_________________________________________ Try the Asia Intelligence Update http://www.stratfor.com/services/aiu/ _________________________________________ Global Intelligence Update Red Alert December 7, 1998 Weekend Revelation of CIA Leaks to Hughes Electronics Baffling and Explosive On Saturday morning, December 5, both the New York Times and the Washington Post ran stories claiming that officials of Hughes Electronics had been warned by agents of the U.S. Central Intelligence Agency that they would be called to testify before Congress on the sale of satellite technology to China. This report is explosive because, if true, these agents would be guilty of a massive security breach. Since the story appeared simultaneously in both the Times and the Post, this was a deliberate decision on somebody's part to plant explosives beneath someone in the CIA. Now, although we only know what we read in the newspapers, it is more than enough to make us wonder what in the world is going on. The unofficial official explanation from the Agency was bizarre. It acknowledged that CIA officials had informed Hughes people that they were going to be summoned by the Senate Select Committee on Intelligence (SSCI) to testify on technology transfers to China. Moreover, it was acknowledged that the leak had been approved by the Agency. They did not claim that this was some unauthorized accident by a junior employee. The official counter-leaks went on to assert that, whoever approved it, it was not CIA Director George Tenet. The Associated Press cited an anonymous CIA official as asserting, "This was not the kind of thing that reached Tenet's desk." So the party line is that CIA employees did warn Hughes officials, that they were authorized to do so by someone with enough clout to authorize such a thing, but that the authorization didn't come from the top because DCI had no knowledge of the SSCI proceeding. That's a little hard to believe. The DCI, we would think, normally likes to stay on top of anything having to do with the Senate Select Committee on Intelligence. Given that this is an already highly sensitive matter that has directly affected the President himself, it is more than a little hard to believe that Tenet doesn't keep himself informed of every detail. But let's assume that he did not authorize the leak. Let's also accept that the people who did the leaking were authorized to do so. Who did the authorizing? Hughes is a major contractor for the intelligence community. Hundreds or even thousands of intelligence employees for all sorts of agencies have daily contact with Hughes employees. But few of these are senior enough to authorize a leak of this sort. And, more important, none of these GS-12s have access to sensitive SSCI papers. We would expect that anything involving the SSCI, the President, campaign contributions, and possible criminality is handled at stratospheric levels in the Agency. If not Tenet, then who in the CIA has access to SSCI-sensitized information? Who has the ability to authorize lower level officials with daily contact with Hughes to pass on information? Who can access Agency's command and control mechanism to pass on such an authorization? Who has that much clout AND a reason to issue such a risky authorization? We give up too. So let's try to approach this from a different direction. What would be the reason for the leak? The obvious answer is to warn Hughes that it is coming. Well, when you think about it, that's a pretty feeble reason. Hughes officials were not about to be kidnapped off the street to testify. A nice letter would be sent on Senate stationary and a date, several days or weeks away would be arranged. The Hughes people would have plenty of time to prepare their testimony. Why risk all of this just to give the Hughes people some extra time to prepare? Besides, the Hughes folks had to know that all sorts of investigations were going on. They read the papers. According to the Post story, there is an innocent explanation being leaked by the CIA. This explanation revolves around a CIA analyst called Ronald Pandolfi, who testified to the SSCI in the Fall of 1998 that Hughes had been "too aggressive" in marketing technology to China. Pandolfi's testimony originated in a study he did in 1995. Back then, Hughes executives had complained to CIA officials about Pandolfi's research. The office that deals with Hughes reprimanded Pandolfi. After Pandolfi's testimony this year, this office informed Hughes of Pandolfi's views. It also offered Hughes that it would give the SSCI a list of Hughes officials that could refute Pandolfi's views. So, it was only in this sense that Hughes was told that they would be called to testify. Only in this sense??!! What this unofficial explanation implies is that it was not the fact that they were going to be called before the SSCI that was being conveyed to Hughes, but rather that the issue before the SSCI was Pandolfi's report from 1995. What they were being told by the CIA was that the Pandolfi report was in the SSCI's hands. Moreover, since Pandolfi had interviewed Hughes officials in writing that report, they had a pretty good idea of what questions he had asked and what answers he had gotten. They knew the internal thinking at SSCI. Passing this on to Hughes was a major security breach. It told Hughes a great deal about what the SSCI knew and when they knew it. The CIA official who authorized the leak to Hughes had no authority to do so, because the CIA didn't own the information. It belonged to SSCI and the U.S. Senate. Why go to all the trouble? What is the issue here? Forget all of the comings and goings and conspiracies for a moment and let's concentrate on why someone at the CIA in an extremely senior position would want to take this kind of risk at all. What could Hughes have been doing that would be so sensitive to the CIA or to someone at the CIA to take such a risk? So far as we can see, there are four possible tracks for explaining this: Track 1 -- The Old Boys Network Explanation: Hughes and the CIA have been working together for