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Special Event

Federal Agencies Hold Press Conference Concerning FBI Espionage Case

Aired February 20, 2001 - 12:40 p.m. ET

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

LOU WATERS, CNN ANCHOR: We're anticipating a news conference momentarily at FBI headquarters in Washington, featuring the director of the FBI, Louis Freeh. We also are expecting John Ashcroft, the new attorney general, and the director of the CIA, George Tenet, to comment on this arrest of an FBI agent.

NATALIE ALLEN, CNN ANCHOR: Right, the story that "BURDEN OF PROOF" has been covering for the past 15 minutes: a 27-year veteran of the FBI arrested on espionage charges, accused of spying for Russia. He had, of late, been working for the State Department. He is said to have been working for the Russians for the last 15 years, as far as the last days of the Cold War.

An FBI official has said Hanssen has been paid substantial amounts by the Russians. He is a 56-year-old father of six. He was arrested Sunday in a Virginia Park as he put, allegedly, classified information in what is called a dead-drop, a place that could be recovered by his contacts.

WATERS: This only the third time in U.S. history that an FBI agent has been charged with espionage.

CNN's Jeanne Meserve is closely following the story in Washington.

And, Jeanne, there is some gravity associated with this case because of the impending appointment of a blue-ribbon panel to look into how much damage this latest incident may have caused the United States.

JEANNE MESERVE, CNN CORRESPONDENT: Lou, that is right.

And we are likely to hear more about that panel at this press conference. It will be held by -- headed by William Webster -- he, of course, a prominent name in intelligence circles. He once headed the FBI and also once was CIA chief. Let me tell you that Hanssen did appear in federal court in Alexandria, Virginia this morning. And we learned a few of the details of the charges against him.

It is alleged that, in May of 1989, he passed secret documents to the Soviet Union as part of -- quote -- "a conspiracy to cause injury to the United States and an advantage to a foreign government" -- namely the USSR. Also, in October of 1985, he is alleged to have identified three KGB officers acting as double agents for the U.S. And, for his trouble, they said in court he received $1.4 million. That is that that substantial amount that you referenced earlier.

WATERS: And, Jeanne, the actual job of this man, Hanssen, was, in effect, spying on spies, was it not? And therein lies the threat of the amount of damage he may have caused.

MESERVE: That is right, Lou.

He worked in counterintelligence for the FBI. He kept track of the people who the United States suspected were spying for the Russians and the Soviets in the United States. It is feared that he could have let the Russians know when they were getting close to being discovered by the U.S. He could also have informed them about various electronic surveillance means that the U.S. was using.

It has also been suggested that he may have been able to confirm to the Soviet Union some of the names of agents that were revealed to them by Aldrich Ames. You will recall he was the CIA agent who was convicted back in the '90s of spying for the Soviet Union. We should note that Aldrich Ames was represented by a prominent Washington attorney by the name of Plato Cacheris. We found out this morning that that very same lawyer is representing Robert Philip Hanssen.

ALLEN: We have also learned that neighbors of Hanssen's are in shock about the arrest, according to neighbors of the family. A neighbor said -- quote -- "They go to church every Sunday, loading all six kids into the van." She said the Hanssens were regulars at the Memorial Day block party and called Hanssen very attractive, not overly gregarious.

So we'll listen in.

WATERS: And here's -- here, Natalie, is FBI director Louis Freeh.

LOUIS FREEH, FBI DIRECTOR: Good afternoon, ladies and gentlemen. I'm Louis Freeh, the FBI director. I'd like to begin by introducing on the platform with me, of course, Attorney General John Ashcroft, seated next to George Tenet, director of central intelligence, Helen Fahey, the U.S. attorney for the Eastern District of Virginia, which has jurisdiction over this case, and Judge William Webster.

My pleasure to introduce the attorney general.

JOHN ASHCROFT, ATTORNEY GENERAL: Thank you, Director Freeh.

Sunday, the FBI successfully concluded an investigation to end a very serious breach in the security of the United States. The arrest of Robert Hanssen for espionage should remind us all, every American should know that our nation, our free society is an international target in a dangerous world. In fact, the espionage operations designed to steal vital secrets of the United States are as intense today as they have ever been.

