I appreciate the opportunity to speak to this distinguished
group on a topic that is a critical part of my responsibility as
Chairman of the Senate Select Committee on Intelligence.
In the four years I have served as Chairman, the Committee has
held more hearings on issues relating to counterintelligence and
security - from PRC nuclear espionage and the loss of missile
technology to China to the Hanssen case - than any other single
This should not come as a surprise. Spying has been described as
the world's "second oldest profession" . . . and one that is, in
the words of one former CIA official, "just as honorable as the
Espionage has been with us since Moses sent agents to spy out
the land of Canaan - and the Philistines sent Delilah to assess
Samson's vulnerabilities - and spies are with us today. I will not
attempt to cover the history of espionage from Biblical days to
now, but I would like to take the opportunity to address some
important recent history, and lessons from recent history, as well
as some of the issues and challenges, new and old, that we face as
we address counterintelligence in the 21st century.
Let me emphasize at the outset that due to the extremely
sensitive nature of the subject, and the fact that some of the
matters I will discuss are the subject of ongoing investigations, I
will be speaking for the most part in very general terms.
The first point I would like to make is that, as those of you
who follow counterintelligence are well aware, between the peaks of
public attention that attend the arrest of an Ames or a Hanssen, or
a case like the Wen Ho Lee case, there is a quiet but steady parade
of espionage or espionage-related arrests and convictions.
A July 1997 Defense Security Service publication lists more than
120 cases of espionage or espionage-related activities against the
United States from 1975 to 1997 - and those are just the ones that
Since then, we have had the Peter Lee case; the Squillacote and
Trofimoff cases; David Boone, an NSA employee; Douglas Groat, who
pled guilty to extortion against the CIA in a plea bargain in which
espionage charges were dropped, the conviction of INS official
Mariano Faget of spying for Cuba, and, of course, the Hanssen case.
Counterintelligence success or failure is often a matter of lessons
learned or not learned. For today's purposes, I would like to
concentrate on some lessons from the most damaging and high profile
recent cases: Ames, PRC espionage against our nuclear and missile
programs, and the Hanssen case.
In its investigation of the Ames case, the Senate Intelligence
Committee found a counterintelligence disaster. Elements of this
disaster included: a crippling lack of coordination between the CIA
and the FBI; fundamental cultural and organizational problems in
the CIA's counterintelligence organization; a willful disregard of
Ames' obvious suitability problems; failure to coordinate and
monitor Ames' contacts with Soviet officials; failure to restrict
Ames' assignments despite early indications of anomalies;
deficiencies in the polygraph program; and deficiencies in the
control of classified information; and, coordination between the
CIA's security and counterintelligence operations. Most disturbing
was the CIA's failure to pursue an aggressive, structured, and
sustained investigation of the catastrophic compromises resulting
from Ames' espionage, in particular the destruction of the CIA's
Soviet human asset program as a result of Ames' 1985 and 1986
By 1986, it was clear to the CIA that, as the SSCI report on the
Ames matter concluded, "virtually its entire stable of Soviet
assets had been imprisoned or executed." Yet as a result of the
failure to mount an effective counterintelligence effort, it was
another eight years before Ames was arrested. The FBI, which lost
two of its most important assets following Ames' June 1985
disclosures, also bore responsibility for the failure to mount an
adequate counterintelligence effort, as a 1997 report by the
Department of Justice Inspector General made clear.
These two FBI assets, who were KGB officers, and a third KGB
asset were betrayed by Hanssen in October 1985 - just a few months
after all three names were disclosed by Ames, according to the
Justice Department affidavit in the Hanssen case. The two KGB
officers were later executed; the third asset was arrested and
imprisoned. Also extremely disturbing, from my perspective, was the
egregious failure by both the CIA and FBI, over the course of Ames'
espionage, to inform the Congressional oversight committees,
despite the clear statutory obligation to notify the Committees of
"any significant intelligence failure."
While the Committees obviously would not have been in a position
to investigate the compromises themselves, they would certainly
have exerted pressure that would have resulted in greater
management attention and a more sustained effort that could have
led to a more expeditious resolution. Before leaving the Ames
matter, I should point out that failure also may come from learning
the wrong lessons.
Most notably, many of the CIA's failings in the Ames case can be
traced to an overreaction to the "excesses" of the Angleton years,
which thoroughly discredited the CIA's counterintelligence program,
particularly in the Soviet-East European Division of the
Directorate of Operations, where Ames worked. Turning next to
Chinese espionage against the Department of Energy and U.S. nuclear
weapons programs: unlike in the Ames case, extensive investigations
into the compromise of U.S. nuclear weapons information have failed
to resolve all the key questions.