generations. Complex systems of personal and institutional connections have developed until the lines distinguishing the two organizations have begun to blur. A contract worker from Hughes who has been working at an intelligence facility for twenty years may be getting a check from Hughes, but his identity is with his facility. Moreover, the CIA is supposed to control its contractors. When Pandolfi reported that Hughes had gone over the line in China, this was a direct attack on the CIA people responsible for monitoring Hughes. The CIA people went to bat for Hughes, Hughes went to bat for the CIA. This whole thing is nothing more than the standard conflation of contractors with Federal agencies that has been going on since the founding. Clean it up and move on. Track 2 -- The Criminal Conspiracy Explanation: The Hughes transfer of technology to China was a deliberate security breach by Hughes (and perhaps other companies like Loral) for the simple purpose of making money. Certain officials of the CIA were aware that the technology transfer was taking place but either failed to report it or were personally part of the conspiracy. Pandolfi's discovery threatened to expose corruption at the CIA, so every attempt was made to discredit him and keep his report from the SSCI. When it got to the SSCI, Hughes was told so that they could start the shredders running and transfer vulnerable employees to Chad. Staff at SSCI got wind of it and went to the newspapers. This would explain the claim that Tenet didn't know about any of this but that it was an authorized leak. Under this theory (for which we haven't a shred of evidence), whoever did the authorizing may have some interesting Swiss bank accounts as well. Track 3 -- The Political Conspiracy Explanation: The President has been charged, among other things, with permitting the transfer of sensitive technologies to China in exchange for political contributions for the 1996 elections. Pandolfi's work was done in 1995, when the fundraising was roaring along. The SSCI is studying the technology transfer issue at the same time that the House Impeachment committee is doing something (though we can't quite figure out what). Henry Hyde just announced that the impeachment committee will not be considering campaign finance issues. Someone at SSCI, aware that there may be some smoking guns in the SSCI's extremely classified archives, is taking advantage of this breach to frantically wave his arms in an attempt to get Henry Hyde's shell-shocked attention. So, this assumes that there was a criminal conspiracy by the President to take campaign money in exchange for permitting technology transfers to China. It also assumes that there is now a political conspiracy by the President's enemies on the SSCI to make this public before the impeachment committee signs off on their recommendation. Track 4 -- There was in fact a major technology transfer program to China, but it was a Trojan horse. In other words, while major technology was transferred to China, the technology was either carefully flawed or embedded with some sort of monitoring system that would permit U.S. intelligence to monitor its use and neutralize its capabilities. Hughes and other companies were participating in a complex, covert operation that had to appear to be a security failure on the part of the United States in order to achieve its ends. The CIA, having recruited Hughes for a covert operation, must help Hughes cover its tracks. This conspiracy is so sensitive that the CIA never mentioned it to the SSCI and it is now leaning on Hughes to keep the secret. In this scenario, Hughes and the CIA are patriotic heroes and the SSCI is blundering around, lousing everything up. (By the way, we have no evidence whatever for this track. In addition we are not revealing anything to the Chinese with this speculation because the Chinese are a lot smarter than STRATFOR and much more paranoid. We have nothing to teach them about being suspicious). Let's throw another one in. Remember right after the Wye Agreement, the Israelis announced that Jonathan Pollard, the Israeli spy, would be released as part of the agreement? Remember that he wasn't released? Remember that it leaked a few days later that George Tenet had threatened to resign if Pollard was released? Well, the only one who would have wanted to leak that story was Tenet, because it made him look really good at the agency. It also made Clinton look like a wimp. Clinton couldn't fire him at the time, because he couldn't afford to look like he was caving in to the Israelis. Clinton must have been extremely annoyed with Tenet for the threat and the leak. If this affair proves as damaging as it appears to be, Tenet's career is over, regardless of what he knew. Maybe this is just the White House taking care of a bit of unfinished business. So, we have cronyism, criminal conspiracy, political conspiracy, covert conspiracy and inside-the-beltway conspiracy to choose from. We genuinely don't know which is the real story. But we don't think it is trivial. This affair could be a wedge into a very important and complex part of American history. Someone is issuing an extremely public invitation to investigate a critical issue with grave implications. It is almost as if someone is painting a map. The revelation of this single, relatively minor security breach could wind up explaining a great deal about the recent past. There may be simple and innocent explanations. There may be complex and dark explanations. But, for what little they are worth, our instincts tell us that this is the place where explanations begin. ___________________________________________________ To receive free daily Global Intelligence Updates, sign up on the web at http://www.stratfor.com/mail/, or send your name, organization, position, mailing address, phone number, and e-mail address to [EMAIL PROTECTED] ___________________________________________________ STRATFOR, Inc. 504 Lavaca, Suite 1100 Austin, TX 78701 Phone: 512-583-5000 Fax: 512-583-5025 Internet: http://www.stratfor.com/ Email: [EMAIL PROTECTED]