As an agency responsible for protecting our national security, this is a difficult day for the FBI. It is especially difficult because the person who was investigated, arrested and charged is one of our own.

The FBI has done an exemplary job of investigating this very sensitive matter and ending this breach of our national security. I want to commend FBI Director Freeh and his agents for taking decisive action once they learned about this risk to our national security. The FBI moved swiftly and discreetly to effect the arrest. Today's announcement is a result of their professionalism, skill, judgment and dedication. I want to thank the FBI, the CIA, the Department of State and the U.S. attorney's office for their productive cooperation in this case.

Let me be clear: Individuals who commit treasonous acts against the United States will be held fully accountable. I will devote whatever resources are necessary within the department to ensure that justice is done in this case and any other case like it. FBI Director Freeh and I have agreed to order a comprehensive, independent review of FBI procedures. I look forward to receiving the report from former FBI director and former director of the Central Intelligence Agency, Judge William Webster, and I thank him for agreeing to lead this review.

FREEH: Thank you, Attorney General, for your remarks.

Sunday night, as you heard, the FBI arrested Robert Philip Hanssen who was charged with committing espionage. Hanssen is a special agent of the FBI with a long career in counterintelligence.

The investigation that led to these charges is the direct result of the long-standing FBI-CIA efforts, ongoing since the Aldrich Ames case, to identify additional foreign penetrations of the United States intelligence community.

The investigation of Hanssen was conducted by the FBI in partnership with the CIA, the Department of the State and, of course, the Justice Department. The successful investigation also is a direct result of a counterintelligence coup by the FBI working with its intelligence partners in this community.

The complaint alleges that Hanssen conspired to and did commit espionage for Russia and the former Soviet Union. The actions alleged date back as far as 1985 and, with the possible exception of several years in the 1990s, continued until his arrest on Sunday.

He was arrested while in the process of using a Fairfax County dead drop to clandestinely provide classified documents to his Russian handlers. FBI agents also covertly intercepted $50,000 in cash, which the Russian intelligence officers put in a second drop we believe intended for Hanssen.

It is alleged that Hanssen provided to the former Soviet Union and subsequently to Russia substantial volumes of highly classified information that he acquired during the course of his job responsibilities in counterintelligence. In return, he received large sums of money and other remuneration, including diamonds. The complaint alleges that he received over $600,000 in cash.

The full extent of the damage done is yet unknown, because no accurate damage assessment could be done during the course of the covert investigation without jeopardizing it. We believe, however, that it was exceptionally grave. The criminal conduct alleged represents the most traitorous actions imaginable against a country governed by the rule of law.

As difficult as this moment is for the FBI and the country, I am, like the attorney general, immensely proud of the men and women who conducted this investigation. Their actions represent counterintelligence at its very best, and under the most difficult and sensitive of circumstances.

Literally, Hanssen's colleagues and coworkers at the FBI conducted this investigation and did so professionally, securely and without hesitation. Much of what these men and women did remains undisclosed. But their success, and that of our CIA friends and counterparts, represent unparalleled expertise and dedication to principle and mission.

The complaint alleges that Hanssen, using the code name Ramon, engaged in espionage by providing highly classified information to the KGB and its successor agency, the SVR, using encrypted communications, dead drops and other clandestine techniques.

The information he is alleged to have provided compromised numerous human sources, technical operations and FBI counterintelligence techniques, sources and methods, as well as investigations, including the Felix Bloch investigation. The affidavit alleges that Hanssen voluntarily became an agent of the KGB in 1985 while assigned to the intelligence division at the FBI field office in New York City. As supervisor of a foreign counterintelligence squad, Hanssen allegedly began spying for the Soviets in 1985, when in is first letter to the KGB he volunteered information that compromised several sensitive techniques. He also independently disclosed the identity of two KGB officials, first compromised by Ames, who were recruited by the U.S. government to serve as agents in-place at the Soviet Embassy here in Washington. When these two KGB officials returned to Moscow, they were tried and convicted on espionage charges and executed.

Hanssen subsequently was assigned to a variety of national security posts that legitimately provided him access to classified information relating to the former Soviet Union and Russia. As a result of these assignments within the FBI, he gained access to some of the most sensitive and highly classified information in the United States government.

