[Congressional Record Volume 140, Number 140 (Friday, September 30, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 30, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
CONFERENCE REPORT ON THE INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 
                                  1995

  Mr. DeCONCINI. Mr. President, it is indeed a pleasure to present this 
conference report to the Senate. Since this will be the last official 
act that Senator Warner and I undertake as Chairman and vice chairman 
of the Select Committee on Intelligence, it is with a great deal of 
pride that we are able to bring back to the Senate what I believe is a 
significant and consequential piece of legislation.
  In this regard, I want to take this opportunity to salute our 
colleagues on the House Permanent Select Committee on Intelligence, 
particularly Chairman Dan Glickman and the ranking minority member, 
Larry Combest, for their cooperation and willingness to work with us to 
produce this far-reaching bill. And I might say, since these two 
Congressmen also happen to be leaving their leadership positions on the 
House committee at the end of this Congress, how much I appreciate the 
fine working relationship we have had with them over the course of the 
103d Congress. They have approached their duties with seriousness and 
enthusiasm, and as a result, have had a very productive tenure.
  I also want to take this opportunity to express my appreciation to 
the senior Senator from Virginia, my friend and colleague, John Warner, 
whose good sense and steadying influence has been invaluable to me and 
the committee over the last 2 years. He has made an enormous and 
lasting contribution during his 8 years on the Intelligence Committee, 
and, indeed, his proposal to establish a presidential commission on 
intelligence, which is included as part of this bill, constitutes, I 
believe, a lasting legacy from his service here.
  In this regard, I also want to mention the part that Senator Bob 
Graham made in terms of developing the commission proposal and bringing 
it to fruition. He has been a serious and active member of the 
Intelligence Committee, and believes, as many of us do, that it is time 
for a fundamental reassessment of the roles and capabilities of the 
U.S. intelligence community in the wake of the cold war.
  This conference report mandates just such a review, putting 
everything--organizations, budgets, missions, capabilities, 
strategies--on the table. It calls for a 17-member commission with 9 
members appointed by the President, and 8 members appointed by the 
congressional leadership in both Houses on both sides of the aisle. It 
mandates a report to the President and the Congress by March 1, 1996.
  The conference report also contains far-reaching provisions to 
improve the coordination of counterintelligence activities and to 
enhance the investigative authorities of investigative agencies. My 
colleagues should appreciate this is in effect the committees' response 
to the defects we've identified in the handling of the Ames case. While 
no one would contend that they will put an end to spying, I do believe 
they will improve our chances of detecting it and prosecuting it 
successfully.
  I also want to mention specifically the provisions of this conference 
report that bring physical searches done for intelligence purposes 
within the United States under the court order procedures of the 
Foreign Intelligence Surveillance Act of 1978. Until now, such searches 
have been carried out without a warrant pursuant to the approval of the 
Attorney General. Indeed, such a search was carried out in the Ames 
case. The committee believed that the constitutionality of these 
searches was subject to question, and believed from the standpoint of 
civil liberties that it was preferable to have a Federal judge approve 
such searches as opposed to the Attorney General. I am delighted to say 
the Clinton administration strongly supported this legislation and that 
the Attorney General and Deputy Attorney General played key roles in 
terms of ensuring its acceptance by the conference committee.
  This bill, needless to say, authorizes funding for the intelligence 
activities of the U.S. Government. While the precise levels are 
classified and are incorporated in a classified annex to the conference 
report, suffice it to say, the conference report funds these activities 
somewhat below last year's levels and below the level requested by the 
administration. Nonetheless, we believe it will provide an intelligence 
capability adequate to meet the national security needs of the country.
  Finally, Mr. President, I wish simply to acknowledge the work of our 
fine staff in putting this legislation together: Norman Bradley, staff 
director; Tim Carlsgaard, deputy staff director; Judy Ansley, minority 
staff director; Chris Mellon, deputy minority staff director; Kathleen 
McGee, chief clerk; Britt Snider, general counsel; Mary Sturtevant, 
budget director; Charlie Battaglia; Steve Cortese; Al Cumming; Pete 
Dorn; Melvin Dubee; Art Grant; Pat Hanback; Mike Hathaway; Judy 
Hodgson; Sarah Holmes; Ed Levine; Karen Lydon; Don Mitchell; Ken Myers; 
Joan Piermarini; Vera Redding; Gary Reese; Randy Schieber; Chris 
Straub; Tawanda Sullivan; Tracey Summers; Eric Thoemmes; Jim Van Cook; 
Chip Walgren; Fred Ward; Grayson Winterling; Jim Wolfe; and Sheryl 
Wood. I know of no other committee which has as talented or as 
dedicated a staff.
  In conclusion, Mr. President, it has been a distinct privilege for me 
to chair the Select Committee on Intelligence for the last 2 years. I 
leave with the feeling that while we have accomplished a lot over the 
last 2 years, there is still much to be done. But I am leaving behind a 
very capable group of members and staff who I am confident will carry 
on the important work of this committee.
  Mr. D'AMATO. Mr. President, I rise today in support of adoption of 
the report of the committee of conference on H.R. 4299, the 
Intelligence Authorization Act for Fiscal Year 1995. This act marks a 
very significant step forward for this Nation and for the intelligence 
community, primarily because of its provisions establishing a 
Commission on the Roles and Capabilities of the United States 
Intelligence Community and because of the improvements it makes in our 
counterintelligence structure and statutes.
  I want to take this opportunity to speak in support of this bill, 
which authorizes appropriations for the intelligence community for the 
coming fiscal year, because I want to make clear my wholehearted 
support for the professionals who do the work that makes our national 
intelligence system the best in the world. While budgets are declining, 
I believe that this bill provides adequate funds to meet this Nation's 
intelligence needs in the coming year.
  I have spoken out concerning what I believe are very important flaws 
in the way the community is run. I will continue my efforts to correct 
those flaws. However, I do not want the many thousands of people who 
labor in necessary anonymity and sometimes in dangerous and difficult 
circumstances to collect, report, analyze, and disseminate intelligence 
that is critical to our national security to think that their efforts 
are not appreciated or will not be supported.
  The problems revealed by the Select Committee on Intelligence's 
public hearing on the National Reconnaissance Office's headquarters 
complex and in the continued revelations concerning the Aldrich Hazen 
Ames case are simply indicative of larger problems we are working to 
fix. While relations between the committee and the Director of Central 
Intelligence, Mr. R. James Woolsey, have become strained, the problems 
are not problems of personality conflicts nor do they originate with 
Director Woolsey's tenure in office.
  It would be a mistake for observers to conclude that Director Woolsey 
is the problem. But by his actions--and inactions--he had become a part 
of the problem, instead of a part of the solution. I regret that this 
is the case.
  In fact, a member of the committee has publicly called upon Director 
Woolsey to resign, and upon the President to call for his resignation. 
I have not gone that far, but I believe that the President should 
consult with everyone who has to work with Mr. Woolsey and make a 
judgment about his future, because I think that very few retain 
confidence in his leadership.
  Mr. Woolsey has a big job to do. If he can do it, he may be able to 
regain enough confidence to allow him to continue in office. If not, 
the President should evaluate the impact of his continuation in office 
upon the national security, the intelligence community, and the Central 
Intelligence Agency, reach his own conclusions, and act accordingly.
  Mr. President, one of the major elements in the present situation is 
the aftermath of the Ames case. The Inspector General of the Central 
Intelligence Agency, Mr. Frederick P. Hitz, produced a long, classified 
report on the case. He also made a statement describing the Ames case 
and his findings. This statement is unclassified. I ask unanimous 
consent that his statement be printed in the Congressional Record at 
the conclusion of my remarks, along with two articles from the Friday, 
September 30, 1994 edition of The New York Times. These articles, both 
by Tim Weiner, are respectively entitled ``C.I.A. Official Tells of 
Botching of Ames Case,'' and ``Agencies Admit Failure To Tell Senate 
Enough on Spy Building,'' both of which were printed on page A24 of the 
paper.

