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[Senate Hearing 106-1013]
[From the U.S. Government Publishing Office]

                                                       S. Hrg. 106-1013

                           THE PETER LEE CASE

=======================================================================

                                HEARINGS

                               before the

        SUBCOMMITTEE ON ADMINISTRATIVE OVERSIGHT AND THE COURTS

                                 of the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                 MARCH 29, APRIL 5, and APRIL 12, 2000

                               __________

                          Serial No. J-106-73

                               __________

         Printed for the use of the Committee on the Judiciary

                   U.S. GOVERNMENT PRINTING OFFICE
73-205                     WASHINGTON : 2001

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                       COMMITTEE ON THE JUDICIARY

                     ORRIN G. HATCH, Utah, Chairman
STROM THURMOND, South Carolina       PATRICK J. LEAHY, Vermont
CHARLES E. GRASSLEY, Iowa            EDWARD M. KENNEDY, Massachusetts
ARLEN SPECTER, Pennsylvania          JOSEPH R. BIDEN, Jr., Delaware
JON KYL, Arizona                     HERBERT KOHL, Wisconsin
MIKE DeWINE, Ohio                    DIANNE FEINSTEIN, California
JOHN ASHCROFT, Missouri              RUSSELL D. FEINGOLD, Wisconsin
SPENCER ABRAHAM, Michigan            ROBERT G. TORRICELLI, New Jersey
JEFF SESSIONS, Alabama               CHARLES E. SCHUMER, New York
BOB SMITH, New Hampshire
             Manus Cooney, Chief Counsel and Staff Director
                  Bruce Cohen, Minority Chief Counsel
                                 ------                                

        Subcommittee on Administrative Oversight and the Courts

                  CHARLES E. GRASSLEY, Iowa, Chairman
JEFF SESSIONS, Alabama               ROBERT G. TORRICELLI, New Jersey
STROM THURMOND, South Carolina       RUSSELL D. FEINGOLD, Wisconsin
SPENCER ABRAHAM, Michigan            CHARLES E. SCHUMER, New York
                       Kolan Davis, Chief Counsel
                 Matt Tanielian, Minority Chief Counsel
                            C O N T E N T S

                              ----------                              

                       WEDNESDAY, MARCH 29, 2000
                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Grassley, Hon. Charles E., a U.S. Senator from the State of Iowa.     2
Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama....     4
Specter, Hon. Arlen, a U.S. Senator from the State of 
  Pennsylvania...................................................     1

                               WITNESSES

Cook, Thomas L., Nonproliferation and International Security 
  Division, Los Alamos National Laboratory, Los Alamos, NM.......    25
Preston, Stephen W., General Counsel, Department of the Navy, 
  Washington, DC.................................................    33
Sayner, Daniel K., Assistant Special Agent-in-Charge, Los Angeles 
  Division, Federal Bureau of Investigation, Los Angeles, CA.....     5
Schuster, John G., Jr., Branch Head, Submarine Security and 
  Technology, Department of the Navy, Washington, DC.............    44
Twogood, Richard, Former Program Leader, Imaging and Detection 
  Program, Lawrence Livermore National Laboratory, Livermore, CA.    22

                        WEDNESDAY, APRIL 5, 2000
                    STATEMENTS OF COMMITTEE MEMBERS

Grassley, Hon. Charles E., a U.S. Senator from the State of Iowa.    60
Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama....    62
Specter, Hon. Arlen, a U.S. Senator from the State of 
  Pennsylvania...................................................    55
Thurmond, Hon. Strom, a U.S. Senator from the State of South 
  Carolina.......................................................    61
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont.    64

                               WITNESSES

Shapiro, Jonathan S., Former Assistant U.S. Attorney, Central 
  District of California, Los Angeles, CA........................    69
Robinson, James K., Assistant Attorney General, Criminal 
  Division, U.S. Department of Justice, Washington, DC; 
  accompanied John C. Keeney, Deputy Assistant Attorney General, 
  Criminal Division, U.S. Department of Justice, Washington, DC..   106

                       WEDNESDAY, APRIL 12, 2000
                     STATEMENT OF COMMITTEE MEMBER

Specter, Hon. Arlen, a U.S. Senator from the State of 
  Pennsylvania...................................................   111

                               WITNESSES

Dion, John, Acting Chief, Internal Security Section, Criminal 
  Division, U.S. Department of Justice; accompanied by Bruce C. 
  Swartz, Deputy Assistant Attorney General, Criminal Division, 
  U.S. Department of Justice, Washington, DC.....................   155
Keeney, John C., Principal Deputy Assistant Attorney General, 
  Criminal Division, U.S. Department of Justice, Washington, DC..   112
Liebman, Michael, Line Attorney, Internal Security Section, 
  Criminal Division, U.S. Department of Justice; accompanied by 
  Bruce C. Swartz, Deputy Assistant Attorney General Criminal 
  Division, U.S. Department of Justice, Washington, DC...........   123

                       SUBMISSIONS FOR THE RECORD

Beach, Kenneth L., letter to Terry J. Hatter, Judge, U.S. 
  District Court, Los Angeles, CA................................   300
Chesnut, Robert C., former Assistant U.S. Attorney, Santa Cruz, 
  CA, letter.....................................................   113
CRS Report for Congress, Investigative Oversight: An Introduction 
  to the Law, Practice and Procedure of Congressional Inquiry....   171
Department of Energy documents ``5'', ``6'', and ``7''...........   100
Department of the Navy memorandum................................    97
Exhibit 1, Declaration of Technical Damage to United States 
  National Security Assessed in Support of United States v. Peter 
  Hoong-Yee Lee..................................................    26
Exhibit 2, Impact Statement......................................    28
Exhibit 3, Memorandum for General Counsel of the Department of 
  Defense........................................................    34
Exhibit 4, Letter from Stephen W. Preston, General Counsel of the 
  Navy...........................................................    34
Exhibit 5, Memorandum for Request for Classification Guidance (U)    44
FBI document ``Royal Tourist'', November 25, 1997................    74
Henderson, James D., Attorney for Defendant, Defendant's 
  Sentencing Memorandum, March 26, 1998..........................   345
Honigman, Steven S., memorandum to John Dion, Acting Chief 
  Internal Security Section, Criminal Division, Department of 
  Justice........................................................   255
Holt, Daniel C., Studio Director, South Bay Studio, Recording for 
  the Blind and Dyslexic, Los Angeles, CA, letter................   381
Industrial Security Manual for Safeguarding Classified 
  Information, Department of Defense.............................   243
Kulla, Donna, Program Manager, Advanced Sensors Applications 
  Program, Intelligence Systems Support Office...................    52
Latta, Robert M., Chief Probation Officer, United States District 
  Court, Central District of California, Los Angeles, CA, letter, 
  December 17, 1998..............................................   378
Lawrence Livermore National Laboratory Website, Radar Ocean 
  Imaging........................................................   128
Lee, Peter, letter to Terry J. Hatter, Judge, U.S. District 
  Court, Los Angeles, CA, January 12, 1998.......................   278
Linford, Gary J., letter to Terry J. Hatter, Judge, U.S. District 
  Court, Los Angeles, CA, March 9, 1998..........................   299
List of Committee Requests to the Department of Justice and the 
  Attorney General...............................................    57
Manella, Nora M., United States Attorney, Central District of 
  California, News Release, March 26, 1998.......................   292
New York Times, ``Reports Show Scientist Gave U.S. Radar Secrets 
  to Chinese''; Article, May 10, 1999............................   271
New York Times, ``An Earlier China Spy Case Points Up Post-Cold 
  War Ambiguities'', article, March 13, 1999.....................   276
``OPCA Front Office'' documents 1, 2, and 3......................    91
Raben, Robert, Assistant Attorney General, Office of Legislative 
  Affairs, U.S. Department of Justice, letter, July 17, 2000.....   382
Ruby, Cheryl, Acting Assistant Secretary of Defense, Department 
  of Defense, memorandum, ``Possible Espionage Arrest Update''...   256
Shapiro, Jonathan S., Assistant United States Attorney, United 
  States District Court for the Central District of California:
    filing of Plea Agreement, December 5, 1997...................   257
    Government's Response to Defendant's Position with Regard to 
      Sentencing Factors.........................................   365
    Judgment and Committment/Probation Order.....................   301
    Memorandum of Points and Authorities and attachment..........   284
Smith, Dennis A., Assistant Studio Director, South Bay Studio, 
  Recording for the Blind and Dyslexic, Los Angeles, CA, letter, 
  August 16, 1999................................................   380
Storm, Erik: letters to Terry J. Hatter, Judge, U.S. District 
  Court, Los Angeles, CA:
    January 31, 1998.............................................   279
    March 18, 1998...............................................   295
Thomson, Jeff:
    letter to Peter Lee..........................................   375
    letter to Terry J. Hatter, Judge, U.S. District Court, Los 
      Angeles, CA, September 11, 1998............................   376
Twogood, Richard E., Lawrence Livermore National Laboratory, 
  statement on the Independent, Non-Acoustic, Anti-Submarine 
  Warfare Program................................................   130
Washington Post ``Taiwan-Born Scientist Passed Defense Data''; 
  article, December 12, 1997.....................................   269
Wilson, Wayne, Director, Office of Technology and Evaluation, 
  Office of the Deputy Assistant Secretary of Defense, Department 
  of Defense.....................................................    52
Zaccaro, Beth E., Offical Court Reporter, United States District 
  Court, Central District of California, Western Division, 
  Transcript of Proceedings, United States of America v. Peter 
  Lee, March 26, 1998............................................   304

 
                           THE PETER LEE CASE

                              ----------                              

                       WEDNESDAY, MARCH 29, 2000

                           U.S. Senate,    
       Subcommittee on Administrative Oversight    
                                        and the Courts,    
                                Committee on the Judiciary,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:30 a.m., in 
room SD-226, Dirksen Senate Office Building, Hon. Arlen Specter 
presiding.
    Also present: Senators Grassley, Thurmond, Sessions, and 
Torricelli.

 OPENING STATEMENT OF HON. ARLEN SPECTER, A U.S. SENATOR FROM 
                   THE STATE OF PENNSYLVANIA

    Senator Specter. Good morning, ladies and gentlemen. The 
hour of 9:30 a.m. having arrived, the subcommittee will now 
proceed. Our hearing today is a continuation of oversight on 
the activities of the Department of Justice and related Federal 
departments and agencies, and we are continuing to take a look 
at activities which relate to alleged espionage efforts by the 
People's Republic of China as those efforts relate to the PRC's 
efforts to become a nuclear power.
    In conjunction with the technology transfers, there is an 
apparent development of this kind of nuclear power by China, 
and our inquiry is to make a determination as to how effective 
the Department of Justice and related Federal departments and 
agencies have been in dealing with that issue.
    The subject matter of today's hearing is Dr. Peter Lee, who 
confessed to two major breaches of security, one involving the 
disclosure of a hohlraum, which is a very important aspect of 
nuclear power for nuclear weapons, in 1985, when he made 
disclosures to key scientists in the People's Republic of 
China, and later disclosures by Dr. Peter Lee relating to the 
physics of submarine detection.
    We will be looking at a series of questions on the handling 
of this investigation. One of our inquiries will be directed to 
finding out why there was not a renewal of warrants under the 
Foreign Intelligence Surveillance Act, where a renewal was not 
made by the Department of Justice at a time when there was very 
substantial information about Dr. Lee's suspect activities.
    We will inquire further to determine why the Department of 
Defense, the Navy, took a stand in issuing a memorandum before 
there was a damage assessment. The memorandum, according to the 
Department of Justice, caused very substantial so-called Brady 
problems on providing what could have been exculpatory evidence 
on Dr. Lee's defense, and then a determination as to why the 
plea bargain was entered into before there was a full damage 
assessment as to what Dr. Lee had disclosed on the submarine 
detection issue.
    There is a very serious question as to whether the 
assistant U.S. attorney in charge of the case knew that there 
had been authorization for the prosecution of Dr. Lee under 
section 794 which contains the potential of the death penalty 
and the alternative of a life sentence. I am not saying that 
Dr. Lee would have been subjected to that, but that he could 
have been charged. But according to some information, the 
assistant U.S. attorney was not advised of that.
    And then the sentencing occurred without the judge having 
knowledge of what was in the pre-sentence report--pardon me--
the pre-sentence report did not contain the damage assessment 
and the sentence was imposed where the judge had not been 
informed of the damage assessment. And where Dr. Lee could have 
received a very stiff penalty under the applicable laws, he 
ended up with community service and a fine and probation, and 
the Government recommendation was only for a short period of 
incarceration as opposed to asking for anything more 
substantial than that, another point that the subcommittee will 
be inquiring into.
    That is a very brief statement of some of the issues we 
will be looking at, so that the witnesses who are here today 
can direct their attention to those points of inquiry.
    We are joined by the distinguished chairman of the 
subcommittee, Senator Grassley. Again, let me publicly 
acknowledge my thanks to Senator Grassley for his willingness 
to cooperate with the subcommittee on this inquiry. We have 
been colleagues since January 3, 1981, and he handed me the 
gavel for the limited purpose of conducting this oversight on 
the Department of Justice.
    Senator Grassley.

STATEMENT OF HON. CHARLES E. GRASSLEY, A U.S. SENATOR FROM THE 
                         STATE OF IOWA

    Senator Grassley. Well, I am proud to be associated with 
your leadership in this area because you have a fine record 
both before coming to the Congress and after coming to the 
Congress of getting to the truth. So I thank you very much for 
taking on the additional responsibilities.
    I would just like to say a few general comments before you 
start your testimony, if I could, Senator Specter, and that is 
that a lot of this work has had to be done behind closed doors, 
and that is justifiable when much of the information is 
classified. And that would be true whether it is Waco or 
whether it is Wen Ho Lee or whether it is this case that we are 
looking at today, and I hope the public understands that and 
you would expect it of issues that are of this importance.
    There seems to be a common thread throughout each of these 
cases, and that thread is something that we can talk about so 
that the public will be informed. We will be seeing that thread 
pop up during today's hearing. Our investigation into these 
cases has shown a pattern of failed coordination between 
Government agencies.
    For whatever reason, agencies, it seems to me, have done a 
poor job of communicating with each other. It could be a turf 
battle, it could be negligence, or it could be outright 
stonewalling, and I would give you a couple of examples. This 
morning, I think we are going to be treated to what I believe 
is a gross lack of communication between the Navy and the FBI 
and the Justice Department in this Peter Lee case.
    The FBI and the Department of Justice didn't provide enough 
information that it had to the Navy so that the Navy could do a 
proper damage assessment caused by Dr. Lee's disclosures. The 
Navy, in turn, it seems to me, did nothing to proactively seek 
out more information that they should have known existed. And a 
vaguely worded communication from the Navy about the damage 
caused by Peter Lee probably contributed to the Department of 
Justice's reluctance to go tougher on Dr. Lee. The Department 
of Justice did nothing to seek clarification of the vagueness 
of that memo.
    To me, this is a total breakdown of communication and 
coordination among agencies charged with protecting our 
national security. In the Wen Ho Lee case, we witnessed the 
brazen withholding of documents from both Congress and the 
Justice Department by the Federal Bureau of Investigation. 
Those documents had a direct bearing on who fell down on the 
job when the Department of Justice turned back a FISAwarrant 
application from the FBI. The withholding of those documents and the 
later discovery makes it look like the FBI withheld important 
information from the Congress and the Department of Justice to hide its 
own mistakes in that case.
    This matter is still under investigation by the task force, 
and I would just remind the Federal Bureau of Investigation 
that they are neither above constitutionally-mandated 
congressional oversight nor are they above accountability from 
the Department of Justice. Stonewalling by the agency continues 
to undermine public confidence in Federal law enforcement.
    Now, these are just two significant examples that we have 
uncovered so far of failures of coordination and cooperation 
between Government agencies and between branches of Government. 
It is something that I hope the subcommittee's efforts can and 
will address. I believe it is an area that the chairman and the 
ranking member, meaning Senator Specter and Senator Torricelli, 
have shown leadership in, particularly in the crafting of the 
legislation that builds a consensus on how to fix these 
problems that we have uncovered. So I look forward to 
continuing to work with my colleagues as we learn these lessons 
and we seek corrective action.
    Thank you.
    Senator Specter. Thank you very much, Senator Grassley.
    We are joined by our distinguished colleague, Senator 
Sessions, who brings to this subcommittee's work a very 
extensive background in law enforcement as U.S. Attorney, 
attorney general, and a very competent lawyer.
    Senator Sessions.

STATEMENT OF HON. JEFF SESSIONS, A U.S. SENATOR FROM THE STATE 
                           OF ALABAMA

    Senator Sessions. Thank you, Senator Specter. I won't take 
but just a minute to say that this case strikes me as too much 
like a number of cases I have seen over the years as a Federal 
prosecutor when agencies and departments whose employees and 
contractors are under supervision would just as soon not have 
the case go to trial. It is just not a pleasant experience for 
them to have to have their employees come forth and testify and 
it oftentimes could result in some embarrassment to the 
supervisors and to the agency involved. I don't know if that is 
the matter here or not, but that is probably one aspect of it.
    I am also troubled that the Department of Justice 
apparently has not had experienced litigators making these 
decisions. Too often, those who haven't tried a lot of cases 
take counsel of their fears. They see the problems and 
difficulties and lose sight of the moral imperative that if 
someone is transmitting important secrets of the United States 
to a foreign power, that is a matter of the most highest 
national importance and they ought to be prosecuted vigorously 
and effectively. And if they promise to cooperate and testify 
truthfully, and if they flunk polygraph tests that say they are 
not cooperating truthfully, then the Government should not give 
them a lenient sentence.
    Frankly, I think we need to have some people looking at the 
death penalty for providing some of the breaches of security we 
have seen in this country. I think we need to make sure that 
everybody involved in laboratories and top-secret agencies of 
this Government understand completely that we do not accept 
this kind of behavior. It is not a college campus mentality 
that people who violate the law will go to jail for long 
periods of time.
    I think this conclusion of this case is insufficient, in my 
opinion, and I am interested in trying to figure out what 
happened. And thank you for providing the leadership on the 
issue, Senator Specter.
    Senator Specter. Thank you very much, Senator Sessions.
    We are joined by the President Pro Tempore of the U.S. 
Senate, former chairman of the full committee.
    Senator Thurmond, do you care to make an opening statement?
    Senator Thurmond. You have had enough talk. I don't think 
it is necessary.
    Senator Specter. That is the shortest opening statement in 
the history of the Judiciary Committee.
    We have now been joined by our very distinguished ranking 
member, Senator Torricelli, whom we give the floor to at this 
time.
    Senator Torricelli. I would like to break Senator 
Thurmond's record. No.
    Senator Specter. It looks like it is a tie to me.
    We have a distinguished panel of witnesses today from the 
Department of Defense, the Department of Energy, the Department 
of Justice, including the FBI. And our lead witness to give us 
an outline as to the activities of Dr. Peter Lee will be 
Assistant Special-Agent-in-Charge of the Los Angeles Field 
Office, Mr. Dan Sayner.
    Our witnesses are Mr. Stephen Preston, Mr. John G. 
Schuster, Mr. Dan Sayner, Dr. Richard Twogood, and Dr. Thomas 
Cook. And before we start the testimony, if you gentlemen will 
all rise for the administration of the oath?
    Do each of you solemnly swear that the testimony and 
information that you will provide before this subcommittee of 
the Judiciary Committee of the United States Senate will be the 
truth, the whole truth, and nothing but the truth, so help you 
God?
    Mr. Sayner. I do.
    Dr. Twogood. I do.
    Mr. Cook. I do.
    Mr. Preston. I do.
    Mr. Schuster. I do.
    Senator Specter. May the record show that each of the 
witnesses has responded ``I do.''
    Mr. Sayner, would you state your full name and title, 
please?

   STATEMENT OF DANIEL K. SAYNER, ASSISTANT SPECIAL-AGENT-IN-
CHARGE, LOS ANGELES DIVISION, FEDERAL BUREAU OF INVESTIGATION, 
                        LOS ANGELES, CA

