FBI Official's Congressional Testimony Was Inaccurate Because He 
Failed to Present Certain Information That Had Been Made	 
Available to Him About the Wen Ho Lee Investigation (28-JUN-01,  
GAO-01-869R).							 
								 
In this report, GAO reviews certain issues relating to		 
information the Federal Bureau of Investigation (FBI) provided to
Congress regarding FBI's investigation of Wen Ho Lee, a scientist
formerly employed at the Los Alamos National Laboratory.	 
Specifically, GAO focused its investigation on determining	 
whether the congressional testimony of Assistant Director Neil J.
Gallagher of the FBI's National Security Committee was false or  
purposely misleading. GAO found that the portion of Mr. 	 
Gallagher's congressional testimony before the Senate Committee  
on Governmental Affairs in which he expressed full confidence in 
an administrative inquiry conducted by the Department of Energy  
was inaccurate and misleading. Mr. Gallagher had ample		 
opportunity to know and should have known that the FBI's	 
Albuquerque Field Office had concerns about the administrative	 
inquiry. Although GAO determined that Mr. Gallagher's testimony  
was inaccurate, GAO was unable to determine whether he		 
intentionally misled the Committee.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-869R					        
    ACCNO:   A01309						        
  TITLE:     FBI Official's Congressional Testimony Was Inaccurate    
             Because He Failed to Present Certain Information That Had Been   
             Made Available to Him About the Wen Ho Lee Investigation         
     DATE:   06/28/2001 
  SUBJECT:   Investigations into federal agencies		 
	     Perjury						 

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GAO-01-869R
     
GAO- 01- 869R FBI Official?s Congressional Testimony Was Inaccurate United
States General Accounting Office

Washington, DC 20548

June 28, 2001 The Honorable Arlen Specter The Honorable Charles E. Grassley
The Honorable Robert G. Torricelli United States Senate

Subject: FBI Official?s Congressional Testimony Was Inaccurate Because He
Failed to Present Certain Information That Had Been Made Available to Him
About the Wen Ho Lee Investigation

This letter responds to your request that we investigate certain issues
relating to information the Federal Bureau of Investigation (FBI) provided
to the Congress regarding the FBI?s investigation of Wen Ho Lee, a scientist
formerly employed at the Los Alamos National Laboratory. In subsequent
discussions with your staffs, we were requested to focus our investigation
on determining whether the congressional testimony of Assistant Director
Neil J. Gallagher of the FBI?s National Security Division was false or
purposely misleading. Mr. Gallagher testified before the Senate Committee on
Governmental Affairs in June 1999 and the Subcommittee on Administrative
Oversight and the Courts, Senate Committee on the Judiciary, in October 1999
regarding the FBI?s investigation of Wen Ho Lee.

We provided classified briefings on the results of our investigation to
Senator Specter?s staff in February 2001 and to the majority and minority
staffs of the Senate Select Committee on Intelligence in March 2001.
Subsequently, you requested that we provide the results of our investigation
to you in an unclassified letter. On June 8, 2001, we provided an
unclassified briefing to the majority staff of the Senate Committee on the
Judiciary.

We interviewed Mr. Gallagher regarding the testimony he gave to the Congress
in 1999. We then interviewed knowledgeable senior officials of the FBI?s
National Security Division and Albuquerque Field Office and officials of the
Department of Justice?s Office of Intelligence Policy and Review and Office
of the Deputy Attorney General about Mr. Gallagher?s testimony. We also
reviewed the hearing records and numerous classified and unclassified
documents provided to the Congress by the Department of Justice, FBI, and
Department of Energy. We conducted our investigation from September 2000
through February 2001 in accordance with investigative standards established
by the President?s Council on Integrity and Efficiency.

In brief, we found that the portion of Mr. Gallagher?s congressional
testimony before the Senate Committee on Governmental Affairs in which he
expressed full confidence

GAO- 01- 869R FBI Official?s Congressional Testimony Was Inaccurate Page 2
in an Administrative Inquiry conducted by Energy 1 was inaccurate and
misleading.

Prior to his congressional testimony, Mr. Gallagher had ample opportunity to
know and should have known that the FBI?s Albuquerque Field Office had
concerns about the Administrative Inquiry. Although we determined that Mr.
Gallagher?s testimony was inaccurate, we were unable to determine whether he
intentionally misled the Committee. Mr. Gallagher told us that he did not
lie or purposely mislead the Committee, but that he inadvertently gave
incomplete testimony. Justice and FBI officials we talked with generally
corroborated Mr. Gallagher?s statements to us. However, we were unable to
resolve an area of disagreement between Mr. Gallagher and the Counsel for
Justice?s Office of Intelligence Policy and Review regarding a separate
matter concerning the production of documents by the FBI to the Attorney
General. Mr. Gallagher and the Counsel have different recollections of the
reasons Mr. Gallagher gave the Counsel for removing references to certain
FBI documents from the final version of a FBI electronic communication, a
copy of which Mr. Gallagher provided to the Congress.