  Taken together, the Hitz statement and the articles will provide 
anyone reading the Congressional Record with a good summary of the 
public part of the situation that leads me and many of my colleagues to 
such dramatic conclusions regarding Mr. Woolsey.
  Beyond these matters, there is the case involving Jane Doe Thompson, 
a female case officer who claims she was the subject of gender-based 
discrimination by the CIA. It is my understanding that she is far from 
unique among female career employees at the Agency. I look forward to 
working to resolve the problems of fairness and equality that her case 
has highlighted.
  Finally, I want to praise my colleagues and especially our 
distinguished chairman and vice chairman for their dedication to making 
substantial improvements in this Nation's counterintelligence posture. 
Their efforts have resulted in a truly substantial improvement over the 
present state of affairs.
  As a member of the Select Committee on Intelligence, I am proud to 
have been a cosponsor of S. 2056, the Counterintelligence and Security 
Enhancements Act of 1994. Among other things, this bill: First, 
required creation of a simplified and uniform system to govern access 
to classified information; second, placed in law the new 
counterintelligence structure created by Presidential Decision 
Directive 24, but importantly strengthened this structure by requiring 
that ``the head of each department or agency within the executive 
branch of Government shall ensure that * * * the Federal Bureau of 
Investigation is advised immediately of any information, regardless of 
its source, which indicates that classified information is being, or 
may have been disclosed in an unauthorized manner to a foreign power of 
an agent of a foreign power;'' third, permitted disclosure of consumer 
credit reports to the FBI in espionage investigations, but only where 
``* * * there are specific and articulable facts giving reason to 
believe that the consumer whose consumer report is sought * * *'' is a 
spy; fourth, created authority for the Attorney General to pay rewards 
for information concerning espionage; fifth, provided for criminal 
forfeiture of property received for or used to commit espionage; sixth, 
denied annuities or retired pay to persons convicted in foreign courts 
of espionage involving U.S. classified information; seventh, provided 
for a warrant process under the Foreign Intelligence Surveillance Court 
to govern physical searches within the United States for the purpose of 
collecting foreign intelligence information; and eighth, made 
unauthorized removal and retention of classified material a Federal 
criminal offense.
  These provisions were substantially included in H.R. 4299, the 
Intelligence Authorization Act for Fiscal 1995. I believe they will 
make a very positive difference in our ability to deter espionage 
against us and to detect persons committing espionage at the earliest 
possible stage so that damage to this country can be minimized.
  In addition, the Violent Crime Control and Law Enforcement Act of 
1994, H.R. 3355, contained a provision, section 60003(a)(2), that 
reinstated the death penalty for espionage provided for in 18 U.S.C. 
section 794(a). It amended that section, making the death penalty 
available in cases where a spy's actions resulted in ``the 
identification by a foreign power * * * of an individual acting as an 
agent of the United States and consequently in the death of that 
individual, or directly concerned nuclear weaponry, military spacecraft 
or satellites, early warning systems, or other means of defense or 
retaliation against large-scale attack; war plans; communications 
intelligence or cryptographic information, or any other major weapons 
system or major element of defense strategy.'' This bill became Public 
Law 103-322.
  Mr. President, the Commission on the Roles and Capabilities of the 
United States Intelligence Community is also important for the future. 
It will hopefully produce the equivalent of the Defense Department's 
Bottom-Up Review for the intelligence community. It will help us make 
certain that the community is going in the right direction in the 
future--no matter who is leading it. It will also allow us to make 
smarter policy and budget choices as we try to shape the community to 
better meet this Nation's future intelligence needs.
  Again, in closing, I urge my colleagues to support this bill.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

