict security controls.
These efforts are a sensible response to the vulnerabilities uncov-
ered by the discovery of the bugged typewriters. The Committee
has encouraged development of this program, and Members spon-
sored an amendment to the Diplomatic Security Act that protects
funds for it.
Congress should also support the substantial, multi-year expendi-
tures that will be required to implement Inman Panel recommen-
dations for enhanced physical security at U.S. facilities overseas.
Congress funded initial requests to improve embassy security
against terrorism, including President Reagan's request for a
$110.2 million supplemental appropriation for FY 1985 and the Act
to Combat International Terrorism (P.L. 98-533), which authorized
$366.3 million for embassy security. The urgent supplemental for
FY 1987 appropriates over $700 million to begin the new construc-
tion and other security enhancements.
The Committee understands that there must be a "rule of rea-
sonableness" in embassy physical security that takes into account
the need for openness and the negative effect of a "fortress" image.
Nevertheless, policy and design should be flexible enough to re-
spond not only to the terrorism threat, but also to the hostile intel-
ligence threat.
Security expertise in other agencies can contribute significantly
to the success of the embassy construction program and it will be
important to factor technical security requirements into both the
planning and the construction of new facilities. This Committee
has worked closely with the Senate Appropriations Committee to
provide funds and positions in the FY 1987 urgent supplemental
for such assistance to the Foreign Buildings Office of the State De-
partment.
The State 'Department advises that budget constraints have re-
quired modification of the plans for certain construction which
originally would have made necessary security improvements in
FY 1988. The revised plan stretches out construction work through
FY 1990. The Committee urges the Administration to accelerate its
'5.
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decisions in light of long-range, tailored security plans for each of
these missions.
Findings and Recommendations
76. Recommendation. ?The Executive branch should continue to
place greater emphasis on the development of means and the im-
plementation of actions to detect and defeat technical penetrations
of sensitive facilities. The National Strategic Security Program
should reconcile the various technical security interests and inte-
grate them with other security disciplines.
77. Finding?Executive branch actions in 1986 to upgrade securi-
ty functions and to coordinate technical security efforts have been
a notable step forward. They deserve continuing high-level support
and resource commitments.
78. Finding?State Department plans to improve the security of
information processing equipment constitute a reasonable approach
to the technical penetration problems. Committee Members have
moved to ensure that the needed funds to begin these programs are
available.
79. Recommendation. ?Congress and the Executive branch
should support implementation of the Inman Panel recommenda-
tions for major site and/or physical changes to U.S. facilities
abroad to enhance security, minimize acts of terrorism and prevent
hostile intelligence penetration.
80. Recommendation.?The State Department should ensure that
security, experts in other agencies are given full opportunity to par-
ticipate in the planning and oversight of new embassy construction
efforts to achieve a comprehensive security system. Decisions on
long-range, tailored security plans for overseas missions should be
accelerated.
F. INDUSTRIAL SECURITY
Espionage cases of the past ten years, involving such industry
personnel as Boyce, Lee, Bell, Schuler, Harper and Cavanagh and
the loss of sensitive technological information through increasing
levels of espionage and illicit transfer, have highlighted the priori-
ty that hostile intelligence services attach to U.S. technology. The
interagency report in 1985 on Soviet Acquisition of Militarily Sig-
nificant Technology described the threat, and its findings are con-
firmed both by Soviet documents obtained by the French and by
the testimony of Soviet bloc defectors. Industry is vulnerable to re-
cruitments by hostile services and to employees who volunteer
their information for pay. Industrial communications are vulnera-
ble to Soviet interception; and industrial facilities are susceptible
to technical penetration, especially overseas. Co-production agree-
ments with foreign firms compound the difficulties.
Hostile intelligence successes in penetrating U.S. industry, culmi-
nating in the Harper case, triggered an in-depth review of industri-
al security programs and policies in 1984 by a DoD Industrial Secu-
rity Review Committee (also known as the "Harper Committee").
This review was particularly important because DoD has been dele-
gated industrial security responsibility for eighteen federal depart-
ments and agencies. The Harper Committee's 25 recommendations
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are designed to enhance industrial security dramatically. While not
all have been adopted by DoD, the majority are being implemented
as proposed or with some revisions. The Committee urges prompt
action on the Harper Committee reforms that have been approved
for implementation. The National Strategic Security Program
should also review those recommendations for government-wide im-
plementation.
Several Harper Committee proposals deserve special emphasis.
First is better integration between counterintelligence and indus-
trial security. In the past, there has been a reluctance on the part
of the counterintelligence community to communicate with indus-
trial security officers. While such communication is improving, par-
ticularly in security awareness programs such as the FBI's DECA
program, there is ample room for closer cooperation. There should
be a continous two-way sharing among counterintelligence agencies
and government and industrial security officers. Counterintelli-
gence agencies should provide more tailored information on the
hostile intelligence threat to particular programs or types of pro-
grams, as well as in particular geographical areas, for use in secu-
rity awareness efforts and the design of security measures.
A pilot program should be initiated for assignment of Defense In-
vestigative Service personnel to large sensitive contractor facilities
on a full-time basis, and the National Strategic Security Program
should review the results as a basis for considering a similar gov-
ernment-wide practice. With 95 percent of all classified documents
(an estimated 15 million out of 16 million) residing with only 4 per-
cent of the cleared industrial contractors, the case for a continuing
government security presence at those facilities is strong. It is fur-
ther enhanced by the admissions of the Chairman of the Board of
Lockheed regarding the sloppiness of the company in accounting
for classfied documents. A GAO investigation had revealed that
Lockheed was unable to account for nearly 1,500 documents due to
inadequate controls. A reordering of priorities to concentrate on
major contractors will not result in the government taking over
contractor security functions, but rather will permit timely audits
of security functions and correction of problems in primary facili-
ties.
As discussed in the section on personnel security, a single-scope
background investigation for Top Secret and SCI clearances would
especially benefit industrial security. The five-year goal for clear-
ing up the backlog of periodic reinvestigation for Top Secret and
SCI, if applied government-wide, would similarly benefit contrac-
tors who are on the leading edge of U.S. intelligence technology.
The Committee has added funds to agency budgets for this purpose
more than one occasion.
Industrial security managers have had to cope with tremendous
needs for, and resultant delays in, clearance investigations for in-
dustry. With the large defense buildup in recent years has come a
dramatic rise in the number of contractor personnel holding securi-
ty clearances. -Between FY 1978 and the end of FY 1985, the
number of such clearance investigations per year increased from
28,000 to 75,000. The Defense Department's recent twenty-percent
reduction in clearances should help ease this burden.
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Federal Acquisition Regulations should be changed to designate
security requirements for classified contracts as a direct cost. When
security is designated as a direct cost instead of an overhead cost,
industrial security officers are relieved of the opposing pressures of
the government-customer who demands more and better security
and the company officials who see security as a drain on profitabil-
ity. In addition, the designation of security as a direct contract cost
will force the customer to more precisely define his security re-
quirements in the Request for Proposals (RFP) and in security deli-
verables. While this approach may appear more costly to the tax-
payer, in the long run it will result in greater cost savings through
effective planning and cost controls.
Consideration should also be given to the greater use of Cost Plus
Award Fee (CPAF) contracts as an incentive for fulfilling contract
security requirements and specifications on time, within cost and
without security violations. Making security a major award fee de-
terminant along with the other award fee elements will give con-
tractors for classified contracts the motivation for ensuring that
more and better-qualified security planning and operations person-
nel are assigned and retained on contracts.
Training and government certification of all current and planned
contractor security officers should be required in each classified
contract. As pointed out in the Harper Committee report, the in-
tense targeting by hostile intelligence services of the large amount
of classified data entrusted to contractors, as well as the absence of
a formal training program for industrial security officers, justifies
the government's establishment of this requirement. The require-
ment for training and certification should also apply to personnel
with security responsibilities for special access program contracts.
A final and most disturbing concern is the hostile intelligence
threat to foreign subsidiaries of U.S. firms and to foreign firms
that have co-production agreements with the United States. Al-
though U.S. counterintelligence efforts abroad, both unilateral and
in concert with our allies, can help deal with this problem, it also
requires national policymaker attention. The Stilwell Commission
warned specifically of the critical problem with co-production ar-
rangements, "where losses could entail not only the end-item being
produced but also the technical 'know-how' necessary to manufac-
ture it in large quantities." Other weaknesses identified by the
Commission include insufficient controls in the sale of classified
weapons systems and ineffective security surveys. The Committee
fully endorses the Stilwell Commission's recommendations for im-
proving the National Disclosure Policy, which governs transfer of
classified military information to foreign recipients. The following
approach would be required in approving classified transfers:
(1) requiring a determination that the need of the recipient
cannot be satisfied by unclassified systems or data;
(2) if classified systems or data are required, then requiring
selection of a model or type of such system that minimizes the
need to transfer classified information;
(3) requiring phasing in of the most sensitive classified infor-
mation over time, if feasible;
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(4) avoiding co-production of military systems which involve
the manufacture of the most advanced version of classifed com-
ponents or end-items.
In addition, security surveys would be conducted by a permanent
professional staff with flexibility to meet pressing needs for in-
country security assessments. The National Strategic Security Pro-
gram should ensure that such improvements are implemented not
only for military information, but for sensitive intelligence and nu-
clear matters as well.
Findings and Recommendations
81. Recommendation.?The National Strategic Security Program
should foster better communication between U.S. counterintelli-
gence agencies and industrial security officials and provide more
tailored information on the hostile intelligence threats to particu-
lar programs or areas.
82. Recommendation.?DIS should initiate a pilot program for as-
signment of its personnel to large sensitive contractor facilities on
a full-time basis, and the results should be reviewed as a basis for a
similar government-wide practice.
83. Finding. ?Recently adopted goals for ending the reinvestiga-
tion backlog for contractors holding Top Secret and SCI clearances
who are currently involved in sensitive classified contracts merit
high-level commitment and support.
84. Recommendation. ?Federal Acquisition Regulations should be
changed to designate industrial security for classified contracts as a
direct cost. The primary intent of this proposal is to identify and
monitor security costs associated with particular contracts.
85. Recommendation. ?Consideration should be given to greater
use of Cost Plus Award Fee contracts as an incentive for fulfilling
contract security requirements.
86. Recommendation.?Trained and government-certified security
officers should be required in each classified contract, including
those for special access programs.
87. Recommendation.?The National Strategic Security Program
should ensure implementation of the Stilwell Commission recom-
mendations on National Disclosure Policy not only for military in-
formation, but for sensitive intelligence and nuclear matters as
well.
88. Recommendation. ?Other Harper Committee recommenda-
tions approved by DoD should be implemented promptly and re-
viewed for government-wide application.
G. CONGRESSIONAL SECURITY
In December, 1985, Randy Jeffries, an employee of a private firm
that transcribed classified hearing transcripts for congressional
committees, was arrested for attempting to sell classified material
to Soviet intelligence. The FBI detected the employee making con-
tact with the Soviet Military Office in Washington. The employee
admitted giving the Soviets excerpts from a classified transcript of
a House Armed Services Subcommittee hearing on Defense Depart-
ment command, control, communications and intelligence pro-
grams. The subsequent FBI investigation revealed that the employ-
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ee had been observed by a co-worker removing classified documents
from the firm under his coat and that a friend of his had destroyed
a locked briefcase given to him that possibly contained? classified
documents. Jeffries pleaded guilty in January, 1986, to a charge of
supplying national security documents to a person not entitled to
receive them. This offense carries a maximum sentence of ten
years in prison.
The case highlights the fact that Congress is not immune from
the espionage problems that have surfaced throughout the govern-
ment in recent years. Both Executive branch and congressional in-
quiries have emphasized the need to enhance congressional securi-
ty in response to espionage threats. In November, 1985, the Stilwell
Commission expressed the following concerns, about the handling of
classified information by Congress:
[A]lthough Executive Order 12356 provides that depart-
ments and agencies may disseminate classified information
to persons outside the Executive branch provided such in-
formation is given "equivalent protection" by the recipi-
ent, DoD elements frequently provide classified informa-
tion to the Congress without any understanding of how
such information will be protected. While all congressional
staff members who receive access to classified DoD infor-
mation are, in theory, cleared by DoD, little attention is
given the handling and storage of such information by con-
gressional staffs, who are not, in fact, bound by the safe-
guarding requirements of Executive Order 12356.
The Stilwell Commission recommended that the Secretary of De-
fense take the following actions:
Urge the President of the Senate and Speaker of the
House of Representatives to adopt, for each House of Con-
gress, rules to provide uniform minimum control over clas-
sified information provided by departments and agencies
of the Executive Branch. Volunteer to provide DoD re-
sources and assistance to Congress to achieve this goal.
In January, 1986, the Report on the Federal Government's Secu-
rity Clearance Programs by the Permanent Subcommittee on In-
vestigations of the Senate Committee on Governmental Affairs ad-
dressed this subject in the following observation:
Congress must also focus on problems dealing with clas-
sified information in ,the legislative branch. For the most
part, there are no established standards and procedures.
Personal offices and Committee practices vary widely in
terms of their handling of clearances and classified materi-
al. There are few, if any, checks in this system. We believe
an overall review of security procedures in the legislative
branch should be conducted by the Rules Committee, in
consultation with the Intelligence Committee, with a goal
of recommending improvements where needed.
The Chairman and Ranking Minority Member of the Subcommit-
tee, Senators Roth and Nunn, addressed this issue through prelimi-
nary letters to the Senate leadership.
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The Senate Intelligence Committee has received information
from the FBI and other U.S intelligence agencies regarding the op-
erations of the intelligence services of Communist countries direct-
ed at Members of Congress and their staffs, including attempts to
recruit or place agents in Congressional offices. Electronic surveil-
lance of domestic communications by foreign countries also poses
threats to Congress. Only a few congressional offices have secure
telephones linked through the Executive branch system.
The information provided to the Intelligence Committee about
the espionage threat to Congress indicates a continuing pattern of
activity designed to exploit vulnerabilities in security. In three
cases over the past ten years, the FBI has uncovered and disclosed
publicly Soviet bloc attempts to recruit and place American citi-
zens as agents inside Congressional offices. U.S. counterintelligence
successfully prevented any damage in the following cases:
In 1976 a political scientist employed by the Atlantic Coun-
cil, James Frederick Sattler, was revealed to be attempting to
secure a position with a House Foreign Affairs Subcommittee,
after being recruited and trained as an espionage agent by
East German intelligence.
In 1980 a former CIA case officer, David Barnett, was pros-
ecuted for espionage based on evidence that he had sold CIA
information to Soviet intelligence and had attempted to gain
employment with the Senate and House Intelligence Commit-
tees on the instructions of Soviet intelligence.
In 1982 a staff assistant to a House Member reported to the
FBI an effort by Soviet intelligence to recruit him as an agent.
At the FBI's request, the staff member became a "double
agent" to learn more about Soviet intelligence techniques and
aid U.S. counterintelligence.
In other cases, which have not been disclosed by the FBI, there is
additional evidence of espionage targeting of Congress by Commu-
nist intelligence services.
In more general terms, the FBI has described the techniques
used to penetrate the Congress. Communist countries assign intelli-
gence officers to the United States as diplomats, journalists, trade
representatives, and in similar capacities. Some of these intelli-
gence officers are instructed to cultivate associations with Members
of Congress and congressional staff for the purpose of developing
confidential relationships. A well-trained intelligence officer knows
how to approach individuals so as not to appear in any way hostile
or threatening. Sophisticated and skillful intelligence officers can
establish relationships that seem entirely innocent. Professional,
academic or social contacts lead to friendships without any sugges-
tion by the intelligence officer of anything illegal or improper.
Only when the intelligence officer has learned enough about an in-
dividual's vulnerabilities will an effort be made to exploit the rela-
tionship.
Lax security practices offer greater opportunities for an intelli-
gence officer to succeed in compromising a congressional staff
member. Unlike Executive branch personnel, congressional staff
have no requirement or established procedure for reporting con-
tacts with representatives of Communist countries. In some cases,
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Members or their staff do report such contacts to the FBI, but the
record is very uneven.
The purpose of contact reports is to assist the FBI's investiga-
tions of suspected foreign intelligence officers. The FBI has advised
the Intelligence Committee that its investigations of suspected in-
telligence officers disclose many contacts with individuals who,
after further inquiries, are found to be congressional staff. Contact
reports save the FBI much time and effort, as well as enabling it to
advise staffers on how to handle such contacts. That agency has
raised with the Intelligence Committee the need for a more formal-
ized procedure in the Senate for briefing staff on the espionage
threat and for reporting contacts with representatives of Commu-
nist countries.
Another matter that the FBI has discussed with the Intelligence
Committee is the handling of classified documents in the personal
offices of Members. The FBI has offered to develop both classified
and unclassified briefings on the espionage threat to Congress from
the intelligence services of Communist countries. The Defense De-
partment, which is responsible for most of the security clearances
for congressional staff, might be an appropriate source of assist-
ance in briefing staff on the handling of classified materials.
In an effort to address issues related to Senate classified informa-
tion security, the Senate Sergeant at Arms, in November, 1985, cir-
culated a Senate Select Committee on Intelligence questionnaire to
all Members' personal offices and Committees of the Senate. The
results of that questionnaire were not encouraging. Based on re-
sponses from 60 Senators' offices, the following conclusions can be
drawn:
There is confusion about the levels and sensitivity of the
classified information received in personal offices.
There is no uniform procedure followed for storage or control
of classified information in personal offices.
Staff with clearances in personal offices rarely receive secu-
rity indoctrinations or other security education.
As a result of the security survey and the foreign intelligence
threat to the Congress, the Senate Select Committee on Intelli-
gence, together with the leaders of the Committee on Rules and
Administration and the Committee on Governmental Affairs, de-
termined that the key to addressing the Senate's information secu-
rity problems lies in the creation of a central office within the
Senate to develop and oversee much-needed standards and proce-
dures on important personnel security and information security
issues.
The security assistance that a central office would provide in-
cludes:
Receiving, controlling, transmitting, storing and destroying
classified material.
Processing clearance requests for personnel of the Senate.
Maintaining a centralized record of clearances held by per-
sonnel of the Senate.
Presenting security briefings and debriefings for the benefit
of Senate personnel.
Consulting on security issues with the personal offices and
committees.
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Conducting administrative liaison with other U.S. Govern-
ment agencies on behalf of the Senate.
A particularly troublesome question relating to classified infor-
mation security is the large number of Senate staff having access
to classified material. The Senate security office should be required
by resolution to conduct a comprehensive survey of all Senate of-
fices to determine which officers and employees hold security clear-
ances. The director would report this information within 90 days to
the Majority and Minority Leaders along with comments and/or
recommendations as to the feasibility of reducing the number of
Senate staff with security clearances.
Another early task of the proposed office should be to devise a
Senate Security Manual whose provisions, if approved by an over-
sight group and the full Senate, would be binding on all Members,
Officers and employees. The Committee has provided to the Senate
leadership a draft Senate security manual to serve as a basis for
discussion which is reprinted in Appendix G to this Report. The
draft security manual contains standards and procedures both for
the handling of classified information and for personnel security.
Findings and Recommendations
89. Finding. ?Hostile intelligence services have attempted to pen-
etrate the staffs of Senate and House Members and Committees.
Hostile services use sophisticated techniques to develop contacts
that can lead to intelligence recruitments.
90. Finding. ?Lax security practices in the Senate increase the
risk of compromising sensitive information. There is no require-
ment or procedure for reporting contacts with representatives of
Communist countries. There are no established procedures for han-
dling classified information, especially in Member offices. There is
no accountability for the handling of such information, and there is
great confusion about the sensitivity of the information and what
should be done with it. There is no central point where the number
of Senate employees with security clearances is tallied or where
such services of common concern as security briefings and day-to-
day information security assistance are provided.