Mr. Gallagher told us that he did not lie or purposely mislead the Senate
Committee on Governmental Affairs, but that he inadvertently gave incomplete
testimony before the Committee in June 1999. In his testimony before the
Committee, Mr. Gallagher expressed his full confidence in Energy?s
Administrative Inquiry, stating that the inquiry made a compelling case for
focusing the W- 88 espionage investigation at the Los Alamos National
Laboratory to include Wen Ho Lee. Mr. Gallagher said that following his
testimony, he learned that as early as November 1998, the FBI?s Albuquerque
Field Office had serious concerns about the analysis made during the 1996
Administrative Inquiry. These concerns were detailed in a January 22, 1999,
electronic communication from the field office to FBI headquarters 2 that,
according to Mr. Gallagher, was included in a briefing book prepared for him
prior to his testimony. In a November 10, 1999, letter to the Chairman,
Senate Committee on Governmental Affairs, Mr. Gallagher explained that based
on additional facts that had come to his attention, after his June 1999
testimony, he provided additional facts in order to have the record complete
and accurate.

Mr. Gallagher added that he failed to read the briefing book in its entirety
because he had previously received numerous briefings on this investigation
and believed that he knew the facts relevant to the Committee?s inquiry that
day. He told us that he was aware in January 1999 that Wen Ho Lee had
reportedly passed the Energyadministered polygraph examination and that the
FBI?s Albuquerque Field Office wanted to eliminate Wen Ho Lee as a suspect.
At that time, he was also aware that the FBI and Energy were jointly
considering expanding the Administrative Inquiry to include additional
suspects. However, he subsequently learned that Wen Ho Lee had failed a FBI
polygraph examination in February 1999 and that following that failure, Wen
Ho Lee was again considered a suspect in the W- 88 investigation.

1 In 1996, Energy completed an Administrative Inquiry, which (1) concluded
that classified information concerning the W- 88 warhead was most likely
compromised at the Los Alamos National Laboratory and (2) identified Wen Ho
Lee and 11 others as suspects in espionage. Mr. Gallagher told us that the
Administrative Inquiry was the responsibility of Energy and that the FBI
only provided assistance. 2 The January 22, 1999, electronic communication
from the Albuquerque Field Office to FBI

headquarters has been classified by the FBI.

GAO- 01- 869R FBI Official?s Congressional Testimony Was Inaccurate Page 3
Mr. Gallagher concluded by saying that he now regrets not reading all the
material.

He said that had he read the January 22, 1999, electronic communication
before he testified, his testimony would have been different. We examined
the briefing book prepared for Mr. Gallagher and determined that it included
a copy of the January 22, 1999, electronic communication.

During Mr. Gallagher?s October 1999 testimony before the Subcommittee on
Administrative Oversight and the Courts, a January 29, 1999, memorandum to
the Director of the FBI was discussed. The memorandum, which was signed by
Mr. Gallagher, contains a brief summary of the January 22, 1999, electronic
communication and noted that Energy?s 1996 Administrative Inquiry needed to
be expanded to include suspects in addition to those already being
investigated. Mr. Gallagher told us that this memorandum was written by a
subordinate and forwarded to him through the chain of command. He said he
reviewed and signed the memorandum and sent it to the Director. We confirmed
that Mr. Gallagher was not the author of this memorandum. Mr. Gallagher also
said that the Subcommittee was incorrect in its characterization of the
memorandum as an ?executive summary? of the Wen Ho Lee investigation that
Mr. Gallagher had authored. He said the memorandum is in fact a ?note? to
the Director, which is routine in big cases. He also said that the statement
in the memorandum regarding the need to expand the Administrative Inquiry
did not mean that the inquiry was flawed.

We also showed Mr. Gallagher a copy of a February 22, 1999, memorandum sent
to John Dion, an official in Justice?s Internal Security Section, which
transmitted various FBI documents, including the January 22, 1999,
electronic communication from the FBI?s Albuquerque Field Office. The
memorandum also noted that Wen Ho Lee had failed a polygraph examination
administered by the FBI in early February 1999. This memorandum, on which
the initials ?NJG? are written near Mr. Gallagher?s name, was discussed at
the October 1999 hearing before the Subcommittee on Administrative Oversight
and the Courts. Mr. Gallagher told us that he had not seen this memorandum
until it was shown to him during his testimony before the Subcommittee. He
said that, in addition to telling the Subcommittee that he had not seen the
memorandum, he testified that he did not write the initials that appear next
to his name and that he did not know who authored the document. Mr.
Gallagher told us that he subsequently learned that a FBI National Security
Division unit chief authored the memorandum and wrote the initials. He added
that transmittal memorandums such as the one discussed at the hearing are
routine and that even when his name appears as the author on such
memorandums, he, following standard FBI practice, ordinarily does not see
them. We confirmed that the National Security Division unit chief authored
the memorandum and wrote Mr. Gallagher?s initials in accordance with FBI
procedures.