               [From the New York Times, Sept. 30, 1994]

             C.I.A. Official Tells of Botching of Ames Case

                            (By Tim Weiner)

       Washington, September 29.--Adding new details to the 
     Central Intelligence Agency's self-portrait of 
     ineffectiveness in the case of Aldrich H. Ames, the agency's 
     inspector general testified today that Mr. Ames's 
     drunkenness, rule-flouting and laziness had not been 
     ``considered unusual'' by his superiors.
       The inspector general, Frederick P. Hitz, told a closed 
     session of the Senate Intelligence Committee that for two 
     years the agency all but gave up searching for the traitor it 
     suspected was in its ranks and that it did not focus on Mr. 
     Ames for nearly seven years after be began his betrayals on 
     behalf of Moscow in 1985. Mr. Hitz's remarks were made public 
     today by the C.I.A.
       The agency's investigation began in 1986, when the C.I.A.'s 
     spies inside the Soviet Union began disappearing and dying. 
     The secrets that Mr. Ames had sold to the Soviets for more 
     than $2 million led directly to the death of 10 secret 
     agents.
       The Federal Bureau of Investigation, whose own agents had 
     seen Mr. Ames visiting the Soviet Embassy in Washington, 
     asked the C.I.A. to investigate in 1986. But the intelligence 
     agency failed to do so, the inspector general said, and the 
     matter was soon forgotten.
       ``The mole hunt virtually ceased'' from 1988 to 1990, and 
     the C.I.A. did not draw up a formal list of suspects until 
     1991, Mr. Hitz said. ``Factors that contributed to this 
     delay,'' he said, ``included the agency's reluctance to 
     believe that one of its own could betray it and a continuing 
     general distaste for the counterespionage function of 
     investigating agency employees.''
       The C.I.A. missed many opportunities to catch Mr. Ames, Mr. 
     Hitz testified. Those breakdowns, he said, included two 
     botched lie-detector tests, failure for nearly four years to 
     complete a financial inquiry into Mr. Ames's affluence, and a 
     near-total collapse in communications among C.I.A. officers 
     when they did begin to focus on him in 1991.
       But the most profound failure was that of the C.I.A.'s top 
     managers, the inspector general concluded.
       Mr. Ames had a long history of ``no enthusiasm, little 
     regard for rules and requirements, little self-discipline, 
     little security consciousness, little respect for management 
     or the mission, few good work habits, few friends and a bad 
     reputation in terms of integrity, dependability and 
     discretion,'' Mr. Hitz said. ``Yet his managers were content 
     to tolerate his low productivity, clean up after him when he 
     failed, find well-chosen words to praise him and pass him on 
     with accolades to the next manager.''
       His laziness and frequent drunkenness ``were observed by 
     Ames's colleagues and supervisors and were tolerated by 
     many,'' Mr. Hitz said. That tolerance permitted the C.I.A. to 
     award Mr. Ames a series of promotions to positions ``where he 
     was perfectly placed to betray almost all of C.I.A.'s most 
     sensitive Soviet assets.'' In retrospect, this managerial 
     indifference is ``difficult to justify,'' the inspector 
     general testified.
       Mr. Hitz said suspicions about Mr. Ames finally 
     crystallized at the C.I.A. in August 1992, seven years after 
     his spying for Moscow had begun. Still, the agency did 
     nothing to act upon those suspicions until the F.B.I.'s 
     formal criminal investigation of the case began eight months 
     later.
       Operations against the Soviet Union were the C.I.A.'s 
     highest priority in the 1980's, Mr. Hitz testified. The 
     destruction of the agency's network of Soviet spies ``should 
     have had a profound effect on the thinking and actions of the 
     leaders of the C.I.A.''
       But thee was no such effect, he concluded. In his final 
     report on the matter, issued this week, Mr. Hitz declined to 
     say why that might have been or who might be to blame.
                                  ____


      Agencies Admit Failure To Tell Senate Enough on Spy Building

                            (By Tim Weiner)

       Washington, September 29.--The National Reconnaissance 
     Office, the secretive Government agency that builds spy 
     satellites, did not intentionally mislead Congress about the 
     cost of its new headquarters, but failed to provide detailed 
     and straightforward information about the building, the 
     Pentagon and the Central Intelligence Agency said today.
       The new headquarters, a complex of four buildings outside 
     Washington, was to have cost up to $347 million, according to 
     figures that the Reconnaissance Office provided after 
     protests by the Senate Intelligence Committee this summer. 
     The committee this month ordered that no more than $310 
     million be spent.
       In addition, the statement by the Pentagon and C.I.A. said, 
     the headquarters has room for up to 3,900 people, 1,000 more 
     than originally planned, and its costs could be cut to about 
     $300 million. The statement said a final report on the 
     project will be completed in October.
       Roger Marsh, the project manager for the new headquarters, 
     apologized to the Senate committee in August, saying the 
     Reconnaissance Office had been ``negligent, clearly 
     negligent, for not showing the budget breakout for this 
     project.''
       The money for the building was broken up into different 
     secret accounts in the Reconnaissance Office's operating 
     budget, its officials said at the August hearing. Today's 
     statement, while finding no intent to deceive Congress, said 
     the office failed to follow guidelines for presenting secret 
     budgets to the Congressional intelligence committees.
       Almost everything about the Reconnaissance Office, whose 
     existence was not officially acknowledged until 1992, is 
     classified more secret than Top Secret. The agency spends, by 
     some estimates, more than $6 billion a year building highly 
     sophisticated spy satellites.
       The chairman of the Senate Intelligence Committee, Dennis 
     DeConcini, Democrat of Arizona, and the vice-chairman, John 
     W. Warner, Republican of Virginia, said today that they 
     remain convinced that they were not fully informed about the 
     project, which Senator Warner called ``a `Taj Mahal.' ''
       Mr. DeConcini said he attributed the Senate's lack of 
     knowledge about the headquarters' cost to ``clandestine 
     bookkeeping'' by the Reconnaissance Office. ``As the smoke 
     continues to clear, I believe the numbers will show that the 
     N.R.O. spent an extra $100 million of taxpayer dollars to 
     insure this complex was a Rolls-Royce and not a Chevrolet,'' 
     he said.
                                  ____