91. Recommendation. ?The Senate should establish a central se-
curity office to develop and oversee standards and procedures on
important personnel security anct.information security issues.
92. Recommendation. ?A central security office, once established,
should immediately survey all Senate offices to determine which
offices and employees hold security clearances. This information
should be reported within 90 days to the Majority and Minority
Leaders along with comments and recommendations on the feasi-
bility of reducing the number of Senate staff with security clear-
ances.
93. Recommendation. ?The proposed office should develop a
Senate Security Manual, the provisions of which would be binding
on all Members, Officers and employees.
94. Recommendation. ?All Members and employees of the Senate
should be encouraged, and employees with security clearances re-
quired, to report contacts with Communist country officials or
other suspected foreign intelligence officers. The central security
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office should establish a procedure for such reporting, either
through it or directly to the FBI.
95. Recommendation. ?Further recommended items for consider-
ation by the Senate security office include: establishment of a
Senate corps of cleared employees for transcribing and reporting
classified hearings; and improvement in the communications secu-
rity of telephone conversations, classified computer data, and face-
to-face discussions of a sensitive nature.
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APPENDIXES
APPENDIX A
UNITED STATES DISTRICT COURT, NORTHERN DISTRICT OF CALIFORNIA
UNITED STATES OF AMERICA, PLAINTIFF,
V.
JERRY ALFRED WHITWORTH, DEFENDANT.
Criminal No.: 85-0552 JPV
Affidavit of Rear Adm. William 0. Studeman, Director of Naval
Intelligence
1. I am William 0. Studeman, a naval officer presently holding
the rank of Rear Admiral. I was commissioned an Ensign in the
Navy in 1963, and have served virtually continuously on active
duty as a naval intelligence officer since that time. My present po-
sition is that of Director of Naval Intelligence, which I have held
since September 1985. As Director of Naval Intelligence, I am re-
sponsible for the collection, analysis and distribution of intelligence
information within the Naval Service. I am the Navy's sponsor for
counterintelligence programs executed by the Naval Security and
Investigative Command, under the policy auspices of the Office of
the Secretary of Defense. I offer this affidavit to the Court for use
as it deems appropriate in constructing an appropriate sentence for
the defendant in this case.
2. The defendant in this case, formerly Senior Chief Petty Officer
Jerry Alfred Whitworth, served the United States Navy for 241/2
years, 18 of which were in the rate of Radioman, rising to the rank
of Senior Chief prior to his retirement. The primary function of a
Radioman is to provide and maintain the ability of Department of
Defense and naval forces to communicate with each other as well
as senior and subordinate commands. Unlike the navies of old, vir-
tually all the information required to plan, operate, command,
maintain, modernize, repair, replenish, warn, inform and control
the military forces of all the services and our allies is exchanged
electrically via communication systems, most of which are consid-
ered secure by virtue of their cryptographic cover. Electrical distri-
bution of naval messages is an essential backbone activity designed
to reach all levels of command in the Navy. This naval communica-
tions system is operated by some of our brightest people who are
given the tools, training and sacred trust to protect the vital high
technology systems and access to sensitive secrets which are placed
(97)
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in their hands. It is important, therefore, to understand the vulner-
abilities inherent in naval communications, to understand the con-
cept of crytographic support to communications security (COMSEC)
and to understand how Radioman Senior Chief Jerry Whitworth's
violation of his trust as a member of the elite fraternity of naval
communication professionals has resulted in unprecedented
damage to the Navy and the nation.
3. Cryptographic systems are designed to encipher information so
that only the holders of the system will be able to decipher that
same information. Contemporary crypto-equipments accomplish en-
ciphering and deciphering on the basis of complex mathematical
formulas called "logic", which are designed as an integral part of
the system with changeable additives called "key". To decipher an
intercepted message, an adversary must know both the logic and
the key of the cryptosystem used to encipher it. Since it is effective-
ly impossible to ensure that the logic of a cryptosystem will not be
compromised during the years it remains in effect, the security of
our machine cryptosystems depends on ensuring the integrity of
the associated key and the personnel who care for the system.
"Key" literally will unlock the secrets contained in encrypted com-
munications.
The ultimate vulnerability of cryptosystems and all procedures
designed to protect sensitive information lies at the human level.
For this reason, personnel chosen for communications-related
duties are carefully screened and indoctrinated in the especially
sensitive nature of the positions they hold and the fiduciary-like
nature of the trust placed in them. No system ever designed can be
invulnerable to the corrupt, cleared individual who has access to
sensitive information. Thus, we depend on an individual's integrity
and deterrence of the law to ensure that this trust is fulfilled.
4. The importance of key was amply demonstrated by the evi-
dence in this trial. The Soviets were clearly willing to pay a high
price for key?more than $300,000 for the defendant alone. But the
price paid by the Soviets pales in comparison to its worth. Naval
intelligence analysis has led us to conclude that the Walker-Whit-
worth espionage activity was of the highest value to the intelli-
gence services of the Soviet Union, with the potential, had conflict
erupted between the two superpowers, to have powerful war-win-
ning implications for the Soviet side.
5. The importance of the individual spy cannot be overestimated
in this type of intelligence acquisition. When an adversary covertly
obtains the protective key supplemented by large volumes of actual
messages, he can potentially read any or all intercepted messages
which that key protects. In the case of Navy operational command
circuits, this can be literally hundreds of messages per key setting,
many of which are vital to the national security of the United
States. Normally, the information contained in those encrypted
messages could be expected to include, at a minimum, further
plans, ship locations and transit routes, military operations, intelli-
gence activities and information, weapons and sensor data, naval
tactics, terrorist threats, surface, subsurface and airborne doctrine
and tactics, and similar information which could prove of incalcula-
ble value to hostile powers. Undetected theft of cryptographic key
by persons intent on penetrating COMSEC safeguards can have ex-
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tremely dire consequence to the defense posture of the nation. His-
tory is replete with examples of the benefits and risks associated
with COMSEC made vulnerable by espionage or otherwise pene-
trated for the benefit of one side or another. Such vulnerabilities
sustained over time have altered the course of history and can do
so again in the future.
6. With respect to this specific case, the sheer volume of encrypt-
ed data compromised to the Soviet Union makes it impossible to
describe all of that data with specificity. The Court has already
heard a few of the specifics during trial; therefore, in paragraphs
7-9, I will simply describe generically the types of information
which have likely been traded to the Soviet Union through the
years of this espionage enterprise. I will briefly mention some of
the more significant aspects of the defendant's activities. I will also
provide to the Court certain conclusions I have drawn concerning
these compromises. My conclusions are based on my twenty-four
years experience as a naval officer, as both a user and producer of
intelligence information, and on my current responsibilities as Di-
rector of Naval Intelligence and the Senior Intelligence Officer for
the Department of the Navy.
7. Ship location and transit information.?This is perhaps the
most common type of information transmitted over naval commu-
nications circuits. On any given day the transit passages and loca-
tions of numerous naval vessels, both U.S. and allied, will be trans-
mitted in encrypted radio traffic. Normally, this type of data is
held confidential until the information is no longer valid. The rea-
sons that ship locater information is temporarily classified are
three-fold. First, simple prudence dictates that the location of ships
of the line be held confidential while that sort of information can
enhance their vulnerability. This is especially true during periods
of hostility. For example, during the Vietnam era, compromises of
this type of information could have been responsible for ineffective
air strikes, downed aircraft, abandoned targets and infantry losses.
It is also particularly true today when U.S. and allied vessels pose
a lucrative target for terrorist attack. Secondly, the location and
transit routes of naval vessels can be valuable information leading
to disclosure, either directly or by informed analysis, of naval doc-
trine and tactics. This, in itself, could prove to be decisive to the
outcome of an engagement at sea. Finally, the rationale that per-
suades the United States to maintain the confidentiality of ship
movements is universally shared by allied nations. Disclosures of
transit movements of our allied navies would be as potentially
harmful to them as to our own ships; therefore, inappropriate dis-
closures of such information resulting from breaches of U.S. securi-
ty could reasonably be expected to have some adverse impact on
both foreign relations and on international military cooperation.
8. US. Naval operations information.?The volume of communi-
cations traffic concerning naval plans and operations is large. As
with the previous section, analysis of naval plans and operations
information can lead, either directly or by informed analysis, to
disclosure of naval excerises, contingency activities, and future
combat operations which can be exploited to the advantage of a
hostile power. In addition, communications will invariably reveal
classified technical information, intelligence data, intelligence sur-
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veillance activities or information critical and potentially harmful
to the foreign policy of the United States. It would directly reveal
substantive information used by the United States in making deci-
sions concerning the security of the nation and its foreign policy. If
a hostile power were to obtain that information, it would be possi-
ble to turn this newly acquired information to the disadvantage of
the United States, either by adopting measures to counter the ad-
vantage otherwise available to the United States, or by inserting
misleading data into the collection process. An indirect benefit of
obtaining this information would be the ability to analyze it for in-
telligence value, and to inferentially extrapolate the location and
concentration of resources dedicated by the United States to ob-
taining similar information worldwide. Thus, disclosures of specific
data can lead to harmful results, both for the specific collection ac-
tivity involved, and also for similar activities conducted worldwide
by U.S. forces and other agencies of the government.
9. Special category (SPECAT) information.?Frequently it is nec-
essary to transmit information which is of such a degree of sensi-
tivity that its disclosure must be limited to only those . individuals
with an absolute need to acquire the data. One method of restrict-
ing access to especially sensitive information is to permit its dis-
semination only within special, restricted channels of communica-
tion called Special Category (SPECAT) channels. The defendant
was on several occasions in a position to have access to SPECAT
communications and had the ability to transfer the information to
the Soviet Union.
Some examples of operations that are planned and executed
through SPECAT channels are:
a. Covert Military Operations: Disclosure of communications
concerning covert operations jeopardizes the United States'
ability to conduct missions vital to the national defense and
world peace. The risks involve not only extreme embarrass-
ment to our government, but also danger to the lives of the
personnel involved. ?
b. Counterintelligence Operations: Only through the aggres-
sive pursuit of counterintelligence initiatives such as double-
agent operations, surveillance, and eavesdropping can the
United States protect itself from the threat of espionage con-
ducted against our defense establishment. Disclosure of
SPECAT communications concerning such operations allows
hostile intelligence services to develop countermeasures and
techniques to render these operations ineffective. ?
c. Human Intelligence (HUMINT) Operations: HUMINT is
unquestionably the most fragile of intelligence sources, due to
the difficulties in recruiting human agents, the ease with
which they are lost, the personal danger often involved and be-
cause the quality of information is entirely dependent on the
abilities of the individual recruited. Disclosure of any informa-
tion relating to HUMINT operations, even the intelligence
report derived from HUMINT can lead to loss of the source,
personal harm to the agent and the insertion of false and mis-
leading information through the agent once the target organi-
zation becomes aware.
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10. Based upon an analysis of Whitworth's access to classified in-
formation during his participation in the espionage scheme, on the
trial testimony, and on debriefings conducted by the Office of
Naval Intelligence, we wish to point out certain areas of concern:
a. Mr. Whitworth met with John Walker two to four times
per year between 1976 and 1985, and supplied Walker with be-
tween twenty-five and fifty rolls of Minox film at each meet-
ing. Since the rolls were undeveloped, Walker cannot assure us
of their content, but he believes that it was largely photo-
graphed key material. The amount of money paid by the Sovi-
ets corroborates that belief. Whitworth was originally paid
$2,000 per month for the material he supplied, however, this
was subsequently increased to $4,000 and then $6,000 per
month later in the conspiracy.
b. ,We also know that Whitworth compromised detailed plans
for primary, secondary and emergency communications cir-
cuits which are used by the National Command Authority to
maintain contact with operational units. With this knowledge,
an adversary can gain significant advantage during crisis
events or hostilities.
c. Whitworth also compromised operational military plans,
operations orders, and operational message traffic over a sig-
nificant period of time. For example, he provided the Soviets
with a full year of operational message traffic from the USS
Enterprise, including TOP SECRET information. He also com-
promised the operations order for Fleet Exercise 83-1, a unique
exercise conducted near the Soviet coast by three carrier battle
groups. We believe that he also compromised the communica-
tions plan for all U.S. naval forces in the Indian Ocean and all
littoral nations.
11. Most importantly, the activities of Jerry Whitworth, continu-
ing as the principal agent of collection for John Walker, permitted
the Soviets to gauge the true capabilities and vulnerabilities of the
U.S. Navy. The U.S. Navy is a technology-intensive service, con-
ducting sophisticated and often sensitive operations using highly
advanced warfare capabilities. Soviet access to those operations and
capabilities provided them with the motivation to dramatically im-
prove the Soviet military posture, and identified the specific steps
which could achieve the largest gains relative to the U.S. It al-
lowed them the focussed insights required to reduce their own vul-
nerabilities while simultaneously increasing the vulnerability of
the U.S. We have seen clear signals of dramatic Soviet gains in all
naval warfare areas, which must now be interpreted in light of the
Walker-Whitworth espionage conspiracy conducted over approxi-
mately two decades. Mr. Whitworth's role was all the more impor-
tant because of the new directions taken by the U.S. Navy during
his years of collection for the Soviets. For example, through Whit-
worth the Soviets were able to monitor the U.S. Navy transition to
use of satellite systems as its principal communication network.
12. In conclusion, the U.S. Navy and the nation have been seri-
ously wounded by Jerry Whitworth's breach of faith and honor
wherein he agreed to sell the secrets with which he was entrusted
to a foreign power for personal gain. His misuse of a position of
trust in naval communications has jeoparized the backbone of this
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country's national defense. Recovery from the Walker-Whitworth
espionage will take years and millions of taxpayer dollars. Even
given these expenditures, we will likely never know the true extent
to which our capabilities have been impaired by the traitorous and
infamous acts of Jerry Whitworth.
WILLIAM 0. STUDEMAN,
Rear Admiral, United States Navy.
Subscribed and sworn to before me this 25th day of August 1986.
PATRICK A. GENZLER,
Lieutenant Commander,
Judge Advocate General's Corps, United States Navy.
Notary service provided in accordance with 10 U.S.C. sec. 936.
UNITED STATES DISTRICT COURT, NORTHERN DISTRICT OF CALIFORNIA
UNITED STATES OF AMERICA, PLAINTIFF,
V.
JERRY ALFRED WHITWORTH, DEFENDANT
CR. No. 85-0552 JP
I, John L. Martin, declare under penalty of perjury that the fol-
lowing is true and correct:
1. I am Chief of the Internal Security Section of the Criminal Di-
vision of the United States Department of Justice in Washington,
D.C. As such, I am responsible for the supervision of all investiga-
tions and prosecutions of violations of the espionage law. In the
performance of my official duties, I am routinely briefed on foreign
counterintelligence matters by the agencies of the United States in-
telligence community including the Federal Bureau of Investiga-
tion, Central Intelligence Agency and National Security Agency.
2. By virtue of my position in the Department of Justice, I am
aware of the facts surrounding the defection to the United States
in July, 1985, of Admiral Vitaly Yurchenko, then a high official of
the primary Soviet intelligence agency, the K.G.B. (Committee for
State Security). The information set forth in this declaration was
provided to me by United States government officials who were re-
sponsible for debriefing Admiral Yurchenko.
3. Vitaly Yurchenko defected to the United States by voluntarily
walking into the United States Embassy in Rome, Italy, in July,
1985. Yurchenko was at that time a 25-year veteran of the K.G.B.,
having attained a military rank in the Soviet Navy of Admiral and
serving since March of 1985 until his defection as Deputy Chief of
the First Department of the First Chief Directorate. The First
Chief Directorate of the K.G.B. is responsible for the clandestine
acquisition of intelligence outside the Soviet Union, and the First
Department of that Directorate is responsible for such activities in
the United States and Canada. Previously, Yurchenko served as
Chief of the Fifth Department of Directorate K of the K.G.B.,
where he supervised internal security matters, including cases in-
volving suspected espionage by K.G.B. officers. Yurchenko had var-
ious responsibilities for internal security matters for a ten year
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period, including a five-year assignment from 1975 through 1980 as
principal security officer at the Soviet Embassy in Washington,
D.C. In that position, he was in charge of liaison between the em-
bassy and United States law enforcement officials concerning the
security of the embassy, and had responsibility for assuring the loy-
alty and security of K.G.B. officers asigned to the Embassy. During
his career, Yurchenko was the recipient of many awards and deco-
rations. In July, 1985, shortly before his defection, Yurchenko re-
ceived the K.G.B.'s highest honor, the title of "Distinguished Offi-
cer of the Organs of State Security."
4. One of Yurchenko's responsibilities as a Deputy Chief of the
First Department of the First Chief Directorate was to review and
supervise the handling of important cases in the United States and
Canada. Moreover, because of his previous experience and exper-
tise in matters of security in the K.G.B., Yurchenko was frequently
consulted when K.G.B. officers came under suspicion of having
been compromised.
5. As the evidence in the trial of this case showed, John Anthony
Walker, Jr. was observed making a "drop" of classified information
to a Soviet intelligence officer on May 19, 1985. He was promptly
arrested and charged. Publicity concerning his arrest was wide-
spread. It was also widely publicized that Walker's former wife,
Barbara Walker, had tipped the FBI to Walker's espionage months
before his arrest.
6. Soon after Walker's arrest and the attendant publicity, Yur-
chenko was briefed and consulted about the Walker case. The
K.G.B. did not believe that the FBI had been tipped by Barbara
Walker and suspected that one of the K.G.B. officers directly in-
volved with Walker had been compromised by Western intelligence
agencies. Because of his expertise in internal security matters, Yur-
chenko's advice was sought with regard to the appropriate course
of action for dealing with the suspected compromise. In his position
in the First Department, it was also appropriate to brief him con-
cerning the Walker! Whitworth case. Because of the high degree of
compartmentalized protection given to a case like Walker-Whit-
worth, Yurchenko, despite his previous assignments involving in-
ternal security and at the Soviet's United States Embassy, had not
previously been aware of the Walker/Whitworth operation.
7. From his briefings, Yurchenko learned that the K.G.B. regard-
ed the Walker/Whitworth operation to be the most important oper-
ation in the K.G.B.'s history.
8. Yurchenko stated that the information delivered by Walker
enabled the K.G.B. to deciper over one million messages. Early on,
operation was transferred to Department Sixteen of the K.G.B,
which handles only the most sensitive and important clandestine
K.G.B. operations around the world.
9. The K.G.B. officers who handled the operation received impor-
tant promotions and decorations for their successes. One of these
officers secretly received the "Hero of the Soviet Union" award
after the Soviet Navy expressed its delight over the success of the
operation. Two other K.G.B. officers involved with the Walker/
Whitworth operation were awarded the coveted "Order of the Red
Banner." Certain K.G.B. officers from Department Sixteen were, at
various times, assigned to the Soviet Embassy in Washington solely
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to handle "drops" made in connection with Walker/Whitworth es-
pionage. The most recent of these, Aleksey Tkachenko, was re-
turned to the Soviet Union when Walker was arrested.
10. Yurchenko was informed by a high K.G.B. official that the
information learned from the Walker/Whitworth operation would
have been "devastating" to the United States in time of war.
Dated: August 26, 1986.
JOHN L. MARTIN,
Chief Internal Security Section, Criminal Division.
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APPENDIX B
[From the Defense Security Institute Security Awareness Bulletin, August 1984]
PARTNERS IN ESPIONAGE
THE CASE OF JAMES HARPER AND RUBY LOUISE SCHULER
An American named "Jimmo" sporting an Irish Brotherhood me-
dallion meets a Polish intelligence agent called "Jacques" at the
Museum of Anthropology in Mexico City?such is the internation-
al, and distinctly bizarre, flavor of the latest espionage case to hit
the Defense Industrial Security Program.