To be very clear on the issue, at no time was he ever authorized to communicate information to agents of the KGB or SVR, nor can there be any doubt that he was keenly aware of the gravity of his traitorous actions. He later wrote to his KGB handler, speaking about the severity with which U.S. law punishes his alleged actions and acknowledging, quote, "I know far better than most what mine fields are laid and the risks." Hanssen was detailed to the Office of the Foreign Missions at the Department of State from 1995 to 2000. The complaint, however, does not allege any compromises by him at the State Department.

In one letter to his Russian handlers, Hanssen complains about lost opportunities to alert them that the FBI had discovered the microphone hidden in the State Department, known then by the FBI, but apparently not by Hanssen, that it was being monitored by a Russian intelligence officer. In this assignment, however, he did continue to have access to sensitive FBI information, and he remained assigned to our national security division and routinely dealt with sensitive and classified matters.

For many years, the CIA and FBI have been aggressively engaged in sustained analytical effort to identify foreign penetrations of our country. That effort is complemented by substantial FBI proactive investigation of Foreign Service Intelligence officers here and by critical work done by the CIA. Because of these coordinated efforts, the FBI was able to secure original Russian documentation of an American spy who appeared to be Hanssen, a premise that was soon to be confirmed when Hanssen was identified by the FBI as having clandestinely communicated with Russian intelligence officers.

As alleged in the complaint, computer forensic analysis, substantial covert surveillance, court-authorized searches and other sensitive techniques reveal that Hanssen has routinely accessed FBI records and clandestinely provided those records and other classified information to Russian intelligence officers. As alleged, he did so using a variety of sophisticated means of communication, encryption and dead drops.

You see before you, on the poster board, pictures of two of the dead drops which he used. The one on the left is called Ellis. It's in Arlington. I'm sorry, it's near Vienna, Virginia. This was the dead drop which he used Sunday night to place his package. He was arrested immediately thereafter. The other dead drop, called Lewis, is in Arlington. That was the location where the Russian intelligence officers put down $50,000 in cash, we believe intended for Hanssen. We recovered that money, and of course we covered the Ellis dead drop, both during the arrest and thereafter.

The complaint alleges that Hanssen, using his training and experience to protect himself from discovery by the FBI, never met face to face with his Russian handlers, never revealed to them his true identity or even where he worked. He constantly checked FBI records for signs that he and the drop sites he was using were being investigated. He refused any foreign travel to meet with the Russians, and even declined to use any of their trade craft.

Hanssen never displayed outward signs that he was receiving large amounts of unexplained cash. He was, after all, a trained counterintelligence specialist. For these reasons, the FBI learned of his true identity long before the Russians. They are learning of it today. Even without knowing who he was or where he worked, his value to the Russians was clear, both by the substantial sums of money paid and the prestigious awards given to their own agents for his operation. While this investigation and arrest represents, for me, a brilliant counterintelligence and investigative success, the complaint alleges that Hanssen located and removed, undetected from the FBI, substantial quantities of information that he was able to access as a result of his assignments.

None of the internal information or personnel security measures in place alerted those charged with internal security as to his activities. In short, the trusted insider betrayed his trust without detection. While the risk that an employee of the United States government will betray his country can never be eliminated, there must be more that we can do at the FBI to protect ourselves from such an occurrence.

I've asked Judge William Webster, and he has graciously agreed, to examine thoroughly the internal security functions and procedures of the FBI and to recommend improvements. Judge Webster is uniquely qualified, as both a former FBI director, CIA director and director of Central Intelligence, to undertake this review.

This is particularly timely as we move to the next generation of automation to support our FBI information infrastructures. Judge Webster and anyone he selects to assist him will have complete access and whatever resources are necessary to complete the task. He will report directly to the attorney general and I, and we will share his report with the National Security Council and the Congress. I intend to act swiftly on any of his recommendations.

Before concluding, I'd like to take an opportunity, again, to thank the director of central intelligence, George Tenet, for his leadership, for his cooperation and the assistance of his agency in this and many other investigations. Through our cooperative efforts, the FBI and the CIA were able to learn the true identity of Ramon and the FBI was able to conduct an investigation.

Our joint efforts over the last several years, and specifically in this case, should be pause to those contemplating betrayal of the nation's trust. Without the current and unprecedented level of trust and cooperation between the CIA and FBI, making this case would not have been possible, nor would many other intelligence, counterintelligence and counterterrorism matters that we work very closely together.