                     Statement of Frederick P. Hitz

       Mr. Chairman, Mr. Vice-Chairman, Members of the Committee 
     and Staff:
       Thank you for the opportunity to discuss our investigation 
     of issues relating to the Agency's handling of the Ames case. 
     The investigation has been an unusual one for the CIA Office 
     of Inspector General. First, our inquiry was requested 
     directly by the Chairman and Vice-Chairman of this Committee 
     in late February 1994--shortly after Aldrich H. Ames and his 
     wife were arrested. Normally, the intelligence oversight 
     committees of the Congress ask the Director of Central 
     Intelligence to request an IG investigation, but on this 
     occasion your request was directed to me. The request 
     underscored the oversight committee's intense interest in 
     this particular investigation.
       Second, DCI Woolsey asked us not to delve fully into the 
     Ames matter until some time had passed after Ames's arrest 
     for fear of disrupting the Ames prosecution. Based on the 
     DCI's concern and also that of the Department of Justice and 
     the United States Attorney for the Eastern District of 
     Virginia that we do nothing which would potentially 
     complicate any trial of Ames, we confined ourselves to 
     background file reviews and interviews of non-witnesses until 
     the Ameses pled guilty in April 1994. The consequence was, 
     however, that we had to cover a great deal of ground in a 
     much shorter time in order to have our Report ready for the 
     DCI and our Congressional oversight committees by September 
     1994. I am extremely proud of our 12-person investigative 
     team. Their efforts are evident in the depth and breadth of 
     the Report.
       A third unusual feature was that in March 1994, the DCI 
     asked us to seek to determine whether individuals in Ames's 
     supervisory chain discharged their responsibilities in the 
     manner expected of them. In this regard, the DCI directed the 
     Executive Director of CIA to prepare a list of Ames's 
     supervisors during the relevant periods. The DCI also 
     directed that awards and promotions for the individuals on 
     the Executive Director's list be held in escrow pending the 
     outcome of our investigation. Neither I nor any member of the 
     team investigating the Ames case has viewed the DCI's escrow 
     list. We wanted to be as completely unaffected by the names 
     on the list as we could be in order to discharge our 
     responsibility to advise the DCI objectively of possible 
     disciplinary recommendations. As a precautionary measure, I 
     did ask my Deputy for Inspections, who was otherwise 
     uninvolved in the Ames investigation, to compare our 
     interview list and the escrow list and determine whether any 
     individuals on the escrow list had not been afforded the 
     opportunity to comment on their actions with respect to Ames. 
     That has been our only involvement with the escrow list.
       In addition to the unusual circumstances that attended this 
     investigation, it was clear from the outset that the Ames 
     case presented several major substantive issues of the most 
     serious concern to the DCI, our oversight committees and the 
     American people. Thus, we chose not to tell the story in the 
     normal chronological way. Instead, we focused on themes: 
     Ames's life, his career, his vulnerabilities, how he was 
     handled from a management standpoint, and how the system 
     dealt with him. We have also discussed in the context of this 
     particular case how counterespionage investigations have been 
     conducted in CIA since the Edward Lee Howard betrayal and the 
     1985 Year of the Spy.
       At this point, I would like to summarize for the Committee 
     the major findings and conclusions of our investigation. 
     These findings and conclusions were developed after the 
     review of almost forty-five thousand pages of documents, ten 
     years of prior studies, thousands of hours of interviews with 
     over 300 employees and other individuals, painstaking 
     analysis, and countless hours of planning, deliberation and 
     vigorous debate.
       The key, inescapable conclusion of our investigation is 
     that the effort to identify the reasons for the loss of 
     virtually all of CIA's human sources reporting on its primary 
     target in the 1980s, the Soviet Union, did not receive the 
     attention that it rightfully deserved. In view of the scope 
     and nature of the losses the Agency suffered, the Agency 
     should have expended every effort and resource necessary to 
     identify the cause. If it had, Ames might have been 
     apprehended sooner and subsequent losses avoided.
       Although the damage assessment is still underway, the 
     estimate at this time of the damage attributable to Ames are 
     truly staggering. As stated in our Report, we now know that 
     he provided the Soviets with information on 36 cases in June 
     1985. Based on his debriefings, Ames now acknowledges 
     providing the Soviets with information on a large number of 
     additional Soviet and East European cases. In addition, Ames 
     disclosed the identities of many Agency employees and non-
     official cover officers, as well as technical operations, 
     finished intelligence, and Agency planning and policy 
     documents.


 problems with managerial attention and timeliness of the investigation

       The effort to find the source of the losses, which we have 
     referred to as the molehunt, began in 1986. However, that 
     effort was plagued after 1987 by senior management 
     inattention and failure to apply an appropriate level of 
     resources to the effort until 1991. For an extensive period 
     of time between 1988 and 1990, the molehunt virtually ceased 
     despite information obtained from several Agency components 
     in 1989 that should have focused attention directly on Ames. 
     Factors that contributed to this delay included the Agency's 
     reluctance to believe that one of its own could betray it and 
     a continuing general distaste for the counterespionage 
     function of investigating Agency employees. In 1991, the 
     molehunt effort was rejuvenated, the FBI offered to 
     participate, and the investigation gradually began to show 
     results.