    Mr. Sayner. My name is Daniel K. Sayner. I am an Assistant 
Special-Agent-in-Charge of the Los Angeles Field Office of the 
Federal Bureau of Investigation.
    Senator Specter. And what role, if any, did you have on the 
investigation of Dr. Peter Lee?
    Mr. Sayner. I was the program manager for foreign 
counterintelligence, which includes espionage investigations.
    Senator Specter. And for what period of time did you hold 
that position?
    Mr. Sayner. From November 1996 to present.
    Senator Specter. So that your tenure encompassed the key 
portions of the FBI investigation of Dr. Lee?
    Mr. Sayner. Yes, sir.
    Senator Specter. OK; would you proceed to give a chronology 
of the FBI investigation of Dr. Lee?
    Mr. Sayner. I have an opening statement to go with that, 
sir.
    Senator Specter. You may proceed as you choose. All 
statements will be made a part of the record, but handle it in 
any way which is comfortable for you, Dr. Sayner.
    Mr. Sayner. Good morning, Mr. Chairman and members of the 
subcommittee. I am Daniel Sayner, currently Assistant Special-
Agent-in-Charge of the Los Angeles Division of the FBI. I am 
here this morning to discuss certain aspects of the foreign 
counterintelligence investigation of Peter Lee conducted by the 
Los Angeles Field Office.
    I would first like to provide the subcommittee with a brief 
description of my background. I joined the Bureau in 1982 as a 
special agent. I was assigned to Baltimore and Atlanta to work 
violent crimes, assigned to New York City from 1984 to 1988 in 
foreign counterintelligence, then to Washington, DC, as a 
headquarters supervisor in foreign counterintelligence for 2 
years. And then in Newark, New Jersey, from 1990 to 1995, I was 
in charge of the terrorism task force, and then for 1\1/2\ 
years organized crime and drug investigations, until I was 
assigned to the Los Angeles Division as Assistant Special-
Agent-in-Charge.
    While in Los Angeles, I also oversee other programs which 
would include civil rights, hate crimes matters, domestic 
terrorism, international terrorism, national infrastructure 
protection program, and foreign counterintelligence, and I had 
that responsibility to oversee in the Peter Lee case.
    Mr. Chairman, I would like to reaffirm the FBI's commitment 
to cooperate with the subcommittee in its important oversight 
mission. As you know, we have provided subcommittee staff with 
unprecedented access to our case files and to our personnel. 
Last month, subcommittee staff traveled to the Los Angeles FBI 
office, where they interviewed myself as well as Peter Lee case 
agents, Special Agent Gil Cordova, C-o-r-d-o-v-a, and Special 
Agent Serena Alston, A-l-s-t-o-n, and their supervisor----
    Senator Specter. It wasn't just the staff, it was me, too.
    Mr. Sayner. I am coming to that, sir. That was prior to 
your visit.
    And their supervisor, Special Agent James J. Smith. Several 
weeks later, Mr. Chairman, you also traveled to the Los Angeles 
FBI office to conduct on-the-record interviews of these FBI 
agents and others. At your request, we tape recorded and 
transcribed those interviews in order that you would have a 
record to utilize at hearings such as this.
    I am ready now to provide a chronology of the 
investigation.
    Senator Specter. Please proceed.
    Mr. Sayner. In April 1991, the Los Angeles Division opened 
its case on Peter Lee based on sensitive information. Shortly 
thereafter, in 1993, we elevated that case to a full 
investigation, and in February 1994 started technical 
surveillance on the subject.
    In May 1997, Peter Lee traveled to China, and in June 1997 
the FBI conducted a nonconfrontational interview of Peter Lee 
to discuss this trip to China. At that time, knowing before he 
had made the trip, it was concluded after the interview of 
Peter Lee that he lied to the FBI, stating that he engaged in 
no technical scientific discussions with the People's Republic 
of China, PRC, and that he paid for the trip himself, which was 
found to be not true.
    On August 5, 1997, the FBI again interviewed Lee and he 
admitted that he lied to his employer, TRW, on post-travel 
questionnaire about the purpose of his travel and about the 
contacts during the trip, but maintained at that point that he 
still paid for the trip.
    I can now go into a verbatim on the affidavit regarding the 
interviews that were conducted August 5 through October 7 
through 8, which also included his admissions to passing 
classified documents in 1985, Senator, if you wish.
    Senator Specter. Please do.
    Mr. Sayner. On August 5 and August 14, 1997, agents 
interviewed Peter Lee in a Santa Barbara, California, hotel 
room. During these interviews, Peter Lee confessed to the 
agents that he had knowingly lied on both his foreign travel 
form and post-travel questionnaire regarding the purpose of his 
trip to the PRC and his foreign national contacts during that 
trip.
    Peter Lee admitted that he traveled to the PRC with the 
intention of giving scientific lectures to the PRC scientists. 
In addition, Peter Lee admitted to agents that he lied when he 
said that he had not received requests from foreign nationals 
for technical information, and lied when he said that no 
attempts were made to persuade him into revealing or discussing 
classified information.
    Peter Lee admitted that he had received requests from 
foreign nationals for technical information, and attempts were 
made to persuade him into revealing and/or discussing 
classified information. Lee also admitted that he did not 
report personal contact with several PRC scientists January 
1993 and April 1994, when they visited the United States.
    In answer to specific questions, Peter Lee continued to 
claim that he had paid for his trip to the PRC with his own 
money. During the August 5, 1997, interview, Peter Lee agreed 
to voluntarily take a polygraph examination administered by the 
FBI. During the August 14, 1997, interview, the agents asked 
Peter Lee to provide them with any receipts which would verify 
that he paid for his May 1997 trip to the PRC.
    Based on the investigation, we were able to obtain 
information that Peter Lee did not indeed pay for those trips 
to the PRC and that the trips were paid by a scientist in the 
PRC. And in late August, Peter Leecontacted that scientist and 
requested him to provide receipts indicating that he had made that trip 
to the PRC, and asked him that those receipts contain his and his 
wife's name in English and that they were paid in cash.
    On September 3, 1997, Peter Lee then provided the agents of 
the FBI with copies of the hotel and airline receipts for his 
1997 May trip to the PRC which appeared to indicate that Peter 
Lee paid cash to cover his expenses for the trip. Peter Lee 
indeed did not pay for the trip to the PRC.
    On October 7, 1997, Peter Lee voluntarily underwent a 
polygraph examination at the FBI office in Los Angeles, 
California, which was administered by an FBI polygraph 
examiner. According to the polygraph examiner, the examination 
results indicated deception on three pertinent questions, which 
were: have you deliberately been involved in espionage against 
the United States. His answer: no. Have you ever provided 
classified information to persons unauthorized to receive it? 
Answer: no. Have you deliberately withheld any contacts with 
any non-U.S. intelligence service from the FBI? No.
    Agents then conducted a videotaped interview of Peter Lee 
immediately following the administration of the polygraph 
examination. Peter Lee was told that he appeared to have been 
deceptive in answering the three questions described above. 
Peter Lee confessed that he had indeed been deceptive.
    In summary, Peter Lee then confessed to having communicated 
classified national defense information to representatives of 
the PRC, knowing that it could have been used by the PRC to its 
advantage. Specifically, Peter Lee confessed to having passed 
classified national defense information to the PRC twice in 
1985, and to lying on his post-travel questionnaire in 1997.
    When asked why he did it, Peter Lee told agents that he did 
it because the PRC ``is such a poor country,'' and one of the 
scientists asked for his help. Peter Lee said he wanted to 
bring the PRC's scientific capabilities closer to the United 
States. Specifically, Peter Lee described the two events in 
which he passed the classified information to the scientists of 
the PRC.
    Now, we will go back to the 1985 trip which Peter Lee then 
describes. The first event during that trip, Peter Lee said 
that on or about January 9, 1985, while in a hotel room, he met 
by a Chinese scientist in Beijing, PRC. The scientist asked 
Peter Lee to help after telling him that China needed help 
because it was a poor country. Peter Lee described a detailed 
conversation in which the scientist indicated that he had 
questions to ask that were classified, that Peter Lee did not 
have to answer these questions verbally, but could nod his head 
yes or no.
    Peter Lee said he knew the scientist was asking for 
classified information. The scientist drew for Peter Lee a 
diagram of what Peter Lee believed was a hohlraum and asked 
Peter Lee questions about the drawing. Peter Lee specifically 
remembered answering questions about the hohlraum, what the 
hohlraum looked like, and where the capsule of the target was 
located in the hohlraum. Some other questions that the 
scientist asked Peter Lee he could not specifically answer.
    Peter Lee said that he knew this information was classified 
when he provided it to the scientist. The scientist then told 
Peter Lee that other PRC scientists would be interested in 
talking to him. The scientist asked Peter Lee to come the next 
day to meet with these scientists and Peter Lee agreed.
    The second event then occurred when Peter Lee, on or about 
January 10, 1985, was picked up at his Beijing hotel by a PRC 
scientist and driven to another hotel where a group of PRC 
scientists were waiting for him in a small conference room. 
Peter Lee said for approximately two hours he answered 
questions from the group and drew several diagrams for them, 
including several hohlraum diagrams, specific numbers which 
described the hohlraum design experimental results, and he 
discussed some problems the U.S. was having in its weapons 
research, in simulation programs.
    Peter Lee also admitted to discussing with the Chinese 
scientists at least one portion of a classified Department of 
Energy document which Peter Lee wrote in 1982. This document, 
titled ``An Explanation for the Viewing Angle Dependence of 
Temperature from Care and Targets,'' was authored by Peter Lee 
when he worked at Lawrence Livermore National Laboratory. It 
was declassified in 1996. Peter Lee said he knew that when he 
provided this information to PRC scientists in 1985, it was 
classified. Peter Lee identified several of the Chinese 
scientists that were in attendance.
    On October 14 and 15, agents of the FBI did interviews with 
Lawrence Livermore to corroborate a lot of this information.
    Senator Sessions. 1997?
    Mr. Sayner. 1997, yes, sir.
    Going back to September 3, Peter Lee provided the 
fraudulent receipts which he obtained from PRC scientists to 
the agents, and at that time our technical surveillance had 
expired. The arrest warrant we had prepared in October, then, 
was never issued inasmuch as Mr. Lee retained counsel and 
entered into plea negotiations with the Department of Justice 
in the Assistant U.S. Attorney's Office in Los Angeles.
    On December 8, Dr. Lee pled guilty to one count of 
violating 18 U.S.C. 793(d), and one count of violating 18 
U.S.C. 1001. As part of his plea agreement, Mr. Lee agreed to 
provide full cooperation with the Government. The FBI conducted 
a polygraph of Dr. Lee on February 26th, 1998, which showed 
deception when asked whether he had lied to the FBI since his 
first polygraph. The FBI followed up with additional 
discussions, after which Dr. Lee's counsel advised that he 
would not submit to further polygraph examinations.
    The FBI supplemented its arrest affidavit and converted it 
for use at Dr. Lee's sentencing hearing on March 26, 1998. The 
fact that Dr. Lee failed the polygraph, the February 26, 1998, 
polygraph, was included with the affidavit in the form of a 
declaration from Special Agent Cordova. Therefore, at the time 
of sentencing the court was made aware that Dr. Lee had shown 
deception on a polygraph administered after the plea agreement 
had been entered.
    Dr. Lee was sentenced March 26, 1998, to 5 years' suspended 
sentence with 3 years' probation, 1 year incarceration in a 
halfway house, and 3,000 hours of community service.
    That is all I have, Senator Specter.
    Senator Specter. Thank you very much, Mr. Sayner. We will 
proceed with 5-minute rounds of questions by theSenators.
    With respect to the warrant under the Foreign Intelligence 
Surveillance Act, was that renewed while this investigation was 
being conducted?
    Mr. Sayner. It went through several----
    Senator Specter. Start the lights at 5 minutes, please.
    Mr. Sayner. Senator Specter, it was initiated February 1994 
and it went through several renewal processes up until 
September 1997, when it expired.
    Senator Specter. And was it renewed after September 3, 
1997?
    Mr. Sayner. No, sir.
    Senator Specter. With respect to the hohlraum issue, did 
the potential violation come within the purview of Section 794 
which relates in part, ``directly concerning nuclear 
weaponry,'' to raise the potential of a sentence of life 
imprisonment or death?
    Mr. Sayner. At the time that it was passed in 1985, yes, 
sir.
    Senator Specter. Was there an authorization given, 
according to the FBI records, for a charge to be made under 
section 794 if there was not a plea agreement to a slightly 
reduced charge?
    Mr. Sayner. There were discussions between Internal 
Security Section, Department of Justice, and the Assistant U.S. 
Attorney's Office on the use of 794 as leverage in the plea 
agreement or plea negotiations.
    Senator Specter. And was authorization given that there 
could be a prosecution under 18 U.S.C. 794?
    Mr. Sayner. That, I think, is something you need to discuss 
with the Assistant U.S. Attorney, Jonathan Shapiro. It is my 
understanding that he was orally advised that he could use it 
in his negotiations.
    Senator Specter. Is there an e-mail among the FBI records 
which states the following, ``according to J.J., ISS/Dion said 
that if R.T. doesn't accept the plea proffer, then he gets 
charged under 18 U.S.C. 794, the heftier charge?''
    Mr. Sayner. Yes, sir.
    Senator Specter. And who is J.J.?
    Mr. Sayner. He is Supervisory Special Agent James J. Smith, 
who was the line supervisor for this investigation.
    Senator Specter. And who is ISS/Dion?
    Mr. Sayner. He is a trial attorney with the Internal 
Security Section of the Department of Justice.
    Senator Specter. And who is R.T.?
    Mr. Sayner. That is a code name for the case at the time, 
Royal Tourist.
    Senator Specter. With respect to the hohlraum material and 
declassification, what occurred?
    Mr. Sayner. I don't think I have the technical expertise to 
address the hohlraum and when it was declassified, sir.
    Senator Specter. With respect to the plea agreement for 
cooperation from Dr. Lee, what, in fact, occurred on that after 
the post-plea interviews?
    Mr. Sayner. He was interviewed approximately ten times, one 
of which there was a polygraph administered which he failed. 
That information that he failed the polygraph was provided as a 
declaration to the affidavit that was submitted to the 
sentencing judge. His cooperation was limited at that point, 
sir.
    Senator Specter. What do the FBI records show with respect 
to the earliest point at which Dr. Lee--the information showed 
that Dr. Lee was compromising the anti-submarine information? 
Was that as early as the 1990's?
    Mr. Sayner. It would be--he began work at TRW in 1991. It 
appears that his trip in 1997, he may have compromised some 
anti-submarine warfare technical information at that point.
    Senator Specter. And was that information compromised as 
early as the early 1990s?
    Mr. Sayner. We don't have it documented as occurring. It 
could have, since he worked at TRW.
    Senator Specter. What information did Dr. Lee write about 
in 1999?
    Mr. Sayner. Dr. Lee--in 1999?
    Senator Specter. 1995. That was the date of that article 
which Dr. Lee wrote.
    Mr. Sayner. I have provided that information. Let me find 
it here. All I have, Senator, is the title of the article. I 
don't know the content.
    Senator Specter. Let me yield at this time to--my time is 
expired. I will yield to Senator Torricelli.
    Senator Torricelli. Thank you, Mr. Chairman, very much.
    Mr. Sayner, when the FISA coverage of Dr. Lee expired in 
September of 1997, was there consideration given to reapplying 
for FISA coverage?
    Mr. Sayner. Yes, sir.
    Senator Torricelli. And what was the determination?
    Mr. Sayner. We made an application to our headquarters and 
there was discussion between our headquarters and the 
Department of Justice to renew the FISA at that time.
    Senator Torricelli. And what was the determination?
    Mr. Sayner. Not to renew.
    Senator Torricelli. And on what was that judgment based?
    Mr. Sayner. I think one of the key points was the 
information in the preceding 90 days which you have to use to 
renew FISAs was stale.
    Senator Torricelli. It was considered stale, after only 90 
days?
    Mr. Sayner. Yes.
    Senator Torricelli. Do you consider, based on your 
experience, that 90 days has been an operational standard in 
all cases in which you have been involved?
    Mr. Sayner. I can't really speak for negotiations between 
our headquarters and DOJ, but----
    Senator Torricelli. The only thing I know that goes stale 
in 90 days is a loaf of bread. That does not seem to me to be 
very much of a history.
    Mr. Sayner. The FISA had been ongoing for several years, 
and they took the take of the FISA into account to make that 
judgment, also, not only----
    Senator Torricelli. But you don't personally feel that you 
have enough experience with these cases to know whether or not 
90 days is the standard?
    Mr. Sayner. That alone shouldn't be the standard for----
    Senator Torricelli. That alone should not be the standard?
    Mr. Sayner. You should take in previous--what occurred in a 
case previously to 90 days.
    Senator Torricelli. So who made this judgmentultimately not 
to proceed with the FISA request?
    Mr. Sayner. It would be Department of Justice Office of 
Intelligence Policy Review.
    Senator Torricelli. And to the best of your knowledge, that 
is where the judgment was made?
    Mr. Sayner. Yes.
    Senator Torricelli. Do you believe that the Department of 
Defense and the Navy genuinely understood and were informed by 
the FBI of the severity of Dr. Lee's revelations to the 
Chinese?
    Mr. Sayner. We passed the information that we had to our 
headquarters. It is my understanding that they passed it on to 
the Department of the Navy.
    Senator Torricelli. You don't know for a certainty, 
however?
    Mr. Sayner. No.
    Senator Torricelli. Therefore, you are not in a position 
really to know either whether the Department of Defense or the 
Navy knew that if they did not participate and cooperate that 
there might never be a case developed against Dr. Lee?
    Mr. Sayner. No, Senator, I am not.
    Senator Torricelli. You are not aware of that either.
    Thank you, Mr. Chairman.
    Senator Specter. Senator Grassley.
    Senator Grassley. Mr. Chairman, I am not going to have any 
questions. And I also wanted to explain that the Budget 
Committee is marking up the budget, so I am going to have to be 
gone the rest of the morning.
    Senator Specter. Senator Thurmond.
    Senator Thurmond. Thank you, Mr. Chairman.
    Mr. Sayner, during an interview with the staff of this 
committee regarding the Peter Lee investigation, FBI Field 
Supervisor John Smith stated that the Foreign Intelligence 
Surveillance Act, or FISA, process is very slow, especially 
with so many levels of approval having to sign off.
    Would you please describe the FBI review and approval 
process regarding the application for a FISA warrant?
    Mr. Sayner. Senator, the field would prepare a document, 
the letterhead memorandum, which would be an extensive summary 
of the investigative results that would be forwarded to our 
headquarters for review and then transmitted to the Office of 
Intelligence Policy and Review at the Department of Justice, 
where an application would be made for a FISA warrant. A FISA 
court would be held and a judge would then sign that FISA 
warrant, sir.
    Senator Thurmond. Mr. Sayner, what suggestions or 
recommendations can you make to this committee that you believe 
would streamline the FISA review and approval process in order 
to enhance and prioritize this law enforcement tool and its use 
by field investigative personnel?
    Mr. Sayner. Senator, I understand that the Director met 
about this issue recently and he supported the committee's 
recommendation for legislative change which would include the 
staleness factor being reviewed and not as much weight put on 
the 90-day staleness of information.
    Senator Thurmond. Mr. Sayner, Special Agents Cordova and 
Alston stated to the staff members of this committee that Dr. 
Lee was not truthful and was not cooperative when they 
interviewed him after the plea bargain was entered into. This 
interview took place prior to sentencing. Would you explain how 
this lack of truthfulness and lack of cooperation was 
ultimately reported to the court, and if not reported, why not?
    Mr. Sayner. Senator, that lack of cooperation, as I stated 
earlier, was attached to the affidavit in the form of a 
declaration of Special Agent Cordova that was used--that was 
provided to the sentencing judge.
    Senator Thurmond. Thank you, Mr. Chairman.
    Senator Specter. Thank you very much, Senator Thurmond.
    Senator Sessions.
    Senator Sessions. Mr. Sayner, I am looking at the affidavit 
of Gilbert Cordova for complaint and arrest warrant that was 
prepared. In it, he says Peter Hoong-Yee Lee, an American 
citizen and employee of TRW, Inc., has been acting 
clandestinely, corruptly, and illegally as a conduit of 
classified information to the PRC, the People's Republic of 
China. By his actions, he has committed violations of 18 U.S.C. 
793(d); that is, with reason to believe that it would be used 
to the injury of the United States and the advantage of a 
foreign nation, he has unlawfully and knowingly conspired to 
communicate, transmit, and deliver to representatives of a 
foreign government, specifically the PRC, information relating 
to the national defense of the United States.
    That is a pretty serious charge.
    Mr. Sayner. Yes, sir.
    Senator Sessions. That was under your supervision?
    Mr. Sayner. Yes, sir.
    Senator Sessions. Were you the Assistant Special-Agent-in-
Charge of the Los Angeles field office?
    Mr. Sayner. Yes, sir.
    Senator Sessions. And you had foreign counterintelligence 
under your supervision?
    Mr. Sayner. That is one program of several, yes, sir.
    Senator Sessions. One of the programs you had. Did Agents 
Cordova and Alston report directly to you or was there another 
level of reporting?
    Mr. Sayner. Their supervisor--actually, Agent Cordova was 
an agent in one of our resident agencies at that time, Redondo 
Beach, which had its own line supervisor. But a determination 
to streamline case reporting was that SA Cordova, along with SA 
Alston, who is on a headquarters Los Angeles city squad, would 
report to one supervisor, and that is the supervisor James J. 
Smith.
    Senator Sessions. And Smith reported to you?
    Mr. Sayner. Yes, sir.
    Senator Sessions. So who in terms of dealing with the 
Department of Justice and the United States Attorney in Los 
Angeles--well, first, let me ask you, were your primary 
communications with the Department of Justice with the 
assistant U.S. attorney or the U.S. attorney in Los Angeles, or 
were they with Washington?
    Mr. Sayner. Well, in an espionage case the U.S. Attorney's 
Office isn't aware. Initially, the call to go into prosecution 
on an espionage case or an intelligence case, to be converted 
into a criminal matter, is made at the Department of Justice, 
and that is in consultation with our headquarters here. So 
there are discussions between our headquarters substantive desk 
here, and in this case it would be ISS, Internal Security 
Section, of the Department of Justice.
    Senator Sessions. Now, who talks with whom? Does 
thepaperwork go up through the FBI to the FBI headquarters and they 
talk to the Department of Justice, or were Department of Justice 
employees and attorneys at this time dealing directly with Agents 
Cordova and Alston who were working the case?
    Mr. Sayner. Senator, the reporting would go to our 
headquarters, who would then go to DOJ.
    Senator Sessions. So to your knowledge, there was little, 
if any, direct contact between the Department of Justice people 
who were reviewing this case and the actual agents 
investigating it?
    Mr. Sayner. Not until they notified and we briefed in the 
U.S. Attorney's Office in California. At that time, most of the 
communications were between the Department of Justice and 
Assistant U.S. Attorney Jonathan Shapiro.
    Senator Sessions. With regard to the plea agreement that 
was entered into, who called the shots on that?
    Mr. Sayner. That would be in the purview of the U.S. 
Attorney's Office, with consultations with us.
    Senator Sessions. What about the Department of Justice in 
Washington? Is that Mr. Dion?
    Mr. Sayner. Yes, they would be involved also, sir.
    Senator Sessions. They would be involved. Is anybody 
assuming final responsibility for this plea bargain, if you had 
to state here--you are under oath--who was responsible finally 
for the approval of this plea bargain?
    Mr. Sayner. The Department of Justice.
    Senator Sessions. And would you say that was delegated to 
the Los Angeles U.S. Attorney's Office or was it to Mr. Dion in 
Washington, or did the Attorney General herself sign off on it?
    Mr. Sayner. Sir, that is something I think that should be 
asked of the Department of Justice, U.S. Attorney's Office.
    Senator Sessions. But as you understand it, the Department 
of Justice handles the pleas and does the plea agreement. The 
FBI does not have the final say-so in that.
    Mr. Sayner. The FBI would still have some input with the 
U.S. Attorney's Office in his negotiations with the Department 
of Justice, yes, sir.
    Senator Sessions. Now, you indicated that in October, after 
these interviews, this arrest warrant affidavit was prepared, 
and then it was not issued because the defendant, Lee, got 
counsel and entered into plea discussions. Is that right?
    Mr. Sayner. Yes, sir.
    Senator Sessions. How soon after this was prepared did that 
occur?
    Mr. Sayner. It was occurring almost simultaneously.
    Senator Sessions. So throughout all this bureaucratic 
process, the people in the headquarters of the FBI, local FBI, 
local assistant U.S. attorneys, and U.S. attorneys in 
Washington--within days, a plea agreement was reached?
    Mr. Sayner. There were several items that had to be 
straightened out, including attempting to get the classified 
documents from DOD, getting authority to use those possibly in 
a trial on 794, or if 793 went to trial; discussions with 
scientists regarding the results of the discussions that----
    Senator Sessions. Well, I guess my time is out, but my 
question was----
    Senator Specter. That is all right. Go ahead, Senator 
Sessions.
    Senator Sessions. How did this happen so quickly? How do we 
have a plea agreement so quickly after this interview in which 
he made confessions? It seems to me like this is a matter of 
national importance, and very great care should have been 
undertaken before up and committing to a plea agreement without 
fully understanding the ramifications of it.
    Mr. Sayner. I don't think we went into a plea agreement 
immediately. It was actually entered early December. We had to 
know what we could go----
    Senator Sessions. It would be in October he made the 
confession. In early December, you were entering a plea.
    Mr. Sayner. The plea was entered in early December.
    Senator Sessions. That is still pretty quick, isn't it?
    Mr. Sayner. Yes.
    Senator Sessions. And you probably reached the agreement 
sometime before the plea actually went down in court. How long 
before?
    Mr. Sayner. Well, during that time again, Senator, we had 
to find out or figure what we had a result of that confession. 
We weren't expecting to get all the information that we did in 
that October confession. We were very fortunate to the degree 
of the experience of the two special agents that interviewed 
Mr. Lee. We got a lot of information that had to be 
corroborated, and we also had to find out just where it was as 
far as the classification process.
    Senator Sessions. Well, I guess that was my concern. It 
seems like there was quite a fast moving to a guilty plea and 
some decisions were made that look to me to have been made in 
haste, such as according to the affidavit of Agent Cordova, Lee 
confessed to having passed classified national defense 
information to the PRC twice in 1985 and once in 1997. Yet, 
1997 seemed not to be a part of the plea agreement.
    Mr. Sayner. Senator, those questions should be best 
directed to Assistant U.S. Attorney Jonathan Shapiro.
    Senator Sessions. Well, I will just say, Mr. Chairman, it 
seemed like to me there were some big decisions being made in 
an awfully hurried point of time.
    Senator Specter. I think the record will bear you out on 
that.
    Senator Thurmond.
    Senator Thurmond. I have another engagement and have to 
leave. I will ask that the rest of my questions be answered for 
the record.
    Senator Specter. We will do just that, Senator Thurmond. 
Thank you very much.
    We are in the last stages of a vote and we will recess very 
briefly and we will return very promptly to proceed with the 
hearing. Thank you.
    [The subcommittee was recessed from 10:21 a.m. to 10:45 
a.m.]
    Senator Specter. Mr. Sayner, let me review some of the 
material on information which has been provided by the FBI to 
the subcommittee on unclassified comments. And if anything 
comes up which is classified, I know I don't have to say to 
you, say so, and we will do it in closed session. But these 
have all been reviewed by my staff and the FBI, and I want 
confirmation from you as to the January 7, 1997, Los Angelas 
headquarters teletype that, ``The FBI investigation raised 
concerns that Dr. Lee could have been compromising 
antisubmarine information in the early 1990's.''
    The first question is, is that in the teletype?
    Mr. Sayner. That information would be correct. I am not 
aware of that teletype. Since he worked at TRW and that was the 
area of his expertise, that was our fear, yes, Senator.
    Senator Specter. You say you are or are not aware of the 
teletype?
    Mr. Sayner. I don't know the content of that communication, 
sir.
    Senator Specter. Well, are you familiar with the fact that 
the FBI provided to the subcommittee this data that on January 
7, 1997, there was an Los Angelas headquarters teletype that I 
just read?
    Mr. Sayner. If that was provided by Los Angelas, then that 
is the information that was put together.
    Senator Specter. Well, the question is whether you know it 
was provided by the FBI.
    Mr. Sayner. No, I was not aware of that particular 
document, no, Senator.
    Senator Specter. Ms. Kalisch, for the record would you 
confirm that that teletype has been provided to the 
subcommittee?
    Ms. Kalisch. The teletype itself has not been provided. We 
have provided access to your staff.
    Senator Specter. Would you step forward here so we can hear 
you?
    Ms. Kalisch. I believe that your staff has had access to 
our documents, including that teletype.
    Senator Specter. Well, the question is, for the record, has 
the FBI provided to the subcommittee this information, quote, 
``January 7, 1997, Los Angelas HQ teletype, 'the FBI 
investigation raised concerns that Dr. Lee could have been 
compromising anti-submarine information in the early 1990s.'''
    Ms. Kalisch. Yes, sir, that is correct.
    Senator Specter. And would you identify yourself for the 
record, please?
    Ms. Kalisch. My name is Eleni Kalisch, that is K-a-l-i-s-c-
h.
    Senator Specter. And your position?
    Ms. Kalisch. I am Special Counsel in the Office of Public 
and Congressional Affairs.
    Senator Specter. Thank you.
    For the record, again, Mr. Sayner, would you confirm that 
the FBI has provided this information--or maybe it will be Ms. 
Kalisch again--August 28, 1997, Los Angelas Headquarters, NSD, 
``In August 1997, the FBI was aware that allegedly in the early 
1980's Dr. Lee gave the Chinese classified information that 
greatly assisted their nuclear weapons program?''
    The question is has the FBI provided that information to 
the subcommittee?
    Mr. Sayner. It was the 1985 results of the confession going 
back to the mid-1980s, and possibly with his previous trips to 
the PRC that would be a conclusion, yes, Senator.
    Senator Specter. Ms. Kalisch, you have nodded in the 
affirmative. Would you confirm that, please?
    Ms. Kalisch. That is correct.
    Senator Specter. OK, and similar confirmation that in June 
1998, in the Royal Tourist FBI analysis, one of the scientists 
said, quote, ``It seems likely that Peter Lee at least 
partially compromised every project, classified or 
unclassified, he was involved with at Livermore, LLNL, and 
TRW.''
    Can you confirm that, Mr. Sayner?
    Mr. Sayner. Yes, Senator.
    Senator Specter. Ms. Kalisch, can you confirm that?
    Ms. Kalisch. Yes, sir.
    Senator Specter. And on April 3, 1998, ``FBI files 
indicated that Dr. Lee gave the antisubmarine lecture not once, 
but twice, with the second lecture coming several days after 
the first and in a different city.'' Can you confirm that, Mr. 
Sayner?
    Mr. Sayner. Yes, Senator.
    Senator Specter. Ms. Kalisch.
    Ms. Kalisch. Yes, sir.
    Senator Specter. Mr. Sayner, are you able to confirm that 
the Department of Defense and Navy did not have the transcripts 
and the tape of Dr. Lee's confession at the time Mr. Schuster 
wrote the memorandum of November 14, 1997?
    Mr. Sayner. I am not able to confirm that, no, sir.
    Senator Specter. Well, do you know when the transcript and 
tape was transmitted to the Department of the Navy?
    Mr. Sayner. No, Senator. I can get that information, 
though.
    Senator Specter. Well, Agents Cordova and Alston have that 
information, but you do not?
    Mr. Sayner. I don't have the date that it was transmitted 
to our headquarters, no, Senator.
    Senator Specter. Well, OK. It may be necessary to bring in 
Agents Cordova and Alston to get that kind of information.
    Are you in a position to confirm that the damage assessment 
which was completed in February of 1998 was not provided to 
Judge Hatter, the sentencing judge, for his consideration 
imposing sentence?
    Mr. Sayner. No, Senator.
    Senator Specter. Senator Torricelli.
    Senator Torricelli. Nothing at this time, Mr. Chairman.
    Senator Specter. Senator Sessions?
    Senator Sessions. This is a troubling memorandum. What 
troubles me on the most basic level is that you had evidence 
that Mr. Lee was not cooperating. I am sure that Senator 
Specter before I did noted the part where you said you were 
more interested in gaining intelligence that punishing felons, 
which I think is an unwise way to articulate the matter.
    But this was in November. As I understand it, prior tothe 
entry of the plea, he had flunked the polygraph test and the judge was 
advised of that.
    Mr. Sayner. Correct, Senator.
    Senator Sessions. But isn't it a fact that particularly in 
a case of espionage, an espionage-type case, that a judge is 
going to tend to rely on the recommendations of the FBI and the 
Department of Justice, and it is your responsibility to make 
sure when a plea is recommended that it is a good one? Would 
you agree with that?
    Mr. Sayner. I agree, yes, sir.
    Senator Sessions. Did the FBI recommend this plea agreement 
and support this plea agreement, or who initiated it? As I read 
this, it looks like the FBI recommended to the Department of 
Justice that the plea go down in a light fashion.
    Mr. Sayner. No, it wasn't--it is not our recommendation, 
sir. It is the Department of Justice.
    Senator Sessions. Well, you told me earlier you talked with 
them about it.
    Mr. Sayner. We spoke to pre-sentencing that prepares the 
report for the judge that gives out the sentence. Both agents 
and I believe Jonathan Shapiro had an opportunity to talk to 
pre-sentencing to give them all the details of his not being 
cooperating with us and his deception.
    Senator Sessions. All right. Well, let me go back to this 
point. Do you now dispute that the affidavit that Cordova filed 
saying that Lee had confessed to 1997 violations of the law--do 
you dispute the accuracy of that or do you continue to believe 
that was accurate?
    Mr. Sayner. That was accurate.
    Senator Sessions. So we go down to a plea now and I want to 
know, did the FBI and Mr. Shapiro--were they in accord with 
this recommendation? I am sure you discussed it--Mr. Shapiro, 
what are we going to recommend--recognizing ultimately the 
Department of Justice attorney speaks for the Department of 
Justice and the FBI. But did you agree with his recommendation 
or not?
    Mr. Sayner. The departmental attorney from ISS--I think it 
is Michael Liebman--actually flew out here and had discussions 
with Jonathan Shapiro.
    Senator Sessions. ISS. That is the Department of Justice?
    Mr. Sayner. Yes, Internal Security Section, sir. They had 
discussions, and I know there was a great deal of frustration 
on the part of Jonathan Shapiro and that he just was not given 
enough leverage to be able to use 794, and that may have been 
what went into his reasoning if he did go along with the 
sentencing that was approved by the Department of Justice.
    Senator Sessions. And Mr. Shapiro was the person handling 
the case?
    Mr. Sayner. That is correct, sir.
    Senator Sessions. He was living with it on the ground in 
Los Angeles?
    Mr. Sayner. He was the assistant U.S. attorney.
    Senator Sessions. And it was assigned to him?
    Mr. Sayner. Yes.
    Senator Sessions. So you noted frustration from Mr. Shapiro 
in terms of what information or for what leverage or ability he 
was given to charge more serious charges?
    Mr. Sayner. Yes.
    Senator Sessions. And that was denied him by the Department 
of Justice, Mr. Liebman?
    Mr. Sayner. I don't know what went on between their 
discussions. I just know----
    Senator Sessions. But apparently he was not being given the 
liberty to be as aggressive as he would like to be. That is 
your impression?
    Mr. Sayner. That is my impression, yes, sir.
    Senator Sessions. Now, with regard to this plea, was the 
FBI told we want to recommend this, do you agree?
    Mr. Sayner. Yes.
    Senator Sessions. And what did the FBI respond?
    Mr. Sayner. Our reasoning was that if he had a period of 
confinement, which we felt he would get out of this, we would 
have more time to debrief him to find out what else he may have 
done and more serious intelligence matters that may have 
occurred if he had been incarcerated for at least a year.
    Senator Sessions. But, of course, there was no need to rush 
this plea in any case, was there? I mean, the plea could have 
been taken 6 months later.
    Mr. Sayner. I can't answer for the process.
    Senator Sessions. Well, you are an experienced agent. You 
know that if a person comes in with a lawyer and wants to plead 
guilty and you want to discuss some things and work out some 
details, you don't have to run to court tomorrow to offer a 
plea. I mean, you can hold that off, keep it secret, and nobody 
would know for months, even years. Isn't that right?
    Mr. Sayner. But I would have to--I can't think for Jonathan 
Shapiro or ISS. They may have felt that this was the best they 
could do to get it, and that we could get--the national 
security reward of having him confined and being able to access 
for him while he is incarcerated would outweigh not rushing a 
plea. He may have not negotiated a plea any further.
    Senator Sessions. Well, Mr. Sayner, the point is this. Once 
that plea is taken and the judge imposes a sentence, the 
leverage is gone. You have no leverage, isn't that correct?
    Mr. Sayner. That is correct.
    Senator Sessions. And why did not the FBI, who apparently 
wanted further intelligence, take the position that if he 
flunked the polygraph test which indicated he was not fully 
cooperative on what he was sharing with the FBI--why would you 
want to go on and rush this plea and give him this sweetheart 
deal?
    Mr. Sayner. I can't answer that. That was--I can't answer 
that, Senator.
    Senator Sessions. Well, maybe you can tell me why all 
references to Peter Lee's confession as it related to the 1997 
disclosures were omitted from Agent Cordova's two sworn 
affidavits for sentencing purposes. They were submitted to the 
Federal judge. Why was that left out?
    Mr. Sayner. That was--the only thing he was charged in 1997 
with was 1001 because we were having difficulty getting a read 
on the classification of the material that may have been passed 
in 1997 from DOD.
    Senator Sessions. What was the 1001 false statement?
    Mr. Sayner. That is lying to----
    Senator Sessions. To the agent?
    Mr. Sayner. Lying to the agent on the travel.
    Senator Sessions. But it appeared that, and his lawyer 
argued, did he not, to the judge that he hadn't done anything 
wrong since 1985? Why wasn't the judge told there were very 
serious matters involving 1997?
    Mr. Sayner. The judge was apprised through pre-sentencing 
of everything that occurred in this investigation.
    Senator Sessions. Well, it is not in the pre-sentence 
report, I don't believe.
    Mr. Sayner. Presentence was advised by the two agents, and 
I believe Jonathan Shapiro, on everything that had occurred.
    Senator Sessions. Well, the fact is ultimately there was a 
question of the will and determination of the prosecutor and 
the FBI to reject this plea or accept it.
    The way I would see it, Mr. Chairman, is the opportunity 
was there. What normally should have happened in any two-bit 
robbery case or whatever you are prosecuting in the country is 
if the person agrees to cooperate and you run a polygraph and 
he flunks it, then you don't go forward with the plea. You say 
we are going to go to the wall; we are going to lock you up as 
long as we can unless you want to tell the full truth.
    Were you able to obtain any valuable information from Mr. 
Lee, if you are able to say that in this hearing?
    Mr. Sayner. At the debriefings, afterwards?
    Senator Sessions. After the plea went down.
    Mr. Sayner. No, sir.
    Senator Sessions. Which is not unusual, is it?
    Mr. Sayner. No, sir.
    Senator Sessions. Once he got his sentence and his halfway 
house 6 months and his little fine, he had no incentive to 
cooperate any further.
    Mr. Sayner. Correct, sir.
    Senator Sessions. And under the law, double jeopardy would 
apply and he couldn't be reprosecuted for it, is that right?
    Mr. Sayner. Right.
    Senator Specter. Well, are you sure about that now? I don't 
want this record to close off----
    Senator Sessions. Well, that is a good question. It may 
not.
    Senator Specter. I don't want to answer for Mr. Sayner, but 
that is a complex legal question and it may well be that there 
is still a possible prosecution for the 1997 disclosures.
    Senator Sessions. I would just say that with regard to what 
he pled to, he couldn't be resentenced or sentenced any more 
severely for it.
    Senator Specter. I agree with you about that, Senator 
Sessions.
    Senator Sessions. And I would withdraw my other statement 
as being overbroad, as the chairman, a good prosecutor, knows.
    Senator Specter. Senator Sessions, let me associate myself 
with your remarks about the questionable plea bargain, and we 
are going to get into that in greater detail. And I think it is 
true that Mr. Sayner does not have the information which Mr. 
Shapiro has, or Mr. Liebman, and we haven't been able to talk 
to Mr. Liebman, which is why we had to issue a subpoena for 
him. But we will have that hearing next week.
    [The prepared statement of Mr. Sayner follows:]