Through Attorney General John Ashcroft, I'd like to thank the Department of Justice, and particularly the U.S. Attorney's Office for the Eastern District of Virginia. Their level of support and expertise -- and that from Acting Deputy Attorney General Robert Mueller, counsel for Intelligence Policy, Frances Frago Townsend, of course the U.S. attorney, Helen Fahey, and Assistant U.S. Attorney Randy Bellows -- has been nothing but superb.

We particularly appreciate the unhesitating leadership, judgment and support of Attorney General Ashcroft from the moment he took office.

Director Tenet and I have briefed the intelligence committees of Congress because of the clear national security implications.

As the director, I am proud of the courageous men and women of the FBI, who each day make enormous sacrifices in serving their country. They have committed their lives to public service and to upholding the high standards of the FBI.

Since becoming director, over 7 1/2 years ago, I've ministered the FBI oath of office to over 4,600 special agents at the FBI. Each one of them -- and I share with them the pride and sanctity of the words that they repeat -- swear to support and defend the Constitution of the United States against all enemies, foreign and domestic, and to bear true faith and allegiance to the same.

Regrettably, I stand here today both saddened and outraged. The FBI agent who raised his hand and spoke those words over 25 years ago has been charged today with violating that oath in the most egregious and reprehensible manner possible. The FBI entrusted him with some of its most sensitive matters, and the U.S. government relied upon him for his service and his integrity. He has, as charged, abused and betrayed that trust. The crimes alleged are an affront not only to his fellow FBI employees, but to the American people, not to mention the pain and suffering he has brought upon his family.

I take solace and satisfaction, however, that the FBI succeeded in this investigation with the help of all the people and entities that I've mentioned, and that, as an agency, we've lived up to our responsibility, no matter how painful that may be.

I'd like to introduce now Helen Fahey, the U.S. attorney for the Eastern District of Virginia, to make her remarks.

HELEN FAHEY, U.S. ATTORNEY, EASTERN DISTRICT OF VIRGINIA: In the past decade it has been the unfortunate duty of the United States Attorney's Office in the Eastern District of Virginia to prosecute a number of espionage cases, including Ames, Pitts, Nicholson, Squillacote, Boone and others. With each case, we hope that it will be the last. Unfortunately today, with the arrest of Robert Hanssen, we begin again the process of bringing to justice another United States government official charged with the most egregious violations of the public trust.

The full resources of the Department of Justice will be devoted to ensuring that those who betray their country and the people of the United States are prosecuted and severely punished.

I wish to express my appreciation for the outstanding work done by the National Security Division and the Washington field office of the FBI in this investigation. Their superlative work in this extraordinarily sensitive and important investigation is a testament to their professionalism and dedication.

I would also like to express my appreciation for the outstanding assistance provided by the Internal Security Section of the Criminal Division of the Department of Justice, and in particular John Dion and Laura Ingersoll, and also Randy Bellows and Justin Williams of my office for their outstanding work on this case. Thank you.

FREEH: We're going to pause just for a moment, and I'm going to be happy to take your questions. And there's some materials that have been prepared for you, including some photographs. They will duplicate the photographs you see on the two boards in front of the room. We also will provide you with the affidavit in support of the arrest warrant, as well as the search warrant. It's about 100 pages. You have a copy of my statement and a copy of a press release. And if there are additional matters that we can release as the process goes forward, we will certainly make those available.

I'll take your questions now.

QUESTION: When did you first start the investigation of Hanssen? Can you pinpoint the exact time?

FREEH: I don't want to pinpoint the exact time. I would say it was the latter part of last year. However, there has been an ongoing initiative, as I mentioned, between the agency and the FBI, going back to the Ames case, to identify additional penetrations. But we focused on it specifically towards the latter part of last year.

QUESTION: Dr. Freeh, can you help us put into perspective how this case compares with the Aldrich Ames case, in terms of the damage? I understand that you have just begun your damage assessment, but just help us with the level of importance to U.S. security.

FREEH: Yes. I don't want to really characterize it or compare it to another case. These charges, of course, are just charges. If you look at the 100-page affidavit, which is very detailed, including a description of the materials that he is alleged to have transferred to the Soviet officers over a long period of time, and I think you can compare that, certainly, with the public documents in those other cases, but I'd rather not characterize it. I certainly want to wait for a damage assessment, which we've not done, and I certainly will make that available at that point.

