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Subject: FWD: FBI Probes Espionage at Clinton White House (Insight Magazine)

05/29/2000
FBI Probes Espionage at Clinton White House
http://www.insightmag.com/archive/200005306.shtml
----------------------------------------------------------------------------
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By J. Michael Waller and Paul M. Rodriguez
waller@insightmag.com and rodriguez@insightmag.com
----------------------------------------------------------------------------
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A foreign spy service appears to have penetrated secret communications in
the Clinton administration, which has discounted security and intelligence
threats.

The FBI is probing an explosive foreign-espionage operation that could dwarf
the other spy scandals plaguing the U.S. government. Insight has learned
that FBI counterintelligence is tracking a daring operation to spy on
high-level U.S. officials by hacking into supposedly secure telephone
networks. The espionage was facilitated, federal officials say, by lax
telephone-security procedures at the White House, State Department and other
high-level government offices and by a Justice Department unwillingness to
seek an indictment against a suspect.

The espionage operation may have serious ramifications because the FBI has
identified Israel as the culprit. It risks undermining U.S. public support
for the Jewish state at a time Israel is seeking billions of tax dollars for
the return of land to Syria. It certainly will add to perceptions that the
Clinton-Gore administration is not serious about national security. Most
important, it could further erode international confidence in the ability of
the United States to keep secrets and effectively lead as the world's only
superpower.

More than two dozen U.S. intelligence, counterintelligence, law-enforcement
and other officials have told Insight that the FBI believes Israel has
intercepted telephone and modem communications on some of the most sensitive
lines of the U.S. government on an ongoing basis. The worst penetrations are
believed to be in the State Department. But others say the supposedly secure
telephone systems in the White House, Defense Department and Justice
Department may have been compromised as well.

The problem for FBI agents in the famed Division 5, however, isn't just what
they have uncovered, which is substantial, but what they don't yet know,
according to Insight's sources interviewed during a year-long investigation
by the magazine. Of special concern is how to confirm and deal with the
potentially sweeping espionage penetration of key U.S. government
telecommunications systems allowing foreign eavesdropping on calls to and
from the White House, the National Security Council, or NSC, the Pentagon
and the State Department.

The directors of the FBI and the CIA have been kept informed of the ongoing
counterintelligence operation, as have the president and top officials at
the departments of Defense, State and Justice and the NSC. A 'heads up' has
been given to the House and Senate Intelligence Committees, but no
government official would speak for the record.

'It's a huge security nightmare,' says a senior U.S. official familiar with
the super-secret counterintelligence operation. 'The implications are
severe,' confirms a second with direct knowledge. 'We're not even sure we
know the extent of it,' says a third high-ranking intelligence official.
“All I can tell you is that we think we know how it was done,' this third
intelligence executive tells Insight. “That alone is serious enough, but it’
s the unknown that has such deep consequences.”

A senior government official who would go no further than to admit awareness
of the FBI probe, says: “It is a politically sensitive matter. I can’t
comment on it beyond telling you that anything involving Israel on this
particular matter is off-limits. It’s that hot.”

It is very hot indeed. For nearly a year, FBI agents had been tracking an
Israeli businessman working for a local phone company. The man’s wife is
alleged to be a Mossad officer under diplomatic cover at the Israeli Embassy
in Washington. Mossad — the Israeli intelligence service — is known to
station husband-and-wife teams abroad, but it was not known whether the
husband is a full-fledged officer, an agent or something else. When federal
agents made a search of his work area they found a list of the FBI’s most
sensitive telephone numbers, including the Bureau’s “black” lines used for
wiretapping. Some of the listed numbers were lines that FBI
counterintelligence used to keep track of the suspected Israeli spy
operation. The hunted were tracking the hunters.

“It was a shock,” says an intelligence professional familiar with the FBI
phone list. “It called into question the entire operation. We had been
compromised. But for how long?”

This discovery by Division 5 should have come as no surprise, given what its
agents had been tracking for many months. But the FBI discovered enough
information to make it believe that, somehow, the highest levels of the
State Department were compromised, as well as the White House and the NSC.
According to Insight’s sources with direct knowledge, other secure
government telephone systems and/or phones to which government officials
called also appear to have been compromised.

The tip-off about these operations — the pursuit of which sometimes has led
the FBI on some wild-goose chases — appears to have come from the CIA, says
an Insight source. A local phone manager had become suspicious in late 1996
or early 1997 about activities by a subcontractor working on phone-billing
software and hardware designs for the CIA.

The subcontractor was employed by an Israeli-based company and cleared for
such work. But suspicious behavior raised red flags. After a fairly quick
review, the CIA handed the problem to the FBI for follow-up. This was not
the first time the FBI had been asked to investigate such matters and,
though it was politically explosive because it involved Israel, Division 5
ran with the ball. “This is always a sensitive issue for the Bureau,” says a
former U.S. intelligence officer. “When it has anything to do with Israel,
it’s something you just never want to poke your nose into. But this one had
too much potential to ignore because it involved a potential systemwide
penetration.”