                            soviet contacts

       Ames was authorized to engage in contacts with Soviet 
     Embassy officials in Washington in 1984, 1985 and 1986. 
     Agency management failed to monitor his contacts with these 
     officials more closely in 1985 and failed to pursue them 
     adequately after they were requested by the FBI in 1986. This 
     provided Ames with the opportunity to consummate the 
     espionage he contemplated based upon his financial situation 
     and the influence on his thinking that resulted from his 
     prior contacts with Soviet officials in New York. If his 
     failure to submit timely contact reports had been questioned 
     vigorously at the time, Ames might have been told to break 
     off the contacts or been caught in a lie regarding their 
     nature and extent. Ames, albeit not the most trustworthy of 
     witnesses, has said that he would have had a hard time 
     explaining these contacts had questions been raised. If the 
     contacts had been pursued as they should have, appropriate 
     attention might have been drawn to Ames in 1985 or 1986 
     rather than years later. As it was, Ames ignored the request 
     to report on the contacts and it was soon forgotten.


                          financial inquiries

       The inquiry into the Ameses' finances should have been 
     completed much sooner by CIC than the more than three and 
     one-half years that the inquiry consumed. After it was 
     discovered in 1989 by CIC that Ames had paid for his house in 
     cash and moved large sums of money from abroad to domestic 
     bank accounts, a full financial inquiry should have been 
     undertaken by CIC and the Office of Security on a priority 
     basis. This effort languished despite a December 1990 
     memorandum from CIC to the Office of Security requesting a 
     reinvestigation of Ames on the basis of his finances and 
     noting his potential link to the 1985-86 compromises. In 
     addition, other available information was not correlated with 
     the financial information.


                               polygraphs

       The 1986 polygraph of Ames was deficient because the 
     examiner failed to establish the proper relationship with 
     Ames and did not detect Ames's reactions even though Ames 
     says he had great apprehension at the time that he would be 
     found out. The 1991 polygraph sessions were not properly 
     coordinated by CIC with the Office of Security after they 
     were requested. The polygraph examiners in 1991 were not 
     given complete access to the information that had been 
     provided to the Office of Security by CIC in December 1990 
     regarding Ames's finances and they did not have the benefit 
     of the thorough background investigation that had been 
     completed on Ames on the very day of the first examination 
     session. Once they had developed suspicions about Ames, 
     the responsible CIC officers, especially with their Office 
     of Security backgrounds, should have participated more 
     aggressively and directly in Ames's polygraph. Since the 
     polygraph was handled in a routine fashion, no CI emphasis 
     was placed on formulating the questions or selecting 
     examiners with the appropriate levels of experience. The 
     was no strategy for the questioning and no planning how to 
     handle any admissions he might have made. The result of 
     the 1991 polygraph was to divert attention from him for a 
     time.


                          personnel resources

       In view of the number of Soviet sources that were 
     compromised, insufficient personnel resources were devoted to 
     the molehunt effort virtually from the beginning. The failure 
     to request additional resources has been acknowledged by 
     several of the key officials involved. Additional resources 
     could have been used to systematically develop and narrow a 
     list of potential suspects based upon employee access to the 
     compromised cases. Prior to 1991, no formal lists of suspects 
     based on access were created or reviewed. This was partly 
     because access or ``bigot'' lists for the individual cases 
     did not exist or were inaccurate. Although the investigation 
     clearly had to be conducted with discretion, concerns about 
     compartmentation must be balanced at some point against the 
     overriding need to resolve the serious problems the 
     compromises created. There clearly were more than three 
     trustworthy and capable officers available in the Agency with 
     the necessary expertise to assist in the molehunt effort. 
     With more focused involvement by senior Agency management, 
     additional personnel could have been added to pursue the 
     financial inquiries and create a better mix of analytical and 
     investigative skills.


           division of responsibility for counterintelligence

       The ambiguous division of responsibility for 
     counterintelligence between CIC and the Office of Security 
     and excessive compartmentation contributed to a breakdown in 
     communication between the two offices, despite the fact that 
     CIC was created in part to overcome such coordination 
     problems. This breakdown in communication had a highly 
     adverse impact on the Ames counterespionage investigation. 
     There was a general absence of collaboration and sharing of 
     information by CIC with the Office of Security at critical 
     points in the reinvestigation of Ames in 1991. Office of 
     Security officers who were assigned to CIC minimized the 
     contribution that could be expected to be received from the 
     Office of Security and their resulting failure to collaborate 
     in fact produced the minimal contribution they expected. 
     These problems and others persisted despite the fact that 
     prior Inspector General inspection reports on 
     Counterintelligence, the Office of Security and Command and 
     Control in the Agency pointed out the jurisdictional and 
     communication ambiguities in counterintelligence matters.