QUESTION: This is clearly one of the worst that your agency has ever faced, is it not?

FREEH: I would clearly characterize it in that fashion.

QUESTION: Director Freeh, how difficult was it to make the case, given the fact that this was a man who was well-versed in all the tradecraft?

FREEH: Well, I think it was very difficult. And I think, when you look at the affidavit, you will get a sense as to not only his experience, but the deliberate and very consistent methods that he employed to avoid detection.

There's about 23 references throughout the 100 pages where, in his conversations, which you will have repeated, to the Russian officers he talks about his security. There's discussions about payments through Swiss bank accounts, taking payments in diamonds. You'll see on pages 88 and 89 of the affidavit that for many years he continuously runs his own name, his address, the drop sites that he's using through FBI indices to see if they are of any interest.

There is an occasion reported in the affidavit where, to contact his handlers securely, he asked them to take out a newspaper ad and then will supply them a number where he can be contacted, which is a pay phone number.

So this is a very experienced intelligence officer. This was his bread and butter for many, many years. And for that reason, it was an extremely complex investigation, particularly to do it securely and clandestinely.

QUESTION: Director, we haven't had the opportunity to read the affidavit, so excuse me if I'm asking something that's written down there. But can you elaborate at all on this counterintelligence feed that you said brought this information to you?

FREEH: I really can't at this point. But I will say and emphasize what I did refer to in my remarks, that this case was not an accidental case. We didn't stumble into this investigation. We didn't, as we do in some cases, predicate it on the incidental or even casual find of information. This was a very carefully planned and deliberately directed investigation by our part. And as I mentioned, there are a lot of things that go into that which I can't discuss right now. But it really does testify to the extraordinary work and talent of the people involved and the coordination between the CIA and the FBI.

QUESTION: In all due respect, how can you call this a counterintelligence success when you had a spy working inside the FBI for over 15 years without being detected? Why wasn't he detected earlier? And how did he manage to pass, presumably, numerous polygraph examinations for a person in those positions?

FREEH: Well, of course, those questions and others that we have will be the subject of Judge Webster's inquiry. The reason I call it a success is that, as an operation and as an investigation, it is an immense success. To conduct this investigation securely, clandestinely, without any leaks and to do it to the point that we could catch, red-handed, an experienced intelligence officer laying down classified documents for his handlers, also intercept $50,000 in cash, which the intelligence officers were providing for him, in the business of counterintelligence I think by any expert would be judged a huge success.

That does not, of course, answer the question as to why someone for 15 years can successfully operate. I've indicated a couple of the reasons in the documents why we think he was successful. As I said, the Russians, until they heard the morning reports, did not know his name, did not know where he worked. He is very, very carefully, throughout the affidavit, obsessed with his security. And he was very, very successful in masking and protecting his communications and his activities. That doesn't mean we can't do better in terms of our countersecurity measures. We're going to ask Judge Webster to look at that. But you have to separate the operational success from the problem, which indeed is a severe one, of having someone successfully do it, at least until the point that we caught him.

(CROSSTALK)

QUESTION: Are there any Russian intelligence officers who will be expelled as a result of his contacts?

FREEH: I can't comment on that.

QUESTION: Mr. Freeh, some past spies were pretty clear that their motive was financial. You say in your statement that he volunteered originally, sent a letter volunteering to spy. Do you have any idea, have you been able to discover why he wanted to spy?

FREEH: Well, you'll be able to see the letter in the affidavit. It's a October 1, 1985, letter. It is implied in the letter that he is volunteering, of course, but that he's not volunteering for nothing. The $600,000, which is alleged in the complaint, is a significant amount of money. There is also references to another $800,000, which the Russian intelligence officers indicate, and he confirms, is in an escrow account for him, somewhere outside the United States.

As to any other motivations, we just have not had the opportunity to establish those, and I wouldn't want to speculate about them.

(CROSSTALK)

QUESTION: You say that several people have been executed partly as a possible result of the information passed on, that U.S. sources have been compromised. Do you have a figure on how many people may have been compromised, how many may have died, as a result of this espionage?

