Israeli Spy Scandal Erupting in U.S.
 

MER WEEKEND READING:

MID-EAST REALITIES - WASHINGTON - 5/6/00:  Israel is excused and protected by many in Washington, feared by many others.  At no other time in American history has this city been more penetrated by both Israeli intelligence services and by a large contingent of American Jews working at the highest levels of the American government and "dually loyal", no matter how offensive other American Jews find this apt term to be.  It is all but forgotten here that during Bill Clinton's first campaign the President of the main Israeli lobbying organization was overheard bragging that his organization had penetrated the Clinton campaign with many operatives and Clinton would be there man in the White House.  And that in fact is what has come to pass.

Much of the media too fits into this overall picture of Israeli influence with the most senior persons at many of the major news organizations linked to the Israelis and American Jewish lobbying groups in various ways.  The names include Wolf Blitzer, Larry King, Ted Koppel, Rich Kaplan, Lester Crystal, Steven Rosenfeld.  And it is for this reason in fact that major stories of this kind are held back by most of the liberal establishment media until they are forced to carry some sanatized version; and thus as in this case the investigation and publication is done by those associated with the conservative right-wing of American politics.

Even so, the sheer magnitude and audacity of what could now emerge as the biggest
spying scandal ever for Israel since the "Lavon Affair" is potentially politically explosive.  (For those who have forgotten, in the 1950s Israel used Egyptian Jews to create terror incidents against Americans in Egypt aiming to disrupt developing U.S.-Egyptian relations).

This exclusive story about what may become the biggest Israeli spy scandal ever is published in the upcoming issue, dated 29 May for the newsstands, of INSIGHT Magazine, a conservative weekly spun off a few years ago from Washington's second newspaper, The Washington Times.

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 FBI PROBES ESPIONAGE AT CLINTON WHITE HOUSE

      "It's a huge security nightmare"

       By J. Michael Waller
       and Paul M. Rodriguez

INSIGHT MAGAZINE:  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.

  "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.'"
 
 
 
 
 
 

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