                       security reinvestigations

       The lack of an effective and timely reinvestigation 
     polygraph program in 1985, when Ames began his espionage 
     activities, enhanced the breakdown of inhibitions that Ames 
     had experienced and led him to believe that he would not be 
     required to undergo a reinvestigation polygraph before his 
     contemplated retirement in 1990. By 1985 the Office of 
     Security reinvestigation polygraph program had fallen 
     seriously behind its targeted five-year schedule and Ames had 
     not been polygraphed for almost ten years. Although the 
     Agency gave the program increased attention in 1985 and made 
     a commitment to provide the resources necessary to maintain a 
     five-year reinvestigation schedule, the hiring of new 
     polygraph examiners created other problems, such as the need 
     for increased management and supervision of inexperienced 
     examiners. These problems were compounded by an exaggerated 
     concern about the reaction of Agency officers and managers to 
     adverse results from polygraph examinations. Employee, 
     management and congressional concerns regarding the 
     intrusiveness of the polygraph led Office of Security 
     management to soften the polygraph program and cater to 
     ``customer satisfaction,'' which seems to have meant not 
     offending employees. These developments reduced the 
     effectiveness and reliability of the polygraph program, which 
     must be based upon an apprehension of the consequences of 
     untruths, and encouraged employees and managers to resist 
     the program.


                  deficiencies in personnel management

       No evidence has been found that any Agency manager or 
     employee knowingly and willfully aided Ames in his espionage 
     activities. Allegations in the so-called ``poison fax,'' sent 
     to the SSCI earlier this year, that the Chief of CE Division 
     from 1989 to 1992 warned Ames regarding Agency suspicions 
     about him appear to be without foundation. Many of the other 
     statements made in the fax also appear to have been 
     unfounded. That said, it is clear from comparing Ames's 
     personnel file with the knowledge about him that was shared 
     orally by employees and managers, that Agency managers 
     consistently failed after 1981 to come to grips with marginal 
     performer who had substantial flaws both personally and 
     professionally. His few contributions to the work of the 
     Agency were exaggerated while his deficiencies and cost to 
     the organization were minimized and not officially documented 
     or formally addressed. He had little focus, few recruitments, 
     no enthusiasm, little regard for rules and requirements, 
     little self-discipline, little security consciousness, little 
     respect for management or the mission, few good work habits, 
     few friends, and a bad reputation in terms of integrity, 
     dependability, and discretion. Yet his managers were content 
     to tolerate his non-productivity, clean up after him when he 
     failed, find well chosen words to praise him, and pass him on 
     with accolades to the next manager.


