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Special Event

FBI Director Louis Freeh Testifies Before Congressional Investigators on Justice Department Handling of Wen Ho Lee Case

Aired September 26, 2000 - 10:23 a.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

DARYN KAGAN, CNN ANCHOR: And now we want to go back to Capitol Hill. Now we hear from FBI Director Louis Freeh on the case of how the Justice Department handled the Wen Ho Lee case.

(JOINED IN PROGRESS)

LOUIS FREEH, FBI DIRECTOR: "CQ Daily Monitor" this morning, there's an observation on the front page, "Senate Republicans gave a lackluster, but while the facts of the case have not changed, there was one key that made this plea possible, Dr. Lee's willingness, finally, to come forward to admit his criminal conduct and most importantly to agree to cooperate."

This is the result we had sought from Dr. Lee from well before the indictment was returned.

It is critical to understand that Dr. Lee's conduct was not inadvertent, it was not careless, it was not innocent. Over a period of years, he used an elaborate scheme to move the equivalent, as you've heard today, twice, 400,000 pages of extremely sensitive nuclear weapons files from a secure part of the computer system to an unclassified, unsecure part of the system, which could be accessed, by the way, from any where outside of Los Alamos, even over the Internet. Dr. Lee then downloaded those files onto portable computer tapes and still later, as we most recently heard, made additional copies of some of all of those tapes. In order to achieve his ends, he had to override default mechanisms that were designed to prevent any accidental or inadvertent movement of those files. His downloading, again as you heard -- but I think it bears repeating -- took him nearly 40 hours over 70 different days.

This wasn't all. He carefully and methodically removed classification markings from documents. He attempted repeatedly to enter secure areas of Los Alamos after his access had been revoked -- 33 different times in a period that we can describe to you. He created his own secret, portable, personal trove of this nation's nuclear weapon secrets.

As an expert from Los Alamos testified in this case, the material downloaded and copied represented the complete nuclear weapons design capability of Los Alamos at that time, 50 years of nuclear weapons development at the expense of hundreds of billions of dollars. Quoting from Dr. Younger, "These codes and their associated databases and the input file, combined with someone that knew how to use them, could, in my opinion, in the wrong hands, change the global, strategic balance. They enable the possessor to design the only objects that could result in the military defeat of America's conventional forces. The only threat, for example, to our carrier battle groups. They represent the gravest possible security risks to the United States."

Before he created the tapes, only two sites in the world held this complete design portfolio: Division X at Los Alamos and another national laboratory.

And many have asked if his conduct was so bad, Why did the government negotiate a plea agreement and agree to release him? Fair question. Understandable. But it has a very simple answer. The Department of Justice and the FBI concluded that this guilty plea coupled with his agreement to submit to questioning under oath and to a polygraph was our best opportunity to protect the national security by finding out what happened to the seven missing tapes -- and, we found out on the way to the courthouse, the additional copies of tapes, which he has now admitted to having made. This was always the object of this investigation and prosecution: Why did he make them, where are they and what happened to them, and who had access to them?

From the moment we learned last year that our nation's nuclear secrets were on missing portable tapes, we have had this central goal to find out what happened to them. This was the goal of the entire national security leadership of our government, not just the FBI and the Department of Justice. Before any charges were brought against Dr. Lee, this matter was analyzed by the highest levels of our government. Working together, we carefully considered the substantial risks to our national security of proceeding with the public prosecution, counter-balanced against the risk of foregoing the prosecution.

In the end, there was a consensus that a criminal prosecution of Dr. Lee presented the best opportunity for discovering where the tapes were, why he made them and who, if anyone else, had access to them? The decision to prosecute Dr. Lee was made only after repeated attempts to gain his cooperation before indictment. The notion that we could have had this deal earlier is not correct. The government repeatedly told Dr. Lee and his attorneys that in order to avoid indictment -- these are negotiations pre-indictment -- he would have to provide a full, truthful and credible explanation, one that we could verify, establishing the complete chain of custody of the tapes from the moment he created them.

These efforts repeatedly failed because Dr. Lee attempted to impose unacceptable conditions upon his cooperation. Mr. Bay can speak about those if you wish.