                  Prepared Statement of Daniel Sayner

    Good morning, Mr. Chairman and members of the Subcommittee. My name 
is Daniel Sayner and I currently serve as Assistant Special Agent in 
Charge (ASAC) of the Los Angeles Division of the FBI. I am pleased to 
be here this morning to discuss certain aspects of the foreign 
counterintelligence investigation of Peter Lee conducted by my office.
    I would first like to provide the Subcommittee with a brief 
overview of my FBI employment. I have been a Special Agent with the FBI 
for eighteen years. Upon joining the Bureau in 1982, I was assigned 
primarily to violent crimes investigations in both the Baltimore and 
Atlanta Divisions. From 1983 to 1988, I was assigned to Foreign 
Counterintelligence, or FCI, investigations, in the New York Division 
followed by two years as FCI supervisor at Headquarters in Washington, 
DC. From 1990 to 1995, I was assigned to the Terrorism Task Force in 
Newark, New Jersey and also served as the Organized Crime Drug 
Coordinator in Newark.
    Since November 1996, I have served in my current position as ASAC 
of the Los Angeles Division. As ASAC, my responsibilities include 
Program Manager of several important FBI programs including Civil 
Rights, Hate Crimes, Domestic Terrorism, National Infrastructure 
Protection, and Foreign Counterintelligence. It is as FCI Program 
Manager that I have had responsibility for overseeing the Peter Lee 
investigation.
    I understand that the Subcommittee would like for me to provide a 
chronology of the FBI's involvement in the Peter Lee investigation, 
from the time the case was opened in 1991 until the time that Dr. Lee 
was sentenced in 1998. I am happy to do so.
          * * * * * * *
4/1991--FBI opens Preliminary Inquiry on LEE.
3/1993--FBI opens Full Field Investigation on LEE.
2/1994--FBI initiates technical surveillance on LEE.
5/1997--LEE travels to China.
6/1997--FBI conducts non-confrontational interview of LEE to discuss 
        his trip to China; LEE lies to FBI by stating that he engaged 
        in no technical scientific discussions with the PRC and that he 
        paid for the trip.
8/5/1997--FBI again interviews LEE; he admits that he lied to his 
        employer, TRW, on post-travel questionnaire about the purpose 
        of his trip and about contacts during the trip, but maintains 
        that he paid for the trip.
8/14/1997--FBI again interviews LEE and asks him to produce receipts to 
        prove he paid for trip to China. Also, LEE agrees to take 
        polygraph.
8/25/1997--LEE contacts PRC scientist (GUO HONG) and asks him to 
        provide fraudulent receipts indicating that LEE paid for the 
        trip to China.
9/3/1997--LEE provides FBI with fraudulent receipts; technical 
        surveillance expires.
10/7-8/1997--FBI interviews LEE and he confesses to unauthorized 
        disclosure of confidential information to PRC in 1985 and in 
        1997.
    At this point, Mr. Chairman, I would like to step back in time and 
discuss the 1985 disclosures that Dr. Lee confessed to in the October 
7, 1997 interview.
1/9/85--LEE visited China and was approached by an individual (CHEN 
        NENGKUAN) who asked LEE technical questions and suggested that 
        LEE shake his head yes or no. LEE was aware that his responses 
        were disclosing classified information relating to hohlraums.
1/10/1985--LEE is taken (by CHEN NENGKUAN) to meet with PRC scientists 
        (including YU MIN) to provide the hohlraum information.
    Following Dr. Lee's confession on October 7 and 8, 1997, the FBI 
consulted nuclear weapons experts at the Department of Energy regarding 
the substance of Dr. Lee's confession. According to DOE experts, the 
information Dr. Lee admitted to disclosing to the PRC was, in fact, 
classified. On October 21, 1997 the FBI completed a draft affidavit for 
the arrest of Dr. Lee on charges of Title 18 USC Section 793(d) 
(attempting to transmit national defense information in aid of a 
foreign government) and Title 18 USC Section 1001 (making a material, 
false statement to a federal official).
    The arrest warrant was never issued for Dr. Lee inasmuch as he 
retained counsel and enterer plea negotiations with the Department of 
Justice. On December 8, 1997, Dr. Lee pled guilty to one court of 
violating Title 18 USC Section 793(d) and one count of violating Title 
18 USC 1001. As part of his plea agreement, Dr. Lee agreed to provide 
full cooperation with the government. The FBI conducted a polygraph of 
Dr. Lee on February 26, 1998 which showed deception when asked whether 
he had lied to the FBI since his first polygraph. The FBI followed up 
additional discussion, after which Dr. Lee's counsel advised that he 
would not submit to further polygraph examination.
    The FBI supplemented its arrest affidavit with a declaration 
stating that Dr. Lee had shown deception on the February 26, 1998 
polygraph examination. The declaration and the arrest affidavit, which 
had been converted to a government pleading, were presented to the 
court at Dr. Lee's sentencing hearing on March 26, 1998. Therefore, at 
the time of sentencing, the court was made aware that Dr. Lee had shown 
deception on the polygraph administered after the plea agreement had 
been entered.
    Dr. Lee was sentenced on March 26, 1998 to a five-year suspended 
sentence with three years probation, one year incarceration in a half-
way house and 3000 hours of community service.
    Mr. Chairman, I would like to conclude by reaffirming the FBI's 
commitment to cooperate with the Subcommittee in its important 
oversight mission. As you know, we have provided the Subcommittee Staff 
with unprecedented access to our case files and to our personnel. Last 
month, Subcommittee Staff traveled to the Los Angeles FBI office where 
they interviewed myself as well as the Peter Lee case agents, SA Gil 
Cordova and SA Serena Alston, and their supervisor, SSA J.J. Smith. 
Several weeks later, Mr. Chairman, you also traveled to the Los Angeles 
FBI office to conduct on-the-record interviews of these FBI agents and 
others. At your request, we tape interviewed and transcribed those 
interviews in order that you would have a record to utilize at hearings 
such as this.
    I would like to thank the Subcommittee for allowing me the 
opportunity to testify this morning. I will be happy to respond to any 
questions you may have.

    Senator Specter. Dr. Twogood, thank you very much for 
joining us. We turn to you at this point. Would you give us 
your full name and position for the record?

 STATEMENT OF RICHARD TWOGOOD, FORMER PROGRAM LEADER, IMAGING 
AND DETECTION PROGRAM, LAWRENCE LIVERMORE NATIONAL LABORATORY, 
                         LIVERMORE, CA

    Dr. Twogood. Richard Twogood, and I am Deputy Associate 
Director for Electronics Engineering at the Lawrence Livermore 
National Laboratory.
    Senator Specter. And that is part of the Department of 
Energy?
    Dr. Twogood. Yes.
    Senator Specter. And would you state briefly your 
qualifications, your background and your experience, education?
    Dr. Twogood. I have a short statement I will read. Mr. 
Chairman, I appreciate the opportunity to appear before your 
subcommittee to testify regarding your assessment of how the 
Peter Lee investigation was conducted.
    Since 1996, I have held the position of Deputy Associate 
Director for Electronics Engineering at the Lawrence Livermore 
National Laboratory. In that role, I manage the 750-person 
department which provides electronics engineering support to 
all laboratory programs.
    From 1988 to 1996, I held the position of Program Leader 
for the Imaging and Detection Program at LLNL. The single 
largest project in that program was the Joint UK/US Radar Ocean 
Imaging Program, which was a DOD-sponsored program executed by 
OASDI/C3I in the Department of Defense. LLNL was the lead U.S. 
technical organization, and I was the Technical Program Leader 
for the Joint UK/US Radar Ocean Imaging Program from 1990 
through 1995. Peter Lee worked as a contractor employed by TRW 
on that same OSD program.
    The Joint UK/US radar program has made important 
discoveries and significant advances in the development of 
methods to detect submarine signatures with remote sensing 
radars. Many of the important details of this work are 
classified. While at TRW, Dr. Lee had access to these results 
at the DOD secret level. Dr. Lee also admitted to revealing 
classified information regarding this program while in China in 
1997.
    To fully understand what may have been inappropriately 
revealed to the Chinese, as well as its potential significance, 
requires a detailed analysis of Dr. Lee's statements and an 
understanding of the R&D thrusts of the Joint UK/US radar 
program. A complete analysis would require discussion of 
classified material. Several such discussions have taken place 
since 1997 within the Department of Justice and most of these 
issues have been explored in some detail.
    I welcome the opportunity to assist the committee in 
addressing any concerns you have regarding these issues. Thank 
you.
    Senator Specter. Thank you very much, Dr. Twogood. Did you 
have occasion to examine the transcript and videotape of Dr. 
Lee's confession?
    Dr. Twogood. Yes.
    Senator Specter. And what was the appropriate 
classification for the kinds of information that he turned over 
to scientists from the People's Republic of China?
    Dr. Twogood. Peter himself admitted that he had passed 
confidential information and stated it was confidential. When I 
saw the videotape and the audio tape, my immediate response was 
that it is at least confidential, and I thought it was likely 
DOD secret and that----
    Senator Specter. You say you thought it was secret?
    Dr. Twogood. Yes, that is how I would have classified it.
    Senator Specter. And what is your background and 
experience, credentials, on classification of security matters?
    Dr. Twogood. Well, formally I am an authorized derivative 
classifier, so I do take materials, usually technical 
materials, not videotape confessions, and make appropriate 
judgments based on classification guidance written by others, 
and that is what I did in this case. I also personally wrote 
some of the guidance that we were using in the OSD program.
    Senator Specter. Would you say that his disclosures 
constituted the key to the whole program?
    Dr. Twogood. I would say that his disclosures went right to 
the heart of what I consider the number one technical 
achievement of the UK/US program up until 1995.
    Senator Specter. And are you familiar with the total cost 
of the research on this program?
    Dr. Twogood. It is on the order of $100 million on the U.S. 
side and a smaller amount in the UK.
    Senator Specter. Order of how much again?
    Dr. Twogood. 100 million.
    Senator Specter. Dr. Twogood, when did you review the video 
and transcript?
    Dr. Twogood. October 15, 1997.
    Senator Specter. Dr. Twogood, did you ever talk to anybody 
from the Department of Justice about your conclusions that the 
information disclosed by Dr. Lee was secret?
    Dr. Twogood. Yes, I did. I believe on October 15, 1997, I 
speculated that it probably was secret, and then in a further--
--
    Senator Specter. You talked to whom?
    Dr. Twogood. Well, Mr. Cleveland, who--and I believe Ms. 
Alston was at the October 15th discussion at Livermore.
    Senator Specter. Special Agent Alston was there?
    Dr. Twogood. I believe that is correct, yes.
    Senator Specter. And you gave her the information that you 
believed that this was secret information?
    Dr. Twogood. Yes.
    Senator Specter. And Mr. Cleveland?
    Dr. Twogood. Mr. Cleveland, who was former FBI, I believe, 
and at that time in 1997 was responsible for the security 
programs at Livermore. So he had become a Livermore employee.
    Senator Specter. Did you talk to anybody else from the 
Department of Justice?
    Dr. Twogood. There were at least one or two others in the 
room where I saw these videotapes and audio tapes, but I don't 
recall who they were.
    Senator Specter. Were you ever contacted by Mr. Jonathan 
Shapiro?
    Dr. Twogood. Yes.
    Senator Specter. And what conversation did you have with 
him and when was it?
    Dr. Twogood. I do not know when that date was. I believe he 
was not present at the first meeting, but then at a subsequent 
meeting I had the same discussion with Mr. Shapiro. And 
probably more importantly, there was an interim period for the 
month after the October 15 reviewwhen I provided to Mr. 
Cleveland the classification guidelines that I would use to base the 
secret classification on.
    Senator Specter. Well, approximately when did you talk to 
Mr. Shapiro? Was it in the October time frame?
    Dr. Twogood. October-November, I believe, yes.
    Senator Specter. Did anybody from the main Department of 
Justice contact you?
    Dr. Twogood. Mr. Cleveland was basically the liaison. I 
provided all my information to him and he provided it to the 
FBI. I did fly to Los Angeles on March 11, 1998, and Ms. Alston 
was there and Mr. Cordova was there, and that is the date when 
I actually interviewed Peter with his lawyer present.
    Senator Specter. But did Mr. Liebman or Mr. Dion or Mr. 
Richards from Main Justice, Washington, ever contact you?
    Dr. Twogood. Not to my recollection, no.
    Senator Specter. Did anybody from the Department of the 
Navy ever contact you?
    Dr. Twogood. No.
    Senator Specter. Mr. Schuster, Mr. Preston, or anybody from 
the Navy, Captain Dewispelaere?
    Dr. Twogood. No.
    Senator Specter. Senator Sessions.
    Senator Sessions. So you reported in 1997 based on your 
analysis of the classification procedure that you thought it 
was secret?
    Dr. Twogood. Yes.
    Senator Sessions. Is this assessment the same one you gave 
to Agent Cordova?
    Dr. Twogood. Yes.
    Senator Sessions. Has anything occurred that would cause 
you to change your assessment on that?
    Dr. Twogood. No. Let me stress it is a judgment call.
    Senator Sessions. My question was did you ever change your 
assessment to anyone?
    Dr. Twogood. Not to my recollection. I believe from the 
first day I thought it was, at least confidential and possibly 
secret. And then after further review between October and 
November 1997, I made the recommendation that it be considered 
secret, and that was documented in a memo sent from Livermore 
to the FBI.
    Senator Sessions. That would have been in November, prior 
to the plea agreement that went down in December of 1997, I 
believe.
    Dr. Twogood. Yes.
    Senator Sessions. I believe Cordova's affidavit that he 
filed in October 1997 quotes you as saying it was confidential.
    Dr. Twogood. I have always thought that it was at least 
confidential and possibly secret.
    Senator Sessions. I think you have made yourself clear. 
Thank you.
    Senator Specter. Thank you very much, Senator Sessions.
    Dr. Cook, thank you for joining us.