That there was espionage, there is no doubt. As the April 1999
Intelligence Community Damage Assessment of PRC nuclear espionage
concluded, "China obtained by espionage classified US nuclear
weapons information." What is not yet known is how, and from whom,
the Chinese got this information. As a result, we do not know
enough of the story to attempt a final or definitive exercise in
counterintelligence "lessons learned."
At the same time, a great deal is known about the overall
security and counterintelligence problems at the DOE labs, which
have been amply documented, for example in the report of the
President's Foreign Intelligence Advisory Board. Because this is so
well known, I will not touch upon it in detail, but will only make
a few general observations. First, despite the history of espionage
against the nuclear labs - and the obvious value of U.S. nuclear
information to any nuclear power, whether established, emerging or
aspiring - the Department of Energy's counterintelligence program
did "not even meet minimal standards," in the words of the director
of the program in November 1998.
He testified that "there is not a counterintelligence [program],
nor has there been one at DOE for many, many years." This was a
terrible failure of counterintelligence analysis and practice - and
of common sense.
Moving from DOE to the role of the FBI, it is abundantly clear
that the FBI counterintelligence investigation into the W-88
compromise lacked resources, motivation, and senior management
attention; failed to pursue all relevant avenues of potential
compromise; and was characterized by a number of missed
opportunities. The CIA, for its part, failed to assign adequate
priority or resources to the translation of the documents provided
by the now-famous walk-in source.
But let me be clear: while the investigation and prosecution of
Wen Ho Lee that emerged from the W-88 investigation have been
widely criticized, we should not lose sight of the facts. Dr. Lee
illegally, purposefully, downloaded and removed from Los Alamos
massive amounts of classified nuclear weapons information - the
equivalent of 400,000 pages of nuclear secrets, representing the
fruits of 50 years and hundreds of billions of dollars worth of
research. Now I would like to address the Hanssen case.
Robert Philip Hanssen was arrested on February 18. On March 5,
the Senate Intelligence Committee directed the Department of
Justice Inspector General to conduct a review of the Hanssen
matter. On March 7, the Committee authorized a separate Committee
investigation. Because of the ongoing criminal investigation and
pending prosecution, I cannot go into details of Hanssen's alleged
activities beyond what has already been made public by the FBI and
the Department of Justice.
By the way, there is a great deal of information in that
affidavit - too much information, some have suggested - and for
anyone interested in counterintelligence, it is a fascinating and
chilling, story. Because there is much that is not yet known about
this case, it would be premature for me to offer any definitive
comments or lessons learned.
What I will do is identify some of the questions and issues the
Committee is investigating, and offer a few preliminary and
First the Committee will prepare a factual summary of the
Hanssen case outlining his FBI career and alleged espionage
activities. An important question here, since the Justice
Department affidavit describes only espionage activities from 1985
through 1991, and 1999 through February 2001, is explaining what
may or may not have been an eight-year gap in Hanssen's
We also need to know if he was involved in any activities of
concern prior to 1985. The Committee will examine whether there
were counterintelligence warning flags indicating a penetration of
the FBI, for example source reporting, or unexplained compromises
of human sources or technical programs, and the response of the
counterintelligence community, if any, to these events.
This is a critical issue. The 1997 Department of Justice
Inspector General report on the Ames case criticized the FBI for
failing to mount an intensive counterintelligence effort to pursue
evidence of catastrophic damage to the FBI's and CIA's Russian
operations beginning in 1985.
The signs were there, but the FBI did not pursue them in an
aggressive and systematic fashion. We now know that such an effort
might have detected Hanssen, as well. We will look closely at the
FBI's efforts following the 1997 IG report to see if the agency
applied these lessons from the Ames investigation to its ongoing
There have been press reports of other source information or
counterintelligence analyses that might have pointed to Hanssen
I cannot address those reports; I can only say that we are
reviewing both Ames-era and post-Ames reporting and analysis to
determine whether any relevant warning flags were missed.
Moving to Hanssen himself, the Committee will review possible
warning flags in Hanssen's own behavior that raised, or should have
raised, questions about his loyalty or suitability, and the
response, if any, by Hanssen's colleagues and security
FBI internal security procedures during the period of Hanssen's
activities will be another critical focus of the Committee's work.
The Committee will review personnel security issues, such as the
FBI's failure to adopt an across-the-board polygraph program
comparable to those at the CIA and NSA, and the adequacy of
financial disclosure requirements.
The Committee will look hard at the FBI's computer and
information systems security practices, and at Hanssen's computer
activities, including the possibility that he gained unauthorized
access or might have manipulated FBI computer systems. Another
issue is the control of classified information in general. Hanssen
appears to have been able to gain authorized or unauthorized access
to an extremely wide range of sensitive intelligence programs and
activities, many of which may have been beyond his "need-to-know."
(Ames too was able to gain access to a great deal of information
for which he had no need-to-know.)