Once the charges against him had been brought, it was still our hope that we could reach a cooperation agreement. Serious discussions about a possible plea agreement began during the late summer when Judge Parker immediately after taking over the case strongly encouraged the parties to engage in mediation and in fact enlisted a senior judge, Judge Leavy, as a mediator. Although mediation is most unusual in a criminal case, the government entered into these discussions in good faith and worked hard to reach an acceptable solution. Ultimately a consensus was achieved within Department of Justice and a plea agreement was reached. We -- the attorney general and I -- are in total agreement with respect to this decision.

It bears repeating that the government made this agreement for one overarching reason, to find out what happened to the missing tapes. There are other factors that figured into the determination of whether a plea agreement at this time made sense, and we don't intend to gloss over them. They included the following: First, as noted above, Judge Parker had upon taking over the case strongly suggested that this case was an appropriate one for mediation and not for trial. In and of itself, this was a signal that the new trial judge viewed this case in a far different manner than his predecessor.

Second, and even more critically, Judge Parker then ruled in favor of the defendant in initial proceedings under the Classified Informations Procedures Act. It appeared from this ruling that the defendant would succeed in his attempt at gray mail. Although the prosecutors were still litigating the CIPA issues, the judge's reasoning left little reason to expect that the government would prevail. The court's ruling would have exposed extremely sensitive nuclear weapons information during a public trial, crossing an exposure threshold we had already determined at the highest levels of the government would pose an unacceptable risk.

Third, Judge Parker had ruled after the August detention hearing that Dr. Lee should be released from his pre-trial confinement. While this ruling was stayed by the 10th circuit which was scheduled to hear the bail matter de novo, we faced the very real prospect that Dr. Lee would soon be released in any event under conditions that we pointed out to the judge were inadequate to prevent Dr. Lee's communications with others. Thus, those who question how the government could argue that Dr. Lee should be confined pre-trial one day and agree to his release the other, misunderstand the situation as it was immediately before the plea. The government's argument against release already had been rejected by the trial court.

Fourth, as Judge Parker's August detention hearing also made clear, the court was likely to permit the trial to become a battle of the experts. Indeed notwithstanding the defendant's experts conceded that they had not actually reviewed the tapes at the time they testified and notwithstanding the weaknesses in their positions that were explored in the closed portion of the hearing, the court still gave way to their testimony. Furthermore, it was clear from the court's rulings that it would have been necessary to disclose still more classified information at trial in order to disprove their claim that the material at issue was in the public domain.

Finally, the FBI's lead case agent had had to correct erroneous testimony from the initial detention hearing. The agent acknowledged that he had misstated what one of Dr. Lee's colleagues had told the FBI about Dr. Lee's explanation of the purpose for which he wanted to use that colleague's computer. The agent also volunteered that he overstated certain evidence relating to whether Dr. Lee had sent letters to find outside employment at Los Alamos, although there is in fact other evidence that shows that Dr. Lee did send such letters, as the agent originally had testified.

With regard to the agent's first misstatement, while the agent stated that he had made an honest mistake as he tried to make the point that Dr. Lee had not disclosed that his true purpose was to download classified nuclear weapons onto portable tapes, this was a serious matter. It prompted detailed reviews of his testimony by the agent's supervisors and the U.S. attorney's office. While we do not believe this error significantly undercut the overall evidence against Dr. Lee, it did affect the agent's credibility and thereby damaged the prosecution.

As the attorney general has said, the decision to enter into the plea agreement was still a difficult one, for despite those setbacks the case against Dr. Lee remained very strong. A conviction on each and every count, however, would not have guaranteed the cooperation of Dr. Lee. Dr. Lee's truthful and full cooperation was the one thing the government most needed to protect our national security.

As you already know from press accounts, the plea proceeding was rescheduled at the last moment and the parties went back to their negotiations with the assistance of the mediator judge. This delay has been the subject of considerable speculation in the media. In fact, the delay rests squarely with Dr. Lee, who make a startling revelation just before the plea proceeding was supposed to begin. For the very first time, Dr. Lee revealed that he had made copies of the tapes he had illegally created in the first place. This was an enormously significant development. What it meant was that instead of seven missing tapes, there could be many others.

The plea agreement, which requires Dr. Lee's sworn testimony and requires him to submit to a polygraph, gives him the most powerful incentives to be completely truthful. If he is not, the plea agreement provides that he may be prosecuted.