This is the case of James Durward Harper who was sentenced to
life in prison, with a recommendation that he never be paroled, on
May 14, 1984. He had pleaded guilty in April to selling classified
documents to the Polish Intelligence Service. The material, classi-
fied up to Secret, pertained to survivability of the Minuteman mis-
sile system and to U.S. defenses against attack by ballistic missiles.
Harper was a self-employed electronics engineer in Mountain
View, California. He first became involved with the Poles in 1975
when a business associate, William Bell Hugle, introduced him to
Polish agents seeking U.S. electronics technology.
Harper was at that time running a small firm, which made and
marketed the world's first digital stopwatches. He sold tecluiologi-
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cal information to the Poles for several thousand dollars. During
this period, Harper did not hold a security clearance and had no
direct access to classified information.
But in May 1979 Harper began what appears to have been a sort
of "business-romance" with a woman named Ruby Louise Schuler.
She held a Secret clearance as executive secretary to the president
of Systems Control Inc., (SCI) in Palo Alto, California, a Defense
contractor doing research for the U.S. Army Ballistic Missile De-
fense Advance Technology Center, Huntsville, Alabama. Schuler
agreed to provide documents to be copied and sold. Harper contact-
ed Hugle who, in return for a share of the proceeds, arranged a
meeting with Polish Intelligence in Warsaw.
Harper conducted a total of a dozen meetings with Polish agents
in Warsaw, Vienna and various locations in Mexico betwen July
1979 and November 1981. He received approximately $250,000 for
documents whose loss has been rated by Army experts as "beyond
calculation."
Harper and Schuler were married in October 1980. She died in
June 1983 from complications of cirrhosis of the liver.
James Harper was ultimately arrested in October 1983, partly on
the basis of information from a source within the Polish Intelli-
gence Service. But his apprehension was also partly due to his own
futile efforts to negotiate immunity and and a double-agent role for
himself through anonymous contacts with the CIA and the FBI.
Shortly after his arrest numerous classified documents were recov-
ered from a safe deposit box in his name in a bank in Tijuana,
Mexico.
The case against Harper has now been completed with his sen-
tencing and incarceration. But certain aspects of this investigation
remain active. Some details have not yet been released, and of
course some never will be.
This account is based primarily upon court papers pertaining to
the prosecution of Harper, especially affidavits and testimony by
the FBI investigators. We have also drawn upon a follow-on inspec-
tion of the cleared facility by the Defense Investigative Service.
The most detailed account of Harper's activities was provided by
prosecution testimony at a pre-sentencing hearing on April 16,
1984. This hearing did not receive extensive coverage in the press,
although more limited information available at the time of Harp-
er's arrest last October was widely reported.
As additional information becomes available on the case, we will
provide follow-up articles in future Bulletin issues.
HIGH STAKES HAGGLING
Accompanied by his friend Mr. Hugle, James Harper sat down
on July 17, 1979 in Warsaw across the table from Zdzislaw Przy-
chodzien, known publicly as an official of Polish Ministry of Ma-
chine Industry but in fact a lieutenant colonel in the Polish Intelli-
gence Service and head of an intelligence section or "Wydzial"
using the Ministry as cover for collection operations against the
West. Przychodzien was fluent in English, having been assigned to
the U.S. in the 1970's with the Polish Commercial Office in New
York.
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Harper described the materials now accessible to him through
Louise Schuler at Systems Control, including classified documents
pertaining to U.S. strategic forces and ballistic missile defenses.
And he provided reproduced excerpts of ten documents. (Enroute to
Warsaw he had placed copies of the full documents in a safe depos-
it box at the Citibank in Paris.)
Przychodzien was very interested in the material. He promised
generous payment, although he demurred at the American's initial
asking price of one million dollars. Also discussed at this July
meeting were other materials available to Harper including com-
puter database tapes obtainable through his contacts in Silicon
Valley.
Harper and Hugle agreed to meet with Przychodzien again in
Vienna the following October. On that occasion Harper delivered
full copies of the ten documents which Przychodzien had previewed
earlier. He also provided excerpts of additional documents.
But a disagreement arose, or rather erupted, over the matter of
payment. Harper and Hugle had come down a good deal from their
original demands, but they understood that $15,000 would be paid
for one of the ten documents. When Przychodzien declined to pay
that much Hugle started a shouting match which quickly broke up
the get-together, which was taking place in a public lounge at the
Hotel International.
Harper had travelled to Vienna with Louise Schuler. They left
the city immediately following this incident and returned to Cali-
fornia. Harper was naturally unsure of his position with Przychod-
zien.
It appeared that the Poles were not as interested in the classified
Defense documents from SCI as he had originally thought, so he
buried them, in an out-of-the-way location in the San Joaquin
River delta near Stockton, California?just for safe-keeping in case
a buyer could later be found.
SOGGY SECRETS AND GREETINGS FROM YURI
At this point Harper wanted nothing further to do with the ex-
citable Mr. Hugle, but he was able to reestablish contact with Przy-
chodzien through a friend in Switzerland, and he returned to
Warsaw in May 1980 with the Silicon Valley database tapes and
without any classified documents.
But it was the classified ballistic missile material that Przychod-
zien really wanted. The intelligence officer paid $10,000 for the ten
documents delivered at the stormy meeting in Vienna, apologized
for the misunderstanding and urged Harper to come back with all
of the Defense documents he could get his hands on.
So Harper went back to the delta, dug up his "stash" and trans-
ported the additional documents to Warsaw (via Vienna and
Geneva) the following month (June 1980). Harper later estimated
that this second delivery of reports, some of which were classified,
weighed about 100 pounds. The documents were somewhat the
worse for their seven month interment on the banks of the San
Joaquin River. But Przychodzien's people worked through the
night of June 5 to separate the matted pages and restore the mate-
rials to decipherable condition.
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On June 6 the documents were brought to the Soviet Embassy
where a team of 20 KGB experts, flown in specially from Moscow,
declared them to be genuine and extremely valuable. Harper was
paid $100,000 on this occasion. A month later Przychodzien and his
unit received a commendation for their efforts, directly from KGB
Chairman Yuri Andropov.
JIMMO MEETS JACQUES
Harper next returned to Warsaw in September 1980, this time
bringing along a document registered for the safe in his wife's
office, i.e., an inventory of all documents in the SCI president's se-
curity container. The Poles selected several items for purchase and
Harper delivered them during visits to Warsaw in October and No-
vember 1980, receiving $20,000 in payment.
During the November meeting with Przychodzien Harper was in-
structed to meet next time in Mexico City with a Polish agent
whom he knew only as "Jacques." Harper himself was given the
code name "Jimmo." He occasionally wore an "Irish Brotherhood"
medallion, and this was to be used as a recognition device. In addi-
tion, Harper wrote a limerick on the back of the laundry slip. This
was then torn in half, and Jimmo and Jacques were to confirm
identities by matching the halves of the paper.
The first meeting with Jacques took place as agreed at the cash-
ier cage of the Museum of Anthropology on December 14, 1980.
Harper brought no documents, treating the occasion as a dry run
to establish contact and "get the feel of the city." Jacques paid him
$10,000 anyway, and at the next encounter in the same city two
months later Harper brought nine Secret documents and received
$60,000.
Following one more transaction with Jacques (eight classified
documents and excerpts of 30 more, in return for $50,000), Harper
told the agent in September 1981 that he was dissatisfied with the
payments he was receiving. He brought no documents to the Sep-
tember meeting, in Guadalajara, and received no payment, al-
though Jacques had brought along $30,000 for the 30 documents
previewed last time in extract. It was agreed that Harper would go
back to Warsaw to work out his complaints with Przychodzien di-
rectly.
This was in fact the end of Harper's active dealings with the
Poles. He made a trip to Warsaw in November 1981 and spoke with
Przychodzien, but he remained dissatisfied with the payments of-
fered and no further contacts ensued.
Before going to Warsaw Harper had driven with Louise to Tijua-
na and placed his remaining collection of classified documents in a
safe deposit box, where they remained until retrieved by the FBI,
with Harper's cooperation, following his arrest.
These were actully the last documents available to Harper, since
Louise lost her clearance in August 1981?not due to any suspicion
of her activities but rather due to acquisition of her company by a
foreign firm.
Under an arrangement approved by the Department of Defense,
SCI's Defense contracts have been retained by a "spin-off" compa-
ny insulated from the parent by a stock proxy agreement. The fa-
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cility clearance for this subsidiary was later upgraded from Secret
to Top Secret. But Ruby Schuler remained an employee for the
original SCI organization, now under British ownership, and her
Secret clearance was administratively terminated as a result.
She had major surgery in August 1982 and died the following
June of cirrhosis of the liver. Her death certificate lists "alcohol-
ism" as a "secondary cause" of death.
PLAYING BOTH ENDS
In September 1981, at the time he was becoming increasingly un-
happy about his exchanges with the Poles, Harper contacted attor-
ney William Dougherty requesting that Dougherty act as go-be-
tween in negotiations with the CIA and FBI. Harper wanted to ar-
range immunity from prosecution in exchange for information on
his activities and services as a double agent. While concealing his
identity from the lawyer, he provided detailed written and tape-re-
corded accounts of his espionage activities through Dougherty to
the government. This continued for two years until Harper's ulti-
mate arrest, although the government showed no willingness to
agree to his terms.
Investigators succeeded in positively identifying him in March
1983. He was immediately placed under physical surveillance at his
home in Mountain View, California, where he was at that time
living with Louise. Wiretaps were also authorized and installed on
their telephone.
Investigators were able to learn the location of a storage locker
where Harper kept records of his activities. They also learned that
he was planning overseas travel and was again in contact with the
Swiss friend who had arranged earlier meetings with Przychodzien.
He was arrested on October 15, 1983, forestalling any chance
that he would turn over his remaining documents:
THE KGB CONNECTION
One lesson of this case is unmistakable confirmation of the inti-
mate ties between Warsaw Pact intelligence services and the Soviet
KGB. It is clear not only that the Polish Intelligence Service works
closely with the KGB, but that they in fact work for the KGB.
When Harper brought his main installment of documents to
Warsaw in June 1980 the Poles spent the night putting the pages
in order, but once collated the materials were immediately turned
over to the Soviets for evaluation and analysis.
Harper has stated to the FBI that the tasking presented him by
the Polish agents was derived from a "master shopping list" pro-
vided by the Soviets. And this has been confirmed by the Polish in-
telligence officer who served as a source in breaking the Harper
case. U.S. investigators have not revealed the source's identity but
they have testified that he was an officer of the Polish Intelligence
Service at the time Harper was active, that he was a close col-
league of Zdzislaw Przychodzien and that he served as liaison offi-
cer with the KGB for Przychodzien's intelligence unit. The source
has confirmed that Polish agents respond directly to detailed task-
ing from the KGB, with military collection as a top priority.
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The Polish source was aware of Harper's activities, although he
did not know Harper's identity. Przychodzien had told him of the
initial meetings with an American, fitting Harper's description,
who had access to ballistic missile information.
He even recalled seeing a phone message from Hugle written on
Przychodzien's desk calendar at the time of those first meetings in
October 1979. This inside information confirmed the authenticity of
Harper's accounts once his anonoymous statements began coming
in.
SECURITY IN THE FACILITY
Information so far available does not reveal any major security
deficiencies at SCI which can be identified as contributing directly
to Harper's and Schuler's activities. She apparently removed the
documents from the facility to be reproduced at home on a paper
copier which Harper had bought for the purpose. As in most facili-
ties, governmental or industrial, there were no searches at the
exists to prevent removal of classified material.
Schuler was noted in the facility during evenings and weekends.
On at least one occasion Harper was with her. But this was not a
violation since he was escorted?by Schuler! Unexplained off-hours
activity has often been highlighted as a possible indication of espio-
nage, and this is another case in point.
As a result of the case the company has centralized its classified
document storage at one location under direct control of the securi-
ty officer (something which would obviously not be possible for a
larger facility), and they have implemented tighter personnel
access controls for non-working hours.
There are some indicators that certain adverse information re-
garding Louise Schuler was known to co-workers and company offi-
cials and was not reported. She was, first of all, an alcoholic and
ultimately died of complications from that disorder. Quotations in
the press indicate that co-workers were aware that she carried
vodka in her purse and drank on the job. An inquiry into that
issue might have revealed some indication of her illicit activities,
or possibly exerted some deterrent effect.
In addition, a former employee of the company, also a cleared in-
dividual, had a close involvement with Louise during much of the
period in question, and he was aware not only of her drinking but
also of her unexplained income. She does not seem to have flaunted
her ill-gotten gains in a public sort of way, and most co-workers
would have had no occasion to notice anything out of the ordinary.
But this other employee was with her on at least one occasion
when she placed a large stack of $100 bills in a safe deposit box at
a local bank, and he did not report this.
THIS CRIME DIDN'T PAY
Much of what makes the Harper case an interesting story also
makes it an atypical story, therefore limiting its value as a source
of "lessons-learned" for future reference and edification. But it
does bring to the public view a rare glimpse of the inner workings
of a foreign intelligence service. And it emphasizes the clear and
present danger which espionage poses to our national security.
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The case dramatically demonstrates that our security system is
inherently and perhaps inevitably vulnerable to betrayal from
within. Procedures and physical barriers can keep uncleared people
from direct access to classified material. But when a cleared person
goes bad, our defenses have already been breached and some
damage is bound to occur.
Above all, the case highlights yet again that our system rests ul-
timately upon the integrity of the cleared individual. We must
strive to indentify and motivate that quality, however elusive.
Finally, the sentence received by Harper provides a "lesson-
learned" that is hard to overlook.
At the time of sentencing Judge Samuel Conti emphasized that
he had "never heard the defendant say that he was sorry," and he
called Harper's criminal activities "beyond comprehension or toler-
ation." "Your actions have exposed all of our people to risk and
danger," he said, "a danger that could well extend into the 21st
century."
"There can be no crime more serious than that of selling our
country's defense secrets to a foreign government," the Judge
stated. 'Your crime concerns each and every living and yet unborn
citizen of this country," and it threatens "the very heart and exist-
ence of our freedom.'
"It is ironic, indeed, that you pled guilty on April 15th, and
that's the very day that all federal income taxes were due. It goes
without saying that a great portion of the billions paid in taxes
goes for national defense and yet you, for your own personal greed,
would cause many of these billions to go for naught and to the ad-
vantage of a foreign power."
The judge then imposed the maximum sentence?life imprison-
ment, with recommendation against parole.
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APPENDIX C
[From the Defense Security Institute Security Awareness Bulletin. June 1983]
CAUGHT UNAWARES: THE CASE OF WILLIAM BELL AND MARIAN
ZACHARSKI
Marian Zacharski arrived in Los Angeles from Poland in late
1976. He was assigned as West Coast Branch Manager for the
Polish American Machinery Company (POLAMCO), a U.S.-incorpo-
rated firm serving as marketing arm for the Polish trade agency,
Metal Export.
But machinery was not Zacharski's only business. He was also
covertly assigned by the Polish Intelligence Service to spot and re-
cruit agents within California aerospace industry. And he was for a
time highly successful in both his occupations. By early 1981 (at
the age of 29) he had been appointed president of POLAMCO, and
he had recruited at least one agent with access to important classi-
fied weapons information and technology.
Thereafter, Zacharski's fortunes took a turn for the worse, and
by the end of 1981 he was serving a life sentence for espionage
against the United States?but not before doing both a lot of good
for Polish exports and a lot of harm to U.S. national security.
William Bell was Zacharski's agent. He was born in Seattle,
Washington on May 14, 1920. He was employed an an engineer
with Hughes Aircraft Company and met the Polish businessman in
1977 at the Cross Creek Apartments in Playa del Rey where both
were residents. The two shared an interest in tennis as well as a
common concern with the aerospace industry, where Zacharski sold
much of his industrial equipment.
After almost a year of purely social and recreational contacts,
Zacharski began to ask Bell for unclassified literature from work.
Then he asked for "interesting" material and received first Confi-
dential, then Secret documents to look over. He paid Bell lavishly
for his minimal "consulting" work. And when Zacharski proposed
that Bell, for additional thousands of dollars, photograph classified
documents and carry them to Europe to meet other Polish repre-
sentatives, Bell was ready to go along. Soon he felt "over his head"
and too committed to back out. William Bell is now in prison, serv-
ing an eight-year sentence.
Zacharski's recruitment approach was a standard one. It should
be as familiar and hence as ineffective as attempts to sell shares in
the Brooklyn Bridge. But Bell's susceptibility was not the result of
tender years, or slim experience or lack of education, training or
intelligence. He was 57 years old when he meet Zacharski, with 25
years in Defense work, a B.S. in applied physics from UCLA and
two overseas tours with his company.
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1
1
Bell had been briefed on the threat of hostile intelligence serv-
ices, but he did not recognize the classic approach when he encoun-
tered it in real life. He did not believe that it could actually be hap-
pening to him, that this amiable Polish tennis buff (who reminded
him of his estranged older son) could possibly be anything other
than what he appeared to be.
Bell was experienced, educated and informed?but not aware. We
are using his story, as he has recommended that it be used, to en-
hance the awareness of others who may face a similar approach?
and in the hope that they will respond by promptly reporting such
contacts to security officials, for their own protection and for the
protection of U.S. national security.
I. THE FACTS
Marian Zacharski was arrested for espionage in June 1981 and
went to trial in October. He was convicted largely on the basis of
William Bell's testimony against him, and Bell's lighter sentence
was based in part upon consideration of his cooperation with the
government in the final stages of the investigation and the trial.
This account of the Bell/Zacharski espionage case is based primari-
ly upon the transcript of Zacharski's trial. It also draws upon Bell's
testimony in May 1982 before the Senate Permanent Subcommittee
on Investigations.
Troubled times
In the Fall of 1977, when he was first introduced to Marian Za-
charski at the swimming pool of the Cross Creek Apartments, Wil-
liam Bell had recently returned to Los Angeles from an assignment
in Brussels as Manager of European Operations for the Radar Sys-
tems Group, Hughes International Corporation. He was now a
Project Manager in the Advanced Systems Division, Radar Systems
Group at the main Hughes facility in Los Angeles.
Bell held a Secret security clearance and was responsible, as he
later testified, for "development and promotion of the radar fire
control product line for tank vehicles." He had been with Hughes
since graduation from UCLA in 1952, employed entirely at the Los
Angeles facility except for two European assignments (in the mid-
1960's and from 1974 to 1976).
In his Senate testimony Bell stated that these overseas assign-
ments had been "financial nightmares" for him, "although they
are touted as glamorous and lucrative." Upon his return in 1976,
he recalled, he was "pursued by four separate IRS offices for back
taxes on disallowed deductions primarily arising out of my overseas
assignments." The year of 1976 was in fact a low point in Bell's life
for a number of reasons. He was divorced from his wife after 29
years of marriage ("in an extended proceeding") and was faced
with alimony payments of $200 per week. His accumulated debts
forced him to file bankruptcy in July 1976. During the previous
year, Bell's family had suffered a tragic loss when his 19-year-old
son died in a camping accident in Mexico.
In addition to finanical hardship, divorce and personal tragedy,
Bell also later recalled feeling "like an outsider" upon his return to
the Los Angeles plant. "I returned from Europe to find a younger
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group at Hughes and I [was] shunted off to a quiet back room." But
regardless of any disappointment with his assignment, Bell was in
fact given major responsibilities for development of advanced weap-
ons systems?a fact which Marian Zacharski was quick to learn.