FREEH: What we've alleged in the complaint is that, on two separate occasions, the defendant provided information after Ames had provided information on two officers, two officers who had been recruited here. And we know from -- as we set forth in the affidavit, they were both executed. So it was an accumulation of both types of information.

As to other cases, I can't speculate about them. There is nothing alleged in the affidavit. And of course, as we do our damage assessment, we may be able to ascertain others, or we may not, depending on how that analysis goes.

QUESTION: Dr. Freeh, two questions: First, was he operating alone or did he have others with whom he worked? And is this an ongoing investigation? And second, is this for you, as the FBI director, the toughest and worst moment since you became director in 1993, given the length of the security breach and the way in which it went undetected for so long on your watch? FREEH: As far as we know, he operated alone, of course in tandem with the Washington intelligence officers. We have no indication that anyone else worked with him or assisted him. But, of course, as we now do a covert investigation, including interviews, we will determine -- have not ruled out the possibility that someone else may have assisted him. There's no evidence of that, however, at this time.

In terms of the worst case, worst moment: I think probably the worst moment in this job will always be when we have agents killed in the line of duty. Unfortunately, four of them have been killed since I've been here, other agents wounded.

In terms of cases and in terms of the integrity of the FBI and the honor of the men and women who serve, this case, as I mentioned, is a great and tragic moment for us.

QUESTION: I understand you're going to do a review of what happened, but surely you've asked some tough questions and you have a sense of what some of the biggest loopholes were in the FBI's internal security that allowed him to function for as long as he did as a spy. Do you have a sense of what those loopholes were? And have you made any immediate changes to plug the holes?

FREEH: We have not made any immediate changes since the point in time when we focused on this particular case and this particular defendant. One of the advantages of having Judge Webster review everything that we do in terms of security programs, personnel management, records management will give us the benefit of that analysis. We have some ideas. We have some theories.

QUESTION: Can you talk about some of them?

FREEH: No, I wouldn't want to talk about what I think are the vulnerabilities in our system.

(LAUGHTER)

FREEH: What I will say, however, is we don't say, at this stage, certainly, that we have a system that can prevent this type of conduct. At the end of the day, all of our systems probably need to be looked at and maybe improved. But at the end of the day, what we rely upon is honest people, who when they take the oath to defend the Constitution and serve the people, they do that honestly and we can rely on that. That's something that did not happen in this case.

QUESTION: How can you be so sure that the Russians didn't know he was an FBI agent?

FREEH: Well, as I said, if you look at the complaint, and we have a lot of other bases to conclude that his conversations with them were done purely in an anonymous channel, and that he specifically designed his relationship that way, so if there was to be a compromise on their side, nobody could identify him by name, where he worked or what he looked like, and he was very conscious and very successful at that.

QUESTION: One, can you at least identify the Russian handlers? And two, in what way did he compromise the Bloch investigation?

FREEH: We have identified some of the handlers. With respect to the compromise of the Bloch investigation, I don't think I want to say more than what's in the affidavit, and there's a fairly definitive description of that compromise in the papers.

QUESTION: Can you elaborate on the nature of Sunday evening's apprehension? The events that took place during that time.

FREEH: Well, as you'll see in the complaint, because of our investigation and surveillance of the subject, we knew that he had an appointment at the Ellis site, as he described it in his computer, at 8 p.m. on 2-18-01, which was Sunday. So we had been anticipating from the point that we learned that, which was sometime before Sunday, that something would happen on that site at that time and place.

So we were set up by surveillance to monitor it. And he came there. As you'll see in the affidavit, he got out of his car, he marked the park sign with a piece of white tape.

The site is called a dead drop. A dead drop is a place where an intelligence officer and his recruited asset can communicate safely and clandestinely without seeing each other or being seen face to face.

After he marked the site, he went into the woods and he laid his package down, which is represented in the photograph, at the base of one of the footings on the footbridge. He was in there about nine minutes, he came out to his car. He was arrested at that point by the FBI agents. He was taken out of the area.

We maintained our surveillance on that site, as well as the site in Arlington where the $50,000 was put down, the Lewis site. And we were expecting him, as I said, to do something at that site on Sunday evening.

QUESTION: Did he comment at that time?