STATEMENT OF THOMAS L. COOK, NONPROLIFERATION AND INTERNATIONAL 
SECURITY DIVISION, LOS ALAMOS NATIONAL LABORATORY, LOS ALAMOS, 
                               NM

    Senator Specter. We know you and Dr. Twogood have come from 
the West Coast, is that correct?
    Dr. Cook. Dr. Twogood from the West Coast and I am from New 
Mexico.
    Senator Specter. New Mexico. Well, they are long distances.
    Do you have a prepared statement?
    Dr. Cook. Yes, sir, I do.
    Senator Specter. Would you proceed to present it to the 
subcommittee at this time?
    Dr. Cook. Surely.
    Senator Specter. Thank you.
    Dr. Cook. It is a pleasure for me to testify before this 
subcommittee as the DOE technical witness in the case United 
States v. Peter Hoong-Yee Lee, which was heard March 26, 1998, 
in U.S. district court, Central District of California, the 
Hon. Judge Terry J. Hatter presiding.
    Dr. Lee confessed in a plea bargain to having knowingly 
passed a document classified secret/restricted data to----
    Senator Specter. Could you speak up just a little?
    Dr. Cook. Oh, sorry.
    Senator Specter. Senator Thurmond always says, ``pull the 
machine a little closer.''
    Dr. Cook. OK. Dr. Lee confessed and plea bargained to 
having knowingly passed a document classified secret/restricted 
data to China Academy of Engineering Physics, CAEP, associates 
during one of his trips to the People's Republic of China. The 
CAEP and its subordinate institutes and laboratories are 
responsible for the nuclear weapons design and development 
programs in China.
    My involvement in the case began in the fall of 1997 when I 
was on a change of station at Department of Energy headquarters 
in the Office of Energy Intelligence working for Notra Trulock, 
who at the time was serving both as the Director of 
Intelligence and of Counterintelligence, Acting Director.
    I supported the FBI investigation, code name Royal Tourist, 
and my role was to provide DOE assessments of technical 
information emerging from the FBI interrogations. In February 
1998--let's see; I guess I stand corrected on that now. It must 
have been March 11th that we were out there. I participated in 
the two-day interrogation session with the FBI agents assigned 
to the case and Dr. Twogood, and we were interrogating Dr. Lee 
at the classified level and were asking questions S/RD and 
secret level. Also present was a laser fusion expert assigned 
to the Department of Energy, formerly from Lawrence Livermore, 
and the ones I have already mentioned.
    We were allowed to ask these questions at the classified 
level, and Dr. Peter Lee repeatedly denied any knowledge of or 
any interest in classified programs and publications. He was, 
however, the author and/or the technical editor on some of 
these publications which he denied knowledge of. Some of his 
work would be declassified by post-1993 guidelines and some of 
it would not have been.
    I attended the sentencing of Dr. Peter Hoong-Yee Lee, and 
DOE Headquarters Safeguards and Security Officer Director Joe 
Mahaley and I were declared witnesses for the U.S. Government. 
If Judge Hatter had requested additional testimony beyond the 
written submissions, Mr. Mahaley would have taken the stand in 
open court and I would have testified in camera at the secret, 
no foreign, SRD level.
    Department of Energy Headquarters Intelligence Office 
Director Notra Trulock was also present as a potential witness, 
and security personnel Don Temple and Larry Wilcher from DOE, 
Germantown. And I had worked with Don and Larry throughout this 
entire interaction in the support that the DOE provided to the 
FBI, Los Angeles.
    Had we gone in camera, my testimony would have included a 
description of detailed classified Nevada test site diagnostic 
systems that Dr. Lee worked on or helped develop, and it would 
have expanded my assessment of the impact such knowledge could 
have had on PRC nuclear weapons science. I would not have been 
able to declare that I knew with certainty of specific 
additional classified information passed beyond that plea 
bargained.
    It is my assessment that Dr. Peter Lee is a world-class 
diagnostician who has expertise relevant to nuclear weapons 
science. Development of methods for measuring the nuclear 
weapons performance was a serious challenge for the PRC in the 
1980s, and this would have been especially true if, as has been 
reported in the press, they moved underground and tested 
neutron bomb concepts and more modern strategic weapons.
    At this time, I would read my official damage assessment 
with the court or I will answer questions, as you choose.
    Senator Specter. Was your damage assessment made available 
to Chief Judge Hatter?
    Dr. Cook. Yes, sir, it was.
    Senator Specter. Well, we will have that made part of the 
record. Do you have a copy of that with you?
    Dr. Cook. Yes, sir.
    Senator Specter. Would you hand that to the court reporter? 
We will make it part of the record. Mark it Exhibit 1 on this 
hearing date.
    [The document referred to follows:]

                               Exhibit 1

  declaration of technical damage to united states national security 
      assessed in support of united states v. peter hoong-yee lee
    I, Thomas L. Cook, being duly sworn, do hereby depose and say:
A. Introduction
    1. I am a Technical Staff Member at the Los Alamos National 
Laboratory. I have spent more than 26 years in professional research 
associated with various aspects of US nuclear weapon programs. I have 
actively participated in Atomic Energy Commission and Department of 
Energy (DOE) research programs at the Nevada Test Site and in weapons 
effects simulations sponsored by Defense Nuclear Agency and Department 
of Defense.
    2. Through the Counter Intelligence Division of DOE/OEI, I have 
assisted the Federal Bureau of Investigation (FBI) in their assessment 
of the impact on the PRC nuclear weapon program of classified technical 
information determined to have been transferred by Peter Hoong-Yee Lee 
to representatives of institutions in, subordinate to, or associated 
with tasks in support of programs of the Chinese Academy of Engineering 
Physics (CAEP). My review of Peter Hoong-Yee Lee's publications lead me 
to assess that he is an excellent diagnostician whose focus has been on 
the development and implementation of, and on the interpretation of 
data from, experimental systems that measure radiation-matter 
interactions at extreme conditions, such as those attainable in direct 
and indirect laser-produced and nuclear-weapon-produced plasmas. I 
expand these concepts below.
B. Technology discussion
    1. The research and development programs pursued by Peter Hoong-Yee 
and co-workers during this years at two DOE national laboratories, 
Lawrence Livermore National Laboratory and Los Alamos National 
Laboratory, generally relate to the design of diagnostic schemes and 
equipment associated with measuring the interaction of electromagnetic 
radiation with matter. The research related to the design and 
evaluation of fusion capsules and to measuring and engineering the 
transport of radiation in special cavities. During the early 1980's the 
DOE spent billions of dollars in classified research, conducted in 
underground nuclear tests at the Nevada Test Site and in high-energy 
laser laboratories, to explore the physics of these processes. The 
studies had both military and commercial objectives. The laser 
simulation component of the U.S. science based stockpile stewardship 
program, which is so important to certifying nuclear weapon reliability 
under the ``zero-yield'' constraints of a Comprehensive Test Ban Treaty 
(CTBT), has its foundations in this early research.
    2. Information contained in the classified DOE document that Peter 
Hoong-Yee Lee admits to having transferred to the PRC presents a scheme 
for interpreting temperature measurements made with x-ray detectors on 
radiation emerging from a plasma in a hollow cavity. References in the 
paper document Lee's formal participation in broad classified intertial 
confinement fusion (ICF) diagnostic development programs. These 
programs had specific classified objectives; including the measurement 
of material properties necessary for benchmarking classified computer 
code simulations, calibration of underground nuclear test (UGT) data in 
fusion laboratories, and adaptation of ICF diagnostic techniques for 
use in UGT's. Some technologies with which Peter Hoong-Yee Lee was 
associated are now unclassified because of academic developments in ICF 
research; others remain classified nuclear weapon science.
c. Significance
    1. The measurement of radiation-matter interactions and time-
resolved and time-integrated laser-plasma diagnostics represent exactly 
the critical technologies important to a developing nuclear weapon 
state that has an active nuclear testing program. The capability to 
measure the performance of various parts of the nuclear weapon 
facilitates the evolution from rudimentary nuclear devices to 
intermediate and advanced designs. These characteristics of the warhead 
determine the deployment options and the appropriateness of mission. 
Possession of only rudimentary and/or intermediate class warheads limit 
these military options. Advanced nuclear warheads could be important to 
the Chinese for use on cruise missiles, on road-mobile intercontinental 
ballistic missiles (ICBMs), and on submarine launched ballistic 
missiles (SLBMs) and as multiple re-entry vehicles (MRV) and multiple 
independent re-entry vehicles (MIRVs).
    2. The above facts are true and correct to the best of my knowledge 
and belief.

                                      Thomas L. Cook, PhD.,
            Technical Staff Member, Los Alamos National Laboratory.

    Senator Specter. Dr. Cook, what was the total cost to the 
Federal Government of the hohlraum research?
    Dr. Cook. The programs with which Dr. Lee was associated 
which had to do with both the inertial confinement fusion 
programs and the underground testing programs have been 
estimated at a total cost by the Department of Energy of about 
$6 billion.
    Senator Specter. A total of $6 billion?
    Dr. Cook. Six billion, yes, sir.
    Senator Specter. With respect to declassification, what 
occurred there?
    Dr. Cook. In the early days of the programs, which were 
referred to as Haylight Centurion where one was taking laser-
driven capsules and testing them in underground nuclear tests, 
as well as in the laboratory with lasers, the concepts of the 
radiation drive of these capsules--certainly, the details have 
been classified because they not only relate to the production 
of energy, but also to the performance of a secondary and a 
nuclear weapon.
    As the inertial confinement fusion programs matured and 
became more widely disseminated in the university scene, some 
of those kinds of physics have been declassified, but not all, 
and the move to declassify----
    Senator Specter. So some of the information which Mr. Lee 
gave to the People's Republic of China scientists has not been 
declassified?
    Dr. Cook. The specific document with which he plea 
bargained, the document that he confessed to having passed in 
1985, has been reviewed by our classifiers and by Livermore's 
classifiers and Department of Energy classifiers, and post-1993 
it would be unclassified.
    Senator Specter. But there are indications that Dr. Lee 
told the PRC scientists materials which he did not confess to?
    Dr. Cook. Yes, sir, that is our assessment, and it was the 
assessment of all of the technical people with whom I was 
associated who debriefed him.
    Senator Specter. Including you?
    Dr. Cook. Yes, sir, including me.
    Senator Specter. And that was based on what?
    Dr. Cook. Dr. Lee repeatedly denied knowledge of classified 
information that there is absolutely no doubt that he had 
knowledge of. For example, in 1981-82, a classified technical 
document was published by Livermore and in that document there 
is a very classified section with weapons information and with 
the hohlraum kinds of studies to which Dr. Lee was the 
technical editor. It was the diagnostic section. So if he is 
the technical editor, he has to have had some interest in or 
some knowledge of the things he denied having knowledge of.
    The second thing that really bothered me was when we 
discussed physics with Dr. Lee, he very willingly would share 
information that he had taught the representatives of the China 
Academy of Engineering Physics. And these concepts were 
basically freshman physics and the people with whom he was 
interacting were the pillars of Chinese nuclear weapons 
science. I mean, these men were extremely capable scientists.
    Senator Specter. Dr. Cook, I am about to have handed to you 
the impact statement prepared by Robin Staffin, Notra Trulock 
and Joseph Mahaley, and ask if you had an opportunity to review 
that?
    Dr. Cook. Yes, sir, I did.
    Senator Specter. Take a look at it. We are going to mark it 
number 2 for the record.
    [The document referred to follows:]

                               Exhibit 2

                            impact statement
    Dr. Peter Lee, a former employee of Lawrence Livermore National 
Laboratory (LLNL), has confessed to providing US classified information 
to the Peoples Republic of China (PRC) in 1984 and 1985. He admits to 
providing information from documents classified as Secret/Restricted 
Data concerning the Inertial Confinement Fusion (ICF) Program. ICF 
Program information was classified as Secret/Restricted Data under the 
Atomic Energy Act of 1954, as amended. Dr. Lee further acknowledges 
that he knew the information was classified when he revealed it to the 
PRC. Dr. Lee has stated during debriefings that his activities have not 
damaged US national security. Contrary to Dr. Lee's suggestion that US 
ICF technology is not related to nuclear weapons technology, it remains 
an integral part of the US nuclear weapons program.
    Dr. Lee was recently interviewed by LLNL and US Government 
technical experts. These experts believe that Dr. Lee's intimation that 
the classified information he released to the PRC is limited to what he 
has confessed, is not credible. For example, Dr. Lee claimed to the 
interviewers to have very little knowledge of certain sensitive 
classified programs; however, former colleagues of his at the national 
laboratories have stated he did have a working knowledge of these 
programs. In addition, Dr. Lee engaged in over 300 e-mail messages with 
his Chinese colleagues between 1994 and 1997. There were also in excess 
of 300 letters between Dr. Lee and his PRC contacts between 1981-1987. 
After 1987, and until 1997, Dr. Lee continued to exchange numerous 
letters with his Chinese colleagues. These communications contain 
details of other, non-ICF related classified programs. Many of these 
messages describe activities at LLNL far beyond his area of assignment; 
although none were specifically found to contain classified 
information. Given the nature of the subjects addressed, however, and 
his access to other program areas in the laboratory, there is a strong 
possibility that in addition to the classified ICF related data, other 
information may have been passed by Dr. Lee that would have caused 
serious damage to national security.
    With respect to the ICF information Dr. Lee has admittedly 
compromised, the following information is provided:
 In basic terms, the ICF process involves striking a 
        cylindrical gold container with several laser beams arranged 
        concentrically around the cylinder. When all the laser beams 
        strike the cylinder at once (within several trillionths of a 
        second), the cylinder is super-heated and causes the resultant 
        x-ray energy from the cylinder wall to strike and compress an 
        ICF target resulting in thermonuclear fusion.
 The ICF Program, when developed in conjunction with an already 
        existing nuclear weapon program, could assist in the design of 
        more sophisticated nuclear weapons. Therefore, certain details 
        of this technology can be used by other countries or 
        proliferants to assist in the design of a thermonuclear weapon. 
        Through December 1993, the Department of Energy (DOE) 
        classified most of the details of the ICF process to prevent 
        the spread of nuclear weapons.
 Scientists working in the ICF Program recognized that it could 
        be used for peaceful purposes, such as the generation of 
        electricity. A great deal of research on ICF has been performed 
        in foreign countries for use in non-weapon applications. As a 
        result of the large number of foreign publications on ICF, DOE 
        declassified many, though not all, aspects of the ICF process 
        in 1993. Nevertheless, DOE ICF research is much more advanced 
        than that of foreign research in this area, and plays an 
        important role in the US nuclear weapons program. Indeed, ICF 
        experiments have been fielded on a series of underground 
        nuclear tests during the 1980's. The data resulting from these 
        tests are key to the design of nuclear weapons relevant 
        experiments to be conducted on the National Ignition Facility 
        for nuclear weapons stockpile maintenance and reliability. One 
        indication of its importance is the greater than $5.8 billion 
        spent on the ICF Program since its inception in 1972 to the 
        present.
 US intelligence analysis indicates that the ICF data provided 
        by Dr. Lee was of significant material assistance to the PRC in 
        their nuclear weapons development program. [Details to be 
        provided in camera]. For that reason, this analysis indicates 
        that Dr. Lee's activities have directly enhanced the PRC 
        nuclear weapons program to the detriment of US national 
        security.
 As a US government-cleared LLNL employee with an access 
        authorization (security clearance), Dr. Lee was obligated by 
        National Security Decision Directive and DOE Order to advise 
        the Department each time he had contact, in any form, with 
        citizens of the PRC. Dr. Lee had continuous unreported contact 
        with representatives from the PRC. Dr. Lee failed to adhere to 
        this requirement, which resulted in the compromise of 
        classified information.
    In summary, Dr. Lee has confessed to compromising classified 
nuclear weapon design information. The information was properly 
classified at the time of compromise and US intelligence analysis 
indicates that this information, in conjunction with other information, 
was of material assistance to the Peoples Republic of China in 
advancing their nuclear weapons program. Compromise of this information 
reasonably could be expected to cause serious damage to US national 
security. Of equal importance, we do not believe Dr. Lee has been fully 
cooperative in identifying or describing other classified information 
he may have compromised. We believe Dr. Lee has confessed to 
compromising selected classified information in the hope his other, 
more damaging activities would not discovered or fully investigated.

                                             Robin Staffin,
Deputy Assistant Secretary, for Research and Development, Office of 
                                                  Defense Programs.
                                        Notra Trulock, III,
        Senior Intelligence Officer, Office of Energy Intelligence.
                                         Joseph S. Mahaley,
  Director, Office of Security Affairs, Office of Nonproliferation 
                                             and National Security.
    Mr. Chairman, I appreciate the opportunity to appear before your 
subcommittee to testify regarding your assessment of how the Peter Lee 
investigation was conducted.
    Since 1996, I have held the position of Deputy Associate Director 
for Electronics Engineering at the Lawrence Livermore National 
Laboratory. In that role, I manage the 750-person department, which 
provides electronics engineering support to all Laboratory programs.
    From 1988 to 1996, I held the position of Program Leader for the 
Imaging and Detection Program at LLNL. The single largest project in 
that program was the Joint UK/US Radar Ocean Imaging Program, which was 
a DoD-sponsored program executed by OASD/C3I in the Department of 
Defense. LLNL was the lead US technical organization, and I was the 
Technical Program Leader for the Joint UK/US Radar Ocean Imaging 
Program from 1990 through 1995. Peter Lee worked as a contractor 
employed by TRW on that same OSD program.
    The Joint UK/US Radar program has made important discoveries and 
significant advances in the development of methods to detect submarine 
signatures with remote sensing radars. Many of the important details of 
this work are classified. While at TRW, Dr. Lee had access to these 
results at the DoD Secret level. Dr. Lee also admitted to revealing 
classified information regarding this program while in China in 1997.
    To fully understand what may have been inappropriately revealed to 
the Chinese, as well as its potential significance, requires a detailed 
analysis of Dr. Lee's statements and an understanding of the R&D 
thrusts of the Joint UK/US Radar program. A complete analysis would 
require discussion of classified material. Several such discussions 
have taken place since 1997 within the Department of Justice, and most 
of these issues have been explored in some detail.
    I welcome the opportunity to assist the committee in addressing any 
concerns you may have regarding these issues.
                                    Dr. Richard E. Twogood.