New beginnings
When he met Zacharski in 1977 Bell was attempting to make a
new start. He had remarried ("to a young Belgian citizen," former-
ly his secretary overseas) and had taken up residence with her and
her six-year old son at the Cross Creek Apartments. He was
making a gradual financial recovery (although alimony, taxes and
debts still put a strain on his $35,000 income). And he found com-
fort in the companionship of a close friend:
Zacharski and his wife moved into the apartment com-
plex and I began to play tennis [with him] on a daily basis.
He slowly became my best friend. He was about the age of
my oldest son who had been close to his mother and quite
distant from me since our divorce.
Marian "made friends easily," Bell recalled. The two couples so-
cialized frequently both by themselves and with an informal "little
United Nations," a social group at the complex consisting of cou-
ples one or both of whom were foreign nationals. And the two men
found common professional interests as well. Zacharski was a
skilled and successful salesman of industrial equipment and the
California aerospace industry was one of his principal sales targets.
He naturally discussed the aerospace business with his tennis part-
ner and, in about mid-1978, he asked Bell for help in making con-
tacts at Hughes and other companies in the field.
Bell gave Zacharski's name to a purchasing manager at Hughes
and also contacted people at Lockheed and Northrop. And for this
Zacharski paid him approximately $5,000. At the trial, the cross-
examining attorney wondered why Bell had not been suspicious of
such generosity. He had been, he claimed, though evidently only
temporarily. "To recieve four or five thousand dollars for doing
pratically nothing made me very suspicious."
Q: It also made you very glad, did it not, Mr. Bell?
A: It sure did. I needed the money.
The conscientious consultant
Bell and Zacharski discussed the possibility that Bell might be
permanently retained by POLAMCO as a "consulting engineer"
and sales advisor, although the terms of the arrangement were left
studiously indefinite ("I was working, in a way, and talked about
working as a consultant for POLAMCO . . ."). Bell began, again
around mid-1978, to provide printed material from the office, to
help Zacharski keep abreast of sales opportunities. "It started out
[with] simple things," Bell later told the Grand Jury, "like the
Hughes News," the company newspaper.
Then came documents of more technical substance. He brought
Zacharski copies of the Hughes "Vector," a technically-oriented
publicity sheet on company programs. Zacharski had specifically
requested these openly-published materials. But then Bell began to
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volunteer materials in response to Zacharski's general expressions
of interest. "I could tell from our conversations that they were
things that he would like to see." "We would be talking about it at
the tennis court?unclassified documents in the beginning."
During the summer of 1978 he provided Marian with several doc-
uments "related to items that were machined." These were unclas-
sified, at least for the most part, but "there was possibly one confi-
dential. . . . I'm not certain." Bell has never been sure of exactly
when he first showed Zacharski a Confidential document?or just
which or how many such documents he had compromised.
He may also have been uncertain in his grasp of security re-
quirements for the handling of Confidential material, as indicated
by this courtroom exchange between Bell and prosecutor Robert
Brewer:
Q: Would that [taking documents home] be a violation of
. . . security policy?
A: Not a confidential document no. You can bring confi-
dential documents home. You cannot bring secret docu-
ments home.
CA WGS, LPIR and DPWS
The Secret documents which Bell compromised can be more reli-
ably identified since the company maintained accountability
records for them (not required by the Industrial Security Manual
for Confidential). Bell determined that his first transfer of Secret
material occured in October or November of 1978 when he lent Za-
charski (at the tennis court) Copy No. 8 of the "Proposal for a
Covert All-Weather Gun System, Executive Summary, Volume I."
Bell was the author of this material. He wanted Zacharski to un-
derstand his role at Hughes and he wanted to impress him with his
work. "I was proud of it," he said of the Executive Summary, "and
I gave it to him." Later Bell turned over an unclassified document
on the same subject and stamped it Secret "to make it look more
important."
The Covert All-Weather Gun System ("CAWGS") was the pri-
mary development project under Bell's technical management at
that time. It envisioned the application to tanks of the Low Proba-
bility of Intercept Radar ("LPIR") or "quiet radar." LPIR utilizes a
disguised radar signal which is difficult for enemy targets to identi-
fy as radar; they are thus prevented from taking evasive action or
using the radar signal for directing return fire. The CAWGS, subse-
quently redesignated the Dual Purpose Weapon System or
"DPWS" (to be used against both aircraft and other tanks), was
Bell's main responsibility throughout his relationship with Za-
charski. It was, according to trial testimony, the principal program
compromised by his espionage activities.
A Friend in Need
It was announced in mid-1978 that the Cross Creek Apartments
would be converted to condominiums. Bell and his wife wanted to
remain, but he was worried that he could not make the down pay-
ment required to purchase this unit. His friend Zacharski said he
might be able to help. And in February 1979 he provided Bell with
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$12,000 in two payments handed over in envelop* at the door of
Bell's apartment. They were speedy and uncomplicated transac-
tions, as Bell later testified: "Q: Did you say anything to him? A:
'Thanks.'"
He used the money for the condominium payment and for back
taxes. He assumed that the money was from POLAMCO's "market-
ing" fund. And he credited Marian's good will with inspiring this
generosity. "I thought we were good friends and I knew he would
like me to stay in the apartment complex. I wanted the condomini-
um and I accepted the money."
Foreign liaison
Bell still thought it was in connection with "consulting" activi-
ties when Zacharski suggested, in the Summer of 1979, that he
travel to Europe to meet certain unidentified Polish representa-
tives ("whom I thought would be POLAMCO people"). He was
asked to photograph documents from work and bring the film with
him to the meeting in Innsbruck, Austria. Marian had earlier
given Bell a Canon movie camera, which turned out to have a
frame-by-frame capability ideal for photographing documents. He
provided a tripod and special film and instructed Bell in using the
camera in his bedroom.
William Bell departed on the first of four overseas "missions" on
November 26, 1979. Marian gave him about $2,500 for expenses, al-
though Bell's wife was an airline flight attendant and his trans-
Atlantic fare was $18. On the morning of November 30 he went to
a pre-designated restaurant in Innsbruck and was met by a man
who introduced himself as "Paul" and asked "are you a friend of
Marian's?"?the agreed-upon recognition signal. The two left the
restaurant and entered a car driven by another man (name not re-
called) and drove to the outskirts of Innsbruck.
Bell handed over his film and the three men discussed Bell's
work, the types of information he should attempt to collect and the
need for secrecy and security. At one point Bell was shown a pic-
ture of his wife and son. "He [Paul] told me that I had a lovely
family. Then he said that our security depended upon each other
and that if anybody got out of line that he'd take care of them."
The Poles did not dwell on the point, but Bell clearly perceived an
"implied threat" in Paul's words. Before leaving Innsbruck, he re-
ceived $7,000 and agreed to another meeting in the same city in
May 1980.
Lost innocence
When he returned to Los Angeles, Bell received an additional list
of desired collection targets from Zacharski. On this and other oc-
casions he was surprised at Zacharski's highly specific knowledge
of system designations and even particular document numbers.
Q: And did you ever ask Mr. Zacharski where he ob-
tained those numbers:
A: Yes.
Q: What did he say, if anything?
A: He didn't answer me. He just smiled.
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By now, at the end of 1979, Bell could no longer maintain the
illusion that he was involved in a (more or less) innocent consulting
arrangement with POLAMCO. It was clear, as he testified, that he
was "conducting espionage" for "agents or officers of the Polish In-
telligence Service." And Zacharski himself dropped any such pre-
tense after that time. He made no more requests for assistance in
promoting machine tools.
Bell took three more trips to Europe, meeting with one or both of
the Polish operatives at Innsbruck in May 1980, at Linz (Austria)
in October 1980 and at Geneva in April 1981. Prior to each meeting
he photographed several documents with the movie camera in his
apartment (when his wife was away). At the Innsbruck meetings he
provided film of unclassified and Confidential documents. At Linz
and Geneva he turned over copies of Secret material related to the
DPWS and LPIR system. He continued to receive substantial pay-
ments, in bills and in gold, from both Zacharski and the handlers
overseas.
Deja Vu
After Geneva, Bell's next meeting with the Poles was to be in
Mexico City. He was uneasy about transacting his business there,
he testified, in part because "Mexico City is where a spy was
caught, I don't recall his name." The name, of course, was Daulton
Lee, accomplice of TRW spy Christopher Boyce. But Bell was re-
lieved of the necessity of following Lee's footsteps to Mexico. He
was called to Hughes security on June 23, 1981 to be questioned by
the FBI. At the trial Special Agent James Reid recalled the crucial
point of the interrogation as follows:
[REID]: I showed Mr. Bell a translation of a Polish news-
paper article which indicated an individual who had been
assigned to the U.N. In New York had defected to the
United States Government. I then explained to Mr. Bell
that this individual had in fact defected, and that he had
been providing the FBI with information concerning activi-
ties of the Polish Intelligence Service in this country.
Q: What if anything did Mr. Bell say?
A: Mr. Bell asked, "Did he mention me?" And then with-
out waiting for an answer, he said, "this is very serious. I
would like to talk to an attorney."
[Reid told Bell that he could talk with a government at-
torney or make a telephone call to an attorney of his own.]
Q: And after you said that, what happened?
A: Well, at that point Mr. Bell physically slumped in his
chair and he said, "I did it. I do not need an attorney."
Bell signed a confession and agreed to cooperate in the further
investigation of Zacharski. On June 28 he was fitted with a hidden
recording device when he met with Marian on the apartment
grounds to discuss further payments and certain sensitive pro-
grams at Hughes which Zacharski was interested in targeting. Za-
charski was arrested shortly thereafter.
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II. THE LESSONS
The Bell case, like any other espionage case, has its unique and
peculiar elements. But it is, by and large, a "text-book" case which
confirms many of the long-standing precepts of counterintelligence,
as well as patterns derived from recent espionage cases.
Motive and predisposition
Financial gain was Bell's primary motivation. This is typical of
most recent cases, and his testimony was quite clear on the point.
Politics or ideology did not play a part:
Q: You are not, in other words, a secret Polish patriot?
A: No I am not.
The motivation was primarily mercenary. "Mr. Zacharski had
found a fool that needed money. I had a weak spot. He took advan-
tage of me." Bell also cited the veiled threats from "Paul." This
played some part in his thinking and discouraged him from pulling
out once he was involved, but "the motive was always money.'
("Q: Was it worth it? A: No, absolutely not.")
Financial difficulties and other personal problems were an im-
portant cause of Bell's susceptibility to recruitment. From his trial
testimony, it appears that Bell faced the kind of difficulties which
everyone encounters at some time during life, although the coinci-
dence of several misfortunes in quick succession clearly contributed
to an imbalance in judgment. Withdrawal of clearances in cases
like this would generally be both cruel and unuseful. But certainly
whatever positive assistance or counselling an organization might
provide to employees in trouble, combined with an active program
of defensive security training, will help to ensure that a person like
Bell is not so choice a target for a person like Zacharsld.
Job dissatisfaction or some element of grudge against the compa-
ny or the U.S government have figured as predisposing elements in
several recent cases (Boyce, Kampiles, Edwin Moore, etc.). Bell's re-
marks display some signs of disgruntlement with Hughes. The Eu-
ropean assignments were not as "glamous and lucrative" as they
were "touted" to be; he felt like an "outsider" among the younger
personnel at the Los Angeles plant?and so forth. But here again
Bell's difficulties were of a rather ordinary sort, providing no obvi-
ous warning of an employee who was ready to take desperate
measures.
Espionage indicators
Several attempts have been made in recent years to draw up a
behavioral profile of the typical spy, to identify the patterns of ac-
tivity which are characteristic of espionage in progress. A listing of
such "warning signals" published recently by the U.S. Air Force
Office of Special Investigations (AFOSI) is provided following this
article (below, p. 122). Bell's is presumably one of the cases which
underlies this analysis and his activities do in fact lend credence to
several of the major espionage indicators. AFOSI calls these factors
an "Ounce of Prevention" since early reporting of suspicious be-
havior may help to halt an espionage operation before irreparable
damage is done.'
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Unexplained affluence is well known as a possible tip-off to on-
going espionage and certainly Bell received a substantial increase
in income from his illicit activities. His estimates of the total
amount varied wildely, from $70,000 to $170,000. Payments specifi-
cally cited during the trial were totalled to between $101,000 and
$103,000.
Bell spent or invested most of the money, although some of the
gold remained unconverted at the time of his arrest and was confis-
cated by the government. His testimony indicates that he was rela-
tively conservative in his use of the funds, and even the luxury
items cited?a "red Cadillac," a $2,000 necklace for his wife and a
brief vacation to Rio de Janeiro?would not necessarily appear ex-
travagant for a family with an income of $52,000 (in 1980): Bell,
$40,000, his wife, $12,000). Much has been made in press coverage
regarding the "young stewardess" angle in the case, but there is no
indication that Bell's second wife either contributed to his financial
setbacks or drove him to seek new income in support of an inflated
lifestyle. (And she was not in fact an airline flight attendant when
she met and married him but entered training in Janaury 1979.)
Bell's windfall earnings were directed not to high living but pri-
marily to hastening his recovery from bankruptcy. His was a case
not so much of unexplained affluence as of unexpected solvency.
Any major alteration in financial circumstances may be of signifi-
cance when personnel with access to classified information are in-
volved.
Attempts to gain unauthorized access to classified information
(e.g., beyond legitimate need to know) are often characteristic of
diligent spies, but Bell seems to have avoided this pitfall. He was
apparently a cautious (or lazy) agent and did not seek out informa-
tion beyond his assigned projects. The major compromises con-
firmed at the trial (LPIR, DPWS) fall within the scope of his pri-
mary duties as a project manager.
Removal of classified material from the facility is a more or less
inevitable accompaniment to spying, and certainly Bell took some
risk in this regard. When he carried documents home to be photo-
graphed he was vulnerable to detection since Hughes had a policy
of random searches at the plant exits. Either Bell was lucky in his
timing or he was somehow able to anticipate the searches. In any
case he was never caught in the act.
Foreign travel, on a regular basis and without sufficient explana-
tion, is another "tell-tale sign" displayed by Bell and one which
evidently contributed to his detection. His trips to Europe were
partially legitimized by company business and family visits. But
testimony (Bell himself and by a Hughes security official) indicates
that his overseas travel?and, on one occasion, incomplete report-
ing of his itinerary?was a factor which helped to place him under
suspicion.
Awareness: The best prevention
So Bell confirms, to some degree, certain of the behavioral pat-
terns associated with previous cases of this kind. Financial difficul-
ties and job-related dissatisfaction can predispose an individual to
espionage. Unexplained income, unauthorized removal of docu-
ments and unexplained foreign travel may be indicators that espio-
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nage activity is underway. But the case also confirms the difficulty
of applying this sort of preventive counterintelligence to real-world
situations, without the benefit of "20/ 20"hindsight." The real
"ounce of prevention" would have involved measures to forestall
Bell's recruitment in the first place. And there is good reason to
think that this could have been done?with the infusion of a little
more awareness.
"Who Would Expect it . . ."
This presupposes that Bell was genuinely unaware, during the
initial stages, of what Zacharski was up to. A more cynical view
might suppose that he knew exactly what was happening all along
and complied with Zacharsld's wishes, from the beginning, with his
eyes wide open. But those who investigated and prosecuted Bell are
inclined to accept his account of the evolution of the case. And Bell
has testified that, when he returned to the state-side facility from
Brussels, he assumed that his worries were over where hostile in-
telligence activities were concerned. "When you are sent to
Europe," he told the Senate Subcommittee, "you are told to expect
attempts by foreign spies, but whoever would expect it to happen
here at home?
He received the required briefings and signed the required forms
upon rejoining the Los Angeles organization, but apparently treat-
ed them as a matter of insignificant routine. A "Security Briefing
and Termination Statement" was introduced in evidence at the
trial, and he acknowledge having seen it: "I recall signing the
normal form you sign when you hire into the company. . . .
There are many forms you sign and I am sure that was one of
them."
"Whoever would expect it to happen here at home?" It was in
this innocent frame of mind that Bell initially made the acquaint-
ance of the Polish machinery salesman and then agreed (in fact ea-
gerly sought) to serve as a consultant for POLAMCO, an arrange-
ment which included providing inside information on his company.
The delusion persisted right up to his first overseas visit:
Even as I went to Innsbruck, Austria, I was rationalizing
and kidding myself that the persons I would meet were
representatives of POLAMCO, that this was just the kind
of industrial espionage that goes on all the time.
After his return from Innsbruck, Bell knew exactly what he was
doing and exactly what had been done to him. Why he did not ex-
tricate himself at that point is a complex psychological question in-
volving a confluence of material inducements, Zacharski's personal
magnetism and "Paul's" implicit menace. For whatever reason,
Bell now felt genuinely trapped. He told the Senators after his con-
viction: "There is little left of my life now but I feel I am freer in
prison than I was with Zacharski."
The classic modus operandi
Clearly there was more to this entrapment than simple mone-
tary temptation. And we must not take too literally Bell's own
statement that he was "a fool that needed money." A fool he may
have been and he was certainly hungry for cash. But too much
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stress on Bell's foolishness can lead us to ignore Zacharski's skill.
Preoccupation with financial motives, moreover, can obscure the
fact that many months of cultivation preceded the first mention of
money between Zacharski and Bell. We must not ignore the subtle
but powerful psychological influences which reinforced the materi-
al incentives once offered and laid the groundwork for Bell's recep-
tivity, by creating a willingness to regard Zacharski's offers as
well-intentioned, as motivated by friendship and a good will.
Cover
Bell's recruitment was the result (not necessarily the only result)
of a carefully planned and orchestrated intelligence operation. As
the focal point for this operation, Zacharski was provided with the
best possible cover for his activities, a cloak of propriety calculated
to inspire the least possible suspicion. To begin with, his national-
ity was in his favor. As a citizen of an Eastern European country
he would not present the same threatening image as a Soviet na-
tional?although there can be no doubt that the information he col-
lected was to be shared with Poland's Warsaw Pact ally. (It might
be recalled in this connection that during the year Zacharski ar-
rived, 1976, a Presidential candidate had come very close to declar-
ing Poland a member of the free world!)
In addition he was provided with a commercial rather than a
diplomatic position. He was employed, in effect, by the Polish gov-
ernment, but as a salesman of industrial equipment he assumed an
image which was less official and hence, again, less threatening. In
addition, he was exempt from travel restrictions imposed upon dip-
lomats from communist countries and had more flexibility of move-
ment and greater access to U.S. industrial facilities and personnel.
Of course commercial status carried with it a certain disadvantage:
no diplomatic immunity. Zacharski is no doubt now hoping to be
exchanged for someone imprisoned in the Soviet bloc, but there
have been no indications that a swap is contemplated.
Once fitted with suitable camouflage, Zacharski was introduced
into a promising hunting ground, the technology-rich area of Los
Angeles, California. He moved into an apartment complex where
many executives and engineers of aerospace companies were resi-
dents. And he set to work.
Closing in
Having met William Bell, as he must have met many others in
similar professional positions, and having decided to proceed with
cultivation, Zacharski worked with extreme caution and practiced
subtlety. He was a skilled salesman and master persuader and well
equipped for his task.
Bell testified that they first met in Autumn 1977. He could recall
no requests of any kind from Zacharski until mid-1978. So Za-
charski spent the better part of an entire year simply making
friends with his prospect, insinuating himself into his personal life,
meeting and befriending his family, assessing his character traits
(and flaws), learning his likes and dislikes (and sharing them), dis-
cerning his weaknesses and above all his needs.