This problem may be FBI-wide, and not limited to Hanssen. In the
1987 ANLACE report - the first of several inconclusive efforts to
solve the 1985 Ames/Hanssen compromises I described earlier -- FBI
agents found that as many as 250 FBI employees in the Washington
Field Office alone had knowledge of these highly sensitive cases.
Also, I am concerned that Hanssen was able, according to the
affidavit, to provide the KGB with original documents (rather than
copies), pointing to a serious failure in document control.
These security issues also are the subject of Judge Webster's
investigation. We look forward to the results of the Webster
Commission, which should aid the Committee in making budgetary and
other decisions to enhance security at the FBI.
The impact of Hanssen's alleged espionage on operational,
budgetary and programmatic decisions across the Intelligence
Community goes to the heart of the Committee's responsibilities,
and will be a critical component of our review. The key issues
include: what operations, programs and sources were compromised,
and their remaining utility, if any; how much it will cost to
replace or replicate these capabilities, if it can be done at all;
and; the impact of the compromise on the utility of these
collection capabilities against other, non-Russian targets. The
Committee will review the possibility that Moscow used sources or
programs compromised by Hanssen for "perception management"
In the wake of the Ames case, the CIA concluded that the Soviets
and later the Russians had used controlled sources or information
compromised by Ames to manipulate U.S. assessments of issues
ranging from internal Soviet political developments to Soviet and
Russian military capabilities and Russian policy toward the former
In sum, the Committee will collect the facts, identify
shortcomings and failures in the FBI's internal security and
counterintelligence operations that may have facilitated Hanssen's
alleged activities, determine the impact on the U.S. government's
intelligence collection efforts, and take such legislative or other
steps as appropriate.
The Committee also will review possible changes in law to
facilitate the investigations and prosecution of espionage cases.
This process may take some time, as the final assessment of the
Hanssen case will not be completed for some time, even if Hanssen
were to reach a plea agreement tomorrow. In the meantime, we intend
to take preliminary steps, as appropriate, in this year's
intelligence authorization bill.
Let me offer a few general thoughts on the Hanssen matter,
reiterating that these are personal and preliminary in nature.
First, let me restate the obvious question: How did the nation's
premier counterintelligence organization fail to detect a spy in
its midst for 15 years? While a number of explanations have been
and will continue to be offered, it is difficult to avoid returning
to that simple question. In any case, we intend to find out the
answer. Part of the answer may lie in Hanssen's ability to use his
knowledge of FBI activities and techniques to avoid detection.
While some of the early assessments of Hanssen as a master spy
may have been exaggerated, it is clear that he was in a position to
benefit from his inside knowledge of FBI procedures, and that would
explain at least some of his success in evading detection for so
long. On the other hand, it seems fair to say that Hanssen, like
Ames, benefited from the FBI's failure aggressively to pursue the
source of the 1985 agent losses and other compromised FBI
activities, as documented by the Justice Department IG.
Second, why didn't the FBI do more to take advantage of the
lessons that the CIA learned so painfully from the Ames case with
respect to financial disclosure, compartmentation, an effective
polygraph program, and other security and counterintelligence
measures. Granted, the reforms adopted by the CIA post-Ames could
not have stopped Hanssen in time to prevent grave damage to the
national security because Ames' arrest and the subsequent
recriminations and reforms came almost a decade after Hanssen
appears to have started spying. On the other hand, we may well
learn that additional losses could in fact have been avoided had
Hanssen been caught five years earlier. I would now like to move to
an important development in national level counterintelligence
On December 28, 2000, President Clinton signed a Presidential
Decision Directive entitled "U.S. Counterintelligence Effectiveness
- Counterintelligence for the 21st Century," or "CI-21." President
Bush has proceeded to implement the directive. CI-21 reflects the
concerns of senior counterintelligence officials - which the
Committee shared - over the ability of existing U.S.
counterintelligence structures, programs, and policies to address
both emerging threats and traditional adversaries using cutting
edge technologies and tradecraft in the 21st Century. I am pleased
to say that the Senate Intelligence Committee, on a bipartisan
basis, played an important role in keeping the pressure on the
executive branch to force them to come up with a
counterintelligence reform plan even when the executive branch
process bogged down amid interagency disagreements.
From an analytical perspective, CI-21 restates and expands upon
other recent assessments of the emerging counterintelligence
environment. It recognizes that the threat has expanded beyond the
traditional paradigm of "adversary states stealing classified data"
-- which includes traditional espionage by Russia, the PRC, and
others -- to include new efforts by these traditional adversaries,
as well as certain allies and friendly states, to collect economic
information and critical but sometimes unclassified technologies,
as we have seen just recently in the Lucent case.