FREEH: We gave him his Miranda rights, and I don't want to comment any further on what happened after that.

QUESTION: Director Freeh, even if the Russian agents did not know his identify, wouldn't the nature of the information he was providing them indicate that he was a deep source within the FBI, considering what he was providing them?

FREEH: No, I don't think so, because in our analysis of the information, both the information which is set forth in the complaint and other information, it would not be very easy to determine where, in fact, he was situated. For instance, the information which is alleged in the complaint, with respect to the three KGB officers that had been recruited, that information was furnished both by Ames and then subsequently by Hanssen as we allege it.

So looking at the documentation, which, as you will see in the complaint, was not just FBI documentation, but throughout the community, it would be very hard to make that analysis.

QUESTION: Three or two?

FREEH: The affidavit refers to three particular officers, two of whom were executed, one who was imprisoned and later released. I'm not sure what page it is on, but it is in your affidavit.

QUESTION: (OFF-MIKE)

FREEH: I don't want to comment on the nature of the surveillance. We had court-authorized orders, which of course authorized us to conduct the most sensitive part of the investigation.

QUESTION: What was Hanssen's reaction when you caught him? And have you been able to discuss this with him or question him?

FREEH: As I said, he was arrested. The agents who conducted the arrest perceived him to be surprised and shocked by the arrest. And I don't want to comment on any of the subsequent events, except he was given his Miranda rights and then taken to a facility to be processed.

QUESTION: How long had he been under surveillance? And was there any reason why he didn't grab him after he took the money?

FREEH: Well, he didn't take the money. The money actually remained in the site in Arlington.

QUESTION: I mean, why not wait until he went to get the money, if that's what you've been waiting for him to do?

FREEH: Well, we were more interested in what was going to happen at the Ellis site, because we believed that, at that point, he would put down a package. The package that he put down contains classified information. It has to do with our internal documents and, actually, matters that are presented before the courts. So it was much more important for us to get him placing that package than picking up the money. So we let the money rest for a while and focused on the Sunday Ellis site.

QUESTION: (OFF-MIKE)

FREEH: No.

QUESTION: Can you confirm that he did in fact take polygraph tests?

FREEH: I don't want to comment on that.

QUESTION: Do you know where he is being held?

FREEH: He is being held in a detention facility in Virginia. And he was, of course, presented for the initial appearance in Alexandria this morning.

QUESTION: (OFF-MIKE) FREEH: It was very, very critical information to have. And as I said, it is original Russian documentation, but I don't want to expand on it right now beyond that.

QUESTION: What was his work here? Can you describe more about what he did in '85 and in his career?

FREEH: Well, as most of his career, as set forth in the affidavit, has been in the foreign counterintelligence area, particularly dealing with the Soviets and the Soviet intelligence services. He worked in New York as a foreign counterintelligence special agent. He ran one of our foreign counterintelligence squads, at that point. His assignments back at headquarters, except for a brief period on our inspections, had to do primarily with foreign counterintelligence. For the last 5 1/2 years, he's been the FBI representative at the State Department, the Office of Foreign Missions. And he was brought back here in January, so we could isolate him and focus more of our investigation on him.

QUESTION: Was he authorized to have contact with Russians?

FREEH: No, he was not.

(CROSSTALK)

QUESTION: Did he work on the Aldrich Ames case or any other major espionage cases?

FREEH: He had access to a lot of the information that related to those investigations and others. As I mentioned, the affidavit alleges an overlap between some of his activities and Ames' reporting.

QUESTION: Many Americans are going to be surprised that this keeps going on. The Cold War is long over. The attorney general said, "Yes, well it keeps going." This man has his roots in the Cold War. Is that what you are finding the United States is mostly facing, a residual? Or, is it a continuing, ongoing -- does recruiting continue? Can you give us some sense of this?

FREEH: Well, I think it's both residual and ongoing. I think that, with respect to the matters alleged in the affidavit, you cannot simply say that this was an artifact or a residual of the Cold War. The activity obviously continued beyond that. And as late as Sunday, there was clearly an intent to exchange $50,000 in cash for very highly classified and very damaging information from the FBI.

So I think that intelligence and counterintelligence are with us and will be with us for some time. As you know, in 1996, the Congress passed the economic espionage statute because of hearings and testimony that indicated that many countries, in fact 22 or 23 of them, use their security services in the United States to clandestinely gather economic information, which is very valuable and which is done by clandestine means.