Only after many months of this did he begin seeking active as-
sistance from Bell and overtly feeding his desire for money. Come-
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lius G. Sullivan, a former counterintelligence agent with the FBI,
testified at the trial that this is a crucial "dividing line" in the
process of developing an agent, the boundary between a simple
social relationship and one involving overt exchange. This "bar-
rier" is typically overcome, he said, by first requesting unclassified
and seemingly innocent items?and this of course is the approach
which Zacharski adopted.
There is also a second dividing line?between providing innocent,
public materials and handing over restricted, sensitive and/or clas-
sified items. Zacharski used the "consulting" process to bridge the
barrier between legal and illicit activities, and this was perhaps the
central gambit in his very successful strategy. It was so effective in
fact that Bell apparently volunteered the first transfers of classi-
fied material on his own initiative.
The "Pitch"
Offering the prospect of a consulting arrangement, as a prelude
to espionage, proved successful in this case for a number of rea-
sons. The promise of additional income appealed to Bell's financial
hunger, of course. And it must also have appealed to his entirely
normal professional vanity to be asked to lend his technical exper-
tise and the benefit of his contacts in the industry. Because the ar-
rangement was obviously improper to a degree, it introduced a sur-
reptitious element into the Zacharski/Bell relationship and helped
to ease Bell toward a fully clandestine role as a full-fledged spy.
(Bell explained his additional income to his wife as coming from
work for a Swiss aircraft firm. He asked her to be discreet about
the arrangement, stating that Hughes would not approve of his
consulting for a competitive firm.)
Perhaps above all the consulting arrangement permitted Za-
charski to deceive Bell, and Bell to deceive himself, into regarding
the initial compromises of national security information as a venial
sort of "industrial espionage." "Within the avionics industry," Bell
told the Senate Subcommittee, "it is a common practice for all
companies to obtain the secrets of their competitors by the same
techniques Zacharski used with me." He thought of POLAMCO as
"an American company." They had offered him a job which would
be "the solution to all my problems." And providing them with
inside information from Hughes would only be adhering to the
common practices of the industry, as he interpreted them:
An engineer for one company is interviewed by the man-
agement of another. Considerable benefits are dangled in
front of the engineer in terms of increased earnings and
better position. He is asked to produce samples of his work
and this is normally done without regard to security classi-
fication. . . .
Whether or not Bell accurately describes a common practice, he
certainly does reflect a common attitude?"Everybody's Doing It."
Zacharski exploited this attitude and used the consulting ploy to
ease Bell almost imperceptibly into his intitial ventures in the ille-
gal exchange of information. After that Bell felt that it was too
late to back out, and it was indeed too late to prevent some damage
to the national security, since some damage had already been done.
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Thinking about espionage
"It would have been so much easier to warn me." This statement
during Bell's Senate remarks does not excuse his crime?and it was
not offered as exculpatory?but it may be the central lesson-
learned in the case. Either he was not sufficiently warned, or he
did not heed the warnings he received. Whether the blame is laid
upon the system of security education or upon the individual, the
damage to national security is the same. And better awareness
training?drawing upon Bell's case as a cautionary example?
should help to warn others similarly situated. As Bell himself put
it: "Every person employed in a security job should know what I
did to myself, to my loved ones and to my country and [should] re-
alize how easy it is to get trapped."
In an article published on the anniversary of the trial, the Los
Angeles Daily News stated the lesson of the Bell case very aptly:
"When William Holden Bell worked for Hughes Corporation, he
never seriously thought about espionage. But it happened anyway."
Thinking seriously about espionage, about the reality of espionage,
is the first requirement of security awareness. And security aware-
ness is the key to security compliance.
III. THE Borrom LINE
Based upon the lesson of Bell/Zacharski, and other similar cases,
awareness briefings should stress the following:
What you should know
There is potential danger in any sustained contact with a com-
munist-country national (and not just with Soviets). You are not re-
quired to avoid all contact; just be careful.
Recruitment is a subtle, gradual process (a "long, bit-by-bit
thing," Bell called it). Cultivation may last for months or years and
initial active involvement may have nothing to do with espionage
in any recognizable form.
Recruitment may involve no elements of blackmail or threat, so
those who regard themselves as "clean-living" may nonetheless be
susceptible to this sort of activity.
Positive inducements are generally more effective than threats.
And such inducements will involve psychological ploys (friendship,
flattery, sharing of common opinions/interests) as well as (and usu-
ally prior to) material offerings.
"Entrapment" once it comes is as much a psychological as a ma-
terial entanglement, and commitment (as in Bell's case) may only
be recognized after the fact.
What you should do
As a cleared contractor employee, you must report to the securi-
ty supervisor: 1) all acts of espionage or suspected espionage, 2) any
attempt to gain unauthorized access to classified information, 3)
any compromise or suspected compromise of classified information,
4) plans for travel to (or through) a communist-controlled country,
5) plans to attend any professional meeting where communist-coun-
try nationals may be in attendance, 6) plans to host a facility visit
by communist country nationals.
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You should (for your own protection) report any contact, particu-
larly sustained contact, with a communist-country national, even if
purely personal and seemingly casual. In this way you avoid any
suspicions which might arise regarding your own conduct and
permit authorities to warn you if the individual is suspected of in-
telligence involvement.
POSSIBLE ESPIONAGE INDICATORS: "AN OUNCE OF PREVENTION"
(Source: U.S. Air Force Office of Special Investigations (AFOSI)
(Adapted from TIG Brief 18, 1982))
From an analysis of confirmed espionage cases, AFOSI has devel-
oped a listing of characteristics shared by several of the spies in
varying degrees. While no element of this list of "warning-signs" is,
in itself proof of an individual's involvement in espionage, observa-
tion of such characteristics in the behavior of an individual with
access to classified information should be a matter of concern to se-
curity and supervisory personnel. Even where espionage is not
present, several of the characteristics may be indicative of prob-
lems in suitability or security which cannot be prudently ignored.
The list as presented here has been adapted to reflect the special
requirements applicable to Defense contractors under the Industri-
al Security Manual for Safeguarding Classified Information (ISM,
DoD 5220.22-M), as well as requirements for DIS employees.
Behavior patterns of possible significance include the following.
Attempts to expand access to classified information, through re-
peated volunteering for special assignments with additional access
or inquiries concerning information for which the individual has no
need to know.
Unauthorized removal of classified material from the work area,
by making extra carbons or copies or placing of classified materials
in briefcase, purses, gym bags, etc.
Repeated or unusual overtime, especially unaccompanied, where-
by the individual arranges to be alone or unobserved in an office
containing classified material.
Falsifying destruction records by requesting certification or wit-
nessing signatures for destruction of classified materials which the
individual has not actually seen destroyed.
Sudden, unexplained affluence as indicated by purchase of expen-
sive cars, real estate, jewelry, etc.; by display of large amounts of
cash; or by lump-sum repayments of significant debts, large stock
purchases, or opening of substantial savings accounts?in the ab-
sence of some legitimate source of increased income. Unexplained
affluence is of particular concern when it follows a period of leave
or travel.
A pattern of recurring travel, within the United States or (espe-
cially) abroad, perhaps 2 to 4 times per year, without apparent rec-
reational or business purpose. Married individuals who travel for
tourism or recreation unaccompanied by family members may also
be of concern.
Falsification of locations visited on leave statements or trip re-
ports. Also reluctance to describe or ignorance concerning places
supposedly visited.
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Travel to Communist countries or on communist-flag ships or air-
craft not involving an organized tour and not explained by business
or family connections. Any attempts to visit communist countries
without complying with applicable reporting requirements is of
particular concern (e.g., paras. 5u and 6b[9], ISM).
Repeated association with Communist-country nationals without
bona fide business purpose or without required reporting.
Note for contractors
Under the ISM cleared contractor employees must report antici-
pated contacts with communist-country nationals at professional
meetings or through facility visits (para. 5u). A forthcoming change
to the ISM (new para. 5ah, to be published in "Industrial Security
Letter" no. 83L-1 and the next edition of the ISM) will require con-
tractor employees to report "all questionable or suspicious contacts
with nationals or representatives of communist countries," i.e., any
contact "determined to consist of an actual, probable or possible
hostile intelligence collection effort." Paragraph B, Appendix VII,
is referenced for assistance in recognizing reportable contacts.
(Para. 6c will be revised to require relaying of such reports from
Security Supervisors to DIS and the FBI.)
Note of DIS employees
DIS employees, as well as all Federal employees, are required to
report improper or suspicious contacts by representatives of any
foreign interest, just as contractors are required to report. These
naturally include contacts by communist-country nationals. See
DIS Regulation 25-5.
While none of the indicators listed is proof of espionage, any pat-
tern of conduct on the part of a cleared employee which suggests
the possibility of improper activity should be reported by supervi-
sors or managers to the? Facility Security Supervisor (under para.
5af of the ISM). Security Supervisors should report in turn to the
Defense Investigative Service and the FBI, as called for under
paras. 6a(1), 6b(1) and 6c.
Where there is doubt whether information should be reported, it
should be furnished to the proper authorities for evaluation. Secu-
rity Supervisors should be aware that in two 1967 cases the U.S.
Court of Appeals for the 4th Circuit held that a contractor is not
liable for defamation of an employee because of reports made to
the U.S. Government pursuant to the Industrial Security Manual
(Becker vs. Philco and Taglia vs. Philco, 389 US 979). The Court
stated in essence that such reports are privileged, since the con-
tractor in executing the requirements of the Manual dons the
cloak of a federal official.
Such reports do not of course constitute incrimination in them-
selves, and adverse action by government activities can only be
taken with probable cause and due process. But the effectiveness of
U.S. security and counterintelligence efforts is directly and vitally
dependent upon early reporting of any possible instances of com-
promise or espionage.
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APPENDIX D
[From the Defense Security Institute Security Awareness Bulletin, December 1985]
PORTRAIT OF AN UNEASY SPY?CAVANAGH CASE HIGHLIGHTS THE
VALUE OF GOOD SECURITY
Thomas Cavanagh had secrets to sell. And he made no bones
about his motive. "I'm after big mony," he told the prospective
buyers. "Before our relationship ends, I want to be independently
wealthy."
He knew that espionage was a serious crime and knew about sev-
eral people who had recently been arrested and gone to jail. But in
order to clear up mounting debts, and make himself rich, the Nor-
throp engineer was willing to take some chances.
"They're real security conscious [at Northrop] and all that crap,"
he remarked during one meeting at the Cockatoo Motel near Los
Angeles. Cavanagh thought he knew how to get around the docu-
ment controls and random searches at the plant, but he was still
very worried about being caught.
What he didn't know was that he had already been caught. The
"KGB agents" he was meeting with at the Cockatoo and the Lucky
Lodge in Commerce, California were actually FBI undercover
agents.
In December 1984, after three meetings monitored and recorded
by the Bureau, Cavanagh was arrested and charged with espionage.
In May 1985 he was sent to prison for life.
The Thomas Cavanagh case has some comic sidelights, but also
some serious lessons for counterintelligence and industrial security.
For the most part it's a success story, both for the FBI, which
caught him before he could get to the Soviets and for the security
program which put some real curbs on his ability to damage the
nation.
Some of the lessons are plain. Above all, the case points up the
importance of document accountability and reproduction control.
And it suggests that exit searches can be an effective deterrent to
espionage activity.
In the first part of the article we'll set the scene and tell the
story of Cavanagh's encounters with FBI undercover agents, who
posed as KGB officers speaking Russian and broken English. We'll
listen in on their conversations as Cavanagh discusses what he's up
against at the Northrop plant and how physical security and docu-
ment control are cramping his style as a spy.
Less straight-forward, as always, are the implications for person-
nel security: adverse information reporting and the psychological
"profile" of the espionage offender. Follow-up investigation con-
cluded that Cavanagh's supervisors had not neglected their report-
ing responsibilities and that the reporting program at his facility
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was satisfactory?although there were some hints in his behavior
that might seem obvious in hindsight.
There's no question about Cavanagh's main motivation. He
wanted money, first to clear up current debts, then to make him-
self "independently wealthy." But his conversations with the un-
dercover agents also hint at other contributing motivations?job
dissatisfaction, disgruntlement with management, social and/or po-
litical resentments.
Investigation by the FBI and Defense Investigative Service after
the arrest revealed further details about Cavanagh's background
and personality?for instance, a fraudulent salary claim when he
first came to work at Northrop and a pattern of impatience and
indifference regarding rules and procedures.
In the second half of the article we'll look into Cavanagh's back-
ground, as revealed through these interviews with former manag-
ers, supervisors and coworkers. And perhaps glean some insights
into what brought him to the Cockatoo Motel on that day in De-
cember, with a classified document stuffed inside his shirt.
SOME ASPECTS OF THE CAVANAGH CASE REMAIN CLASSIFIED
We can't discuss how he was originally detected and became in-
volved in meetings with the undercover agents, since that would
compromise important investigative methods. But it's significant to
note?for the benefit of other would-be spies?that someone at-
tempting to contact the KGB can end up in touch with the FBI in-
stead.
And we can't discuss the information which Cavanagh was
trying to sell. He didn't succeed in selling it, and obviously we
don't want to give any of it away for free.
Suffice it to say that he was working on a classified project re-
quiring Special Access, and he'd been put in for Top Secret clear-
ance requiring a Background Investigation. He told the "KGB"
that a substantial down payment on his information would insure
that excessive indebtedness did not interfere with the clearance up-
grade leading to even more sensitive access.
At the first meeting, on December 10, 1984, Cavanagh introduced
himself to his contacts as Mr. "Peters."
Two topics dominated his conversation: his financial problems
and worries about getting caught.
He said early in the first meeting: "I'm up for a Top Secret clear-
ance rating but I won't get that clearance rating because of my bill
problems.
"So somehow we have to come to an agreement, ah, on money."
He needed several thousand dollars, he said, "just to get the bill
collectors off my back."
"Peters" was worried about being caught partly because of the
recent espionage cases which he had heard about. He mentioned
Bell, Boyce and "the two people in Sunnyvale" (the Harpers).
He was worred about leaks "on your end," i.e., U.S. informants
inside Soviet intelligence, no doubt thinking of the informants
inside Polish intelligence who helped put Bell and Harper behind
bars.
See appendix C on Bell and appendix B on Harper.
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And he didn't want to talk with his contacts on the telephone?
"because it's constantly being bugged; they bug it with micro-
waves."
But his biggest source of anxiety was the security program at
Northrop.
He was extremely concerned about his accountability for docu-
ments. He wouldn't turn them over to the "KGB" agents, and he
wanted to get them back to the plant as quickly as possible.
"I can't give you the documents and have them back in time.
They have audits. A guy just came by today and asked me how
many secret documents I have." Security might open his safe and
check his documents at any time.
By sheer coincidence, Cavanagh had faced a surprise audit of his
classified documents on the very day of this first meeting with
what he thought was the KGB.
It was strictly a random check by a company security representa-
tive?who had no suspicion that the material he was reviewing was
about to be put up for sale to the Soviets. Everything was in order,
but Cavanagh had been visibly upset, according to coworkers inter-
viewed after the arrest.
"What are you messsing around with me for? I've served my
time in Vietnam," he told the security officer. Cavanagh obviously
thought twice about what he was doing?although he went ahead
and did it. But the system of strict accountability put some impor-
tant limits on his espionage activities.
Cavanagh was also hampered by reproduction controls at Nor-
throp. "You can't run you own copies in the plant. They got that
regulated too." The agents had to bring in a camera and a portable
copier and make copies in the motel room.
Northrop employees were subject to random search of anything
handcarried in or out of the plant. And Cavanagh was worried
about that as well. "I had to stick it in my shirt and walk out with
it."
He couldn't always fit things under his shirt. But he thought he
could get through the exit searches without detection. The
searches, he believed, were sufficiently infrequent and predictable
to be successfully avoided.
Tougher and tougher and tougher
When he arrived for a second meeting on December 12, Cavan-
agh was greeted warmly by his friends at the motel:
"KGB": "So, how are you today?"
CAVANAGH: "Good. But a little nervous because, ah, get-
ting the documents out is getting tougher and tougher and
tougher."
"KGB": "Why tougher?"
CAV.: "They're real security conscious, and all that crap.
Okay?"
"KGB": "So you were scared?"
CAV.: "Well not scared, just very careful and apprehen-
sive. . . . Every once in a while you get somebody that's
real conscientious and wants to look at everything going in
and out."
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So the "triple threat" of document accountability, reproduction
controls and random searches made Cavanagh a very nervous
spy?very "careful and apprehensive," as he put it. (And an "ap-
prehensive" spy is a certain sign of good security, although in this
case it fell short of total deterrence.)
Cavanagh was unable to obtain documents without signing for
them (though he tried to do so, as we will see).
Making "bootleg" copies was impossible. Northrop Advanced Sys-
tems Division controls document reproduction through a system of
"fully-controlled machines." In other words, no self-service. Special
operators handle all copying machines, under the oversight of secu-
rity. They make sure that all requirements are met for authoriza-
tion, marking and accountability.
Cavanagh was also worried about the entrance and exist
searches. But he felt that they presented an acceptable risk.
He didn't get the chance to test this assumption over the long
run. There's no way of knowing if he could have gotten past the
guards throughout the "long-term relationship" which he hoped to
establish with the KGB. But he, and perhaps others, had the per-
ception that the search system could be beaten. It was a threat, but
not enough of a threat.
"It's cash and early
During the second meeting (December 12) Cavanagh pressed anx-
iously for quick payment. "It's cash and carry cause I'm in debt up
to my ears. I'm after big money."
He wanted the several thousand dollars in two days, but the
"Russians" wouldn't make any promises.
CAVANAGH: "IS it, is it possible to see money by Friday
[Dec. 14].
"KGB": "By Friday, I don't know. By Christmas. . . ."
CAV.: "Oh God."
"KGB": "Oh, you have very, how you say Merry Christ-
mas. If documents are good."
CAV.: "To be honest with you gentlemen, I need it before
the 25th for security reasons [the Background Investiga-
tion]. I need that money."
"KGB": "Okay, we do our best."
They met again on December 18. Right away, Cavanagh asked
about the money. The agents had the money. And an arrest war-
rant.
"KGB": "So, ah, how do you do today? Good to see you."
CAVANAGH: "Okay, okay. Any word on the cash?"
"KGB": "Oh we got good surprise for you today."
CAV.: "Okay, okay. Am I gonna get it today?"
"KGB": "Da da, yes."
Cavanagh showed them the documents he had brought along,
and they struggled to make the portable copier function properly.
He spoke of his financial bind. He was bitter that he couldn't get a
business loan for his AMWAY distributionship, while Vietnamese
immigrants, he felt, easily got money for fishing operations.
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The agents suggested that future meetings be held outside the
United States. But Cavanagh didn't want to keep his documents
out that long. Besides, unexplained foreign travel might "flag" his
activities with security.
Cavanagh was a gun collector and showed the agents a .45 cali-
ber pistol he was carrying, because he was "nervous." Earlier he
had warned the "Soviets" against carrying firearms ("No guns, no
guns, all right, no guns.") They discussed guns and hunting. One
agent took the gun to admire it, and then quietly held on to it.
A long-term relationship
After copying the documents, the agents handed Cavanagh the
payment in small bills. He counted it eagerly. He wanted to have
monthly meetings, he said, with substantial payment each time.
It should be worth it to them, "because billions of dollars worth
of research went into those drawings. Billions!" Of course he didn't
want to be "too greedy." "You know, if we play it right, it's a long-
term relationship."
Cavanagh complained that bill collectors were calling him at
work. "It's demeaning, degrading, cause everybody knows your
business, you know?" "Of course, must be problem," one agent
sympathized.
Cavanagh added: "I'm bitter because I worked hard for the com-
pany and sometimes politics plays a big role in getting ahead."