    Senator Specter. Is that an accurate copy of the referenced 
report?
    Dr. Cook. Yes, sir, it is.
    Senator Specter. And do your report and this report 
elaborate upon the fact that it was concluded that Dr. Lee 
provided classified information to the PRC scientists beyond 
that which had been declassified in 1993?
    Dr. Cook. It is our assessment and it is my assessment that 
he did provide more information than that on which he plea 
bargained, and that that information was essential and crucial 
to the development of modern nuclear weapons.
    Senator Specter. And with respect to the information which 
was declassified in 1993, was there substantial value to the 
PRC in having that information in the interim between 1985 and 
1993, when it was classified?
    Dr. Cook. Yes, sir, I believe there was and----
    Senator Specter. And why?
    Dr. Cook [continuing]. That is an assessment, but the value 
of the information provided depends not only on the content of 
the information, but on the degree of maturity in the nuclear 
weapons program which acquires it. And in that time frame, the 
information provided was a semi-analytical treatment of a 
method for interpreting temperature inside a hohlraum, 
basically for interpreting experiments for the way radiation 
and matter interact.
    Now, at Livermore and Los Alamos, we had moved beyond semi-
analytical treatments. We were using computer models, and I 
assessed that the Chinese program at that time would not likely 
have been advanced enough to have taken full advantage of 
computer modeling.
    Senator Specter. So the essence is that when China had that 
information in 1985, 1986, 1987, 1988, 1989, 1990, 1991, 1992 
and into 1993 before it was declassified, it was of material 
assistance to the PRC in developing their own nuclear weapons 
system?
    Dr. Cook. That is my assessment.
    Senator Specter. And that information had been acquired by 
the U.S. Government at a very high cost?
    Dr. Cook. Yes, sir, the programs were very expensive.
    Senator Specter. Up to $6 billion?
    Dr. Cook. Yes, sir.
    Senator Specter. With respect to the possible charge under 
Section 794 which relates to nuclear weaponry--that is the 
statutory language--does this fall into the category of nuclear 
weaponry?
    Dr. Cook. In my opinion, it does, given that I am an 
amateur at understanding those kinds of guidelines. However----
    Senator Specter. Well, you may be an amateur at the 
statute, but you are not an amateur at what is nuclear 
weaponry, are you?
    Dr. Cook. No, sir. And, in fact, if I--my assessment has 
always been that if you were moving, as China, we assess, was 
doing in the early 1980's, from large, heavy, crude nuclear 
weapons to neutron bombs and more sophisticated strategic ones 
in the 1980's, the one thing you would need would be a 
diagnostician to help you measure the performance of those 
weapons.
    Senator Specter. And Dr. Lee was that kind of a 
diagnostician?
    Dr. Cook. Dr. Lee was that kind of diagnostician.
    Senator Specter. Senator Sessions.
    Senator Sessions. I believe your report here refers to him 
as a world-class diagnostician.
    Dr. Cook. That was my impression. When I first became 
involved and I scanned down the publications list that Dr. Lee 
had and the diverse interests that he had, he kept moving from 
one technology to another. And to be able to do that and 
continue to publish without a large gap in time, I think, takes 
a first-class scientist.
    Senator Sessions. Well, Dr. Cook, I appreciate your 
approach to this. I think it is common sense and sound. My 
experience in thousands of cases is that when people admit 
something, they usually don't admit all they did. I mean, that 
is just basic criminal law that you deal with people and they 
will admit what they think you can prove, but don't want to 
admit any more. So I think it is quite possible, and even 
likely, that more was given out than Dr. Lee admits that he 
gave out.
    And in addition to that, I think you made two excellent 
points that he was lying about other matters by saying he 
denied knowledge of classified information and material that he 
had written about specifically and been involved in. It also 
was interesting that he would rapidly tell you all about basic 
physics matters he was discussing with China's greatest 
scientists, but would be reluctant to discuss anything of a 
technical matter. So I think that indicates deception. In 
addition to that, we have the FBI's polygraph showing 
deception.
    So it would be pretty clear to me that regardless of proof 
beyond a reasonable doubt in court, reasonable leaders of the 
United States of America concerned about trying to make a 
decision about what he actually gave out would have to conclude 
he gave out more than he admitted. And I think you are correct 
to have concluded that and I thank you for your analysis.
    I was interested in that there were reports produced by 
Doctors Storm and Lindford. Do you know who caused those 
analyses of this matter to be conducted?
    Dr. Cook. I don't know. I have passing familiarity with 
their comments, I believe.
    Senator Sessions. My understanding was that the Defense 
Department asked for that independent review, basically, of 
your analysis. Is that correct?
    Dr. Cook. I believe that is correct. Refresh my memory. Is 
this the analysis that suggested that he was never involved in 
anything beyond academic ICF science?
    Senator Sessions. There was a report, yes, that really 
minimized the damage by Doctors Storm and Lindford, and it 
strikes me as almost bizarre that that would happen. Do you 
have any thoughts about it?
    Dr. Cook. Yes, sir, I do.
    Senator Sessions. Would you share those with me?
    Dr. Cook. Surely, thank you. One has to ask that if ICF and 
ICF science has no relevancy to nuclear weapons science, then 
why is it a major part of our stockpile stewardship program. 
Furthermore, the words that you are obviously familiar with in 
my damage assessment that I filed with the court--I pulled 
three of those phrases directly out of a Lawrence Livermore 
classified document that had been declassified. At least that 
paragraph had been declassified where they state the relevance 
of the Haylight Centurion research in the early 1980's to 
nuclear weapons science.
    And those were, one, they were conducting experiments in 
their laser laboratories that would allow them to certify, 
normalize, validate their computer code models of radiation 
matter interaction. Two, they were helping design classified 
experiments and the Nevada test site. And, three, they were 
helping interpret classified experiments at the Nevada test 
site. And so those are direct Livermore quotes that are now no 
longer classified, and that is in opposition to Dr. Storm and--
--
    Senator Sessions. Well, I misspoke. I think I said they 
were Defense Department, but they were the defense lawyers' 
report. That is quite a difference.
    Well, thank you for your cooperation and assistance, and 
for, I think, your accurate analysis of this matter.
    Senator Specter. Thank you, Senator Sessions.
    Dr. Cook, returning to this evaluation from Staffin, 
Trulock and Mahaley, it contains the notion, ``U.S. 
intelligence analysis indicates that the ICF data provided by 
Dr. Lee was of significant and material assistance to the PRC 
in their nuclear weapons development program. Details to be 
provided in camera. For that reason, this analysis indicates 
that Dr. Lee's activities have directly enhanced the PRC 
nuclear weapons program, to the detriment of U.S. national 
security.'' Do you agree with that?
    Dr. Cook. Absolutely.
    Senator Specter. And another paragraph, quote, ``In 
summary, Dr. Lee has confessed to compromising classified 
nuclear weapon design information. The information was properly 
classified at the time of compromise, and U.S. intelligence 
analysis indicates that this information, in conjunction with 
other information, was of material assistance to the People's 
Republic of China in advancing their nuclear weapons program. 
Compromise of this information reasonably could be expected to 
cause serious damage to U.S. national security. Of equal 
importance, we do not believe Dr. Lee has been fully 
cooperative in identifying or describing other classified 
information he may have compromised. We believe Dr. Lee has 
confessed to compromising selected classified information, in 
the hope his other more damaging activities would not be 
discovered or fully investigated.''
    Do you agree with that?
    Dr. Cook. Yes, sir, I do.
    Senator Specter. Thank you very much.
    [Responses of questions from Senator Leahy follows:]

        Responses of Thomas Cook to Questions From Senator Leahy

SUBJECT: Disagreement over the Significance of PHY Lee's 1985 
        Disclosures

    Question A. Are you aware of any scientists or experts who disagree 
with your conclusions about the nature and significance of the 
information disclosed by Lee in 1985?
    Answer A. Yes.

    Question B. The answer to (1)(A) is affirmative, please provide the 
names of any such scientists or experts and the nature of the 
disagreement.
    Answer B. I think several experts working in Inertial Confinement 
Fusion (ICF) programs at Lawrence Livermore National Laboratory (LLNL) 
disagreed with the damage assessment. The paper Dr. Lee admitted to 
having passed to the PRC was declassified by the time of the hearing--
about 10 years after the transfer of information. I understand that 
this/these scientist(s) wrote a letter to Judge Hatter in Dr. Lee's 
defense. The one name I know is Dr. Eric Storm.
    Regarding the nature of the disagreement, I have not spoken with 
Dr. Storm, but I assure that he will argue that Lees involvement in the 
classified Halite-Centurion programs was only on the academic side of 
ICF research. But in fact, Dr. Lee published several reports classified 
SECRET RESTRICTED DATA in the early 1980's and he was the technical 
editor of a classified LLNL Laser Monthly specifically dedicated to a 
Halite-Centurion test during that time frame as well.
    The physics involved in ICF research is also the physics of 
thermonuclear weapons (TNWs), albeit at very different pressures, 
temperatures and length scales. If ICF science is not relevant to TNW 
science why is the National Ignition Facility (NIF) a component of the 
US science-based-stockpile-stewardship (SBSS) program?

    Senator Specter. Mr. Preston, thank you for joining us here 
today, and if you would identify yourself, and I believe you 
have a prepared statement and we will be pleased to hear it at 
this time.

TESTIMONY OF STEPHEN W. PRESTON, GENERAL COUNSEL, DEPARTMENT OF 
                    THE NAVY, WASHINGTON, DC

    Mr. Preston. Thank you, Mr. Chairman and Senator Sessions. 
My name is Stephen Preston. I am General Counsel at the 
Department of the Navy. I do have a prepared statement. I think 
in lieu of reciting it for the committee, I would just ask that 
it be submitted for the record.
    Senator Specter. All right. It will be made a part of the 
record, as you have requested.
    Do you care to make an opening statement?
    Mr. Preston. No, sir. I would be happy to answer your 
questions, though.
    Senator Specter. Have you had an opportunity to examine the 
memorandum for General Counsel of the Department of Defense 
submitted by Mr. Wayne W. Wilson, Director of Technology and 
Evaluation; Mr. John G. Schuster, CNO; and Ms. Donna Kulla, 
Intelligence Systems Support Office, dated March 9th, which 
says, ``As requested, my office, the Navy, in 1987, and the 
Intelligence Systems Support Office undertook a review of the 
FBI transcript of interviews with Mr. Peter Lee dated October 
7, 1997, and October 8, 1997. We found these transcripts 
substantially consistent with the affidavit provided to the 
Department in 1997. The statements provided by Peter Lee and 
the transcripts are consistent with the previous determination 
that the material he provided to the People's Republic of China 
was confidential,'' close quote.
    Mr. Preston. Yes, sir, I have seen that memo.
    Senator Specter. Referring to your letter of May 21, 1999--
and we will have this March 9, 2000, memorandum marked next in 
sequence, and your letter of May 21, 1999, marked subsequently 
in sequence.
    [The documents referred to follow:]

                               Exhibit 3

      memorandum for general counsel of the department of defense
SUBJECT: Classification Review of Peter Lee Material
    As requested my office, the Navy (N87), and the Intelligence 
Systems Support Office undertook a review of the FBI Transcripts of 
interviews with Mr. Peter Lee dated 10-7-97 and 10-8-97.
    We found these transcriptions substantially consistent with the 
affidavit provided to the Department in 1997. The statements provided 
by Peter Lee in the transcripts are consistent with the previous 
determination that the material he provided to the People's Republic of 
China was Confidential.
                                           Wayne W. Wilson,
                         Director, Technology & Evaluation DASD(I).
                                               Donna Kulla,
                               Intelligence Systems Support Office.
                                          John G. Schuster,
                                                          CNO N875.

                               Exhibit 4

                               General Counsel of The Navy,
                                    Washington, D.C., May 21, 1999.
The Hon. Christopher Cox, Chairman,
The Hon. Norm Dicks, Ranking Minority Member,
Select Committee on U.S. National Security and Military/Commercial 
    Concerns With the People's Republic of China,
U.S. House of Representatives, Washington, DC.
    Dear Mr. Chairman and Representative Dicks: Following up on recent 
discussions with Committee staff concerning the Peter Lee matter, I am 
writing to express the Department's continuing concern that the draft 
Committee report is inaccurate in its account of Lee's May 1997 
disclosure, and to provide information and documentation that we hope 
will assist the Committee in clarifying the facts as it finalizes its 
report.
    We believe that the draft report mischaracterizes the substance and 
significance of the disclosure made by Lee during his trip to Beijing 
in 1997. for example, the report repeatedly suggests that the 
disclosure of Lee's research, ``if successfully completed, could enable 
the PLA to threaten previously invulnerable U.S. nuclear submarines.'' 
There is no support for this proposition in the affidavits submitted by 
the Government at sentencing (public records that we understand the 
Committee has). Nor is there any support for it in the contemporaneous 
assessment of the 1997 disclosure provided by the Navy to the Justice 
Department in connection with the latter's consideration of prosecution 
(a copy of which is attached).\1\ To the contrary, that assessment 
indicated that the information disclosed by Lee, while possible 
classified in part, was similar to information available from 
unclassified publications. Accordingly, the Navy concluded, it would be 
difficult to make a case that significant damage had occurred.
---------------------------------------------------------------------------
    \1\ The assessment was originally classified and has been reviewed 
for declassification. The redacted version attached is unclassified.
---------------------------------------------------------------------------
    The draft report's description of the Defense Department's input 
into the Justice Department's determination not to prosecute Lee for 
the 1997 disclosure in Beijing is likewise incomplete and thus remains 
misleading. The report states: ``In 1997, the decision was made not to 
prosecute Lee for passing this classified information on submarine 
detection to the PRC. Because of the sensitivity of this area of 
research, the Defense Department requested that this information not be 
used in a prosecution.''
    As noted above, in connection with the Justice Department's 
consideration of prosecution, the Navy advised that the information 
disclosed by Lee was similar to information available from unclassified 
publications and that it would be difficult to show significant damage 
as a result. In addition, the Navy was concerned about a prosecution 
that could lead to a broader inquiry, quite apart from the substance of 
Lee's 1997 disclosure, in the area of anti-submarine warfare, and it 
conveyed that concern to the Justice Department.
    The Department condemns any disclosure of classified information on 
Lee's part and supported the prosecution in which he ultimately pled 
guilty. However, the current draft Committee report creates the 
erroneous impression that the technology Lee discussed during his 1997 
Beijing trip was highly sensitive and previously unknown, and that his 
disclosure to the PRC caused grave harm to the national security, 
imperiling our submarine forces. In the considered judgment of the 
Navy, fortunately that is not the case.
    We appreciate your consideration in this matter.
            Sincerely yours,
                                        Stephen W. Preston.

    Senator Specter. Had you had access to the tapes and 
transcript of Dr. Lee's confession which has been testified to 
by Dr. Twogood?
    Mr. Preston. No, sir.
    Senator Specter. In your letter of May 21, 1999, to 
Congressman Cox, you took issue in the second paragraph with 
the Cox Commission's statement, ``If successfully completed''--
I will start a little earlier. This is your letter, and first I 
ask if this is accurately read.
    ``For example, the report repeatedly suggests that the 
disclosure of Lee's research, if successfully completed, could 
enable the PLA to threaten previously invulnerable U.S. nuclear 
submarines.'' Is that an accurate reading?
    Mr. Preston. I believe so, yes, sir.
    Senator Specter. And when you said PLA, what do you mean by 
that?
    Mr. Preston. I believe that is a reference to the Chinese 
military.
    Senator Specter. At the time that you wrote this, did you 
have access to any information beyond Mr. Schuster's memorandum 
of November 14, 1997?
    Mr. Preston. Senator, that was the principal record 
evidence that we had of damage and classification assessment. 
In addition, we had an affidavit and submission that had been 
submitted in connection with the sentencing, and we also had 
the recollections of those DOD and Navy personnel who had been 
previously involved in this and the views of the cognizant 
offices. But the principal document reflecting and constituting 
the communications with Justice about the assessment of the 
disclosures was the memorandum prepared by Dr. Schuster.
    Senator Specter. Well, what do you mean by previous 
recollections? You have identified three things. You have 
identified the affidavit by the special agent, you have 
identified Mr. Schuster's letter, and you talk about previous 
recollections.
    Mr. Preston. I am just referring, sir, in the process 
leading up to the preparation and transmission of this letter, 
a number of people were involved in addressing the situation 
and----
    Senator Specter. Well, who were they and what did they say?
    Mr. Preston. I allude to a number of them in my prepared 
statement. Within the Department of the Navy, I was assisted by 
Special Assistant to the Under Secretary for Special Projects 
and Intelligence, the Deputy Director of the Special Programs 
Division. That was Captain Dewispelaere's successor.
    Senator Specter. Well, did any of them have access to Dr. 
Lee's confession tapes and transcript?
    Mr. Preston. Not to my knowledge, sir, I don't believe so.
    Senator Specter. Did you make any effort to talk to Dr. 
Twogood before writing this letter of May 21st?
    Mr. Preston. No, sir.
    Senator Specter. Did you make any effort to obtain the 
transcripts or tapes of Dr. Lee's confession before writing 
this letter of May 21st?
    Mr. Preston. No, sir.
    Senator Specter. Had you known about the specifics of the 
tapes and the transcripts and Dr. Twogood's evaluation of Dr. 
Lee's confession as classifying secret information and, as you 
have heard him testify here, giving away the essence of this 
Navy program, would you have written this line disagreeing with 
the Cox Commission's conclusion?
    Mr. Preston. Sir, in the May 1999 time frame the issue that 
we were wrestling with and the concern at DOD was not focused 
on the level of classification of the information, but rather 
on the assessment as to damage done and the availability or 
non-availability of the information or similar information that 
was disclosed in public, open sources.
    So the specific level of classification--my understanding 
had been that it was classified as confidential, although that 
was a proposition that was not free from doubt or in the sense 
of possible challenge to the extent that there was information 
in the public domain concerning this, as well as the method by 
which the classification guide would be applied.
    But our focus in May 1999 was on the extent to which there 
had been actual damage to the national security and the extent 
to which Peter Lee's disclosures disclosed things that were or 
were not already in the public domain.
    Senator Specter. Well, Mr. Schuster's memorandum--we are 
about to get to that--was ambiguous even as to whether it was 
confidential. Isn't that a fact?
    Mr. Preston. I would have to concede, sir, that it is not a 
model of clarity. I understood it to be saying that the 
information was confidential, but that that was a matter that 
was not free from doubt.
    Senator Specter. So it was ambiguous? I don't want to 
settle for ``not a model of clarity.'' If you think it was not 
ambiguous, say so, or if you agree it was ambiguous, say so.
    Mr. Preston. I don't believe it was deliberately ambiguous.
    Senator Specter. I am not asking about deliberateness. Was 
it ambiguous or not?
    Mr. Preston. I could see how it could admit of different 
readings, yes, sir.
    Senator Specter. Dr. Twogood, I think you have testified to 
this, but let's sharpen it up even more. Was the material which 
you heard Dr. Lee confess to on the tapes in the public domain?
    Dr. Twogood. Not to my knowledge, no.
    Senator Specter. And I think you have already testified to 
this----
    Dr. Twogood. There were some classified portions. Much of 
what was on the tapes might have been in the public domain, but 
a few key segments which included the classified information--
--
    Senator Sessions. Well, there was classified information in 
Dr. Lee's confession that was not in the public domain.
    Dr. Twogood. That is correct.
    Senator Specter. And you have already testified to this, 
but let's sharpen it up. There was significant damage to U.S. 
national security interests by what Dr. Lee had told the PRC 
scientists, correct?
    Dr. Twogood. That is my opinion, yes.
    Senator Specter. Well, Mr. Preston, if you had had access 
to those tapes and had talked to Dr. Twogood, would you have 
written this letter of May 21, 1999?
    Mr. Preston. Sir, I am not sure my access to the tapeswould 
have made any difference. What I was doing--what we were doing in the 
May 1999 time frame was relying on the professional judgment of the 
program experts which was reflected chiefly in Mr. Schuster's 
memorandum and----
    Senator Specter. Well, they didn't have----
    Mr. Preston. Excuse me.
    Senator Specter. Go ahead.
    Mr. Preston. And the views of virtually every cognizant 
office within DOD and the Navy that----
    Senator Specter. Cognizant office?
    Mr. Preston. An office with an interest in the program 
area, the program legal policy, as well as program. We----
    Senator Specter. Well, those are a lot of big, fancy words, 
but did anybody there talk to Dr. Twogood or examine the tapes 
or the transcript?
    Mr. Preston. Well, as I said earlier, I don't know of 
anyone that examined the tapes or transcripts, and I couldn't 
speak to whether anyone had had any conversations with Dr. 
Twogood.
    Senator Specter. Well, I think the answer is no, and we are 
going to talk to Mr. Schuster, but we have talked about this on 
the record before. But let me repeat the question. If you had 
talked to Dr. Twogood and had examined the tapes or not 
examined the tapes--perhaps you are not competent to make an 
evaluation, but if you talked to Dr. Twogood and heard that 
there was classified information which was not in the public 
domain and there was damage to national security--had you taken 
the time to make those inquiries, would you have written this 
letter of May 21?
    Mr. Preston. Sir, I would have had to have deferred to the 
program experts on that.
    Senator Specter. Well, does that mean you wouldn't have 
written that letter unless the program experts had backed up 
this letter?
    Mr. Preston. I believe that the concern at that point in 
time was that the Cox committee report had the potential of 
creating a widespread misperception that by virtue of Lee's 
disclosures the submarine force had been rendered vulnerable to 
adversaries. And I frankly as I sit here am unable to parse 
between what I have heard Dr. Twogood say, what I understand 
Dr. Schuster and others to have believed, and frankly is not 
within my area of expertise to make that judgment.
    Senator Specter. Well, all right. If you can't parse it and 
you couldn't come to a conclusion, then would you have written 
this letter which does come to a conclusion?
    Mr. Preston. I don't know that I can answer your question 
any more satisfactorily than I have, sir.
    Senator Specter. Well, I will try some more. We are about 
to take up Mr. Schuster's memorandum. Mr. Schuster hadn't 
talked to Dr. Twogood either. Mr. Schuster hadn't reviewed the 
tapes. Mr. Schuster didn't know the full import as to what Dr. 
Lee had said and the Navy was not operating with all the 
information. Nobody had taken the trouble to go back and find 
out.
    I think somebody should have told you about that. I think 
the Department of Justice should have told you about that.
    Mr. Preston. Well, sir, let me speak to that. My 
understanding, and I think the understanding of others in the 
May 1999 time frame was that the classification and damage 
assessment that was performed was performed on the basis of the 
product of the FBI's investigation of the Peter Lee matter.
    Senator Specter. Well, was there a damage assessment? There 
wasn't a damage assessment by the Navy, was there?
    Mr. Preston. Well, sir, I am referring, of course, to Mr. 
Schuster's memorandum which reviewed the matter for 
classification as well as damage to national security.
    Senator Specter. Isn't it a fact, Mr. Preston, that there 
wasn't a damage assessment based on those tapes and the 
scientific information until after this subcommittee asked the 
Navy to do that?
    Mr. Preston. I don't believe that the program people looked 
at tapes or transcripts prior to that time. What I was getting 
at, Senator, was my understanding of your interest in the 
process that was followed here, interest in improving the 
process, one which we share. And to be frank, if this was a 
circumstance where the program people did not have access to 
material that they felt they needed and that would make a 
difference, I think that is an issue with the process.
    But all I can tell you is in the May '99 time frame, our 
understanding was that the assessment was performed on the 
basis of information provided by the FBI reflecting the product 
of their investigation. And I was not aware of, and I don't 
know of anyone else that was aware of any deficiencies in that 
information at that time.
    Senator Specter. Well, Mr. Preston, you are correct that 
what we are looking for here is a way to prevent these problems 
from recurring. There may also be some inquiry as to whether 
there can still be a prosecution of Dr. Lee for this issue on 
these disclosures in 1997.
    But it seems to me that your letter of May 21st was based 
upon totally incomplete information, and it should have been 
presented to you by the Department of Justice or you could have 
made an inquiry on your own. But I don't think it is a very 
complicated matter that this statement disagreeing with the Cox 
Commission has no foundation in light of what information was 
available from Dr. Twogood and the specifics of Dr. Lee's 
confession and the scientific assessment that there had been 
damage to national security.
    Now, if you say you still weren't certain because there was 
a contrary opinion--I don't know that you had a contrary 
opinion; we are going to talk to Dr. Schuster in a moment or 
two--you still had no basis for saying this if you were not 
convinced that Twogood was right or wrong.
    Mr. Preston. Senator, I think there were two propositions 
of which we were aware and of which we understood the Cox 
committee not to be aware that we thought were material to 
understanding the circumstance in terms of damage to the 
national security and the security of the submarine force.
    One of those propositions was the fact that information 
that Dr. Lee disclosed in May of 1997 was similar to 
information found in unclassified briefings and publications, 
according to Mr. Schuster's memo. The second proposition was 
the judgment by Mr. Schuster and the program people that it 
would be difficult to show that there had been significant 
damage to the national security.
    We felt that we should provide that information to the Cox 
committee so that their report--they would have an opportunity 
to provide a complete report, or a more complete report, and 
therefore a report that was less subject to misinterpretation, 
less subject to the misperception thatLee's disclosures had in 
themselves rendered the submarine force vulnerable.
    Senator Specter. Had you known of what Dr. Twogood found, 
would you have written this letter of May 21?
    Mr. Preston. I think it would be fair to say that I would 
have consulted--I think all of us involved in this would have 
consulted the program experts to find out whether they viewed 
that as material to their assessment.
    Senator Specter. So you wouldn't have written this letter 
until you had taken another step. That is what you just said, 
consulting your experts.
    Mr. Preston. I guess what I am trying to say is if we had 
had additional information or additional input, presumably we 
would have taken that into account. It wouldn't have been my 
personal judgment, frankly, but the judgment of the program 
professionals.
    Senator Specter. Well, I can understand your writing this 
letter not knowing the facts. I can't understand your defending 
this letter knowing the facts.
    Senator Sessions.
    Senator Sessions. Thank you, Senator Specter. You have 
raised some very important points.
    You are the General Counsel for the Navy?
    Mr. Preston. Yes, sir.
    Senator Sessions. And so when you write a letter to a 
Congressman of the recognized brilliance and capability and 
dedication of Congressman Cox, that is a serious matter, is it 
not?
    Mr. Preston. This most certainly was a serious matter.
    Senator Sessions. Don't you owe it to him to have complete 
information?
    Mr. Preston. Senator Sessions, we provided that information 
that was available to us based on the findings of the program 
professionals, based on the views of those who had some 
contemporaneous involvement of this in the fall of 1997, and 
based on the views of virtually every cognizant office we could 
identify in both the Navy and the Office of the Secretary of 
Defense.
    Senator Sessions. Well, you have already acknowledged there 
was other information readily available that you didn't obtain.
    Mr. Preston. I am not sure I agree with that proposition. 
It is my understanding now that when the damage and 
classification review was performed in the fall of 1997 that it 
was based on an affidavit, a draft affidavit summarizing the 
findings of the FBI and their investigation, and that the 
transcripts and tapes of the confessions were not provided.
    Senator Sessions. Did you ask for them?
    Mr. Preston. I don't know whether anyone asked for them in 
the fall of 1997. I was not in office during that period.
    Senator Sessions. When you wrote your letter.
    Mr. Preston. I beg your pardon?
    Senator Sessions. When you wrote your letter.
    Mr. Preston. In May 1999, we did not ask for tapes and 
transcripts.
    Senator Sessions. How did it come to the General Counsel of 
the Navy that this matter needed to be responded to?
    Mr. Preston. Well, sir, as I recite in my prepared 
statement, our attention to this in the May----
    Senator Sessions. I mean, who within the Navy contacted you 
to say there is a problem with this, or outside the Navy?
    Mr. Preston. I couldn't tell you from recollection what the 
first contact was. There were press reports in May, on May 10, 
that generated a good deal of attention and concern in both the 
Office of the Secretary of Defense and the Department of the 
Navy. I was one of the people involved in responding to that 
situation.
    Senator Sessions. Well, it looks pretty clear to me that 
this was a political response through and through, and it was 
designed to attack the integrity of the Cox report. And it does 
appear to me that it was hastily drawn and inaccurate and not 
possessed of sufficient information.
    As a lawyer, particularly chief counsel for the Navy, when 
a lawyer goes to court and makes a representation, doesn't he 
indicate that he has exhausted all reasonable opportunities to 
receive information and that that representation is based on a 
good-faith and honest analysis of all pertinent information? 
Isn't that a duty of a counsel in a court of law?
    Mr. Preston. Senator, most respectfully, I cannot accept 
your characterization of what the impetus was for this letter, 
nor the process that generated it.
    Senator Sessions. Well, it was first drafted as a press 
release, was it not?
    Mr. Preston. It was--the substance of it was first prepared 
in the form of a press statement, in the form of a letter to 
the editor of the New York Times, the principal concern being 
the possibility of a widespread public perception with respect 
to damage to national security and the security of the 
submarine force and an effort to dispel that misimpression.
    Senator Sessions. I think you are stretching that.
    Mr. Preston. I feel compelled to point out, sir, that that 
press release wasn't issued. Instead, we engaged with the Cox 
committee prior to the issuance of its report, and that effort 
eventuated in sending a letter which was notreleased to the 
press. It was sent to the Cox committee and the Cox committee staff for 
their benefit to try to apprise them of information and to provide them 
with a pertinent document that we understood they were unaware of.
    Senator Sessions. The Cox report--how did it get released?
    Mr. Preston. How did the Cox report get released?
    Senator Sessions. The letter get released?
    Mr. Preston. To my knowledge, sir, the Department of 
Defense and the Department of the Navy have never released this 
document publicly.
    Senator Sessions. You are not aware of how it became 
public?
    Mr. Preston. It was provided to the chairman and the vice 
chairman.
    Senator Sessions. Well, of course, it would be provided to 
the minority members of the committee, too, wouldn't it?
    Mr. Preston. It was provided to the chairman and the vice 
chairman.
    Senator Sessions. And the vice chairman, the minority----
    Mr. Preston. It was provided to this subcommittee early in 
its work last fall.
    Senator Sessions. Well, how long did it take that thing to 
pop out of the Cox committee and into the newspapers?
    Mr. Preston. I will be honest with you, sir. I have not 
made a study of the matter. I have not seen this letter 
referred to in the press.
    Senator Sessions. Well, the fact that this analysis was 
challenged has been in the press, has it not?
    Mr. Preston. I have no idea what sort of coverage this 
subcommittee's efforts is getting. I will just repeat----
    Senator Sessions. I mean back at the time you wrote the 
letter.
    Mr. Preston. No, sir, I am not aware of any press coverage 
making reference to the letter. I have not done a database 
search or read all the papers for that purpose. As a matter of 
fact, when the Cox committee report came out, the determination 
was made that we would not release the letter because there was 
nothing to be achieved by further airing the disagreement in 
interpretation.
    Senator Sessions. Let me ask this just to get the record 
straight. How did it fall to you to do the letter? Do you 
normally respond to inaccurate congressional reports within the 
Department of Defense, reports you believe to be inaccurate?
    Mr. Preston. Sir, I think it probably fell to me in two 
respects. First of all, in the November of 1997 time fame, it 
had been a Navy assessment that was prepared that was 
transmitted by the then Navy General Counsel in November of 
1997. If you fast-forward to May 1999, this was an issue that 
was being actively worked in both OSD and the Department of the 
Navy. And in terms of trying to deal at a staff level with the 
Cox committee, it fell to me as a matter of being assigned the 
laboring oar to interface with the Cox committee.
    Senator Sessions. Did you personally talk with the 
Secretary of Defense about it?
    Mr. Preston. I have never spoken to the Secretary of 
Defense about this.
    Senator Sessions. Has there been any reference to you at 
any time leading up to the preparation of this letter that the 
White House had requested the Navy to respond?
    Mr. Preston. I don't recall any White House request to the 
Navy to respond.
    Senator Sessions. So there could have been?
    Mr. Preston. I am just offering you my best recollection.
    Senator Sessions. So there could have been. You don't 
recall?
    Mr. Preston. I think if there had been, I would recall, but 
I don't recall.
    Senator Sessions. Thank you, Mr. Chairman.
    Senator Specter. Thank you, Senator Sessions.
    [The prepared statement of Mr. Preston follows:]