                      suitability for assignments

       Despite his deficiencies in performances, Ames continued to 
     be selected for positions that gave him considerable access 
     to highly sensitive information. In the face of the strong 
     and persistent evidence of performance and suitability 
     problems that was available, this access is difficult to 
     justify. Our report reviews most of these assignments in 
     detail. While Ames's poor performance would probably not have 
     led to termination of his employment, it did not justify 
     permitting him to fill positions where he was perfectly 
     placed to betray almost all of CIA's sensitive Soviet assets. 
     Despite doubts about his performance and suitability among 
     officials who previously supervised him, he was placed in 
     positions that gave him access to the most sensitive Soviet 
     sources. After a disastrous tour in Mexico, Ames was placed 
     in charge of a counterintelligence unit that was responsible 
     for Soviet operations, and it was there that he acquired much 
     of the information he turned over to the KGB in 1985.
       Ames was selectied to participate in debriefings of Vitaliy 
     Yurchenko, described by the Associate Deputy Director for 
     Operations at the time as the most important defector in 
     CIA's history. Little in his previous performance merited 
     that selection and the task should have been reserved for the 
     very best SE Division had to offer. His assignment to a 
     sensitive position in SE Division after his return to 
     Headquarters in the Fall of 1989 from Rome is inexplicable in 
     light of the reservations about him that were held by the 
     departing Chief of SE Division who had considered Amess's 
     Rome assignment as a means of getting rid of a problem 
     employee.
       Ames's selection in October 1990 to serve in CIC is hard to 
     explain given the knowledge that was then available to SE 
     Division's management and CIC regarding the 1985-86 
     compromises, Ames's work habits, his unexplained affluence, 
     and the nature and scope of the access to information that he 
     would have. His CIC managers had been warned that there was 
     reason to watch him closely and certainly could have south 
     more specific information from their superiors in CIC. Once 
     suspicions concerning Ames had crystallized in August 1992 
     when his bank deposits and contacts with the Soviets had been 
     correlated and Agency management had been advised, he should 
     have been place in a position where his access would have 
     been limited and his activities closely managed. No evidence 
     was found that senior Agency managers were fully advised or 
     that such alternatives were ever discussed by Agency 
     management, and neither CIC nor the Office of Security played 
     any role in decisions regarding his assignments until after 
     the FBI investigation began in the spring of 1993.
       Necessarily, we have made analytical judgments about what 
     we have learned--some of them quite harsh. We believe this is 
     our job--not just to present the facts, but to tell the DCI, 
     our oversight committees and other readers how our findings 
     strike us. We have the confidence to do this because we have 
     lived with the guts of Ames's betrayal for countless hours, 
     we know the information we have developed better than anyone 
     else at this point, and it is our responsibility to make 
     these judgments. In this sense, our 12 investigators are like 
     a jury--they find the facts and make recommendations to the 
     DCI for his final determination. And the investigative team 
     and I, like a jury, represent the peers of the intelligence 
     professionals from whose ranks we are drawn. We have been 
     sometimes shocked and dismayed at what we have learned, 
     intrigued by the complexity of the Ames story and 
     appreciative of the individual acts of competence and 
     courage, of which there are many outlined in our Report.
       In this latter regard, several individuals deserve special 
     praise: the Deputy Chief, CIC for his persistent efforts to 
     get to the bottom of the matter despite the passage of time; 
     three CIC members for their work that paved the way for 
     identifying Ames as a spy; four employees and managers who 
     made known their concerns about aspects of Ames's wealth, 
     suitability and performance; and finally, the officer who 
     conducted a timely and thorough background investigation of 
     Ames in 1991 and the Deputy Chief, Counternarcotics Center 
     and another officer who provided substantial assistance to 
     the FBI in the FBI phase of the investigation.
       In the end, however, the Ames case is about accountability, 
     both individual and managerial. The DCI and our oversight 
     committees have made this the issue, but if they had not, we 
     would have. In this regard, let me note that we had already 
     assembled a small team to look into the Ames case on our own 
     prior to any request from the SSCI or the DCI. We did so 
     because we believed that the statute setting up our office 
     required it. The issue of managerial accountability has been 
     one of my office's principal points of focus since its 
     inception in 1990--and we have enjoyed mixed success in our 
     efforts to assist in bringing it about.
       Fixing managerial accountability in the Ames case has not 
     been an easy task. On the individual level, we have uncovered 
     a vast quantity of information about Ames' professional 
     sloppiness, his failure to file accountings, contact reports, 
     and requests for foreign travel. Ames was oblivious to issues 
     of personal security--he carried incriminating documents in 
     his checked airline luggage; he left classified files on a 
     subway train; he openly walked into a Soviet compound in Rome 
     and the Soviet Embassy in Washington. We have noted that 
     Ames's abuse of alcohol, while not constant throughout his 
     career, was chronic and interfered with the performance of 
     his duties. By and large, these deficiencies were observed by 
     Ames's colleagues and supervisors and were tolerated by many 
     who did not consider them highly unusual for Directorate of 
     Operations officers on the ``not going anywhere'' promotion 
     track. That an officer with these observed vulnerabilities 
     should have been placed in positions involving 
     counterintelligence and Soviet operations where he was in a 
     prime position to contact Soviet officials and thus massively 
     betray his trust is difficult to justify. The IG 
     investigative team has found fault with management's tolerant 
     view of Ames's professional deficiencies and the random 
     indifference given to his assignments, and our 
     recommendations reflect that view. We have not made these 
     recommendations, which are primarily systemic and 
     institutional in nature, a formal part of our Report, but 
     have given them to the DCI in an advisory capacity.
       In inclusion, on the grander scale of how the Agency's 
     reaction to the unprecedented loss of Soviet cases in 1985-86 
     was managed, our team has been strict and demanding. The 
     pivotal point of our logic is that, if Soviet operations--the 
     effort to achieve human penetrations of the USSR for foreign 
     intelligence and counterintelligence information--were the 
     priority mission of the clandestine service of CIA in 1985-
     86, then the rapid loss of most of our assets in this crucial 
     area should have had a profound effect on the thinking and 
     actions of the leaders of the Directorate of Operations and 
     CIA. The effort to probe the reasons for these losses should 
     have been of the most vital importance to U.S. intelligence 
     and should have been pursued with the utmost vigor and all 
     necessary resources until an explanation--a technical or 
     human penetration--was found. In this investigation we have 
     concluded that the intelligence losses of 1985-86 were not 
     pursued to the fullest extent of CIA's capabilities, and our 
     findings, analytical judgments and recommendations reflect 
     that conclusion.
       Thank you Mr. Chairman. I will be glad to try to answer any 
     questions you or other Members of the Committee may have.
  Mr. WARNER. Mr. President, I join the chairman of the Intelligence 
Committee in strongly recommending that the Senate adopt the conference 
report on the fiscal year 1995 Intelligence authorization bill.
  While I would have preferred, and supported, a higher funding level 
for intelligence activities, I believe that the conference report 
dollar amount strikes a responsible compromise. The conference 
agreement contains a reduction of only $340 million from the 
administration's request; but it provides funding, in excess of the 
request, in four key areas for which I sought higher funding:
  First and foremost, intelligence support to U.S. military operations;
  Second, efforts to improve our counterintelligence capabilities;
  Third, activities to reduce the critical problem of proliferation of 
weapons of mass destruction; and
  Finally, advanced R&D initiatives which will help keep our 
intelligence capabilities on the cutting edge.
  Several months ago, General Clapper appeared before the Senate 
Intelligence Committee and revealed that there are currently 64 hot 
spots in the world today--areas where there exists extensive fighting, 
human rights violations, and tragic death. That is double the number 
from just 7 years ago. We are today confronted with a world that is 
rife with ethnic, religious, and racial conflict--witness the problems 
in Haiti, Bosnia, Somalia, and Rwanda.
  Such a world presents the intelligence community with new diverse, 
and complex challenges. Maintaining a viable intelligence capability in 
a rapidly changing world is not an easy--or inexpensive--task. And it 
is a time-honored principle that intelligence is a force multipler, 
especially as defense expenditures decline. Therefore, I will continue 
to resist further reductions in the intelligence budget until I am 
convinced that efficiencies can be achieved that will not harm U.S. 
National security.
  In addition to authorizing the resources and activities of the 
intelligence agencies, this measure contains landmark legislation that 
will enhance the security of the United States for many years to come.
  Every Senator, indeed all Americans, are shocked by the tragic case 
of Aldrich Ames. We are shocked not only by the magnitude of Ames' 
treachery, which cost many lives, but also by the fact that it took so 
long for the CIA to catch a sloppy spy, who made little effort to 
conceal his ill-gotten gains. That he went undetected for 9 years, 
despite the fact that there were numerous warning signs pointing to 
Ames' betrayal, indicates that we need more than minor 
counterintelligence reforms at the CIA, we need new attitudes and 
procedures--in effect, cultural changes.