As they finished their business Cavanagh heard a noise outside.
"It must be the maid, or perhaps the pipes," one agent said. "It
wouldn't be bad just to look out the door, said "Peters." The agent
looked out. "It is nothing."
But then a knock. The door was opened again. "FBI! Freeze,
don't move!"
Cavanagh was arrested and charged with two counts of espio-
nage. He was sentenced, on May 23, 1985, to two concurrent life
terms in prison.
Postmortem
Espionage which threatens U.S. national security is never cause
for celebration. But this case is, at least relatively, a success story.
The F.B.I. caught Cavanagh before he reached the Soviets. And
Northrop security did its job in curbing the range of his activities,
through document accountability and control?and effective en-
forcement of need-to-know.
Particularly notable is the taming of the "Xerox" machine.
Ready access to photo reproduction is popularly thought to have
made document control obsolete.
But the copiers at Northrop were effectively controlled, so Ca-
vanagh was forced to use original documents which were under ac-
countability. This exposed him to detection through random audits,
and it limited both the number of documents he could compromise
and the length of time he was willing to keep them outside the
plant.
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REASONS AND REVELATIONS
Greed and indebtedness were the major motivations for Cavan-
agh. But there were other, more subtle, influences at work as well.
After the arrest, Cavanagh's activities, behavior and background
were naturally probed in detail by both the FBI and Defense Inves-
tigative Service. We've already looked at Cavanagh's brief and very
unsuccessful career as a spy.
What follows is the story of his career as a technician and engi-
neer, with the U.S. Navy and three of the country's biggest aero-
space companies. That career wasn't as successful as Cavanagh ap-
parently thought it should have been.
Disappointment with his advancement both professionally and fi-
nancially seems to have played a major role in the psychological
lead-in to espionage.
Prologue
At the time of his arrest in late 1984, Cavanagh, 40 years old,
was earning about $40,000 as an Engineer Specialist with the Ad-
vanced Systems Division of Northrop Corporation, Pico Rivera,
California. He had begun his technical career as an Interior Com-
munications specialist for four years in the Navy, leaving the serv-
ice in 1967 as a Petty Officer Third Class. Between 1967 and 1978
he attended Cerritos Junior College, ultimately earning an Associ-
ate Degree.
He was married and had two sons, born in 1967 and 1968.
Rockwell and Hughes
He worked for North American Rockwell for about a year (July
'68 to August '69) and then went to work for Hughes Aircraft Com-
pany, El Segundo, California. While at Hughes, Cavanagh was pro-
moted from technician to "Research Associate." But he was unable
to attain full status as an engineer without a four-year degree.
Records and recollections at Hughes didn't reflect anything par-
ticularly distinguished or out of the ordinary about Cavanagh. One
supervisor recalled him as high-strung and temperamental but gen-
erally manageable. Another had found him likeable and easy:to get
along with.
But a third former boss said Cavanagh had problem6 dealing
with people and recalled a heated argument in which he seemed on
the verge of physical violence.
Cavanagh had once been formally counselled for tardiness and
had been placed on a one-year probation for parking violations. His
salary had been attached on three occasions, for debts of $125 or
less.
He was very "money motivated," said one coworker. And he had
a high opinion of his own skills and abilities. But he was unlikely
to advance very far at Hughes, even apart from the lack of an engi-
neering degree. Most coworkers assessed his professional abilities
as fair-to-middling at best. His technical skills were "reasonably
good," according to one supervisor. Another, more typically, rated
him as a marginal electronics technician and better suited to me-
chanical assembly.
Cavanagh held a Secret clearance while working at Hughes.
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Northrop: He hoodwinked us
In November 1981, Cavanagh made the jump to full engineer
status when he joined Northrop Electronics Division in Hawthorne,
Califorinia. Northrop gave him a substantial raise and the title of
"Senior Engineer," on the basis of over ten year's experience as an
electronics technician?and also due to Cavanagh's ability to sell
himself despite a marginal record at Hughes.
But the size of the raise which Northrop gave him was based
upon an inflated claim of final base pay at Hughes. Several co-
workers at his former office were aware that he had presented
Northrop with a pay slip reflecting substantial unitemized over-
time, claiming the total amount as base salary for the pay period.
Northrop Personnel Office accepted the claim, although one of Ca-
vanagh's managers was pretty sure that he had "hood-winked us."
Cavanagh's Secret clearance was transferred from Hughes and
he was assigned to work on automatic test equipment for the F-5
aircraft. At Northrop, Cavanagh generally held supervisory posi-
tions, even though here again his technical abilities were generally
rated as marginal.
He had a "dynamic"?sometimes "brash"?personality, accord-
ing to one coworker. His assertiveness evidently commended him to
management as a potential leader, but it also led to some interper-
sonal problems on the job.
On his first assignment, supervising integration of test equip-
ment for the F-5 project, Cavanagh's managers rated his engineer-
ing skills below par. One supervisor later recalled that he seemed
better suited to a technician's role. He was "in over his head tech-
nically," said one coworker, but he had a "big ego" and "radiated
confidence" in his own abilities.
Colleagues remembered him as a frequent complainer with a
short temper. A couple of incidents had led to threatening remarks
("I'll knock her block off," and the like). Once he slammed a door
into the back of a supervisor who was leaving the room after a
heated exchange.
New assignment
In mid-1982 the F-5 project closed down and Cavanagh was given
a less technically demanding assignment. One manager recalled
that he took the downgrade in stride (there was no cut in pay), but
he showed little enthusiasm for the new project. He was more
"paper oriented" than the assignment required and "didn't like to
get his hands dirty."
Part of his job involved computer maintenance, but he frequently
called in the manufacturer's technician without really trying to fix
a problem himself. Cavanagh viewed himself as a supervisor, one
manager remarked, when the job really called for a "doer."
Managers and co-workers had seen no signs of major financial
difficulties while Cavanagh worked in the Electronics Division. He
wore good clothes and had a gun collection and two Corvettes (mid-
70's vintage)?but nothing really out of line for someone making in
the neighborhood of $40,000 per year. He asked for an early pay-
check on a couple of occasions. During 1982 he took about $1000 as
an advance on a trip to Beaverton, Oregon for a technical training
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course. He apparently had trouble repaying what was due when he
returned and was contacted several times by the finance office. He
sometimes complained casually about owing money to unspecified
creditors. But, in all, his co-workers had no reason to suspect sub-
stantial problems.
Cavanagh was separated from his wife at about this time (1982).
He had no really close friends at Northrop and co-workers were
unsure about the exact timing and details of his marital difficul-
ties. But it was generally known that he had begun an affair with
another woman during the trip to Oregon. After he moved out of
the family house, the Beaverton woman came down to California to
live with him in an apartment.
In January of 1984 Cavanagh was transferred on loan with sever-
al other engineers to an urgent and sensitive project in Northrop's
Advanced Systems Division (ASD) in Pico Rivera. Cavanagh was
one of the first to be chosen to go, according to one manager. Su-
pervisors had agreed that he was more troublesome personally
than he was worth technically.
Last stop
And again at ASD he ran into personal difficulties and soon had
a reputation as a "chronic complainer." He had at least one heated
exchange with his first supervisor, and co-workers recalled other
"loud and nasty" remarks. He frequently objected that others were
receiving promotions and raises while he was getting less than his
due.
A subsequent supervisor at ASD recalled that Cavanagh was
careless and impatient with controls and procedures and had an in-
flated view of his own capabilities. But this manger thought Cavan-
agh might respond to additional responsibility, so he placed him
once again in a supervisory position, as a lead engineer?his final
assignment prior to the arrest in December 1984.
ASD management personnel interviewed after the arrest suggest-
ed that Cavanagh had some problems with administration and
working with others but was improving in those areas. Again his
engineering skills were called into question, but he seemed to be
meeting basic expectations.
In this last assignment Cavanagh seemed to be generally well-
liked by co-workers and subordinates. He regularly bowled and
played softball with groups from the office.
One engineer who worked for him said that Cavanagh was the
"clown" of their group. Everyone had laughed when, shortly before
his arrest, he asked if he could deposit $10,000 in a bank without
alerting the IRS.
Financial brinksmanship
Co-workers at ASD had a general idea that Cavanagh was finan-
cially pressed. Most attributed this to his separation and divorce.
One colleague recalled being mildly surprised when Cavanagh
bought another car (1984 Blazer). He was upset in November 1984
about a raise which he considered inadequate. At about that time
he had asked the company to pay him a $3000 referral bonus for
his own employment. (They didn't.)
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One colleague remembered that Cavanagh seemed to have a lot
of credit cards. And a couple of people mentioned a recent two-
week Club Med vacation in Mexico.
Cavanagh complained to the undercover agents that "everybody"
knew his business. But in fact no one had any idea of the extent of
his indebtedness.
When investigators reviewed Cavanagh's financial records, they
found about 25 outstanding credit accounts, including two Ameri-
can Express cards (one green, one gold), two Master Card accounts
and five Visa cards. In December 1984 his balance with Club Med
was almost $17,000.
Overall, he owed more than $41,000, in addition to a $98,000
mortgage. He had managed to make most of his payments so far,
and none of the creditors had yet taken legal action. But there
were several past due notices and he clearly had more debt than he
could manage for much longer.
Looking for loopholes
Several former supervisors remarked that Cavanagh often tried
to "test" the system, to see how far he could bend the rules. But he
generally fell into line when counselled or confronted.
This pattern held true in his handling of classified material. At
the Advanced Systems Division Cavanagh regularly obtained classi-
fied documents from two control stations. The document control
people at both locations remembered having trouble with him. He
would often pull documents from the cabinet himself, which many
employees did during busy periods.
But Cavanagh would sometimes try to walk out without signing
a receipt. When challenged he would plead absent-mindedness or
simply treat the process as a joke.
The control clerks learned to keep an eye on him. And they ap-
parently succeeded in keeping tabs on his documents. All the clas-
sified items which Cavanagh handed over to the undercover agents
were duly signed for?hence his anxiety to get them back to the
plant as quickly as possible.
Cavanagh's attempts to disregard and dismiss security require-
ments are typical of an attitude which is frequently encountered,
perhaps most frequently among senior executives or "technical
types" who feel they have a claim to special exemption from the
rules.
Security Awareness Bulletin #2-85 (December 1984) describes
several cases of this kind, in an article entitled "Above the Law."
These were cases of security violations which did not?so far as we
know?involve actual espionage. But they still involved compro-
mise and potential damage to national security.
Cavanagh was not allowed to circumvent the system. But his
case is a reminder of just how dangerous this kind of attitude can
be.
No easy answers
The "typical" spy has yet to be discovered and the behavioral
profile that will let us recognize one every time has yet to be in-
vented. The psychology of espionage is not a source of tidy conclu-
sions.
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But Cavanagh shows some traits which we've encountered before
in other spy cases. Job and career dissatisfaction is a big one, espe-
cially when it involves a sense of resentment toward the organiza-
tion. Financial difficulties and/or irresponsibility are old standbys.
Cavanagh, in addition, showed some tendency to violent or disrup-
tive behavior, some instances of dishonesty and a general lack of
respect for authority and procedural process.
Still, none of this rose to the level where supervisors considered
reporting it for security purposes. Cavanagh was not a model citi-
zen, but his behavior was well within normal, or at least tolerable,
limits?until, quite suddenly by all indications, he went over the
edge and tried to sell out the country to make himself rich.
How do we distinguish the Cavanaghs, before the fact, from the
many other cleared people who are simply having difficulties with
life's normal trials and tribulations?
Unfortunately, we don't often distinguish them, until after the
fact. And we can't?until and unless we know a lot more about
human psychology.
But we can protect the documents and the information, as North-
rup did, by applying the proper measures for accountability and
control, as well as physical safeguards. None of that will prevent
espionage. A clearance, like any other kind of trust, always carries
the potential for betrayal. But controls can make spying a lot
tougher and a lot more expensive and a lot more risky.
Mr. Cavanagh took the risk and lost. He'll be in prison for a long
time. Others will be that much more reluctant to take the same
chances.
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APPENDIX E
UNITED STATES DISTRICT COURT, EASTERN DISTRICT OF NEW YORK
AND SOUTHERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA
AGAINST
1. GENNADIY FEDOROVICH ZAKHAROV, DEFENDANT,
2. PREMISES KNOWN AND DESCRIBED AS THE SECOND FLOOR APART-
MENT OF A TWO-FAMILY RESIDENCE LOCATED AT 6019 TYNDALL
AVENUE BRONX, NEW YORK; AND
3. ONE 1982 BLUE PLYMOUTH RELIANT BEARING NEW YORK LICENSE
PLATE 2281-ASJ
Affidavit for an Arrest Warrant and Search Warrant
(T. 18, U.S.C. ? 794(c))
EASTERN DISTRICT OF NEW YORK, SOUTHERN DISTRICT OF NEW
YORK, SS:
Daniel K. Sayner, being duly sworn, deposes and says that he is
a Special Agent of the Federal Bureau of Investigation, duly ap-
pointed according to law and acting as such.
In or about and between April 1983, to and including the date of
this affidavit, both dates being approximate and inclusive, within
the Eastern District of New York and elsewhere, the defendant
Gennadiy Fedorovich Zakharov (hereinafter "Zakharov") did know-
ingly and willfully combine, conspire and agree together with
others known and unknown, to communicate, deliver, transmit and
attempt to communicate, deliver and transmit to a foreign govern-
ment, to wit, the Soviet Union, directly and indirectly, documents,
writings, code books, instruments and other information relating to
the national defense with the intent and reason to believe that it
was to be used to the injury of the United States and to the advan-
tage of a foreign nation, in violation of Title 18, United States
Code, Section 794(a).
OVERT ACTS
In furtherance of the conspiracy and to effect the objects thereof,
the following overt acts, among others, were committed in the
Eastern District of New York and elsewhere:
1. On or about May 10, 1986, the defendant Zakharov met with a
confidential source (hereinafter "CS") in Queens, New York, and
entered into an agreement with "CS" whereby "CS" would be re-
(136)
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quired to obtain classified information relating to the national de-
fense for Zakharov and the Soviet Union. The defendant Zakharov
made a payment to "CS" of a sum of money at this meeting.
2. On or about August 2, 1986, the defendant Zakharov met with
"CS" in Queens, New York, and assigned "CS" the task of surrepti-
tiously copying documents kept in a locked safe at "CS's" place of
employment, a manufacturer of precision components for use in
the engines of military aircraft and in radars, so that Zakharov
could determine the importance of the information contained in
the documents.
(Title 18, United States Code, Section 794(c))
Upon information and belief, there is presently concealed within
the premises known and described as: (1) The second floor apart-
ment of a two family residence located at 6019 Tyndall Avenue,
Bronx, New York (hereinafter the "Premises") and (2) One 1982
blue Plymouth Reliant bearing New York license plate 2281-ASJ
property; namely, 1) espionage paraphernalia including a) devices
used to conceal and transmit classified and intelligence informa-
tion; b) materials utilized by espionage agents to communicate
among each other and with a foreign government; to wit, coded
pads; secret writing paper; greeting cards and other documents con-
taining microdots; microfiche and instructions in the use of the ma-
terials; recording and electronic transmittal equipment; and c)
chemicals used to develop coded or secret messages; 2) books,
records, documents and papers which reflect a) identities of foreign
espionage agents; b) financial transactions including payments
made to foreign espionage agents; c) telephone records reflecting
contact among foreign espionage agents; 3) fingerprints of various
persons who have visited or been at the Premises; and 4) other doc-
uments and paraphernalia that refer or relate to Zakharov's activi-
ties as an espionage agent. The aforedescribed property constitutes
evidence of a violation of Title 18, United States Code, Section
794(c), to wit, conspiracy to transmit, deliver and communicate doc-
uments and information relating to the national defense to a for-
eign government with the intent or reason to believe that it is to
be used to the injury of the United States and to the advantage of
a foreign nation.
The source of your deponent's information and the grounds for
his belief are:
1. "CS" is an individual known to your deponent to be a confi-
dential source working for the Federal Bureau of Investigation.
"CS" has provided information to your deponent for approximately
the last one and one-half years regarding the defendant Zakharov's
contacts with "CS" and has provided information to other agents
since in or about April of 1983 regarding the defendant Zakharov's
contacts. The majority of the meetings between the defendant Zak-
harov and "CS" described below which occurred from March of
1985 to August 2, 1986 have been tape recorded. The recordings
corroborate "CS's" accounts of his meetings with Zakharov. In ad-
dition, surveillance agents of the Federal Bureau of Investigation
have observed numerous meetings between Zakharov and "CS".
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2. "CS" has informed agents of the Federal Bureau of Investiga-
tion that in April 1983, "CS" was approached by Zakharov on the
campus of Queens College, New York, where "CS" was a third-year
student majoring in computer sciences. Zarharov did not identify
himself as a Soviet, but did tell "CS" that he worked at the United
Nations doing scientific research. Zakharov requested "CS's" help
in obtaining material of robotics and computer technology. Zakhar-
ov offered to pay "CS" a sum of money for "research time" neces-
sary to obtain unclassified microfiche from local university librar-
ies. At this first meeting Zakharov gave "CS" a list of specific
microfiche relating to robotics and computers that "CS" was to
obtain for Zakharaov. A second meeting was scheduled.
3. On or about May 3, 1983, a second meeting occurred between
"CS" and the defendant Zakharov. During this second meeting,
Zakharov identified himself as a Soviet and paid "CS" a sum of
money even though "CS" had not located any material for Zakhar-
ov.
4. During the period from May 1983 to March 1985, Zakharov
met with "CS" on numerous occasions, most often in Queens, New
York, but also occasionally in Brooklyn, New York. In compliance
with Zakharov's instructions during this period of time, "CS"
would steal unclassified microfiche from various libraries and in-
formation centers and provide the microfiche to Zakharov. Zakhar-
ov continued to pay "CS" for his services.
5. As "CS's" graduation from Queens College approached in Jan-
uary 1985, the defendant Zakharov regularly encouraged "CS" to
apply for a job with a high tech company. Zakharov paid "CS" to
have professional r?m?prepared to assist "CS" in obtaining
such employment. Additionally, Zakharov advised "CS", in sub-
stance, that the Soviets would be willing to pay for educational ex-
penses if "CS" wanted to go to graduate school.
6. During the period from in or about March 1985 through in or
about May 1985, the defendant Zakharov discussed with "CS",
among other topics, emergency meeting procedures, development of
drop sites for the transfer of documents between Zakharov and
"CS", and emergency signaling procedures. Zakharov further ad-
vised "CS" in substance, that he wanted to have a longterm rela-
tionship with "CS" and that "CS" should not be in this type of ac-
tivity entirely for money but also to hurt America.
7. In or about September 1985, "CS" became employed at a com-
pany located in Queens, New York (hereinafter the 'Company").
The Company manufactures unclassified precision components for
use in military aircraft engines and in radars that are assembled
by major defense contractors such as the Bendix Corporation and
General Electric Corporation.
8. After "CS" began working for the Company, Zakharov's em-
phasis in the gathering of information shifted from seeking unclas-
sified microfiche on technical subjects such as robotics, computers
and artificial intelligence to seeking documents from the Company
relating to the Company's manufacturing activities. For instance,
on or about January 18, 1986, Zakharov instructed "CS" to photo-
copy the first few pages of the operating manuals for the machines
that the Company uses to manufacture its military aircraft compo-
nents. Zakharov stated to "CS", in substance, that by knowing the
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type of machines the company uses, his "Institute" would be able
to determine specifically what the Company manufactures. Zakhar-
ov also cautioned "CS" at this time that their relationship was no
longer as innocent as it had been previously and that no one
should know of their relationship. Your deponent believes that the
"Institute" is a term that Zakharov uses to refer to his superiors in
the United States and Moscow.