I would now like to address the disturbing allegations that the government engaged in selective prosecution or racial profiling in its investigation and prosecution of Dr. Lee. There is simply no truth to these allegations. Dr. Lee was not investigated nor indicted nor incarcerated because he is an American of Asian descent. As the attorney general and the director of the FBI, we are honored to head organizations that pride themselves with fair and impartial law enforcement. We would never tolerate racial profiling or selective prosecution.

UNIDENTIFIED MALE: Mr. Chairman, if I could ask the director to suspend for a second. There is a vote in progress and I'm concerned about leaving it and missing any of Mr. Freeh's testimony.

SEN. RICHARD SHELBY (R), ARKANSAS: We want to try to keep the hearing going because we just have one more hour. I hadn't left yet. They'll hold the vote in a few minutes. I'm waiting for...

UNIDENTIFIED MALE: How close, Mr. Freeh, are you to the end of your statement?

FREEH: About 15 more minutes, Senator.

UNIDENTIFIED MALE: Fifteen.

SHELBY: We're 15 minutes into the vote, I believe.

UNIDENTIFIED MALE: Yes. Well, Mr. Chairman, obviously your judgment. I'm just concerned that not having heard the rest of the statement, but there may be unavoidable.

SHELBY: Well, if we don't, you'll furnish a copy of the statement for the record.

FREEH: You will have it, yes, sir.

SHELBY: OK.

UNIDENTIFIED MALE: Thank you.

SHELBY: We'll proceed.

FREEH: Thank you, Senator Shelby.

Dr. Lee was investigated and prosecuted because of his actions, not his race. And he has been convicted based solely on his actions. I'd like to turn to some facts again.

The counterintelligence investigation of Mr. Wen Ho Lee which has been commented upon: Dr. Lee was made known to the FBI in 1982. At that time, he worked again in Los Alamos' X Division. His name surfaced when he contacted a suspected agent of a foreign power who was the subject of an ongoing FBI counterintelligence investigation. He offered to help that person identify who had brought him to the attention of the authorities. When Dr. Lee was first confronted by the FBI in November, 1983, he denied having contacted the individual. In fact, he denied even knowing the person. Only after he learned that the FBI had indisputable proof that the contact took place did he finally admit it.

After providing an explanation of the reasons for the contact, he agreed to cooperate with the FBI regarding the individual being investigated for passing classified information. After he provided limited cooperation, the FBI ultimately closed that first inquiry into Dr. Lee because nothing else developed.

Ten years later in 1994, Dr. Lee again came under investigation because of his actions. Dr. Lee met with a senior foreign government nuclear weapons designer who was part of an officially approved delegation visiting the United States. The circumstances of the encounter clearly indicated that they knew one another even though Dr. Lee had never reported meeting this individual designer on prior trips abroad, as he was required to do by the conditions of his employment.

The FBI's investigation into this 1994 matter was still ongoing when Dr. Lee emerged as a potential subject in the 1996 administrative inquiry by the Department of Energy into the possible compromise of information related to the W-88 nuclear warhead. Being aware of the potential interest in Dr. Lee, and not wanting to take any steps that would interfere with the inquiry or expose the FBI's interest in him, FBI headquarters and FBI-Albuquerque agreed to hold the investigation of the 1994 incident in abeyance.

On May 26, 1996, the Department of Energy's administrative inquiry identified possible potential candidates for the leak, but concluded that, quote, "Wen Ho Lee appears to have the opportunity, means and motivation to have compromised the W-88 information."

The FBI opened an investigation of Dr. Lee in May 1996 based on this predicate. Clearly, the FBI should have conducted an additional independent investigation to verify what was reflected in the administrative inquiry. That was not done until years later.

Nevertheless, when his name surfaced in the Department of Energy investigation, Dr. Lee already had a history with the FBI.

KAGAN: We have been listening to FBI Director Louis Freeh, as he addresses congressional investigators, as they want to hear more about how the Justice Department handled the Wen Ho Lee case. The Justice Department never having its day in court because Wen Ho Lee pleaded guilty to one felony count after 58 charges against him were dropped.

Director Freeh today pointing out, as the FBI believes that over 40 hours on 70 different days, Dr. Lee made a personal, portable trove of U.S. nuclear secrets, as the FBI describes it.

Director Freeh, also, defending the Justice Department's decision to go ahead with the plea agreement, saying that the government's main purpose all along was to get the best opportunity to protect national security and find out what happened to the missing tapes that Dr. Lee allegedly made.

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