                Prepared Statement of Stephen W. Preston

    Stephen W. Preston is the General Counsel of the Department of the 
Navy. He was appointed, with the advice and consent of the Senate, on 
September 25, 1998. The General Counsel is the chief legal officer of 
the Department and serves as the principal legal advisor to the 
Secretary of the Navy. He oversees an office of 650 attorneys in this 
country and abroad, providing legal counsel to the Secretariat and 
components of the Navy and Marine Corps.
    For the previous three years, Mr. Preston served as a Deputy 
Assistant Attorney General at the U.S. Department of Justice, where he 
was in charge of the Appellate Staff of the Civil Division. He was 
responsible for civil litigation in the courts of appeals on behalf of 
the United States.
    From 1993 to 1995, Mr. Preston served in the Office of General 
Counsel of the Department of Defense, initially as Deputy General 
Counsel (Legal Counsel), then as the Principal Deputy General Counsel 
and, from March 1994 through September 1994, as Acting General Counsel. 
Upon his departure, he was awarded the Department of Defense Medal for 
Distinguished Public Service.
    Before entering government service, Mr. Preston was a partner in 
the Washington, D.C. law firm of Wilmer, Cutler & Pickering. There, 
from 1986 to 1993, he was engaged in a trial and appellate litigation 
practice with emphasis on federal securities law.
    From 1984 to 1985, Mr. Preston was a visiting fellow in the 
Washington, D.C. office of the Center for Law in the Public Interest. 
From 1983 to 1984, he served as a law clerk to the Honorable Phyllis A. 
Kravitch on the U.S. Court of Appeals for the Eleventh Circuit.
    A member of the District of Columbia bar, Mr. Preston is active in 
the American Bar Association's Section of Litigation, currently serving 
as Co-Chair of the Government Litigation Counsel Committee.
    In 1979, Mr. Preston received his bachelors degree (summa cum 
laude) from Yale University. He completed a graduate program (with 
First Class Honors) at Trinity College, University of Dublin, in 1980. 
In 1983, he received his law degree (magna cum laude) from Harvard 
University.
    Thank you, Mr. Chairman and members of the Subcommittee.
    I have been asked to appear before the Subcommittee today in 
connection with its inquiry as it pertains to the matter of Peter Lee, 
specifically Lee's disclosure to the Chinese during a trip to Beijing 
in May 1997. As I did not become General Counsel of the Navy until 
September 1998, I have no first-hand knowledge of events in 1997 
relating to Lee, including communications between the Department of 
Justice and the Department of Defense in the fall of 1997 concerning 
possible prosecution. I am, however, familiar with the circumstances of 
a May 21, 1999 letter to the Cox Committee, in which the Subcommittee 
staff has expressed interest. I will endeavor to address that aspect of 
the matter at this time.
    The Peter Lee matter received a great deal of attention within the 
Department of Defense between May 10, 1999, and May 25, 1999. Beginning 
on May 10th, a number of newspaper stories referring to Lee's May 1997 
disclosure caused considerable concern in the Office of the Secretary 
of Defense and the Department of the Navy over a misperception that Lee 
had disclosed highly sensitive and previously unknown technology 
imperiling America's submarine force. One or more of these stories 
pointed out that the Peter Lee case would figure in the report of the 
Select Committee on U.S. National Security and Military/Commercial 
Concerns with the People's Republic of China (referred to as the ``Cox 
Committee''), the release of which was said to be imminent.
    Examination of the relevant portion of a draft of the Cox Committee 
report compounded the concern over misperception of Lee's May 1997 
disclosure in terms of its substance and significance, as well as the 
account of later contacts between DOJ and DOD. There followed an effort 
to apprise the Cox Committee of that concern and provide clarifying 
information, which was received apparently in all good faith, but 
unfortunately to limited effect. DOD's continuing concern prompted 
transmission of my May 21, 1999 letter to the Cox Committee and, as an 
attachment, the assessment of Lee's May 1997 disclosure provided by the 
Navy to DOJ in November 1997. The report of the Cox Committee was 
produced over the holiday weekend and issued on May 25, 1999.
    My understanding of events in the fall of 1997 is as 
follows: In connection with DOJ's consideration of prosecution, 
the Navy was asked to review a draft affidavit summarizing the 
product of the FBI's investigation of Peter Lee in order to 
assess the level of classification of the information disclosed 
by Lee in Beijing and the extent of damage to the national 
security resulting from the May 1997 disclosure. The Navy's 
assessment, set forth in a memorandum dated November 14, 1997, 
was transmitted to DOJ on November 19, 1997. That assessment 
found that the information disclosed by Lee, evidently drawn 
from a document previously classified CONFIDENTIAL by 
compilation, was similar to information available from 
unclassified publications. The assessment further concluded 
that it would be difficult to make a case that significant 
damage had occurred as a result of the May 1997 disclosure. 
Finally, the memorandum expressed concern about public 
proceedings that could draw attention to the area of 
antisubmarine warfare.
    From DOD's perspective, the problem with the draft Cox 
Committee report, as of May 21, 1999, was essentially one of 
omission. The draft report alluded to the impact of Lee's 
disclosure on the security of the submarine force, as well as 
contacts between DOJ and DOD concerning possible prosecution. 
It did not, however, make any reference to the fact that the 
techniques Lee discussed with the Chinese were discussed in 
open sources and the judgment that it would be difficult to 
show significant damage to the national security. In this 
sense, the draft report was viewed as incomplete in its 
treatment of the May 1997 disclosure and subject to 
misinterpretation. The Cox Committee presumably was unaware of 
the Navy's contemporaneous assessment before it was brought to 
the staff's attention in mid-May 1999. It was to stress DOD's 
concern in this regard, and to furnish a copy of the November 
14, 1997 memorandum, that the May 21, 1999 letter was sent to 
the Cox Committee.
    In understanding the circumstances of the May 21, 1999 
letter to the Cox Committee, it may be useful to consider the 
process by which that letter was generated. First, underlying 
the letter was the November 14, 1997 memorandum setting forth 
the Navy's assessment of the May 1997 disclosure. That 
assessment was performed by the Science and Technology Branch 
of the Submarine Warfare Division on the Chief of Naval 
Operations Staff. It was signed out by the Head of the Branch 
(N875), and concurred in by the Deputy Director of the Division 
(N87B), the Assistant Deputy Chief of Naval Operations for 
Resources, Warfare Requirements and Assessments (N8B) and the 
Vice Chief of Naval Operations (and, in addition, the General 
Counsel of the Navy). In short, the assessment was the work of 
the Navy experts responsible for submarine warfare science and 
technology, and it was approved all the way up the OPNAV chain 
of command.
    The substance of the May 21, 1999 letter was originally 
drafted as a press statement (in the form of a Letter to the 
Editor). This was a collaboration of the Office of the Under 
Secretary of Defense for Acquisition and Technology, the Office 
of the Under Secretary of Defense for Policy, the Office of the 
Assistant Secretary of Defense for Command, Control, 
Communications and Intelligence, the Office of the Assistant 
Secretary of Defense for Public Affairs, the DOD Office of 
General Counsel and myself. During this timeframe, I was 
assisted by the Deputy Director of the Special Programs 
Division (N89B), the Assistant to the Under Secretary of the 
Navy for Special Programs and Intelligence, a Special Agent in 
the Counterintelligence Department of the Naval Criminal 
Investigative Service and Counsel for the Special Projects 
Division. The letter to the Cox Committee itself was prepared 
by DOD OGC and myself, and then distributed for coordination. 
The final draft received concurrences from OASD(C3I), DOD OGC, 
OUSN/ASP&I, the Deputy Director of Naval Intelligence (N2B), 
the Deputy Director of the Special Programs Division (N89B) and 
the Vice Chief of Naval Operations, as well as the OSD and DON 
legislative offices.
    The principal cognizant offices--OSD and DON, program, 
policy and legal, civilian and military--having participated in 
its preparation and review, I was (and remain) confident that 
the May 21, 1999 letter reflected the considered judgment of 
program professionals with respect to Lee's May 1997 disclosure 
and the corporate view of DOD with respect to the draft Cox 
Committee report.
    I appreciate your attention and am prepared to answer 
questions.

    Senator Specter. Dr. Schuster, the memorandum that you 
prepared dated November 14, 1997, will be marked part of the 
record.
    [The memorandum referred to follows:]

                               Exhibit 5

         memorandum for request for classification guidance (u)
    1. (u) The signal analysis techniques briefed by the subject are 
UNCLASSIFIED when applied to environmental data and they have been 
presented and published in several unclassified forums. Any application 
of the technique to submarine wake signatures, however, would be 
classified at the SECRET level, as called but in current classification 
guides.
    2. (u) The material that was briefed appears to have been extracted 
from a CONFIDENTIAL document. This classification was applied based on 
concern that the document, taken as a whole, might suggest a submarine 
application even though it was not explicitly stated. Given that the 
CONFIDENTIAL classification cannot be explicitly supported by the 
classification guides and that material similar to that briefed by the 
subject has been discussed in unclassified briefings and publications, 
it is difficult to make a case that significant damage has occurred. 
Further, bringing attention to our sensitivity concerning this subject 
in a public forum could cause more damage to national security than the 
original disclosure.
    3. (u) Based on the above, it is recommended that the disclosure of 
this material should not be considered as the sole or primary basis for 
further legal action.
                                        J.G. Schuster. Jr.,
                                 Head, Science & Technology Branch.

    Senator Specter. I will ask you at the outset if that is an 
accurate memorandum that you prepared?

  STATEMENT OF JOHN G. SCHUSTER, JR., BRANCH HEAD, SUBMARINE 
SECURITY AND TECHNOLOGY, DEPARTMENT OF THE NAVY, WASHINGTON, DC

