Richardson Announces Results of Inquiries
Related to Espionage Investigation

Secretary of Energy Bill Richardson today announced the results of inquiries into specific aspects of the espionage investigation at the Department of Energy's Los Alamos National Laboratory (LANL). Richardson had asked the independent Office of the Inspector General to look at the circumstances surrounding the security clearance, access and work assignments of the suspect at Los Alamos. A second inquiry looked at whether Los Alamos counterintelligence officials properly assisted the Federal Bureau of Investigations (FBI) with regard to computer search waivers. In a third investigation, Richardson asked the Inspector General to investigate allegations that Department officials blocked or prevented briefings to former Secretary Peña or the Congress about potential espionage at the labs.

Secretary Richardson said, "I believe the Office of Inspector General has done a thorough, fair and independent review, and I accept its conclusions and criticisms about the problems in this Department. This report makes it clear that Department of Energy (DOE) political and career management failed to give necessary attention to counterintelligence and security. That combined with the lack of accountability, unclear communication with other agencies and dysfunctional reporting relationships was fertile ground for the problems that occurred during the investigation. There was a total breakdown in the system and there's plenty of blame to go around."

"The espionage suspect should have had his job assignment changed to limit his access to classified information much sooner than it was, and cooperation with the FBI should have been stronger," Richardson said. "The Inspector General noted that the reforms we have undertaken are designed to address the systemic problems that led to these mistakes. I'm frustrated that the factual record isn't clearer about who knew what when about the suspect's access, and therefore should have acted. In some cases, there isn't sufficiently strong enough evidence in this report to carry out disciplinary actions. There were three lab employees whose responsibilities were clear, and they failed to meet their responsibilities, and I'm asking that the lab take appropriate action to discipline them."

Inspector General Report on Espionage Suspect's Security Clearance, Access and Work Assignments

The Inspector General looked at the circumstances surrounding the security clearance, access and work assignments of the suspect. In the course of the investigation, the Inspector General's office conducted 97 interviews of current and former DOE officials, Laboratory personnel and FBI officials.

In a classified report, the Inspector General cited:

• "systemic problems in the Department's management of counterintelligence matters"
• "a lack of adequate communications at all levels and confusion as to individual responsibilities and accountability. For instance, a misunderstanding of terms relating to 'limiting' [the suspect's] access through 'redirection' of his work assignments [that] may have contributed to delays in action, or inaction, by senior managers";
• "several senior level transitions were not structured so as to ensure that incoming Departmental and Los Alamos officials were fully conversant with ongoing counterintelligence matters, including details of the history and status of [the suspect's] clearance, access, and work assignments";
• "senior managers and other key personnel, apparently relying on their advisors or others did not obtain sufficient confirmation that directed actions had, in fact, been appropriately executed";
• "indicators of long-term management deficiencies. The Department's management structure, during the time, was such that many participants contended that they had no direct responsibility for and, therefore, should not be held accountable for decisions and actions relating to this matter";
• "senior officials did not ensure that the positions taken by the Federal Bureau of Investigation, with regard to the suspect's clearance, access and work assignments, were clear and fully understood";
• "Certain senior officials with direct management responsibility for LANL were not aware of, nor did they seek, essential information on [the suspect] in this matter and, specifically, on the status of [the suspect's] clearance and continued access within the X Division";
• "senior officials with intelligence or counterintelligence responsibilities, who were also aware of the FBI's initial request to leave [the suspect] in his position, may not have adequately reassessed the status of [the suspect's] access following Director Freeh's comments and the change in the FBI's position and, consequently, failed to respond in an appropriate and timely manner"; and
• "Senior managers and other key personnel, apparently relying on their advisors or others, did not obtain sufficient confirmation that directed actions had, in fact, been appropriately executed";

The Inspector General noted that the Department has implemented a number of internal reforms, saying, "while concerns raised during this inquiry are significant, the Department has taken steps designed to address many of these issues. For example, the responsibility for departmental security matters has recently been centralized with the naming of a retired senior military officer as the Department's 'security czar.' Further the Department now has a separate office of counterintelligence with direct responsibility for counterintelligence matters throughout the complex. The director of this office, a recognized specialist in counterintelligence, reports directly to the Secretary on such matters."

The Inspector General reported that witnesses had "varying degrees of recollection" and they provided conflicting versions about the circumstances surrounding decisions related to the suspect's clearance, access and work assignments. The Inspector General was "unable to reconcile many of these conflicts."

Without assigning blame to any specific individuals, the Inspector General identified 19 officials at the Department of Energy and LANL who "had a degree of responsibility regarding Department intelligence and counterintelligence matters, or programmatic security; a degree of understanding with respect to the status of the FBI's request to keep [the suspect] in his position; and, a certain level of knowledge regarding [the suspect's] clearance, access, or work assignments."

Based on the report, Secretary Richardson concluded that, while a significant number of the 19 properly carried out their responsibilities based on the information available to them, others bear responsibility in varying degrees for failures in management, leadership or follow through. In some cases, the evidence is not sufficiently strong to carry out disciplinary action. However, Richardson will ask the director of Los Alamos to take disciplinary action against individuals at the Laboratory whose responsibilities in the matter were clear and, who by action or inaction, failed to meet those responsibilities.

Specifically, Richardson has asked the Director of Los Alamos to hold a senior lab official accountable for failing to follow through on an express request by senior DOE management to develop a plan for limiting the suspect's access, for failing to inform Department's management that the plan had failed, and for failing to take alternative actions to limit the suspect's access.

Also, in October 1997, the FBI Albuquerque field office related to a LANL official that there was no investigative reason to keep the suspect in classified access and that DOE should feel free to move the suspect to prevent any future losses. When confronted with this substantial change in the FBI's position, the counterintelligence official decided to leave the suspect in place without consulting senior management about the FBI's change in position or about his decision not to recommend that the suspect be removed from all classified information. As a result, the suspect held a security clearance and had access to classified information until late 1998.

The individual at the laboratory responsible for these failures is no longer in the same position, but Secretary Richardson has asked the Director of Los Alamos to reevaluate the Lab's relationship with this individual.

Computer Waiver
The second inquiry into support of the FBI investigation determined that a counterintelligence official at Los Alamos performed poorly in his obligation to assist the FBI. Specifically, the individual did not carry out an adequate search of lab records to find the suspect had executed a written computer privacy waiver in April 1995. As a result, it was not until May 1999 that the FBI became aware that Los Alamos had maintained on file a paper waiver signed by the suspect. Failure to conduct a diligent search deprived the FBI of relevant and potentially vital information. Secretary Richardson has asked Los Alamos management to take appropriate personnel actions against this employee for this serious dereliction of duty.

Inspector General's Investigation into Allegations that Department Officials Blocked Briefings
The Inspector General's two month investigation examined allegations that Department officials blocked or prevented briefings to former Secretary Peña or the Congress about potential espionage at the labs. In the course of its investigation, the Inspector General's office conducted 82 interviews. They found that witnesses possessed varying degrees of recollection and there were conflicting versions about the reporting of LANL espionage allegations to the Secretary and the Congress. Despite a number of primary and follow-up interviews designed to clarify key matters, they were not able to reconcile the conflicting information. As a consequence, the Inspector General could not establish with any certainty that any Departmental official, knowingly or intentionally, improperly delayed, prohibited or interfered with briefings to Mr. Peña or to the congressional intelligence committees.

R-99-213