A key element of this threat is the growing use of modern
technology, particularly modern computer technology and the
Internet, to develop information warfare (IW) and intelligence
collection capabilities and intelligence tradecraft that alter
traditional notions of time, distance, and access.
Faced by these emerging challenges, the drafters of the CI-21
plan found current U.S. counterintelligence capabilities to be
"piecemeal and parochial," and recommended adoption of a new
counterintelligence philosophy -- described as more policy-driven,
prioritized, and flexible, with a strategic, national-level
CI-21 also established a restructured national
counterintelligence system. Key elements of the plan include a
proactive, analytically-driven approach to identifying and
prioritizing the information to be protected, enhanced
information-sharing between counterintelligence elements, and more
centralized guidance for counterintelligence policies and
CI 21 proposes significant changes in the way the United States
Government approaches, and organizes itself to meet, the threat of
foreign espionage and intelligence gathering. The Committee looks
forward to working with the new Administration to ensure the
effective implementation of the CI-21 plan.
In closing, I would like to make a couple of general points
about the challenge of counterintelligence in the 21st century.
The first is the impact of technology. Modern microelectronics
and information technology have revolutionized just about
everything else, so it is not surprising they would have an impact
on counterintelligence. After all, the currency of espionage is
information. Therefore, the impact of evolving information
technologies is particularly significant.
One aspect of this is the miniaturization of information. It
took Jonathan Pollard 17 months to spirit away enough classified
documents to fill a 360 cubic foot room.
Today, that information can fit in a pocket, dramatically
diminishing the risk of detection while increasing the productivity
of an agent. A laptop computer like the one that disappeared from
the State Department can fit into a briefcase or backpack yet yield
an entire library of information.
Another is revolutionary change in the dissemination of
information. Depending on the computer security measures in place,
an agent can transfer or simply retype classified information into
an unclassified Email system and send it around the world in
seconds. Or consider the "virtual dead drop."
No more marks on mail boxes or hiding messages in a soda can.
Classified information can be transferred or retyped into an
unclassified computer with an Internet connection, and left there
for someone to "hack" into. The whole transaction may be difficult
or impossible for security officials to detect or recreate. Even if
the agent is careless and fails to delete classified information
from an unclassified computer, it may be difficult if not
impossible to prove anything beyond a security violation.
Another challenge, in an era of extensive scientific cooperation
between nations that are, if not adversaries, not exactly friends,
is the difficulty of protecting sensitive, proprietary or even
classified information in the course of scientific exchange or
joint ventures. This problem was especially apparent in the
interactions between American and Chinese engineers launching U.S.
satellites in China that were the subject of an Intelligence
American satellite company engineers, who have multimillion
dollar payloads riding on primitive Chinese rockets, face a serious
conflict of interest: how to ensure successful launches while not
doing anything to improve Chinese rockets that are essentially
identical to Chinese ICBMs in everything but the payload.
Identifying sensitive, but unclassified, technical information at
risk in transactions of this type, and then finding ways to protect
it, will be an important focus of the CI-21 plan. Most fundamental
to counterintelligence - as true today as ever - is the need to
"think the unthinkable." Yet this is one of the most difficult
attitudes to instill and maintain because it runs contrary to human
nature, especially in open societies like the United States.
Consider the following scenarios: Two Soviet agents are named by an
American President to serve as Secretary of State and Secretary of
Unthinkable? You might think so. Yet Henry Wallace, Vice
President during Franklin Roosevelt's third term, said later that
if Roosevelt had died and he had become President, he would have
appointed Laurence Duggan and Harry Dexter White - both of whom
were revealed to have been Soviet agents - to those positions. As
it happened, Harry Truman replaced Wallace three months before
Roosevelt's death. Or imagine that another Soviet agent became
chief of the British Secret Intelligence Service, or SIS.
Yet Kim Philby was one of the main contenders to take over the
SIS before he came under suspicion and eventually defected. (And
there are still people who claim that Roger Hollis, head of the
British internal security service MI-5, was a Soviet agent.)
Today, thinking the unthinkable is not getting any easier, but
it is just as critical to our national security.
As we proceed to face the counterintelligence threat of the 21st
century, we are faced with a host of challenges: some new, others
ancient and deeply rooted in human weakness, and some not yet even
I am pleased to say that today, we have an Administration that
is more willing to see the world as it is, and not as we would wish
it, and this gives me confidence in our ability to meet these
challenges. I look forward to working with the Bush administration
to build on the lessons of the past, and seize the opportunities of
the present and future, to strengthen our national
counterintelligence policies and posture in defense of our nation's
The Honorable Richard Shelby, a
United States Senator from Alabama and Chairman of the U.S. Senate
Select Committee on Intelligence, spoke May 9, 2001, at The
Heritage Foundation on "
Espionage in the New Millennium: Current Threats, Old