    Mr. Schuster. Yes, sir.
    Senator Specter. Thank you for joining us and we would be 
pleased to hear any opening statement you care to make.
    Mr. Schuster. Yes, sir. My name is John G. Schuster. I am 
the Branch Head for Submarine Security and Technology, and I 
report to the Director of Submarine Warfare on the staff of the 
Chief of Naval Operations. In this position, I am responsible 
for the SSBN security program, including all the projects in 
submarine warfare related to non-acoustic anti-submarine 
warfare.
    In the fall of 1997, I received a request from Captain Earl 
Dewispelaere, who was then OPNAV N89B, to review an FBI 
affidavit regarding the disclosure of potentially classified 
material by Mr. Peter Lee to the People's Republic of China. I 
was asked to give my opinion on the seriousness of the 
disclosure made by Mr. Peter Lee and to evaluate whether level 
of damage caused justified a prosecution that might risk 
exposure of other non-acoustic ASW information.
    I reviewed the affidavit, as well as additional published 
information authored by Mr. Peter Lee, and wrote an internal 
memorandum to Captain Dewispelaere summarizing my conclusions 
on November 14, 1997, which is the letter just referred to. In 
this letter, I stated that classified information at the 
confidential level had been divulged, but that the information 
released did not cause significant damage to national security. 
Moreover, it was my opinion that bringing attention to our 
sensitivity concerning this subject in a public forum could 
cause more damage to national security than the initial 
disclosure.
    In the spring of 1999, I was asked by Captain Dewispelaere 
to review the classification of the November 14 memorandum for 
release to the Cox committee. I concluded that the memorandum 
was unclassified and could be released.
    The above actions describe my total involvement in the 
Peter Lee case prior to being questioned in connection with the 
investigations of the Senate Judiciary subcommittee starting 
last fall.
    Senator Specter. Dr. Schuster, the memorandum which you 
cosigned with Mr. Wilson and Ms. Kulla dated March 9, 2000, had 
been prepared after you had an opportunity to review what 
materials?
    Mr. Schuster. That was after we reviewed the transcripts of 
the, I believe, October 7 and 8 interviews with Mr. Peter Lee.
    Senator Specter. And was that review essentially done at 
the request of this subcommittee?
    Mr. Schuster. Yes, sir.
    Senator Specter. In this memorandum, you say that the 
statements of Dr. Lee constituted a disclosure of confidential 
information?
    Mr. Schuster. Yes, sir.
    Senator Specter. Had you reviewed the transcripts before 
you wrote your memorandum of November 14, 1997----
    Mr. Schuster. No, sir.
    Senator Specter. Well, I was about to say, had you done so, 
would you have come to a firm conclusion in that November 14, 
1997, memorandum that Dr. Lee's disclosures were confidential?
    Mr. Schuster. My intention on November 14th, '97, was that 
they were confidential.
    Senator Specter. Do you think that memorandum says they 
were confidential?
    Mr. Schuster. I believe it does. That was my 
interpretation. That is the way I wrote it.
    Senator Specter. You don't think it is ambiguous?
    Mr. Schuster. I understand that question has been asked. I 
didn't think so at the time.
    Senator Specter. It hasn't been asked to you.
    Mr. Schuster. I'm sorry, sir?
    Senator Specter. It hasn't been asked to you today.
    Mr. Schuster. Yes, sir. I understand the statement has been 
made.
    Senator Specter. Do you think your memorandum is ambiguous?
    Mr. Schuster. I understand, you know, as I said, that 
perhaps there could be different interpretations. My intention 
was to make it clear, but----
    Senator Specter. You have heard Dr. Twogood's testimony 
that he thinks the information disclosed by Dr. Lee was 
appropriately classified at the secret level. Why do you 
disagree with that?
    Mr. Schuster. Based on my review----
    Senator Specter. I don't want you to get into anything, I 
don't have say, classified.
    Mr. Schuster. I will not.
    Senator Specter. But if you can't answer it without doing 
so--but if you can, we would like to know your answer.
    Mr. Schuster. It was based on my review of the--I mean, 
certainly, in the affidavit the information he was alleged to 
have disclosed and the sources of that information which were 
classified at the highest level, confidential. And the majority 
of that information that was classified confidential had been 
previously published at the unclassified level.
    Senator Specter. Well, isn't Dr. Twogood--whether you may 
disagree with his classification or not, isn't it true that, as 
Dr. Twogood has testified, there were materials disclosed by 
Dr. Lee to the PRC scientists that had not been in the public 
domain?
    Mr. Schuster. There was a confidential report. Clearly, 
that was not in the public domain. Peter Lee, in the 
information we had, said that he released the details of that 
report. So therefore he did release confidential information 
that was not in the public domain. However, the majority of 
that information, the confidential report, had been separately 
published in unclassified publications.
    Senator Specter. Well, but isn't Dr. Twogood correct that 
there were portions as to what Dr. Lee admitted giving to the 
PRC which was not in the public domain?
    Mr. Schuster. Certainly, I understand.
    Senator Specter. Although you have evaluated the materials 
as confidential and Dr. Twogood has evaluated the materials as 
secret, would you say that there was a rational basis for the 
disagreement, and that is that Dr. Twogood had a rational basis 
for a different classification at the secret level?
    Mr. Schuster. There certainly can be disagreements on the 
interpretation of these sorts of things. I believe the evidence 
supports the confidential classification and that is what I 
have stated.
    Senator Specter. But was there sufficient latitude here for 
a reasonable classification by Dr. Twogood of secret?
    Mr. Schuster. I don't agree with the classification at the 
secret level based on the information I have seen.
    Senator Specter. So there was no reasonable basis for his 
classification of secret?
    Mr. Schuster. I am not aware of a basis for secret 
classification.
    Senator Specter. Dr. Twogood testified that he gave away 
the heart, the core--you heard his testimony; I am paraphrasing 
it--of the information. Would you disagree with that?
    Mr. Schuster. He was talking about the information in the 
program. This is not my program and I don't know that I could 
speak to the hard core of that program.
    Senator Specter. So that is beyond the purview of your 
expertise or knowledge?
    Mr. Schuster. Yes, sir, relative to the program.
    Senator Specter. So based on your knowledge, you wouldn't 
have a basis for disagreeing with what Dr. Twogood said?
    Mr. Schuster. Not in that sense. I couldn't comment, no, 
sir.
    Senator Specter. And how about Dr. Twogood's conclusion 
that there was significant damage done to U.S. national 
security interests? Would you disagree with that?
    Mr. Schuster. I would disagree with that, yes, sir.
    Senator Specter. Well, what is the basis for your 
disagreeing with that if you don't have sufficient information 
to evaluate Dr. Twogood's conclusion that Dr. Lee gave the core 
and heart of the information to the PRC?
    Mr. Schuster. My understanding was he said the core and 
heart of the program information. I mean, that depends on what 
the program is, I mean, and it was not my program. It was an 
OSD program. We were only asked to comment on the information 
in the affidavit.
    Senator Specter. Okay, so you don't know the details of the 
program. I understand that, and that is why you didn't disagree 
with Dr. Twogood's statement about giving away the heart and 
core of the program. But the next question which logically 
follows is what is the import for national security, and if you 
don't know the program, what is your basis for disagreeing with 
Dr. Twogood's conclusion that it was a serious national 
security breach?
    Mr. Schuster. My basis for the assessment of the lack of 
serious damage was my review of the materials of Peter Lee. The 
details of that assessment obviously get into classified 
information.
    Senator Specter. Senator Sessions.
    Senator Sessions. Is your analysis and your statementbased 
solely upon what Peter Lee admitted having said? Did you analyze his 
confession?
    Mr. Schuster. Yes, Senator.
    Senator Sessions. Are you aware or do you dispute the fact 
that he could have given away more?
    Mr. Schuster. Not at all.
    Senator Sessions. What do you mean?
    Mr. Schuster. I don't dispute that at all.
    Senator Sessions. That he couldn't have given away more?
    Mr. Schuster. It is possible.
    Senator Sessions. If it had given away more, would your 
analysis be correct? In other words, your basic analysis in 
this memorandum was based solely on the specific information he 
provided?
    Mr. Schuster. Yes, sir.
    Senator Sessions. That he admitted he gave?
    Mr. Schuster. Yes, sir.
    Senator Sessions. Do you acknowledge, as Dr. Cook does, and 
would you dispute my statement I made earlier that it is likely 
he gave away more than he admitted?
    Mr. Schuster. It is certainly possible. I mean, I didn't 
attempt to speculate at that, and at the time, based on the 
affidavit, we certainly didn't have the information in the 
affidavit that would allow us to draw that conclusion.
    Senator Sessions. Do you dispute the fact that he had 
access to more information?
    Mr. Schuster. He did have a secret clearance and my 
understanding is that he had access to more classified 
information. But I don't know the--again, it is not my program. 
I don't know the level. I mean, I don't know the details of all 
the access he had.
    Senator Sessions. Well, how did you come to write this 
memo?
    Mr. Schuster. I was asked to review the affidavit, to look 
at what was in the affidavit and make an assessment based on 
that as to what the seriousness of disclosure was.
    Senator Sessions. So if we are dealing with systemic 
problems, wouldn't you recognize that you have to be real 
careful here because your memorandum is based solely on the 
information that he admitted giving to the Chinese?
    Mr. Schuster. Yes, sir.
    Senator Sessions. And could be misinterpreted?
    Mr. Schuster. It could be.
    Senator Sessions. Would you have any comment on the view 
that this memorandum was a body blow to the prosecutor's case?
    Mr. Schuster. I have no opinion. I did not write the 
memorandum for the Justice Department.
    Senator Sessions. But ultimately it could have that effect. 
You would recognize that an internal Department of Defense 
memorandum, Department of the Navy memorandum, could have the 
effect of undermining the ability of a prosecutor to proceed 
with his case in a case like this?
    Mr. Schuster. I assume that could be possible. I mean, the 
memorandum I wrote was what I wrote to the best of my ability, 
given the information I had.
    Senator Sessions. Well, given the information you had, 
would you admit that that is a dangerous situation? Did you 
realize at the time that this memorandum could eventually have 
to be produced for the defense and that it could undermine the 
prosecution of the case when you wrote it?
    Mr. Schuster. No, I did not.
    Senator Sessions. Do you think that would be something 
important for people to know in the future?
    Mr. Schuster. Yes, sir.
    Senator Sessions. Did you have any occasion to discuss with 
any other people in the Navy or the Department of Defense the 
contents of your memorandum? Was it ever reviewed and sent back 
to you with suggestions for change and that kind of thing?
    Mr. Schuster. No, sir. I only talked to Captain 
Dewispelaere.
    Senator Sessions. Captain who?
    Mr. Schuster. Captain Dewispelaere, who was the one who 
asked me to generate the memorandum.
    Senator Sessions. Well, I think that is how we get in a 
fix. It is dangerous business to have memorandums floating 
around by people who don't have access to all of the facts, 
because when the prosecutor has got to try this case, he has 
got to say that Mr. Schuster, head of the Science and 
Technology Branch of the Navy, has said thus and so. And so he 
has got to prove his case beyond a reasonable doubt and if you 
have generated some internal document or a document that was 
expected to be used outside or otherwise that hastily makes 
opinions about the validity of a prosecution, those can be 
devastating blows. I am not sure this document is that. I am 
not sure it is that clear, but it is certainly not a positive 
event for the Department of Justice, in my view.
    Thank you.
    Senator Specter. Thank you, Senator Sessions.
    Dr. Schuster, you didn't talk to Jonathan Shapiro about 
this matter?
    Mr. Schuster. No, sir.
    Senator Specter. Or anybody from the Department of Justice?
    Mr. Schuster. No, sir.
    Senator Specter. Turning to your memorandum, and this is an 
unclassified memorandum, correct?
    Mr. Schuster. Yes, sir.
    Senator Specter. You start off, quote, ``The signal 
analysis techniques briefed by the subject are unclassified 
when applied to environmental data and they have been presented 
and published in several unclassified forums. Any application 
of the techniques to submarine wake signatures, however, would 
be classified at the secret level, as called out in current 
classification guides.''
    Doesn't that statement lend some support to Dr. Twogood's 
conclusion of a secret classification contrasted with your 
conclusion on March 9 of a confidential classification?
    Mr. Schuster. The intent of that paragraph was to summarize 
the range of the classification guide. The reference to the 
secret level is the threshold that I would take to make the 
material secret, and I saw no evidence in any of the material I 
saw that he released information on submarine wake signatures.
    Senator Specter. Going on, the memorandum says, ``The 
material that was briefed appears to have been extracted from a 
confidential document. This classification was applied based on 
concern that the document taken as a whole might suggest a 
submarine application even though it was not explicitly stated. 
Given that the confidentialclassification cannot be explicitly 
supported by the classification guides and material similar to that 
briefed by the subject has been discussed in unclassified briefings and 
publications, it is difficult to make a case that significant damage 
has occurred.''
    Isn't it a fair reading of that sentence, Dr. Schuster, 
that you are raising a question as to even a confidential 
classification?
    Mr. Schuster. Yes, sir. I think the issue is, if you look 
at the classification guides, there is no clear statement that 
says at this level it is unclassified and at this level it is 
confidential. The confidential determination on the report was 
made by the program manager of the program when the report was 
published and it was based on their concern that the 
compilation of several sources of data was at the confidential 
level.
    But you can't go back and say here is a statement in the 
classification guide and clearly when these two things happened 
it became confidential. It was classified confidential, 
however, and he knew that. It was a report that had been 
classified at the confidential level. It was a report that he 
was involved in and he should have been aware it was 
confidential.
    Senator Specter. Well, I don't understand your answer. 
Would you say that this does raise a question or an ambiguity 
as to whether you thought it was confidential?
    Mr. Schuster. I clearly--I thought I clearly stated that 
the document was confidential that he took this material from. 
Therefore, the material was confidential. If you try to go back 
and prove that it is confidential based on the classification 
guides, it is very difficult because the classification guides 
don't make an explicit statement of, coupling these two things 
together, they are confidential.
    Senator Specter. But when you later found out that there 
was more to it after reviewing the transcript and tapes, as 
noted in your March 9, 2000, memorandum, there was no doubt 
that it was confidential, at least confidential?
    Mr. Schuster. There was no doubt at that time, and 
previously, that it was the material from the confidential 
report and therefore was confidential.
    Senator Specter. No doubt previously that what you had just 
from the affidavit and not the tapes that it was confidential?
    Mr. Schuster. Yes, that the material he took was from a 
confidential report and he disclosed that material.
    Senator Specter. So that what he had disclosed, even before 
you saw the transcript and tapes, was confidential?
    Mr. Schuster. Yes, sir.
    Senator Specter. And your last line here, ``Based on the 
above, it is recommended that the disclosure of this material 
should not be considered as the sole or primary basis for 
further legal action.'' As you and I have discussed before when 
we talked in closed session, that is because you thought that 
it might be appropriate for prosecution along with the hohlraum 
issue?
    Mr. Schuster. Yes, sir.
    Senator Specter. Dr. Schuster, when the classification 
talks about filtering techniques, doesn't that put it into the 
secret category?
    Mr. Schuster. Sorry, sir. Filtering techniques?
    Senator Specter. Filtering techniques. When the 
classification guide refers to filtering techniques, doesn't 
that put it in the secret classification?
    Mr. Schuster. I don't believe so.
    Senator Specter. In the affidavit which you had reviewed 
prior to your November 14 letter, there is a statement, ``Peter 
Lee said he told his audience that his lecture was on microwave 
scattering from ocean waves. Someone from the audience 
questioned Peter Hoong-Yee Lee about its application to 
antisubmarine warfare and Peter Hoong-Yee Lee said that he 
agreed with the questioner that that was its application.''
    So isn't there really an issue here of the application 
which is contrary to what you said earlier?
    Mr. Schuster. No, sir, I don't believe it is contradictory. 
Certainly, Peter Lee worked in anti-submarine warfare. There 
were other authors on unclassified papers that worked in anti-
submarine warfare, and the extension to say that there was a 
possibility that this stuff could be related, I think, is a 
conclusion somebody could draw.
    What I didn't see in any of the information was that there 
was specific data given as this is how you would apply it to 
submarine warfare or that submarine signatures were involved in 
any of the data he showed, or that performance for any 
submarine warfare was disclosed, which is what I think you 
would need to make it secret.
    Senator Specter. Anything further, Senator Sessions?
    Senator Sessions. Well, I think the memorandum was ill-
advised. And we are talking about Peter Lee being in some 
Chinese hotel room, after having lied about how he got there 
and what he was doing originally, talking about the 
application. According to this affidavit, he said he told the 
PRC scientists that you filter the Doppler spectrum at the void 
and peak to enhance detection. It sounded like to me he 
admitted talking about some of the matters that would have been 
perhaps something at the secret level.
    Mr. Schuster. I believe what he was referring to was 
surface ship detections which were part of the confidential 
report. I mean, that is my interpretation based on the data I 
saw.
    Senator Sessions. I suppose we will be talking more about 
the plea bargain later. Is that what you are----
    Senator Specter. Lots.
    Senator Sessions. OK; well, I will withhold my comments on 
that.
    Senator Specter. Gentlemen, thank you very much for coming. 
The thrust of what we are looking for is to improve the 
procedures. That is what we want to do here, and I think that 
when we deal with matters of this importance--and I think 
everyone will agree--there has to be the kind of communication, 
interaction and thought so that we all know what is involved.
    The Department of the Navy should have been provided with 
information by the Department of Justice, beyond any question, 
and the matter should have been deferred until that was done. 
And it is a different question as to the duty of the Navy to 
make inquiries in the absence of that information being 
provided.
    But we request what you all are doing. You are all in very, 
very important positions, carrying out very, very important 
matters for the U.S. Government, and we appreciate what you are 
doing. We are all on the same team and Congress has the 
responsibility to take a look from time to time at what is 
going on.
    The whole theory of oversight, which is a constitutional 
responsibility, is that there will be a lot of people paying 
attention to what we are doing here, so that when Congress does 
take the time to take a look, it has a ripple effect throughout 
the entire Government. We are too busy and too preoccupied to 
do very much of this. Very, very little oversight is done.
    We will be getting into the heart of the matter next week 
when we take up the issues of the plea bargain, and on those 
occasions Senator Sessions and I may know a little more about 
what we are talking about than getting into the details of the 
hohlraum and wakes and all the rest of it.
    We thank you for what you do generally and we thank you for 
coming here today.
    Mr. Sayner. Senator, before we conclude I would like to 
just pass on that we will give to the subcommittee information 
regarding when those tapes were sent to our headquarters, the 
confession tapes. I have a summary here that there were 
repeated efforts to contact DOD, and I don't have the dates 
from our headquarters or who they talked to, but we will 
provide that information to you.
    Senator Specter. Well, that is very important as to what 
the FBI did in an affirmative way.
    We have other potential witnesses who were not called upon 
to testify because their testimony would have been cumulative, 
but we thank Ms. Donna Kulla and Mr. Wayne Wilson, and their 
prepared statements will be made a part of the record.
    [The statements of Ms. Kulla and Mr. Wilson follow:]

                   Prepared Statement of Donna Kulla

    I was the Program Manager for the Advanced Sensors Applications 
Program (ASAP) from October 1990 through October 1999. I was then, and 
still am, an employee of the Intelligence Systems Support Office 
(ISSO). This office primarily supports OSD (Command, Control, 
Communications and Intelligence (C3I)).
    In the fall of 1997, I participated in meetings with 
representatives of the Department of Justice, DoD General Counsel, and 
the Department of the Navy regarding Peter H. Lee, a TRW employee. 
These meetings concerned the Department of Justice's request for the 
relevant classification guide and for an evaluation of the appropriate 
classification of information reported to have been passed by Dr. Peter 
Lee to the PRC, as described in an affidavit prepared by Special Agent 
Cordova of the Federal Bureau of Investigation.
    I reviewed the affidavit and publicly-available information on non-
acoustic ocean imaging, including several articles by Dr. Lee. I also 
reviewed charts I received directly from Assistant U.S. Attorney 
Jonathan Shapiro, which he told me during the course of a telephone 
conversation Peter Lee had used during his lecture in the PRC. 
Subsequently, my office complied and forwarded a literature review, 
including Peter Lee's articles and the charts noted above, as well as a 
classification guide, to the DOD General Counsel.
    The above actions describe my total involvement in the Peter Lee 
case prior to being questioned in connection with the investigation of 
the Senate Judiciary Subcommittee on Administrative Oversight and the 
Courts starting last fall.

                   Prepared Statement of Wayne Wilson

    I am the Director of the Office of Technology and Evaluation in the 
Office of the Deputy Assistant Secretary of Defense (intelligence) in 
the Office of the Secretary of Defense. Since late 1996 I have had 
oversight responsibility of the Department's Advanced Sensor 
Applications Program (ASAP). ASAP is directly managed in the 
Intelligence Systems Support Office (ISSO) which I also oversee.
    In the fall of 1997 my staff participated in one meeting that 
included the Justice Department, the DoD General Counsel, and the 
Department of the Navy regarding Peter H. Lee, a TRW employee. The DoD 
General Counsel tasked my staff to provide the classification guide to 
the Justice Department and to search for related unclassified 
information. We provided that information to the Justice Department and 
to the DoD General Counsel. That package of information has been 
provided to the Subcommittee. During this time, my staff also 
participated in telephone conversations with members of the Justice 
Department on these same subjects.
    Apart from internal DoD discussions on the details of the incident, 
this describes my staff's involvement prior to being questioned by this 
Subcommittee.

    Senator Specter. That concludes the hearing.
    [Whereupon, at 12:24 p.m., the subcommittee was adjourned.]

 
                           THE PETER LEE CASE

                              ----------                              

                        WEDNESDAY, APRIL 5, 2000

                               U.S. Senate,
           Subcommittee on Administrative Oversight
                                            and the Courts,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:35 a.m., in 
room SH-216, Hart Senate Office Building, Hon. Arlen Specter, 
presiding.
    Also present: Senators Grassley, Thurmond, Sessions, 
Torricelli, and Leahy (ex officio).

 OPENING STATEMENT OF HON. ARLEN SPECTER, A U.S. SENATOR FROM 
                   THE STATE OF PENNSYLVANIA

    Senator Specter. We have waited for a few minutes here for 
the arrival of some of the Senators from the minority, but we 
are a little past starting time, and we are going to have a 
complicated morning because two votes have been scheduled at 11 
o'clock. So we will start at this time.
    The Subcommittee on Oversight of the Department of Justice 
is going to proceed now with its second hearing on the plea 
bargain of Dr. Peter Lee, which involves a matter which is 
very, very serious, concerning two matters of espionage, one 
where Dr. Lee in 1985 informed scientists of the People's 
Republic of China about nuclear secrets, and again in 1997 when 
Dr. Lee informed scientists of the People's Republic of China 
about ways to detect submarines.
    The Department of Justice entered into a plea bargain 
which, in the face of offenses that could have carried the 
death penalty or life imprisonment, resulted in a 
recommendation by the Department of Justice of a short period 
of incarceration, which not unexpectedly resulted in a sentence 
which had no jail at all but had only community service, a 
fine, and probation. That plea bargain was entered into without 
any damage assessment by the Department of Defense.
    The assistant U.S. attorney, the trial attorney, was 
unaware, according to testimony or according to a statement 
which I took from Mr. Jonathan Shapiro in Los Angeles on 
February 15, that he was authorized to proceed under 794, which 
is a tough provision, but said that his only instruction was to 
secure a plea bargain, 793 and 1001, and could get nothing more 
by way of authorization from the Department of Justice.
    In interviews with ranking DOJ officials, that was never 
disclosed to this subcommittee. But documents have been 
discovered from the FBI and the Department of Defense that if 
that plea bargain was declined, there was authorization to 
prosecute under 794, again, a fact, at least according to the 
assistant U.S. attorney, not made known to him.
    We have had a request by Attorney General Reno not to 
subpoena line attorneys and had an extended meeting with the 
Attorney General yesterday afternoon, a meeting attended by 
Senator Hatch, Senator Grassley, Senator Torricelli, Senator 
Leahy, and a good many officials from the Department of 
Justice, FBI, and staff.
    After considering the request of the Attorney General, it 
was my judgment that this hearing ought to proceed and it ought 
to proceed with the subpoena standing. The Attorney General 
raised an objection that it was inappropriate to subpoena a 
line attorney, but there is an overwhelming weight of authority 
to the contrary. The Congressional Research Service has 
summarized the issue, and I will make a part of the record a 
memorandum on this subject.
    Senator Specter. But suffice it to say for these purposes 
at this time that there are many, many, many authorities 
supporting congressional--many precedents supporting 
congressional authority to subpoena line attorneys. As recently 
as last June 9, 1999, a line attorney was subpoenas by the 
Governmental Affairs Committee. In 1992 to 1994, Government 
line attorneys were subpoenaed with respect to the DOJ 
influence on the Environmental Protection Agency. Line 
attorneys testified in the Rocky Flats investigation in 1992. 
In 1975, line attorneys were subpoenaed by the FBI and the 
Department of Justice on domestic intelligence issues. Line 
attorneys were subpoenaed in Watergate, testified in Iran-
contra. In many of the situations, line attorneys were not 
subpoenaed but testified voluntarily, and this authority goes 
all the way back to Teapot Dome and is as recent as last year.
    The Attorney General raised an issue about morale in the 
Department of Justice, and I do believe it is a fair 
observation that the Department of Justice survived on the 
morale issue on these many, many other occasions where line 
attorneys testified.
    I have had some experience myself in the field, having been 
a line attorney, as an assistant district attorney in 
Philadelphia for some 4 years, and I know what that is like. 
And then I was district attorney there for 8 years, so I have 
some appreciation and insights as to what it is to have an 
office. The Attorney General said to me yesterday that I didn't 
understand what it was like being Attorney General. And I 
didn't disagree with that because I haven't been Attorney 
General. But I have had some experience both as a prosecutor 
and as a Senator on the Judiciary Committee for almost 20 years 
now. And I commented about the scope of my office, 160-plus 
attorneys, 30,000 prosecutions, and 500 homicide cases, and 
said that if one of my assistants was called upon or if I had 
been called upon under circumstances that are present in this 
matter, I wouldn't object; and that, in fact, I think it can 
have a salutary effect on the morale of the Department of 
Justice, or should have, when these questions are raised. And 
if there are answers, I am prepared to hear them.
    But this subcommittee has conducted a far-ranging search 
and hasn't found answers. And what we have found is a concerted 
and persistent pattern by the Department of Justice in 
obstructing Senate oversight, a consistent and persistent 
pattern of obstructing Senate oversight.
    When we have made requests for documents, they have not 
been produced. When we have made requests for eliminating 
redactions, we have had no cooperation. When we have 
interviewed ranking DOJ officials and have come to the subject 
of what was done in this case, nobody told us that there was 
authority for prosecution under 794. And it was only last night 
that we received from the Department of Justice information 
that the Department of Energy damage assessment had been 
provided to the Department of Justice, a fact concealed from 
this committee.
    Now, we are going to inquire about that as well. And it may 
well be that the so-called Department of Justice is guilty of 
obstruction of justice. And we intend to get to the bottom of 
that. Mr. Robinson, shaking your head in the negative. We sit 
and deliberate on subpoenas, and the Department of Justice, Mr. 
Robinson, who apparently disagrees with my last statement, 
sends a letter to the ranking Democrat commenting about me 
without sending me a copy.
    I will also make a part of the record a long list of 
requests which have been made to the Department of Justice and 
the Attorney General specifically where commitments at hearings 
were made by Attorney General Reno, commitments were made by 
her which she did not fulfill, including my request on May 5th 
for the specifics on the plea bargain as to Peter Lee and my 
request again on June 8th as to the specifics on the report of 
the plea bargain on Peter Lee.
    [The list follows:]

                                Hearings

July 15, 1998--Judiciary Committee Hearing--Oversight of the Department 
        of Justice
 You asked for the Attorney General's opinion as to whether it 
        was ``specific and credible'' evidence of a legal violation 
        when Mr. Karl Jackson testified that Mr. Huang said within 
        earshot of President Clinton, ``elections cost money, lots and 
        lots of money, and I am sure that every person in this room 
        will want to support the reelection of President Clinton.'' The 
        Attorney General responded that she would be ``happy to review 
        it with the task force and get back to you.'' She did not do 
        so.
March 12, 1999--Judiciary Committee Hearing--Dept. of Justice FY2000 
        Budget Oversight
 You requested that the Attorney General make available to the 
        Committee any writings, memoranda or documents which ``deal 
        with Mr. LaBella with respect to his recommendations on 
        independent counsel . . ., or whether that issue came up in any 
        of the Department of Justice documents which led to the 
        appointment of Mr. Vega. Attorney General Reno responded that 
        she would be ``happy to furnish you anything that I can 
        appropriately furnish you on any matter relating to that.'' The 
        Attorney General did not follow up by furnishing information or 
        even to say that there was nothing she could ``appropriately'' 
        furnish.
 When you stated that Mr. LaBella was quoted as saying that he 
        did not even get a phone call from the Justice Department that 
        Mr. Vega was going to be nominated, the Attorney General 
        responded that it was her understanding that he did, but that 
        she would check and let you know. Notwithstanding this 
        commitment to respond, she did not do so.
May 5, 1999--Judiciary Committee Hearing--Oversight of the Department 
        of Justice
 The Attorney General agreed to respond in writing as to 
        whether there were any ongoing investigations as to Mr. Fowler 
        and Mr. Sullivan. She did not do so.
 The Attorney General agreed to respond in writing as to her 
        thoughts on the plea bargain of Peter Lee, specifically the 
        propriety of the sentence given the seriousness of the offense. 
        Notwithstanding this commitment, the Attorney General did not 
        respond.
June 8, 1999--Judiciary Committee Hearing--Closed Hearing
 In response to your questions, the Attorney General promised 
        to provide you with the following three things:
          1. A report within a month on where DoJ stood on prosecuting 
        WHL.
          2. A report on the Peter Lee plea bargain.
          3. Details of the Chung plea bargain.
          Notwithstanding this commitment, the Attorney General did not 
        provide any of these items.

                                Letters

December 2, 1997
 You wrote to the Attorney General requesting that a copy of 
        the Freeh memorandum be made available to the Judiciary and 
        Governmental Affairs Committees. You received a response from 
        Attorney General Reno and Director Freeh on December 8 stating 
        that they must decline your request.
July 10, 1998
 You wrote to the Attorney General reiterating your request 
        from December 2, 1997, that a copy of the memorandum from FBI 
        Director Freeh recommending appointment of Independent Counsel 
        on campaign financing reform matters be made available. No 
        response.
July 23, 1998
 You wrote to the Attorney General requesting a copy of the 
        LaBella report recommending Independent Counsel. No response.
July 22, 1999
 You wrote to the Attorney General (Senator Hatch signed on) 
        requesting all documents in the Department's possession 
        relating to (1) the Department's investigation of illegal 
        activities in connection with the 1996 federal election 
        campaigns, and (2) the Department's investigation of the 
        transfer to China of information relating to the U.S. nuclear 
        program. DOJ staff responded by providing very little 
        information.
September 9, 1999
 Together with Senators Hatch and Torricelli, you wrote to the 
        Attorney General regarding the redactions in the transcript of 
        the June 8 closed session hearing. The Attorney General did not 
        respond to you, but instead met separately with Senators Hatch 
        and Leahy on the issue.
September 29, 1999
 You wrote to the Attorney General to request the ten pieces of 
        intelligence information mentioned in the United States 
        Department of Justice, Office of Inspector General Special 
        Report on the Handling of FBI Intelligence Information Related 
        to the Justice Department's Campaign Finance Investigation 
        (July, 1999). You further requested any analysis available to 
        the Department of Justice related to the validly of the 
        information and its suitability for use in a prosecution or 
        relevance to a plea agreement. No response.
September 29, 1999
 You wrote a follow-up letter to the Attorney General regarding 
        the documents you requested on July 22, 1999. Again, no 
        response.
March 15, 2000
 Your counsel, David Brog, was invited to DOJ offices to review 
        the partially unredacted LaBella memo which had already been 
        reviewed by other members of Congress. When he arrived, he was 
        informed that he could not review the memo, since the new head 
        of the Campaign Finance Task Force had to review it in order to 
        see if further redactions were necessary in light of some 
        ongoing cases.
March 24, 2000
 You wrote to the Attorney General regarding a letter from 
        Assistant Attorney General James Robinson which was sent to 
        Senator Leahy in time for the Judiciary Committee executive 
        business meeting on March 23. You asked her for her view of 
        whether it was proper for Mr. Robinson not to send you a copy 
        of the letter even though you were a topic of the letter. No 
        response.