So I think part of this case has got a foot in the past, but part of it has clearly got a foot in the present. QUESTION: (OFF-MIKE)

FREEH: No. I don't want to expand beyond that. But no.

I'll take one more question.

QUESTION: You often talk about the need for accountability within the bureau. Who is accountable in a situation like this? And as director, how much of the responsibility or accountability do you see as your own or the head of the National Security Division? Where does the buck stop?

FREEH: Well, the buck stops with me. I'm accountable for it. I'm responsible for it. It clearly happened on my watch and what I have to do, in conjunction with Judge Webster's review, is reexamine, you know, my leadership and my administration to make sure that I didn't let anything go. But I'm the one the responsible and I should be held accountable.

I'll take one last question. Yes?

QUESTION: Dr. Freeh, you're working closely with the Russians on various international investigations. What does a case like this do to your cooperation with the Russians?

FREEH: I don't think it impacts on it at all. You know, we work very closely with the ministry of the interior on criminal matters. We work with their security agency, the internal security agency, on counterterrorism matters. Those will relationships are extremely important to both countries, and I think they will continue and not be affected by this case.

Thank you very much.

WATERS: The new attorney general of the United States calling this a difficult day for the FBI -- outrage expressed by not only Ashcroft, but the director, Louis Freeh, and the U.S. attorney, at the arrest of Robert Philip Hanssen, 27-year veteran of the FBI, who spent most of that career in counterintelligence work.

It's alleged in the complaint that, using the name -- a code name, Ramon -- that Hanssen supplied substantial volumes of highly classified information to the Russians in exchange for cash and diamonds. There's some disagreement about how much cash is involved here, but somewhere in excess of $1 million. In an incident that the director "calls exceptionally grave, most fractious action possible, and a betrayal of our nation's trust" -- Attorney General Ashcroft saying individuals who commit treasonous acts against the United States will be held fully accountable.

And in the case of Hanssen, if convicted, he could get the death penalty and/or be fined twice the amount of cash he is alleged to have gotten from Russians. They say that this arrest was part of an ongoing effort to identify penetration to U.S. intelligence sources since the Aldrich Ames' case. We're looking at photographs now of the suburban neighborhood where Robert Philip Hanssen lived with his wife and six children, a family described as salt of the earth, attending the cul-de-sac potluck dinners, good Catholics. And there's a sense of shock expressed by some of the neighbors as the FBI seals off the area and attempts to find whatever evidence they can to determine the facts of the case.

Among the secrets disclosed in the allegations: that Hanssen told the Russians about U.S. methods for conducting electronic surveillance. His job was to spy on the spies. And he may have confirmed for Russians information originally supplied to them by convicted CIA spy Aldrich Ames. And he may have identified KGB agents working for the U.S. as double agents, and led to execution.

This has been going on since 1985. And a blue-ribbon panel headed by former FBI Director, Judge William Webster, is being formed in order to look not only into the damage that Philip Hanssen may have caused because of his alleged espionage activities, but also an examination of what Louis Freeh calls the "internal security." There was no detection by the FBI's internal security of Robert Philip Hanssen's activities, which they suggest may have dated back to 1985.

And the secretary of state, Colin Powell, made a comment about the case just a short while ago. And we will listen to what he has to say.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: Let me just say that the FBI has done a terrific job in uncovering this, working with a number of other agencies. And Director Freeh has kept me advised of this case ever since I became secretary of state a little over a month ago. And so I congratulate him for this work.

It's always sad when you see a fellow citizen who is alleged to have committed these crimes out in front of the world in this way. But I think I need to remain quiet because this is -- these are still allegations to be proved in a court.

(END VIDEO CLIP)

WATERS: Secretary of State Colin Powell.

It should be noted that Robert Philip Hanssen, between 1995 and 2000, was assigned to the State Department to study the activities of international spies. And it's also noted by John Ashcroft today a warning that this is a very serious situation, a serious breach in the security of the United States. "Every American should know that our nation, our free society is an international target in a very dangerous world."

Much more about that -- about this as we continue on: including what evidence has been accumulated in this case against Philip Hanssen -- Robert Philip Hanssen.

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