Seasoned counterintelligence veterans are not surprised. “The Israelis
conduct intelligence as if they are at war. That’s something we have to
realize,” says David Major, a retired FBI supervisory special agent and
former director of counterintelligence at the NSC. While the U.S. approach
to intelligence is much more relaxed, says Major, the very existence of
Israel is threatened and it regards itself as is in a permanent state of
war. “There are a lot less handcuffs on intelligence for a nation that sees
itself at war,” Major observes, but “that doesn’t excuse it from our
perspective.”

For years, U.S. intelligence chiefs have worried about moles burrowed into
their agencies, but detecting them was fruitless. The activities of Israeli
spy Jonathan Pollard were uncovered by accident, but there remains
puzzlement to this day as to how he was able to ascertain which documents to
search, how he did so on so many occasions without detection, or how he ever
obtained the security clearances that opened the doors to such secrets. In
all, it is suspected, Pollard turned over to his Israeli handlers about
500,000 documents, including photographs, names and locations of overseas
agents. “The damage was incredible,” a current U.S. intelligence officer
tells Insight. “We’re still recovering from it.”

Also there has been concern for years that a mole was operating in the NSC
and, while not necessarily supplying highly secret
materials to foreign agents, has been turning over precious details on
meetings and policy briefings that are being used to
track or otherwise monitor government activities.

The current hush-hush probe by the FBI, and what its agents believe to be a
serious but amorphous security breach involving telephone and modem lines
that are being monitored by Israeli agents, has even more serious
ramifications. “It has been an eye opener,” says one high-ranking U.S.
government official, shaking his head in horror as to the potential level
and scope of penetration.

As for how this may have been done technologically, the FBI believes it has
uncovered a means using telephone-company equipment at remote sites to track
calls placed to or received from high-ranking government officials, possibly
including the president himself, according to Insight’s top-level sources.
One of the methods suspected is use of a private company that provides
record-keeping software and support services for major telephone utilities
in the United States.

A local telephone company director of security Roger Kochman tells Insight,
“I don’t know anything about it, which would be highly unusual. I am not
familiar with anything in that area.”

U.S. officials believe that an Israeli penetration of that telephone utility
in the Washington area was coordinated with a penetration of agents using
another telephone support-services company to target select telephone lines.
Suspected penetration includes lines and systems at the White House and NSC,
where it is believed that about four specific phones were monitored — either
directly or through remote sites that may involve numbers dialed from the
complex.

“[The FBI] uncovered what appears to be a sophisticated means to listen in
on conversations from remote telephone sites with capabilities of providing
real-time audio feeds directly to Tel Aviv,” says a U.S. official familiar
with the FBI investigation. Details of how this could have been pulled off
are highly guarded. However, a high-level U.S. intelligence source tells
Insight: “The access had to be done in such a way as to evade our
countermeasures … That’s what’s most disconcerting.”

Another senior U.S. intelligence source adds: “How long this has been going
on is something we don’t know. How many phones or telephone systems we don’t
know either, but the best guess is that it’s no more than 24 at a time … as
far as we can tell.”

And has President Clinton been briefed? “Yes, he has. After all, he’s had
meetings with his Israeli counterparts,” says a senior U.S. official with
direct knowledge. Whether the president or his national-security aides,
including NSC chief Sandy Berger, have shared or communicated U.S.
suspicions and alarm is unclear, as is the matter of any Israeli response.
“This is the first I’ve heard of it,” White House National Security Council
spokesman Dave Stockwell tells Insight. “That doesn’t mean it doesn’t exist
or that someone else doesn’t know.”

Despite elaborate precautions by the U.S. agencies involved, say Insight’s
sources, this alleged Israeli intelligence coup came down to the weakest
link in the security chain: the human element. The technical key appears to
be software designs for telephone billing records and support equipment
required for interfacing with local telephone company hardware installed in
some federal agencies. The FBI has deduced that it was this sophisticated
computer-related equipment and software could provide real-time audio feeds.
In fact, according to Insight’s sources, the FBI believes that at least one
secure T-1 line routed to Tel Aviv has been used in the suspected espionage.

The potential loss of U.S. secrets is incalculable. So is the possibility
that senior U.S. officials could be blackmailed for indiscreet telephone
talk. Many officials do not like to bother with using secure, encrypted
phones and have classified discussions on open lines.

Which brings the story back to some obvious questions involving the
indiscreet telephone conversations of the president himself. Were they
tapped, and, if so did they involve national-security issues or just matters
of the flesh? Monica Lewinsky told Kenneth Starr, as recounted in his report
to Congress, that Lewinsky and Clinton devised cover stories should their
trysts be uncovered and/or their phone-sex capers be overheard.