9. On or about March 15, 1986, the defendant Zakharov met with
"CS" in Queens, New York. At this meeting, "CS" provided Zak-
harov with unclassified documents pertaining generally to the
maintenance and manufacture of components of military aircraft
engines. At this meeting, Zakharov asked "CS" if any materials at
the Company to which he might have access were classified. Zak-
harov further discussed with "CS", in substance, whether "CS"
would like to enter into an agreement with Zakharov pertaining to
their clandestine relationship. At this meeting, Zakharov made
payment of a sum of money to "CS".
10. On or about April 20, 1986, Zakharov met with "CS" in
Queens, New York. At this meeting, Zakharov stated, in substance,
that before Zakharov could make payment to "CS" for delivery of
documents and information, Zakharov would first have to send the
material to Moscow for their review.
11. During a meeting on May 10, 1986, which occurred on a
subway platform in Queens, New York, Zakharov dicated an agree-
ment to "CS" whereby "CS" would continue to work for the Soviets
for a period of ten years, after which the agreement could be recon-
sidered and renegotiated. The agreement dictated by Zakharov to
"CS" specifically included a provision that "CS" would be required,
as part of his assignments, to obtain classified material for the So-
viets which could not be obtained by a citizen of the USSR. The
agreement entered into between Zakharov and "CS" further pro-
vided that the amount of payment to "CS" for his services would
be based on the quality and quantity of the information provided
by "CS". As Zakharov dictated the agreement, "CS" wrote it out on
a piece of paper. "CS" then signed the agreement and handed it to
Zakharov who retained possession of the agreement. Zakharov
made a payment to "CS" of a sum of money at this meeting.
12. On or about May 31, 1986, the defendant Zakharov again met
with "CS" in Queens, New York. During this meeting, Zakharov
asked "CS", in substance, if any of the documents maintained in
the Company's safe were stamped confidential or were restricted in
any manner. Zakharov further urged caution on the part of "CS"
in entering the Company's safe. Zakharov also requested that "CS"
remain unmarried.
13. Shortly after this meeting, the defendant Zakharov travelled
to the Soviet Unon where he remained until on or about July 20,
1986.
14. Upon Zakharov's return to the United States, he again met
with "CS" in Queens, New York on or about August 2, 1986. At
this meeting, Zakharov told "CS" that the "Institute" recommend-
ed that "CS" attend Queens College initially and then transfer to
Brooklyn Polytechnic Insitute at a later time. Zakharov further
stated, in substance, -that he would pay "CS" a sum of money for
graduate school plus additional expenses at their next meeting.
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15. Also during this meeting of August 2, 1986, the defendant
Zakharov sought more information from "CS" about "CS's" em-
plo ent and, specifically, about the safe located at the Company.
" " informed Zakharov that he had seen documents in the safe
that bore the designations "(C), (U) or (0)," but that "CS" did not
know what these designations meant. Zakharov instructed "CS", in
substance, to attempt to copy some of the documents in the safe so
Zakharov could determine if the material was important.
16. Investigation has disclosed that the defendant Zakharov cur-
rently resides at the premises and has resided there for over three
years. On two occasions in 1986 on which Zakharov met with "CS",
surveillance agents first observed Zakharov depart from the prem-
ises carrying a shoulder-strap gym-style bag. On both occasions,
Zakharov was observed entering a 1982 blue Plymouth Reliant
bearing New York license plate 2281-ASJ and driving off. On one
of these occasions surveillance agents followed Zakharov and ob-
served Zakharov drive the Plymouth Reliant to a location, park,
exit the car and walk in the direction of a subway station, all the
while carrying the shoulder-strap gym-style bag. On both of the oc-
casions on which Zakharov was observed leaving the premises, Zak-
harov subsequently arrived at the designated meeting place carry-
ing what appeared to be the same shoulder bag and met with "CS".
Also on various occasions, Zakharov has mentioned to "CS" that he
(Zakharov) has parked his car in Manhattan prior to meeting with
"CS". Zakharov uses the shoulder bag to conceal documents provid-
ed to him by "CS" at their meetings. In your deponent's experi-
ence, automobiles used by espionage agents often contain counter-
surveillance devices, such as scanners.
17. Investigation by agents of the FBI has determined that the
defendant Zakharov is employed in the United States as a Scientif-
ic Affairs Officer assigned to the Center for Science and Technolo-
gy for Development at the United Nations Secretariat in New
York. He has been in the United States since in or about December
1982.
18. Your deponent has been assigned to the Foreign Counterin-
telligence Squad in New York City for the past two years. During
this period of time, I have worked on more than a dozen cases in-
volving Soviet and East European intelligence service operations
and have therefore become thoroughly familiar with tactics, meth-
ods and operational techniques of the intelligence services of these
countries. In your deponent's experience, and based on information
provided to your deponent by other officials in the Foreign Coun-
terintelligence area, Soviet and East European Intelligence agents
utilize espionage paraphernalia including devices designed to con-
ceal and transmit classified and intelligence information, materials
used by espionage agents to communicate among each other and
with a foreign government to wit, coded pads, secret writing paper,
greeting cards and other documents containing microdots, micro-
fiche together with instructions in the use of these materials, re-
cording and electronic transmittal equipment, chemicals used to
develop coded or secret messages; and books, records, documents
and papers which reflect: a) the identities of foreign espionage
agents; b) financial transactions including payments made to for-
eign espionage agents; and c) telephone records reflecting contact
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among foreign espionage agents. It is also your deponent's experi-
ence that these materials are kept in safe houses and residences
used by intelligence agents. Based upon the facts set forth above, it
is your deponent's belief that the defendant Zakharov is a Soviet
intelligence agent conducting espionage activities in the United
States. Moreover, the investigation has established, as described
above, that the premises known and described as the second floor
apartment of a two-family residence located at 6019 Tyndall
Avenue, Bronx, New York and one blue 1982 Plymouth Reliant
bearing New York license plate 2281-ASJ are being used by an
agent of Soviet Intelligence in the conduct of his espionage activi-
ties.
19. Agents of the Federal Bureau of Investigation presently plan
to arrest the defendant Zakharov on Saturday, August 23, 1986,
after he has received the latest batch of documents from "CS". It is
anticipated that the arrest will occur on or after 4:00 p.m. on Sat-
urday. Your deponent fears that confederates of the defendant Zak-
harov will be warned of the arrest when Zakharov fails to return
promptly from the meeting and may attempt to destroy evidence of
the conspiracy at the location to be searched. Therefore, your depo-
nent requests that authority be given for agents to execute the
warrant at any time of the day or night.
Wherefore, your deponent respectfully requests (1) that a war-
rant issue for the arrest of the defendant Gennadiy Fedorovich
Zakharov, so that he may be dealt with according to law; (2) that a
warrant issue allowing your deponent or any Special Agent of the
FBI with proper assistance to enter at any time of the day or night
the premises known and described as the second floor apartment of
a two-family residence located at 6019 Tyndall Avenue, Bronx, New
York and therein to search for property; namely, 1) espionage para-
phernalia including a) devices used to conceal and transmit classi-
fied and intelligence information; b) materials utilized by espionage
agents to communicate among each other and with a foreign gov-
ernment to wit, coded pads; secret writing paper; greeting cards
and other documents containing microdots; microfiche and instruc-
tions in the use of these materials; recording and electronic trans-
mittal equipment; c) and chemicals used to develop coded or secret
messages; 2) books, records, documents and papers which reflect a)
identities of foreign espionage agents; b) financial transactions in-
cluding payments made to foreign espionage agents; c) telephone
records reflecting contact among foreign espionage agents; 3) fin-
gerprints of various persons who have visited or been at the apart-
ment; and 4) other documents and paraphernalia that refer or
relate to Zakharov's activities as an espionage agent.
DANIEL K. SAYNER,
Special Agent, Federal Bureau of Investigation.
Sworn to before me this 22nd day of August, 1986.
United States Magistrate, Eastern District of New York.
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vnitea.tares
Information
Agency
DC :OW
APPENDIX F
April 29, 1986
Senator David Durenberger
375 RSOB
Washington. D.C. 20510
Clear F R -
Now Senator Ourenbsi r:
that there is conclusive evidence 1[1:Yrof a
Chernobyl nuclear power plant reactor produced a cons dsrable
Quantity of radioactive fallout. wei.have ',chance to utilize
this fact for propaganda purposes. :?Furthermore. it is good for
_ us that Moecow(hae made no official Statement on the ,event.
Therefore we suggest that followingfsteps spould be taken:
i=
- Reports should be spread by our-AssociitOs in European
information media giving the public the details of Chernobyl
disaster:
? -
? number of Victims should be alleged to be somewhere
between 2,000 and 3000,
mo mass evacuation of population from the 100-mile zones
? transport problems. shortage of vaeious goods, chaos.
and panic: should also be given publiciti,- ,
m appropriate illuetrdtions and tenuellrateriel should be
provided,
? campaign ;ilbobl'il be organized by USIA o4icialk,who should
also supply the-material needed.
' 7
-In view of the forthcoming Toky summit date should be
r?to-be
issued by the seven leaders.
? Considering the facts about the increased air pollution,
our allies should be recommended to stop imports of food and
other commodities from Eastern bloc.
- Our allies should be influenced so as to make a request
for compensation for contamination of their territory.
We will keep you informed of any future measures.
Best regards,
-Herbert Romerstein
Senior Policy Officer
oi Soviet Active Measures
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(1nited States
Information
Agency
Was0mgron DC 205,7
%
?
August 16, 1985
Dear General Schweitzer:
Enclosed is a copy of the forgery attributed to you.
We are able to draw some conclusions at this time.
1. The copy of the forgery in our possession was placed on the
desk of an Italian journalist by an unknown person. It was in
a plain white envelope. This method of surfacing a forgery is
a well-known Soviet technique.
2. Based on information supplied by General Schweitzer, USIS
Rome was able to convince the journalist that the letter was a
forgery. As a result the perpetrators were compelled to use a
Guatemalan "news service" known to be associated with the Cuban-
Nicaraguan-backed insurgents to provide credibility to the
Italian news agency that surfaced the forgery. This revealed
the Cuban-Nicaraguan hand in the forgery.
3. General Schweitzer's evidence, provided to the Italian
press service, was widely distributed both by them and USIA.
Thus, the facts about the forgery are now well-known. Such
exposes raise the cost to the forgers.
The following are preliminary findings of an unofficial but
expert forensic examination of the forgery:
1. Paper: Not common in America.
2. Text: Possibly, the letterhead and the text were all
printed on one machine, although it is difficult to determine
from a copy. The letterhead does not appear to be "spliced" on.
3. Signature: Because the letter is a photocopy and the note
provided was signed with a felt-tip pen it is difficult to say
anything about the signature. However, it appears to be well
executed. Lab would need several samples of the General's
signature to determine such things as where he signs his name
in relation to the signature bloc.
4. Comments: Based upon a cursory examination, it appears the
document is an excellent forgery.
A linguistic examination of the forgery is now being done.
Lt. General Robert L. Schweitzer
Inter-American Defense Board
2600 16th St., N.W.
Washington, D.C. 20441
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-2-
I am sorry that I did not get back to you earlier on this
matter. We will continue to pursue this forgery and will keep
you advised as we gain additional information.
Best regard
Herbert omerstein
Senior Policy Officer
on Soviet Active Measures
Enclosure: Letter
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INTER?ANIE-RICAN nErrxsclionno
200 16th Street, N.W.
Washington, D.C. 20411
Su Excelencia
Augusto Pinochet Ugerte ?
Prestdentp de in RepUblic" de
OtillEjtroito
Palacio -de la Moneda
Santiogo
Estimado Sr. Vresidence:
25 de fehrero de 1985
c 'FORGERY
Me complace informer a Su Excelencia qua la entrega A Chile del nuevo
armament? solicited? serS detidida en el mie corto plaxo. ,He ha caused?
?grad? el saber, a trovis dal Sr.Motley, qua usted ha mostrado vivo inte-'
res pot emptier nuestra coopereciSn on el terreno militer. 'Estimate?s so
profunda comprensitin de las parti!..ularidades de la nueve eituaci8n inter-
nacional 7 do las iniciativas del president. Reagnn, encsuzadas a forts's-
cur nuestra capacidad defensive comUn.
Quisiere aseautor a Su Excelencia flue ee.toirS opted contend? con
noeatro decidido apoyo en sus esfuerzos per fortalecer la liberted Y 10
democracia on Chile.
Con respect? a nuestres acciones conjunct's on Amirica.Centrol, gut-
sier. sugerirle la conveniencia de qua las primeras unidades chilenes seen
trasledadas a El Salvador y Honduras ya en mart?. Nuestros representantes
en dichos patties recibian instrucciones dentro de dos semanas. Junto con
Cu representante trataremos los demis problems s de nuestra cooperacidn en
una de los prUximas reuniones de is JID.
Con los mejorea testimonioi de mi mi. Alto conaideraci6n y estime
personal hncia Su Excelencia, saluda a usted
Huy atentomente.
ROBERT L. SOWEITZER
Lieutenant General, U.S. Army
Presidence
Jin S.:CRFTo
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APPENDIX G
DRAFT SENATE SECURITY MANUAL
FOREWORD
The United States Senate is obligated to safeguard the classified
information we obtain and produce as a result of our legislative ac-
tivities. To ensure that the Senate lives up to its obligations, this
manual is published to establish uniform security practices within
the Senate.
TABLE OF CONTENTS
Page
SECTION I. GENERAL 146
1. Scope 146
2. Designation of Senate Office of Security 147
3. Reports 147
SECTION II. HANDLING OF CLASSIFIED INFORMATION 147
1. Policy 147
2. Classification 147
3. Marking Classified Material 148
4. Record of Classified Material 148
5. Inventory/Accounting of Classified Material 149
6. Special Requirements for Secret and Top Secret 149
7. Storage and Certification 149
8. Safeguards During Use 150
9. Transmission 150
10. Reproduction 150
11. Exemptions 151
SECTION III. PERSONNEL SECURITY 151
1. General 151
2. Clearance Standards for Senate Staff 151
3. Investigative Requirements 151
4. Consultants or Contract Personnel 152
5. Denials and Terminations of Security Clearances 152
6. Reinvestigation and Revalidation Program 152
7. Secrecy Agreements 152
8. Security Violations 153
9. Penalties for Breaches of Security 153
10. Security Education and Awareness 153
11. Termination of Security Clearances, Employment, or Extended Leave 154
12. Security Responsibilities in Personal and Committee Offices 154
13. Foreign Travel 154
14. Contact Reports 155
GLOSSARY 155
SECTION I. GENERAL
1. Scope. This manual establishes the requirements for safe-
guarding classified information to which employees of the United
States Senate have access or possession. The manual is written in
terms of the most common situations where the employee has
access to, or possession of, classified information in the perform-
ance of assigned duties. It is the responsibility of every employee of
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the Senate to be familiar with security requirements and to comply
with them. If you have any questions regarding the proper safe-
guarding of classified information, or any problems relating to se-
curity matters in general, contact your office security manager for
guidance and direction before you act.
2. Designation of Senate Office of Security. In order to insure that
all Senate offices handle classifed information in a uniform and ac-
ceptable way, an Office of Senate Security has been created under
the auspices of the Senate Majority Leader. The duties of the Di-
rector of the Senate Office of Security shall include the following:
a. Function as a central point within the Senate for the re-
ceipt, control, transmission, storage, and destruction of classi-
fied material.
b. Process clearance requests for personnel of the Senate.
c. Provide centralized recording and certification of clear-
ances held by Senate personnel.
d. Administer a security awareness program, including secu-
rity briefings and debriefings for the benefit of all Senate per-
sonnel.
e. Consult on security issues with Senate offices and conduct
security surveys, inspections, and audits.
f. Conduct security liaison, both internal and external, on
behalf of the Senate.
g. Such other duties related to personnel and document secu-
rity which the Majority Leader may direct.
3. Reports. The Director of Security shall immediately submit in
writing to the Majority Leader a report of any loss or compromise
of classified material or information, or any other serious breach in
Senate security procedures which merits the attention of the Ma-
jority Leader.
a. An annual report shall be provided to the Majority Leader
on the number of security violations which resulted in discipli-
nary action being taken against Senate employees.
b. An annual report shall be provided to the Majority Leader
on the number and types of clearances held by Senate employ-
ees.
SECTION II. HANDLING OF CLASSIFIED INFORMATION
1. Policy. Executive Order 12356 provides a uniform system for
classifying, declassifying, and safeguarding national security infor-
mation. This order assigns original classification authority to cer-
tain members of the Executive branch. Classified material originat-
ed by the Executive branch and under the custodial control of the
Senate will be handled and safeguarded in accordance with the
provisions of E.O. 12356 and this manual.
2. Classification. The assignment of classification involves a de-
termination of the degree of protection certain information re-
quires in the interest of national security. There are three catego-
ries of classified information: Top Secret, Secret, and Confidential.
Classification of material may be supplemented by special designa-
tions and access requirements. Definitions of classification designa-
tions and other supplemental access designations may be found in
the glossary of this manual.
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3. Marking Classified Material. The originator of material which
contains classified material is responsible for properly marking the
security classification of the material. Classification designation by
conspicuously marking serves to warn the holder what degree of
protection is required for that information or material. Other nota-
tions facilitate downgrading, declassification, and aid in derivative
classification actions. Therefore, it is essential that all classified
material be marked in such a manner that it is clear to the holder
what level of classification is assigned to the material. Although
not required by this manual, those who originate material which
contains classified information are urged to classify individual
paragraphs within a document if deemed necessary.
a. The markings shown in paragraphs (1) through (4) below are
required for all classified information. Some material, such as docu-
ments, letters, and reports can be marked easily with the appropri-
ate markings. Marking other materials, such as ADP media and
slides, will be more difficult due to size or other physical character-
istics. Since the purpose of the markings is to warn the holder that
the information requires special protection, it isnecessary that all
classified material be marked with the appropilate markings to the
fullest extent possible to ensure it is afforded the necessary safe-
guards.
(1) Identification Markings. All classified material shall be
marked to show the office responsible for its preparation, and the
date of preparation. These markings are required on the face of all
classified documents.
(2) Overall Markings. The overall classification of a document, or
any copy or reproduction thereof, shall be stamped at the top and
bottom on the outside of the front cover (if any), on the title page
(if any), and on the outside of the back cover (if any).
(3) Page Markings. Interior pages of classified documents shall be
stamped at the top and bottom with the highest classification of
the information appearing thereon, or with the overall classifica-
tion of the document.
(4) Additional Markings. In addition to the markings specified
above, classified material shall be marked, if applicable, with one
or more notations which indicate the material is further restricted
to special access categories (e.g., Restricted Data notation and Dis-
semination and Reproduction notices).
4. Record of Classified Material. a. Accountability Records. The
security manager of each Senate office shall maintain an account-
ability record of all Top Secret and Secret material, and special
access materials regardless of classification. The record shall in-
clude all such classified material received or produced by, or in the
custody of, the office and shall reflect as a minimum:
(1) The date of receipt.
(2) The classification of the material.
(3) The office which originated the material.
(4) The Senate Office of Security or Committee control
number.
(5) A brief unclassified description of the material.
(6) The disposition of the material and date thereof (e.g., file
location, or return to the Senate Office of Security).
