March 29, 2000

Thank you, Mr. Chairman and members of the Subcommittee.

I have been asked to appear before the Subcommittee today in connection with its inquiry as it pertains to the matter of Peter Lee, specifically Lee's disclosure to the Chinese during a trip to Beijing in May 1997. As I did not become General Counsel of the Navy until September 1998, I have no first-hand knowledge of events in 1997 relating to Lee, including communications between the Department of Justice and the Department of Defense in the fall of 1997 concerning possible prosecution. I am, however, familiar with the circumstances of a May 21, 1999 letter to the Cox Committee, in which the Subcommittee staff has expressed interest. I will endeavor to address that aspect of the matter at this time.

The Peter Lee matter received a great deal of attention within the Department of Defense between May 10, 1999, and May 25, 1999. Beginning on May 10th, a number of newspaper stories referring to Lee's May 1997 disclosure caused considerable concern in the Office of the Secretary of Defense and the Department of the Navy over a misperception that Lee had disclosed highly sensitive and previously unknown technology imperiling America's submarine force. One or more of these stories pointed out that the Peter Lee case would figure in the report of the Select Committee on U.S. National Security and Military/Commercial Concerns with the People's Republic of China (referred to as the "Cox Committee"), the release of which was said to be imminent.

Examination of the relevant portion of a draft of the Cox Committee report compounded the concern over misperception of Lee's May 1997 disclosure in terms of its substance and significance, as well as the account of later contacts between DOJ and DOD. There followed an effort to apprise the Cox Committee of that concern and provide clarifying information, which was received apparently in all good faith, but unfortunately to limited effect. DOD's continuing concern prompted transmission of my May 21, 1999 letter to the Cox Committee and, as an attachment, the assessment of Lee's May 1997 disclosure provided by the Navy to DOJ in November 1997. The report of the Cox Committee was produced over the holiday weekend and issued on May 25, 1999.My understanding of events in the fall of 1997 is as follows: In connection with DOJ's consideration of prosecution, the Navy was asked to review a draft affidavit summarizing the product of the FBI's investigation of Peter Lee in order to assess the level of classification of the information disclosed by Lee in Beijing and the extent of damage to the national security resulting from the May 1997 disclosure. The Navy's assessment, set forth in a memorandum dated November 14, 1997, was transmitted to DOJ on November 19, 1997. That assessment found that the information disclosed by Lee, evidently drawn from a document previously classified CONFIDENTIAL by compilation, was similar to information available from unclassified publications. The assessment further concluded that it would be difficult to make a case that significant damage had occurred as a result of the May 1997 disclosure. Finally, the memorandum expressed concern about public proceedings that could draw attention to the area of antisubmarine warfare.

From DOD'S perspective, the problem with the draft Cox Committee report, as of May 21, 1999, was essentially one of omission. The draft report alluded to the impact of Lee's disclosure on the security of the submarine force, as well as contacts between DOJ and DOD concerning possible prosecution. It did not, however, make any reference to the fact that the techniques Lee discussed with the Chinese were discussed in open sources and the judgment that it would be difficult to show significant damage to the national security. In this sense, the draft report was viewed as incomplete in its treatment of the May 1997 disclosure and subject to misinterpretation. The Cox Committee presumably was unaware of the Navy's contemporaneous assessment before it was brought to the staff's attention in mid-May 1999. It was to stress DOD's concern in this regard, and to furnish a copy of the November 14, 1997 memorandum, that the May 21, 1999 letter was sent to the Cox Committee.

In understanding the circumstances of the May 21, 1999 letter to the Cox Committee, it may be useful to consider the process by which that letter was generated. First, underlying the letter was the November 14, 1997 memorandum setting forth the Navy's assessment of the May 1997 disclosure. That assessment was performed by the Science and Technology Branch of the Submarine Warfare Division on the Chief of Naval Operations Staff. It was signed out by the Head of the Branch (N875), and concurred in by the Deputy Director of the Division (N87B), the Assistant Deputy Chief of Naval Operations for Resources, Warfare Requirements and Assessments (N8B) and the Vice Chief of Naval Operations (and, in addition, the General Counsel of the Navy). In short, the assessment was the work of the Navy experts responsible for submarine warfare science and technology, and it was approved all the way up the OPNAV chain of command.

The substance of the May 21, 1999 letter was originally drafted as a press statement (in the form of a Letter to the Editor). This was a collaboration of the Office of the Under Secretary of Defense for Acquisition and Technology, the Office of the Under Secretary of Defense for Policy, the Office of the Assistant Secretary of Defense for Command, Control, Communications and Intelligence, the Office of the Assistant Secretary of Defense for Public Affairs, the DOD Office of General Counsel and myself. During this timeframe, I was assisted by the Deputy Director of the Special Programs Division (N89B), the Assistant to the Under Secretary of the Navy for Special Programs and Intelligence, a Special Agent in the Counterintelligence Department of the Naval Criminal Investigative Service and Counsel for the Special Projects Division. The letter to the Cox Committee itself was prepared by DOD OGC and myself, and then distributed for coordination. The final draft received concurrences from OASD(C3I), DOD OGC, OUSN/ASP&I, the Deputy Director of Naval Intelligence (N2B), the Deputy Director of the Special Programs Division (N89B) and the Vice Chief of Naval Operations, as well as the OSD and DON legislative offices.

The principal cognizant offices -- OSD and DON, program, policy and legal, civilian and military -- having participated in its preparation and review, I was (and remain) confident that the May 21, 1999 letter reflected the considered judgment of program professionals with respect to Lee's May 1997 disclosure and the corporate view of DOD with respect to the draft Cox Committee report.

I appreciate your attention and am prepared to answer questions.