Specifically, she said that on March 29, 1997, she and Clinton were huddled
in the Oval Office suite engaging in a sexual act. It was not the first
time. But, according to Lewinsky as revealed under oath to the investigators
for the Office of Independent Counsel, it was unusual because of what the
president told her. “He suspected that a foreign embassy was tapping his
telephones, and he proposed cover stories,” the Starr report says. “If ever
questioned, she should say that the two of them were just friends. If anyone
ever asked about their phone sex, she should say that they knew their calls
were being monitored all along, and the phone sex was just a put on.”

In his own testimony before a federal grand jury, Clinton denied the
incident. But later — much later — he admitted to improper behavior and was
impeached but not convicted. U.S. District Court Judge Susan Webber Wright
found him to have obstructed justice. Curiously, Starr never informed
Congress whether the Lewinsky tale was true. For that matter, according to
Insight’s sources, Starr never bothered to find out from appropriate
agencies, such as the FBI or the CIA, whether the monitoring by a foreign
government of the president’s conversations with Lewinsky occurred.

Insight has learned that House and Senate investigators did ask questions
about these matters and in late 1998 were told directly by the FBI and the
CIA (among others) that there was no truth to the Lewinsky claim of foreign
tapping of White House phones. Moreover, Congress was told there was no
investigation of any kind involving any foreign embassy or foreign
government espionage in such areas.

But that was not true. In fact, the FBI and other U.S. agencies, including
the Pentagon, had been working furiously and painstakingly for well over a
year on just such a secret probe, and fears were rampant of the damage that
could ensue if the American public found out that even the remotest
possibility existed that the president’s phone conversations could be
monitored and the president subject to foreign blackmail. To the FBI agents
involved, that chance seemed less and less remote.

The FBI has become increasingly frustrated by both the pace of its
investigation and its failure to gain Justice Department cooperation to seek
an indictment of at least one individual suspected of involvement in the
alleged Israeli telephone intercepts. National security is being invoked to
cover an espionage outrage. But, as a high law-enforcement source says, “To
bring this to trial would require we reveal our methods of operation, and we
can’t do that at this point – the FBI has not made the case strong enough.”
Moreover, says a senior U.S. policy official with knowledge of the case:
“This is a hugely political issue, not just a law-enforcement matter.”

----------------------------------------------------------------------------
----

       ‘You’ve Got the Crown Jewels’

If spies wanted to penetrate the White House, a facility widely considered
the most secure in the world, how might it be done? For that matter, how
might any agency or department of government be penetrated by spies?

“Actually, it’s pretty easy if you know what you’re doing,” says a retired
U.S. intelligence expert who has helped (along with other government
sources) to guide Insight through the many and often complicated pathways of
government security and counterespionage.

Access to designs, databases, “blueprints,” memos, telephone numbers, lists
of personnel and passwords all can be obtained. And from surprising sources.
Several years ago this magazine was able to review from a remote site
information on the supposedly secret and inaccessible White House Office
Data Base, or WHODB (see “More Personal Secrets on File @ the White House,”
July 15, 1996).

Despite the spending of additional millions to beef up security when the
White House installed a modern $30 million computerized telephone system a
few years ago, communications security remains a big problem. Whatever the
level of sophistication employed, there are soft underbellies that raise
significant national-security problems. And potential for espionage, such as
electronic intercepting of phone calls, is very great.

Calls to or from the White House dealing with classified information are
supposed to be handled on secure lines, but it doesn’t always happen.
Sometimes, according to Insight’s sources, despite the existence of special
phones at the White House and elsewhere to handle such calls, some don’t use
them or only one side of the call does. An Insight editor recently was
allowed for demonstration purposes to overhear a conversation placed over an
unsecured line involving a “classified” topic.

Carelessness always has been a problem, but former and current FBI special
agents say that under the Clinton administration the disregard for security
has been epidemic. Many officials simply don’t like the bother of
communicating on secure phones.

In another instance, Insight was provided access to virtually every
telephone number within the White House, including those used by outside
agencies with employees in the complex, and even the types of computers used
and who uses them. Just by way of illustration, this information allowed
direct access to communications instruments located in the Oval Office, the
residence, bathrooms and grounds.

With such information, according to security and intelligence experts, a
hacker or spy could target individual telephone lines and write software
codes enabling the conversations to be forwarded in real-time for remote
recording and transcribing. The White House complex contains approximately
5,800 voice, fax and modem lines.

“Having a phone number in and of itself will not necessarily gain you access
for monitoring purposes,” Insight was told by a senior intelligence official
with regular contact at the White House. “The systems are designed to
electronically mask routes and generate secure connections.” That said,
coupling a known phone number to routing sequences and trunk lines would
pose a security risk, this official says.