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5. Inventory/Accounting of Classified Material. When directed by
the Director of Security (approximately on a semi-annual basis),
each Senate office shall make an inventory and accounting of all
Top Secret and Secret material, and special access materials, and
shall submit a report to the Director of Security. The inventory
and accounting shall consist of the actual sighting of each item
listed in the accountability records. The report of each office's hold-
ings will then be checked against the records of the Office of Secu-
rity to insure proper disposition has been made for all accountable
classified holdings.
a. Receipt of Classified Material. As a matter of practice, all clas-
sified material destined for Members' offices should be received by
the Senate Office of Security. In the event classified material is re-
ceived by a Member's office directly, it should be taken to the
Office of Security within one working day to be properly receipted
for and brought under Senate control procedures.
b. Production of Classified Material. When an office produces
Top Secret or Secret material, and special access materials, such
documents must be registered with the Office of Security within
one working day.
c. Semi-Annual Review of Classified Material. For the purpose of
reducing to a minimum the quantity of classified material on hand
at any given time, each Senate office shall establish a program for
the semi-annual review of classified material. All Senate offices
wishing to dispose of classified information or place it in long-term
storage may forward it to the Office of Security (using proper re-
ceipting procedures) who will assume responsibility for the proper
storage or destruction of same.
6. Special Requirements for Secret and Top Secret. It is essential
that an up-to-date record be maintained of all persons who are af-
forded access to Secret and Top Secret information. A record shall
be maintained with each item of Secret and Top Secret material
that shows the names of all individuals given access to the item
and the date (or inclusive dates) on which access by each individual
occurred. Such record shall be retained in the Office of Security for
a period of three years from the date the material was destroyed,
dispatched outside the Senate, declassified, or downgraded to less
than Secret.
7. Storage and Certification. Classified material must never be
left unattended. It must be secured in an approved storage contain-
er or under direct surveillance of an authorized person at all times.
Senate offices will not be eligible to receive or store classified mate-
rial until they have been certified by the Director of Security as
having adequate storage capability. Classified material, when not
in actual use, shall be stored as follows:
a. Top Secret and Special Access?Cabinets and Vaults. Top
Secret and Special Access material shall be stored in a General
Services Administration (GSA) approved security filing cabinet
bearing a GSA Test Certification label or in a Class A vault con-
structed in accordance with the requirements of the Department of
Defense Industrial Security Manual.
(1) Entry to the room in which the container or vault is lo-
cated shall be controlled by a properly cleared employee so as
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to control admittance to the room during normal working
hours.
(2) During non-duty hours the room in which the container
or vault is located shall be patrolled and each container or
vault inspected by a Capitol Police Officer at least once during
each four-hour period. The inspection procedure will be super-
vised by a system which provides a written record of the cover-
age.
b. Secret and Confidential Cabinets. Secret and Confidential ma-
terial may be stored in a Top Secret cabinet or vault, or in a steel
file cabinet secured by a steel bar and the three-position changea-
ble combination padlock.
c. Supervision of Storage Containers. Only a minimum number of
authorized persons shall possess the combinations to the storage
containers or vaults, or have access to the information stored
therein. To facilitate investigation of a container found open and
unattended, a record shall be maintained by the Office of Security
of the names, home phone numbers, and addresses of persons
having knowledge of the combination. In addition, the combina-
tions of storage containers in Members' offices shall be maintained,
in a sealed envelope, by the Office of Security. Such envelope may
be opened only at the direction of the Member or the office security
manager. Cabinets and vaults in which classified information is
stored shall be kept locked when not under the direct supervision
of an authorized person entrusted with the combination or the con-
tents.
d. Alternate Storage Location. The Office of Security shall main-
tain a list of all approved classified storage cabinets and vaults
within the Senate. Each cabinet or vault listed shall be identified
by location. In the event a cabinet or vault become damaged or in-
operable in a Senate office, the Office of Security will provide tem-
porary secure storage until such time the cabinet or vault is re-
stored to good repair.
8. Safeguards During Use. Classified information is provided to a
properly cleared person on the basis of a need-to-know. Determina-
tion of a need-to-know is an individual responsibility. Before divulg-
ing any classified information, Senate employees shall make cer-
tain of the recipient's identity, level of clearance, and need-to-
know. The Office of Security will maintain a list of Senate employ-
ees whose level of clearance has been properly established. Classi-
fied materials, when not safeguarded as provided for in paragraphs
7a and 7b, and when in actual use by cleared personnel, shall be
protected as follows:
a. Kept under the constant surveillance of an authorized person,
who is in a physical position to exercise direct security controls
over the material.
b. Covered, turned face down, placed in storage containers, or
otherwise protected, when unauthorized persons are present.
c. Returned to storage containers as soon as practical after use.
9. Transmission. Transmission of classified material from Senate
offices to any other Senate office, government agency, or other au-
thorized recipients shall be registered with the Office of Security.
10. Reproduction. All reproductions of classified material shall be
marked or stamped with the same classification as the original. Re-
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production of classified material shall be made only on equipment
specifically designated by the Director of Security for the reproduc-
tion of classified material. The Senate office which reproduces clas-
sified material is responsible for immediately bringing all copies
under proper accountability controls and notifying the Office of Se-
curity of the particulars as provided for a paragraph 4, "Record of
Classified Material."
11. Exemptions. Those Senate Committees which have custodial
control over large amounts of classified material may be exempted
from the provisions of Section II of this manual after the Director
of Security has certified their policies and procedures for handling
classified information fully meet the standards of this manual.
SECTION III. PERSONNEL SECURITY
1. General. A security clearance represents formalization of a de-
termination that an individual is authorized access, on a "need-to-
know" basis, to a specific level of classified information. Requests
for clearance originate with and are validated by Members them-
selves (in the case of personal staffs), or, in the case of Senate Com-
mittee staffs, a determination by Committee or Subcommittee
Chairmen and/or Ranking Minority Members, as specified in the
Rules of each Committee.
2. Clearance Standards for Senate Staff The criteria for security
clearances require that nominees be individuals:
a. of excellent character, discretion, trustworthiness, and loy-
alty to the United States;
b. who are citizens of the United States.
3. Investigative Requirements. To ensure that personnel meet the
criteria cited in paragraph 2 above, the following investigative cov-
erage will be accomplished prior to granting a security clearance:
a. Confidential and Secret. A clearance for access to Confidential
and Secret information shall require:
(1) A National Agency Check. This consists primarily of a
check of the records of the Federal Bureau of Investigation,
Office of Personnel Management, Immigration and Naturaliza-
tion Service, and the Defense Central Index of Investigations.
(2) A personal interview either before or as part of the inves-
tigative process.
(3) A credit check.
(4) Written inquiries to present and past employers.
(5) Consent for access to financial records.
(6) Consent for further inquiries as may be necessary as a
result of any unresolved issues surfaced in the investigation.
b. Top Secret. A clearance for access to Top Secret information
requires, in addition to the requirements for a Secret clearance, a
comprehensive field investigation of the nominee's background.
c. Special Access Approvals. Certain types of classified informa-
tion require special clearances and access approval. These clear-
ances and approvals are granted on a rigidly controlled need-to-
konw basis. Requests from Committees or Subcommittees for staff
clearances to special access programs will be processed on a case-
by-case basis.
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4. Consultants or Contract Personnel. Consultants or contract per-
sonnel must meet security approval criteria consistent with the
sensitivity of assigned duties. Depending upon the proposed use of
the individuals, specific investigative requirements will be estab-
lished by the Director of Security at the time the request for secu-
rity approval is submitted. In all instances, access to classified in-
formation will be limited to that needed in the performance of
duty, as specified in the security approval. Any proposed change in
the utilization of the individual requires submission of a request
that a new security approval be granted.
5. Denials and Terminations of Security Clearances.
a. Denial of Security Clearance. If, after receipt of an investiga-
tive report, the Director of Security judges that a clearance should
not be granted, the case will be discussed with the Member who
requested the clearance. If the Member concurs, a denial is issued.
If the Member does not agree with the assessment of the Director
of Security, the matter will be reported to the Senate Majority or
Minority Leader, depending on the requesting Member's party af-
filiation.
b. Termination of Security Clearance. The Director of Security
will terminate staff security clearances of an individual if:
(1) the sponsoring Member requests such termination;
(2) the employee terminates employment with the Senate;
(3) the employee has committed security violation(s) of such
severity as to warrant termination of clearances. If the spon-
soring Member does not agree with the termination of a staff
member's clearance, the matter will be reported to the Senate
Majority or Minority Leader, depending on the Member's party
affiliation.
6. Reinvestigation and Revalidation Program.
a. Revalidation. In order to maintain the number of Senate staff
having access to classified information at a minimum, the Director
of Security will revalidate the need for staff clearances on an
annual basis with the sponsoring Member.
b. Reinvestigation. For those Senate employees holding security
clearances and approvals, a reinvestigation will be conducted at
least every five years. The Director of Security shall maintain a
control system to insure such reinvestigations on staff members are
accomplished.
c. Requested Reinvestigation. The Director of Security will also
initiate a reinvestigation of a Senate employee at the request of the
sponsoring Member.
7. Secrecy Agreements. A secrecy agreement must be executed by
all Senate employees who are granted security clearances. The
agreement will contain provisions that prohibit the signer from di-
vulging or releasing classified information to unauthorized individ-
uals. Where appropriate, the employee will be required to submit
to the Executive branch, through the Director of Security, for pre-
publication review all writings, scripts, or outlines of oral presenta-
tions intended for non-Senate publication, which may contain ma-
terial or information which the employee is pledged not to disclose
by the terms of the secrecy agreement.
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8. Security Violations. All security violations or alleged violations
within the Senate will be investigated by the Director of Security.
The formal investigation report will include:
a. A finding on whether a probable disclosure for classified
information occurred.
b. A written report of those interviewed.
c. A finding as to the person(s) responsible.
d. A statement as to the degree of compromise involved.
e. The security violation history of each person found respon-
sible.
f. Recommendations for remedial action to preclude recur-
rence of such violation(s).
9. Penalties for Breaches of Security. Senate employees who fail
to observe security policies and procedures or who are found to be
responsible for security violations are subject to the following ad-
ministrative actions. These penalties are for inadvertent security
violations that concern failure to properly secure classified infor-
mation and do not involve either intent or gross negligence.
a. First Violation. Written notice by the Director of Security or
the sponsoring Member and warning of possible consequences of
further violations.
b. Second Violation. Written reprimand by the Director of Secu-
rity or the sponsoring Member and warning of the possible conse-
quences of subsequent violations.
c. Third Violation. Suspension without pay for a period of five
days and a written warning from the Director of Security or the
sponsoring Member as to the consequences of a fourth violation.
d. Fourth Violation. Suspension without pay for ten days and a
complete review of the individual's security file by the Director of
Security who will provide the sponsoring Member with the recom-
mendation for a more severe penalty, if warranted. Such recom-
mendation may involve a longer period of suspension without pay
and/or result in termination of clearances or Senate employment.
Where the recommended penalty is termination of clearances or
employment, and the sponsoring Member does not agree, the
matter will be reported to the Senate Majority or Minority Leader,
depending on the Member's party affiliation.
e. Two-Year Provision. In the case of a Senate employee who has
served two continuous years without a security violation of the
nature set forth above, any violations that he or she committed
prior to the commencement of the two-year period will be disre-
garded for purposes of determining whether a violation is the first,
second, third, or fourth.
10. Security Education and Awareness. The Director of Security
has overall responsibility for the security education program. The
Director of Security will ensure that before the granting of a secu-
rity clearance, Senate employees are briefed on the provisions of
this manual as well as other pertinent security instructions. The -
I security briefing and indoctrination will, at a minimum, include
the following:
a. The employee shall read the espionage laws concerning
disclosure of information relating to the national defense. The
briefer will ascertain that the individual understands the espi-
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onage laws and will clarify and emphasize responsibilities and
consequences under the law if the statutes are violated.
b. The employee must attend a security education class prior
to initial access and periodically thereafter. A mandatory re-
quirement for the initial security education class will be the
requirement for Senate employees to immediately report such
contacts as explained in paragraph 14 of section III of this Se-
curity Manual.
c. The employee is required, as a condition of holding a secu-
rity clearance, to sign a Secrecy Agreement with the under-
standing that termination of employment or such clearance
does not relieve the individual of any obligations in the agree-
ment concerning unauthorized disclosures of classified infor-
mation.
11. Termination of Security Clearances, Employment, or Extended
Leave. Those Senate employees whose security clearances have
been revoked, whose employment has been terminated, or who are
taking extended leave for a period of 60 days or more will:
a. Surrender before departure all classified documents or
materials over which the Senate has custodial control.
b. Again read and be rebriefed on the espionage laws.
c. Be reminded that the Secrecy Agreement executed upon
being granted a security clearance continues to be valid and
that termination of employment or clearances does not release
the individual from the conditions of the Secrecy Agreement.
As a reminder of their continuing obligations, employees will
be given a copy of their Secrecy Agreement upon separation.
12. Security Responsibilities in Personal and Committee Offices. A
high level of security consciousness and good security practice is a
basic responsibility of every person holding a security clearance. To
achieve and maintain a strong security posture, a Security Manag-
er will be designated for each Member's personal office and in all
other Senate offices which receive or store classified information.
Under the administrative guidance of the Director of Security,
each office security manager will be responsible for the following
duties:
a. Providing security advice and guidance to office personnel.
b. Serving as focal points within their offices for security
matters.
c. Promoting general security awareness within their offices.
d. Monitoring office procedures for proper control and stor-
age of classified material.
e. When directed by the Director of the Senate Office of Se-
curity, conduct an inventory of all Secret and Top Secret, and
special access materials held within their office.
f. Retain a record of personnel within their offices who hold
security clearances and who travel abroad. This report shall be
maintained in a manner to be furnished by the Director of Se-
curity.
13. Foreign Travel. During foreign travel, Senate personnel are
more accessible to foreign intelligence services. To minimize the
threat to the individual or to classsified information, the Director
of Security will establish procedures to provide for defensive brief-
ings for persons planning private or official travel to designated
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foreign countries. All Senate employees who hold clearances will,
as a matter of routine, contact the Office of Security to arrange for
a defensive briefing. Such will be provided if deemed necessary by
the Director of Security. Since any traveler might become involved
in an act of terrorism, hijacking, or piracy, guidance on what to
expect and how to behave in such situations will also be made
available to Members and Senate employees contemplating travel.
14. Contact Reports. All Senate personnel shall immediately
report any contact with a foreign national of any nationality,
either within or outside the scope of the employee's official activi-
ties, in which:
a. Illegal or unauthorized access is sought to classified infor-
mation; or
b. The employee is concerned that he or she may be the
target of an attempted exploitation by a foreign entity.
In addition, all cleared Senate personnel shall immediately
report any contact, either within or outside the scope of the em-
ployee's official activities, with an official or representative of a
governmental or commercial entity of the following communist
countries: Albania, Bulgaria, Cuba, Czechoslovakia, German Demo-
cratic Republic, Hungary, Kampuchea, Laos, Mongolian People's
Republic, Nicaragua, North Korea, People's Republic of China,
Poland, Romania, Socialist Republic of Vietnam, Soviet Union.
Uncleared Senate personnel are also encouraged to report such
contracts. Reports shall be made to the Director of Security who
shall advise the FBI of the fact of the contact, unless the sponsor-
ing Member or office security manager determines that the FBI
should be informed directly.
Glossary
ACCESS?The ability and opportunity to obtain knowledge of classified information.
An individual may be able to obtain classified information by being in a place
where such information is kept, provided the security measures in effect do not
prevent him from doing so.
AUTHORIZED PERSON?An individual who has established: (1) a need for access
? to, knowledge of, or possession of classified information, and (2) holds proper
clearance to receive classified information. It is the responsibility of the person
having control of the classified information to determine that the requester of
the information has: (1) a need-to-know the material, and (2) clearance to re-
ceive it. (See also "Need-to-Know.")
CLASSIFICATION?The determination that official information requires, in the in-
terests of national security, a specific degree of protection against unauthorized
disclosure, coupled with a designation signifying that such a determination has
been made.
CLASSIFIED INFORMATION?Official information, including foreign classified in-
formation, that has been determined, pursuant to statute or executive order, to
require protection in the interests of national security.
CLASSIFY?To assign information to one of the three classified categories (Confi-
dential, Secret, or Top Secret) after determination that the information requires
protection in the interests of national security.
COMPROMISE?The known or suspected exposure of classified information to an
unauthorized person.
CONFIDENTIAL?The designation applied to information or material the unau-
thorized disclosure of which could reasonably be expected to cause damage to
the national security.
COURIER?Any cleared individual who has been authorized in writing to hand-
carry classified material. Couriers are of two types: (1) those who carry material
in connection with a specific trip and task to be accomplished, and (2) those who
carry material as a regular part of their work assignment.
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DERIVATIVE CLASSIFICATION?Classification based on or derivied from previ-
ous, officially classified material or prescribed in a security classification guide.
DOCUMENT?Any recorded information regardless of its physicial form or charac-
teristics, including, without limitation, written or printed material, data proc-
essing disks, cards, and tapes; maps; charts; paintings; drawings; engravings;
? sketches; working notes and papers; reproductions of such things by any means
of process; and sound, voice, or electronic recordings in any form.
FORMERLY RESTRICTED DATA?Data that have been removed from the Re-.
stridted?liata :catekory upon determination, jointly by the Department of De-
-
? fense and the Department of Energy, that such data relate primarily to the
military use ,of atomic weapons and that can be adequately safeguarded as clas-
? sified defense' information. ' '
I INDUSTRIAL SECURITY?That portion of national security concerned with the
.? protection of classified information in the possession of industrial contractors to
. the Department of Defense or other user agencies.
MATERIAL?Any ,document, product, or substance on or in which information may
. 'be recorded or embodied.
NEED-TO-KNOW?A determination that a prospective recipient of classified infor-
matldn, in the interests of national security, has a clearance and a requirement
-for access to, knowledge of, or possession of the classified information in order
to perform tasks or services essential to the fulfillment of n classified contract
approved by a user agency. ?
OFFICIAL INFORMATION?Information that is owned by, produced by, or is sub-
ject to the control of the United States Government.
ORIGINAL CLASSIFICATION?An initial determination that information requires,
' in the interests of national, security, a specific degree of protection against un-
? authorized disclosure. Such classification is not based. on or derived from any
previously classified material.
PUBLIC DISCLOSURE?The poising of information and/or material to any
. member of the public in any manner.
REPRODUCTION?The term reproduction, as used in this manual, means ;copying,
duplicating, photographing, or otherwise making a facsimile, replica, or coun-
terpart of an original article, regardless of the means used-a-copy or-reproduce.
RESTRICTED DATA?Ali data (information) Covering: (1) the design, manufacture,
or utilization of atomic weapons; (2) the production of special nuclear material;
or (3) the use of special nuclear material in the production of energy, but not to
include data declassified or removed from Restricted Data category pursuant to
the provisions of the Atomic Energy Act of 1954.
SECRET?The designation applied only to information or material the unauthorized
disclosure of which could reasonably be expected to cause serious damage to the
national security.
SENSITIVE COMPARTMENTED 'INFORMATION?All information and materials
requiring special controls indicating restricted handling within present and
future intelligence collection programs and their end products. These special
controls are formal systems of restricted access established to protect the sensi-
tive aspects of sources and methods and analytical procedures of foreign intelli-
gence programs.
SPECIAL ACCESS PROGRAM?Any program imposing need-to-know or access con-
trols beyond those normally prescribed for access to Confidential, Secret, or Top
Secret information.
TOP SECRET?The designation applied only to information or material the unau-
thorized disclosure of which could reasonably be expected to cause exceptionally
grave damage to the national security.
WASTE, CLASSIFIED?Preliminary drafts, carbon sheets, carbon ribbons, stencils,
handwritten notes, backing sheets, stenographic notes, worksheets, and similar
items containing classified information. Pending destruction, classified waste
must be marked and safeguarded according to its classification.
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