Mr. Gallagher told us that prior to his testimony in June 1999, he did not
know that any FBI unit had raised concerns about the analysis made during
the Administrative Inquiry. Mr. Gallagher also said he first learned about
the January 22, 1999, electronic communication in late June or early July
1999, after his June 1999 congressional testimony, during a conversation
with the Special Agent in Charge of the Albuquerque Field Office. According
to Mr. Gallagher, the Special Agent in Charge informed him that the
Albuquerque Field Office reported its concerns about the Administrative

GAO- 01- 869R FBI Official?s Congressional Testimony Was Inaccurate Page 4
Inquiry in a January 22, 1999, electronic communication. Mr. Gallagher added
that he

then obtained a copy of this electronic communication and reviewed it. Mr.
Gallagher told us that in September 1999 after it became evident to him that
there were problems with the Administrative Inquiry, he spoke to the FBI
agent assigned to assist Energy in conducting the Administrative Inquiry. He
said that the agent told him that he made written changes to a draft of the
Administrative Inquiry in 1996 and suggested a more aggressive investigation
of the original information. Mr. Gallagher told us that as a result of this
conversation he determined that the agent?s suggestions were ignored. He
also learned that the agent did not see the final version of the
Administrative Inquiry because he was no longer involved with the case after
his review of the draft.

Other officials from the FBI?s Albuquerque Field Office and National
Security Division told us that there was a general belief that (1) the
Administrative Inquiry was weak and (2) further investigation was needed to
determine the extent that the information compromised was disseminated.
National Security Division officials also said that it would be unlikely for
Mr. Gallagher to have seen the January 22, 1999, electronic communication at
the time it was received at FBI headquarters. One of these officials also
told us that the January 22, 1999, electronic communication and the January
29, 1999, memorandum became less important after Wen Ho Lee failed the FBI
polygraph in February 1999.

The Special Agent in Charge of the FBI?s Albuquerque Field Office confirmed
that he had a conversation with Mr. Gallagher during which the January 22,
1999, electronic communication was discussed. He said he was ?shocked? when
Mr. Gallagher told him that he had not seen the document and was not aware
that there were concerns about the Administrative Inquiry.

With respect to the separate issue concerning the production of documents by
the FBI to the Attorney General, Mr. Gallagher told us that after his talk
with the Special Agent in Charge, he requested an outline of FBI Albuquerque
Office concerns with Energy?s Administrative Inquiry. Mr. Gallagher said he
reviewed and made changes to two early drafts of this document before it was
finalized as an Albuquerque Field Office electronic communication to FBI
headquarters on September 3, 1999. Mr. Gallagher said that, among other
things, he removed references in the drafts to the January 22, 1999,
Albuquerque Field Office electronic communication as well as other documents
from the November and December 1998 time period. He told us that he removed
these references because he wanted to make a nonthreatening challenge to
Energy and did not want to unnecessarily upset agency officials when they
learned that the FBI was officially questioning the Administrative Inquiry.
He also said he believed that the report became more focused with the
references removed. Furthermore, Mr. Gallagher said that after reading the
September 3, 1999, electronic communication, which raised questions about
the Administrative Inquiry, Energy?s Chief of Counterintelligence was
nevertheless very upset with both him and the FBI.

According to the Counsel for Justice?s Office of Intelligence Policy and
Review, Mr. Gallagher told her during a September 17, 1999, telephone
conversation that he removed the references to specific documents from the
November and December

GAO- 01- 869R FBI Official?s Congressional Testimony Was Inaccurate Page 5
1998 time period from the drafts of the September 3, 1999, electronic
communication.

According to the Counsel, Mr. Gallagher explained to her that these
references were removed because they were ?errors in the draft? and did not
exist any longer. Mr. Gallagher told us that he recalled having a
conversation with the Counsel in September 1999 concerning the drafts and
sent copies of them to the Counsel. According to Mr. Gallagher, (1) he has
no recollection of a September 17, 1999, telephone conversation with the
Counsel, (2) he did not make the statement that the Counsel attributes to
him, and (3) the Counsel must have misunderstood him.

Mr. Gallagher?s Comments

Mr. Gallagher reviewed a draft of this letter and said that he generally
agreed with the facts presented. He told us that he believes that his
testimony before the Senate Governmental Affairs Committee in June 1999 was
neither inaccurate nor misleading, but, rather, incomplete. Mr. Gallagher
suggested language changes and, where appropriate, we have made those
changes.

- - - - We are sending copies of this letter to the Attorney General,
Secretary of Energy, Director of the FBI, and interested congressional
committees. Copies of this letter will also be made available to others on
request. The letter will also be available at www. gao. gov. If you have any
questions, please contact me at (202) 512- 7455 or Assistant Director
Patrick F. Sullivan at (202) 512- 6722. Senior Special Agent Thomas Wiley,
Senior Analyst Shelia James, and Senior Attorney Barry Shillito made
significant contributions to this investigation and letter.

Robert H. Hast Managing Director Office of Special Investigations

(600773)
*** End of document. ***