Add to that detailed knowledge of computer codes used to move call traffic
and your hacker or spy is in a very strong position. “That’s why we have so
many redundancies and security devices on the systems — so we can tell if
someone is trying to hack in,” says a current security official at the White
House.

Shown a sampling of the hoard of data collected over just a few months of
digging, the security official’s face went flush: “How the hell did you get
that! This is what we are supposed to guard against. This is not supposed to
be public.”

Indeed. Nor should the telephone numbers or locations of remote sites or
trunk lines or other sundry telecommunications be accessible. What’s
surprising is that most of this specialized information reviewed by Insight
is unclassified in its separate pieces. When you put it together, the solved
puzzle is considered a national-security secret. And for very good reason.

Consider the following: Insight not only was provided secure current phone
numbers to the most sensitive lines in the world, but it discovered a remote
telephone site in the Washington area which plugs into the White House
telecommunications system.

Given national-security concerns, Insight has been asked not to divulge any
telephone number, location of high-security equipment, or similar data not
directly necessary for this news story.

Concerning the remote telecommunications site, Insight discovered not only
its location and access telephone numbers but other information, including
the existence of a secret “back door” to the computer system that had been
left open for upward of two years without anyone knowing about the security
lapse. This back door, common to large computer systems, is used for a
variety of services, including those involving technicians, supervisors,
contractors and security officers to run diagnostic checks, make repairs and
review system operations.

“This is more than just a technical blunder,” says a well-placed source with
detailed knowledge of White House security issues. “This is a very serious
security failure with unimaginable consequences. Anyone could have accessed
that [back door] and gotten into the entire White House phone system and
obtained numbers and passwords that we never could track,” the source said,
echoing yet another source familiar with the issue.

Although it is not the responsibility of the Secret Service to manage
equipment systems, the agency does provide substantial security controls
over telecommunications and support service into or out of the White House.
In fact, the Secret Service maintains its own electronic devices on the
phone system to help protect against penetration. “That’s what is so
troubling about this,” says a security expert with ties to the White House.
“There are redundant systems to catch such errors and this was not caught.
It’s quite troubling.… It’s not supposed to happen.”

Insight asked a senior federal law-enforcement official with knowledge of
the suspected Israeli spying case about the open electronic door. “I didn’t
know about this incident. It certainly is something we should have known
given the scope of what’s at stake,” the official says.

Then Insight raised the matter of obtaining phone numbers, routing systems,
equipment sites, passwords and other data on the telecommunications systems
used by the White House: How hard would it be for a foreign intelligence
service to get this information? “Obviously not as hard as we thought,” a
senior government official said. “Now you understand what we’re facing and
why we are so concerned.”

That’s one reason, Insight is told, the White House phone system is designed
to mask all outgoing calls to prevent outsiders from tracing back into the
system to set up taps. However, knowing the numbers called frequently by the
White House, foreign agents could set up listening devices on those lines to
capture incoming or outgoing calls. Another way of doing it, according to
security experts, is to get inside the White House system. And, though it’s
considered impossible, that’s what they said about getting the phone numbers
that the president uses in his office and residence.

Like trash, information is everywhere — and often is overlooked when trying
to tidy up a mess.

       — PMR and JMW

----------------------------------------------------------------------------
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       ‘So What, It’s Only Israel!’

There is a tendency in and out of government to minimize the impact of
Israeli espionage against the United States because Israel is a friendly
country. That overlooks the gravity of the espionage threat, says David
Major, former director of counterintelligence programs at the National
Security Council. “This ‘don’t worry about allied spying, it’s okay’
attitude is harmful,” he warns. “The U.S. should expect that the rest of the
world is bent on rooting out its national-security secrets and the secrets
that could subject its leaders to blackmail.” Minimizing or excusing
“friendly spying,” he argues, only discourages vigilance and encourages more
attacks on U.S. national security. “I’m not outraged by nations that find it
in their interests to collect intelligence but by our unwillingness to
seriously pursue counterintelligence.”

Major, now dean of the private Center for Counterintelligence and Security
Studies, asks: “What price should Israel pay for this? My predictions are
that there will be no impact whatsoever. Do we put our heads in the sand or
do we take it as a wake-up call?”

Others observe that Israel has passed stolen U.S. secrets to America’s
adversaries. The government of Yitzhak Shamir reportedly provided the Soviet
Union with valuable U.S. documents stolen by Israeli spy Jonathan Pollard.
“It’s the security equivalent of herpes,” says a former U.S. antiterrorism
official now at a pro-Israel think tank who requested anonymity. “Who gets
it [beyond Israel] nobody knows.... Once we let it happen, the word gets out
that ‘you can get away with this.’”

       — JMW

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