  Unfortunately, many of the problems that the Ames case has uncovered 
do not lend themselves to legislative solutions. They require strong 
leadership and internal reforms at the CIA. However, a number of 
critical problems were revealed by the Ames case that do require 
legislative remedies.
  Shortly after the Ames case came to light in February, I joined with 
Chairman DeConcini, who, to his credit, has worked relentlessly on this 
legislation against considerable opposition from the administration, in 
introducing legislation to improve the counterintelligence and security 
posture of the U.S. intelligence community. Our legislation--which was 
incorporated in the pending conference report--provides valuable tools 
for deterring espionage activities and detecting violations when 
deterrence fails.
  Unlike the spies of the 1940's, 1950's, and 1960's who were primarily 
motivated by ideology, today's turncoats betray this great Nation for 
money. With this in mind, the DeConcini-Warner bill focuses on the 
financial activities of employees with access to classified 
information.
  The legislation requires all employees who are granted a security 
clearance to consent--in writing--to Government access to their 
financial and travel records. In addition, those employees with access 
to particularly sensitive information would be required to file 
financial disclosure reports. We leave it to the President's discretion 
to determine which categories of employees would be required to file 
such financial disclosure forms, and how often those forms would have 
to be filed.
  I know some have voiced concern about this legislation due to 
concerns about the right to privacy of the Government employees who 
would be affected. I believe that Government employees who are trusted 
with the Nation's most vital intelligence information must be willing 
to accept certain personal disclosures as a condition of employment. It 
is an issue that balances national security interests against one's 
rights to personal privacy.
  In an area as sensitive and critical as the Nation's security, the 
scales must tip in favor of protecting our Nation's secrets. Our 
legislation achieves that goal.
  Another issue we addressed in our counterintelligence legislation was 
the long-standing--and clearly documented--problem of lack of 
cooperation, over many years, between the CIA and the FBI in espionage 
cases. Our solutions engendered a great deal of controversy in the 
Senate, and outright opposition from the administration. 
Understandably, the executive branch believed the general doctrine of 
executive prerogative should control.

  The lack of effective cooperation between the CIA and FBI is not a 
new problem. This is an issue that has come before the Intelligence 
Committee in years past, and it is one that the CIA, for example, 
assured the committee--in 1986--had been resolved. Unfortunately, we 
find now that that was not the case then or now. This lack of 
cooperation has continued to lessen the effectiveness of espionage 
investigation, and contributed to delays of several years in making a 
legal case against Aldrich Ames.
  The administration believed that they could fix this problem with a 
new executive order--despite the fact that there have been no less than 
10 such good faith attempts since 1947 to find a solution. We believed 
that legislation was necessary, convinced the conference, and now this 
will go to the President.
  Our bill establishes a mandatory requirement for all agencies and 
departments to immediately notify the FBI when they have reason to 
believe that classified information has been compromised. In turn, we 
place a reciprocal requirement on the FBI to consult with affected 
departments and agencies during the course of espionage investigations. 
While Director Woolsey vigorously opposed a legislative solution, he 
did make important suggestions, as did Senator Warner, in the final 
draft.
  From this point forward we expect the FBI to be alerted to possible 
espionage cases at the very outset so that their investigative 
expertise can be brought to bear at the earliest opportunity.
  The Ames case prompted me to pursue the need for an independent, 
objective, top to bottom review of the roles and capabilities of the 
intelligence community in the post-cold-war world.
  As far back as May, I sent a letter to President Clinton proposing 
such a Presidential commission to examine the roles and missions of our 
intelligence agencies, particularly the CIA. At the time I first raised 
the idea of a commission, there was widespread opposition, both from 
the administration and my Senate colleagues.
  It has been a long uphill struggle, but gradually the idea of a 
commission for the intelligence community gained support in the 
Congress. When the Intelligence authorization bill came to the Senate 
floor in August, my commission amendment passed 99-0. I am pleased to 
report that despite continuing administration opposition, the 
conference report before you does indeed contain the Warner amendment 
on a Presidential commission. I want to acknowledge the strong support 
I received from Senator Graham, who made valuable additions, and to 
Chairman DeConcini.

  The commission established by this measure will consist of 17 
members--9 appointed by the President and 8 by the congressional 
leadership. In order to ensure objectivity, the staff of the commission 
will be drawn almost entirely from outside of the intelligence 
community.
  The commission will have a broad mandate to examine the activities 
and capabilities of the intelligence community--the legislation lists 
19 specific areas for review. The commission is to make its final 
report to the Congress no later than March 1, 1996. I believe that a 
truly independent and objective assessment by this commission will 
validate the need for intelligence activities to support senior 
policymakers and the U.S. military. At the same time, the commission 
may well recommend changes in priorities, organization, or the 
allocation of resources. It is my hope, however, that at the end of the 
process, the public will have renewed confidence that the activities 
and funding levels of the intelligence community merit this support in 
this ever changing world. It is not becoming a safer place.
  In closing, I would like to pay tribute to my co-chairman, Senator 
DeConcini, who has made an important contribution to the security of 
this country with this legislation. He and I have worked together from 
the beginning, and never once did partisanship interfere. We consulted 
closely, as two Americans with the best interests of their country at 
heart, and I am very proud of the result.
  I would also like to thank our excellent professional staff, Judy 
Ansley, Chris Mellon, Norm Bradley, Tim Carlsgaard, Britt Snider, Mary 
Sturtevant, Pat Hanback, and others, for their tireless work on this 
legislation. They made vital contributions to this process and we are 
fortunate to have them on the committee staff.
  The conference report was agreed to.

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