    Senator Specter. When Attorney General Reno has appeared at 
oversight hearings, she has had the consistent response, ``I 
will review that and get back to you.'' So yesterday at the 
session, while Attorney General Reno was present and we were 
talking about the Peter Lee plea bargain, I asked her what 
participation she had. I knew the answer was she had none 
because I had found that out. But I said to her, eyeball to 
eyeball, this is a matter that the Attorney General should have 
supervised. And she gave me the same answer: ``I am not going 
to answer that at this time, but I will later.''
    Now, in this context, it seems to me that this subcommittee 
would not be doing its job if we didn't pursue this matter at 
this time in this open session. This is not the only matter 
that this subcommittee has to work on, and to get information 
has been a long, tortuous struggle. And if at the last minute 
the Attorney General is going to come in and say don't proceed 
with your hearing, submit written interrogatories, which is, as 
any trial attorney knows, totally unsatisfactory because of the 
absence of follow-up, or take a deposition and re-evaluate at a 
later time, we wouldn't be doing our duty.
    And this is not the only matter on the agenda of this 
subcommittee. We have to pursue Wen Ho Lee where we have met 
fierce resistance from the Department of Justice on getting at 
the Attorney General's redacted statement from June 8 so badly 
you can't tell what the testimony was. We have under request 
now subpoenas for FBI Director Louis Freeh and former special 
assistant Charles LaBella. We have questions outstanding for 
the plea bargains in John Huang and Charlie Trie and Johnny 
Chung. We have the Pauline Kanchanalak case to investigate. We 
have the Maria Hsia matter to look into. We have the issues of 
Vice President Gore's soliciting hard campaign contributions 
from the White House, the refusal of the Attorney General to 
appoint independent counsel. And if we take a long, tortuous 
road, tougher than extracting bicuspids, and at the last minute 
fooled and say we will do something else, we wouldn't be doing 
our job, and we would have no chance to finish this 
investigation in the 9 months remaining in this administration.
    Now, those are just a few of my thoughts. If in the course 
of this hearing we approach any classified information, we will 
adjourn and have a closed session.
    I don't know if it is worth noting or not, the letter which 
was put on my desk from the National Association of Former U.S. 
Attorneys objecting to the calling of line attorneys, 
representing to speak for a great many people with a single 
signature. But let it be noted that the author did not hear the 
subcommittee's point of view. And if the association has 
anything to say, we would be glad to hear them in a formal 
session.
    I want to yield to my distinguished colleague, Senator 
Grassley, who has shared the podium with me since January 3, 
1981, who is the chairman of this full subcommittee, and I 
again thank him for allowing me to take the lead on this 
limited DOJ oversight aspect.

STATEMENT OF HON. CHARLES E. GRASSLEY, A U.S. SENATOR FROM THE 
                         STATE OF IOWA

    Senator Grassley. Well, and I feel very comfortable having 
a very competent person like you, not only a competent Senator 
but also the reputation you had as a prosecutor, to take the 
lead on a very difficult situation. And it is too bad that you 
have to go through so many hoops to just do our constitutional 
responsibility of oversight, and I thank you for being willing 
to fight hard for that and to tell you how proud I was 
yesterday to listen to you at your meeting with the Attorney 
General to stand up for the right of Congress having the 
information that we need to carry out our constitutional 
responsibility of oversight. And every Senator should be proud 
of what you are doing because the extent to which you would be 
run over in this process, every Senator would be diminished to 
a considerable degree in each of us fulfilling our 
constitutional responsibility of oversight.
    And so let me thank you for that, and let me say that 
probably the credibility of the Justice Department in the case 
of line attorneys testifying might be a little more legitimate 
and credible if there had not been a history of several other 
instances of stonewalling in efforts of Congress to get 
information or even getting answers to our questions in open 
hearing when they didn't have the information available or 
there wasn't time to give that information. So thank you very 
much for doing that.
    I have got just a short statement on a small concern of 
mine that I want to give today, and as I did last week in our 
first hearing on the Peter Lee case, I would like to commend 
you, first of all, for your hard work and diligence. And as I 
also mentioned last week, this case seems to show a 
communication breakdown among the various agencies involved. I 
think today's hearing should answer a lot of those questions. I 
think it is important that we find out who in the Justice 
Department made key decisions about how the case would be 
prosecuted and charged and why. And it is also important to 
find out how much of the evidence was shared or not shared with 
the Navy and who made that decision and why that decision was 
the way it was.
    Was the prosecuting attorney as aggressive as he should 
have been? Or were his hands tied by Main Justice? We expect 
that the witnesses today from the Justice Department can help 
answer these and other questions so that we can gain some 
accountability and make some reasonable judgment as to their 
actions.
    As a side note, but an important one, we have uncovered a 
discrepancy since last week's hearing, and I think it is 
something we need to get to the bottom of. Last week, we 
received testimony from the FBI's Daniel Sayner from the Los 
Angeles office. He was asked about the FISA coverage expiring 
September 1997 and if there was a request for it to be renewed. 
Mr. Sayner said yes, but it was turned down by the Justice 
Department because the activity in question was stale.
    This week, representatives from the Justice Department 
briefed us that there was no such record of their turning down 
a FISA renewal, and they would never have characterized the 
activity as stale for what they called ``obvious reasons.'' We 
had this exact same problem in the Wen Ho Lee case. It was also 
on a FISA application.
    The Federal Bureau of Investigation blamed the Justice 
Department for turning down the FISA request in 1997. The 
Justice Department says the FBI was told it needed to do more 
homework.
    Subsequent documents that we have discovered show the 
Justice Department may have been right, in my view. I hope this 
subcommittee does what it can to resolve these discrepancies. 
If we allow finger-pointing to go unchallenged, we fail to get 
accountability, which is whatwe are here for and what this 
whole set of hearings are all about under the direction of Senator 
Specter.
    To really learn the lessons from these cases, we have to 
know who played what role. We have the first matter under 
investigation, and I believe this discrepancy should be 
investigated as well.
    I look forward to today's testimony, and once again, Mr. 
Chairman, I thank you and commend you for your hard work.
    Senator Specter. Thank you very much, Senator Grassley.
    Senator Thurmond.

STATEMENT OF HON. STROM THURMOND, A U.S. SENATOR FROM THE STATE 
                       OF SOUTH CAROLINA

    Senator Thurmond. Mr. Chairman, I commend you for holding 
these hearings to discuss the Dr. Peter Lee espionage 
investigation, the plea-bargaining process that was involved, 
and the subsequent sentencing of Lee.
    The damage done by espionage, whether nominal or egregious, 
to our national security interests is something that each of us 
must consider very seriously. After gathering full information 
and facts, we on this committee must take a positive approach 
regarding this oversight to determine what we can do to assist 
our law enforcement agencies not only to curtail espionage but 
also to focus on swift, certain, and proper punishment to those 
involved in any type of espionage against our country.
    I have serious concerns about the plea bargain allowed in 
this case. It appears that Lee's sentence was extremely light 
given the seriousness of his conduct, his failure to cooperate, 
and his failure even to be truthful with authorities.
    I believe these hearings are important in regard to 
protecting our national security interests. Mistakes and 
shortcomings of the past cannot be wiped clean, but we can take 
steps that will hopefully serve to preclude identified mistakes 
of the past from occurring in the future.
    I welcome our witnesses to this hearing and look forward to 
discussing this important matter with them today.
    Thank you, Mr. Chairman.
    Senator Specter. In order of sequence, which is our 
practice, Senator Sessions?

STATEMENT OF HON. JEFF SESSIONS, A U.S. SENATOR FROM THE STATE 
                           OF ALABAMA

    Senator Sessions. Thank you, Chairman Specter.
    I have served as an assistant U.S. attorney, a line 
prosecutor, for two and a half years and as a U.S. attorney for 
12. I have seen this matter from both sides. I have had 
hearings in this committee where my assistants have testified 
on matters, at least in the House committee, and it strikes me 
odd that people would suggest that a public servant could never 
be called and should never be called to discuss matters 
occurring.
    I have read your questioning of Mr. Shapiro, Senator 
Specter, and I think his testimony is a crystal-clear, ringing 
testimony of a competent, experienced, capable assistant U.S. 
attorney whose knowledge of the case was extraordinary, whose 
dedication to justice was total, and who was blocked time and 
time and time again by people in the Department of Justice from 
doing what he knew to be his duty. It is plain. Anybody who 
reads it knows it, who has been there and who has dealt with 
prosecutors knows it. And I have seen people in the Department 
of Justice and I have seen the line prosecutors on the question 
of the validity of a case, whether or not it will be successful 
at trial, experienced trial attorneys in the field have the 
best judgment time and time and time again. And this is a 
classic example of it. The people in Washington who were 
denying him the right to go forward in the way that case in my 
view should have gone forward were far less experienced in 
actually handling cases in court than he was. And I think we 
need to look at that. That is a systemic problem.
    There is also a systemic problem with institutions like the 
Navy who don't want cases to go forward because they are afraid 
some of their people will have to testify under oath and the 
institution may be embarrassed in the course of it. So they are 
more concerned about the embarrassment potential to their 
institution and some terror that somebody might say something 
that would embarrass them or give away some secret that they 
just don't want any case to go forward. And that is the 
responsibility of the Department of Justice. They are the 
Department of Justice, and they have to say to institutions we 
are not concerned about that. We have a responsibility, we have 
an individual who was a spy against the United States, who met 
in a hotel room in Beijing with a top scientist of China and 
gave away and discussed American secrets.
    I will tell you one thing: I don't think Mr. Shapiro would 
have had a problem getting a conviction on that. He confessed 
to it and I don't think any jury is going to believe that he 
was there for his health and a casual conversation to have two 
different meetings in Beijing hotel rooms with top Chinese 
scientists. There is no business for that, and anyone with 
common sense would understand it.
    So I just would suggest that we ought not to lightly 
subpoena line attorneys. I think that is a legitimate concern. 
But we have had a number of plea bargains here in recent weeks 
that have come to my attention by this Department of Justice 
that raises troubling concerns. We don't have a special 
prosecutor law anymore. Who is going to--is the fox going to 
guard the henhouse? Is the Department of Justice able to say 
you can't subpoena line attorneys so nobody anywhere can ever 
really find out what happened in a case that went awry? We can 
never do that?
    The constitutional responsibility of this Senate is to 
provide oversight, and how can we do it if we can't talk to the 
people who were actually involved? What if we have got 
political appointees who are not actually giving us a clear 
picture? We have had testimony on this matter previously in 
secret hearings, but the tone of it was quite different when 
you heard the testimony of Mr. Shapiro and how his perspective 
of it was from the field and wanted to go forward. I think we 
needed his testimony.
    So the Department of Justice is just going to have a right 
to say to the Congress of the United States we are never going 
to submit an assistant U.S. attorney under oath to testify 
about a case? It ought not to be lightly done, but to say it is 
never going to be allowed to be done, I do not believe that is 
sound. How can we ever--the defendant is happy with the outcome 
of the case. He got a sweetheart deal. He ought to be happy. 
Who is going to challenge the prosecutor? Who is going to ask 
the questions? We don't have an independent counsel. I submit 
it only can be the Congress that does that.
    I care about the rule of law. I care about Justice in 
America. And I care about spying and giving away American 
secrets to a communist nation. And we have had a lot of that 
lately, and I haven't observed that we have done a verygood job 
of prosecuting it.
    So I think it is time to go forward, Chairman Specter. 
Thank you for your leadership. I thought your work has been 
extraordinary. You have had frustration after frustration. The 
Department of Justice and the White House have delayed in a 
stonewall mode from day one. You have had a hard time even 
getting any additional help. You have personally committed your 
personal time to mastering this case. And we wouldn't be here 
today if you hadn't showed the kind of determination to 
overcome these obstacles that you have, and I thank you for it.
    Senator Specter. Thank you very much, Senator Sessions.
    Senator Thurmond. Mr. Chairman?
    Senator Specter. Yes, Senator Thurmond.
    Senator Thurmond. I have another commitment and have to 
leave. I have some questions I would like to be answered for 
the record.
    Senator Specter. Senator Thurmond, they will be answered 
for the record. Thank you very much for joining us, and we 
understand your other commitments.
    Senator Specter. Thank you, Senator Sessions, for your 
comments based on your experience as a U.S. attorney and an 
Attorney General, and I think the indignation in your voice 
ought to be shared by everyone.
    Senator Torricelli, the ranking on the subcommittee, 
declines an opening statement, and Senator Leahy, while not a 
member of this subcommittee, maybe ex officio, ranking of the 
full committee, but regardless of any of the technicalities, we 
will call on him now for an opening statement.

  STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM THE 
                        STATE OF VERMONT

    Senator Leahy. I thank you, Mr. Chairman, for your usual 
courtesies.
    Senator Specter has been an advocate for pursuing this 
investigation of how the Justice Department, the FBI, the 
Defense Department, the Navy, and the Energy Department handled 
the case against Peter Lee. He has raised questions that our 
agencies responsible for protecting our national security 
failed--in this case, the Justice Department, the FBI, the 
Defense Department, the Navy, and the Energy Department.
    Those are serious allegations. They have profound 
implications, both for how our friends and our enemies view our 
Nation's response to espionage that is targeted at our nuclear 
secrets.
    Now, I should state at the outset that while we may have 
some disagreements in this case, Senator Specter has every 
right to raise questions about the prosecution of Peter Lee and 
to leave no stone unturned. I do feel, however, that this 
oversight investigation into the prosecution of Peter Lee does 
not reveal new items of significance. So I will state my 
reasons for earlier objecting to the Senator from 
Pennsylvania's request for and the Judiciary Committee's 
approval on a party-line vote of subpoenas to two of the 
witnesses appearing here today.
    Michael Liebman, who is a current line attorney at the 
Department of Justice, and Jonathan Shapiro, a former assistant 
U.S. attorney in Los Angeles, are not and were not supervisory 
lawyers or political appointees within the Department of 
Justice. These attorneys were not ultimately responsible for 
the prosecutorial decisions in the Peter Lee matter, though 
they certainly helped execute those decisions.
    To the extent there are factual questions about which Mr. 
Liebman and Mr. Shapiro could testify, the answers to those 
questions could and should have been obtained from the Justice 
Department by other means, whether by deposition, interviews, 
closed session, or otherwise. This was not done. I feel, as I 
said before, that Mr. Liebman and Mr. Shapiro should not be 
here today.
    I remain concerned about this committee subpoenaing line 
attorneys. Compelling line attorneys to testify publicly before 
congressional oversight committees runs the serious risk of 
chilling the free exchange of opinions within prosecutors' 
offices and making prosecutors look over their shoulders at the 
politicians when they decide to make a particular charge or not 
and whether they will then be second-guessed in this kind of a 
forum.
    Now, I know well that internal discussions and debates and 
even disagreements between and among line prosecutors and 
supervisors about the course of a prosecution and the merits of 
a case are invaluable. And line prosecutors should be free to 
express their candid opinions about a prosecution, even free to 
play devil's advocate on a particular case if they wish, 
without feeling that they are someday going to be testifying 
about it. We want them to express their opinions candidly 
without second-guessing.
    Now, my concerns are not new, nor are they partisan, nor do 
they have anything to do with the subject matter of this 
particular hearing about which I have other unrelated 
questions. They previously have been voiced by others, 
including the chairman of this committee, Senator Hatch, who 
has said that line attorneys should never be subjected to 
congressional inquiry, not even in exceptional circumstances.
    Now, whether such an exception should be warranted is 
irrelevant here because there has been no showing of need in 
this investigation. Let me summarize.
    First, Senator Specter says that the Department of Justice 
did not tell Mr. Shapiro when he was serving as a Federal 
prosecutor in California that he was authorized to charge Peter 
Lee with violating the most serious espionage law, 18 U.S.C. 
794. Well, that is not right. At the time of the plea 
agreement, the Federal prosecutor had not been authorized to 
indict Lee on the 794 charge. Internal FBI and DOD memoranda 
relied upon by the chairman of the subcommittee suggest only 
that if Lee had refused to accept the plea offer that the 
Justice Department may then have authorized and brought a 794 
case. Since that contingency never came to pass, there was 
never any such authorization.
    Second, he said that the Department of Justice agreed to a 
plea bargain with Peter Lee before a damage assessment had been 
completed regarding the information Lee confessed to passing to 
the Chinese. That is wrong. Prior to Lee's plea, Justice 
Department attorneys had numerous contacts with representatives 
of both DOD and the Navy. Representatives of DOJ and the FBI 
met with the agencies and provided a copy of FBI Special Agent 
Gil Cordova's draft affidavit, which summarized Lee's 
disclosures. In addition, there were numerous telephone 
conversations about the issuebetween the prosecutors and the 
officials at DOD and the Navy.
    To the extent the claim that no damage assessment had been 
completed is based on the fact that DOD and Navy officials 
reviewed only the case agent's affidavit to assess the 
information Lee disclosed, instead of his own statements, is 
immaterial. DOD and Navy officials have now reviewed the 
transcripts of Lee's confessions and confirmed they are 
substantially consistent with the affidavit that had been 
provided in 1997.
    Third, he said that when the damage assessment was 
completed, the Navy agreed with the Department of Energy that 
the information Peter Lee confessed to passing to the Chinese 
was classified. That is not the point. The Navy has always 
agreed with the Department of Energy that the information was 
classified, though healthy and thoughtful internal debate 
occurred among the agencies over the appropriate level of 
classification.
    The point is that the Navy and the Department of Energy 
looked at the information Peter Lee confessed to passing and 
determined that most of it was in the public domain, either at 
the time he passed it to the Chinese or shortly thereafter. It 
does not take a prosecutor to realize that when you are arguing 
to a jury that classified information turned over to foreigners 
could hurt the United States, the jury might not believe you. 
They could go on the Department of Energy Web site and find 
most of the same information right there.
    To the extent the information Peter Lee disclosed to the 
Chinese was not in the public domain, the Navy made clear that 
focusing on the reasons that this information would harm our 
national security would not be helpful and, in fact, ``bringing 
attention to our sensitivity concerning this subject in a 
public forum could cause more damage to national security than 
the original disclosure.'' That was in John Schuster's 
memorandum of November 14, 1997.
    We should look at the scope and intensity in the 
investigation of Peter Lee's activities. He is a naturalized 
U.S. citizen who worked from October 1976 until 1991 at 
Lawrence Livermore National Laboratory as a research physicist. 
He was cleared to have certain access, and he worked at TRW--
and I will put all this in the record.
    But the FBI has been investigating him since 1991. In 
February 1994, the FBI sought and obtained permission to 
conduct secret electronic surveillance under FISA, and this 
secret surveillance continued for over 3 years, until September 
1997. During the time of this surveillance, Lee, with the 
knowledge of the FBI, traveled to China, maintained his secret-
level clearance at TRW, and had access to classified material.
    In June 1997, he was interviewed by the FBI about a trip he 
had taken to China a month earlier, and he falsely told the FBI 
that he had not engaged in technical scientific discussions in 
the PRC and that he had paid for his trip. Later he said that 
he had participated in scientific discussions. He was given a 
polygraph examination, and his answers were found to be 
deceptive.
    After he failed the polygraph, he was interviewed at length 
by the FBI over the course of 2 days, and then he confessed to 
providing confidential information to the PRC on two separate 
occasions. He admitted that 12 years earlier he had passed 
information relating to hohlraums, devices used in the 
simulation of nuclear detonations. Then in May 1997, he relayed 
information about the radar ocean imaging project he had worked 
on at TRW.
    The case was brought by the FBI to the U.S. Attorneys 
Office for the Central District of California. Then, because it 
involved espionage, all decisions were coordinated with the 
Internal Security Section of the Department of Justice. The 
supervisors in that unit were ultimately responsible for the 
decisions in the case. Jonathan Shapiro was the line assistant 
U.S. attorney assigned in California. He is here. Michael 
Liebman, also here, was the line attorney assigned to the case 
in the Internal Security Section.
    The case against Dr. Lee, as I have seen it, was a tough 
one to make. As I understand it, the primarily, if not only, 
evidence against Lee were his confessions. But there may have 
been problems anyway.
    The information Lee said he disclosed in 1985 has since 
been declassified. In 1993, all or virtually all of the 
information relating to hohlraums was declassified. Now, this 
would not have stopped them bringing a case, but it certainly 
hurt the jury appeal of the case, again, if this matter is all 
in the public domain anyway. As a defense attorney, I can 
imagine him saying, when asked how much this was hurting the 
Government, he might say let's just click on the Web site.
    Every appropriate charge relating to the 1985 hohlraum 
disclosure was barred by the statute of limitations. Now, one 
exception, of course, section 794, which includes the death 
penalty, that could have been brought. I suspect on the facts 
in this case, juries, if not the presiding judge himself, might 
say that might be a tad bit of overreaching on the part of the 
prosecution.
    Third, significant exculpatory information would have 
undermined a prosecution of Lee for his 1997 disclosure about 
the radar imaging project. Among other things, Mr. Schuster 
said that the confidential classification cannot be explicitly 
supported by the classification guidelines and raised other 
questions that I have already said. In fact, prosecutors 
described this memorandum as a body blow to the 1997 case. Not 
only did it suggest some equivocation as to the classification 
of the material disclosed, but it also revealed that similar 
information was available in the public domain.
    Problem 4: No expert from the Department of Defense or the 
Navy was prepared to testify on behalf of the Government. 
Although Dr. Richard Twogood, a former director of the radar 
imaging program, was available to testify, prosecutors believed 
that his testimony could have been rebutted by a plethora of 
experts from the Defense Department and Navy who would have had 
to testify on behalf of Dr. Lee.
    So I think in light of all these problems, one could make a 
very strong argument for the plea agreement. Considering the 
nature of the evidence against Dr. Lee and the formidable 
obstacles of a trial, the plea agreement negotiated by former 
AUSA Shapiro and his supervisors at the Department of Justice 
should be praised. Under the terms of the agreement, Dr. Lee 
agreed to cooperate. He pled guilty to two counts. Both counts 
were felonies. They did expose Lee to a maximum of 15 years in 
jail. What is remarkable, actually, is that the prosecutors 
convinced Lee to pleadguilty to a serious count, the 793(d) 
charge, even though the statute of limitations had expired on it. We 
ought to be praising the prosecutors for getting somebody to plea to 
something when the statute had run.
    Now, questions have been raised about why the prosecutor 
did not push harder for a lengthy prison term for Peter Lee. I 
happen to agree with Senator Specter that Peter Lee got a 
lenient sentence. We are in agreement on that. But the 
prosecutor's role in sentencing is limited. That is up to the 
judge.
    So, Mr. Chairman, as I said, there are a number of areas 
where we do agree. I disagree, however, that there has been 
obstruction of Senate oversight. The Justice Department has 
cooperated. They have provided thousands of documents. They 
have made personnel available for interviews. They have 
provided Congressional staff with access to raw investigative 
files and to classified files, something that I have rarely 
ever seen happen.
    Senator Specter. I am sorry that Senator Leahy was not here 
for my opening statement, and I would refer him to the detailed 
report filed by Dobie McArthur, all of which are at substantial 
variance with his representation of the facts.
    Senator Leahy. I understand, and I will read both----
    Senator Specter. Excuse me, Senator Leahy. Excuse me, 
Senator Leahy. You are not recognized, and I am speaking.
    Senator Leahy. I am awfully sorry. I am terribly----
    Senator Specter. You are not--you--when you say you are 
awfully sorry, I might have to agree with that.
    As I was saying very briefly in response to that lengthy 
statement, when Senator Leahy makes the statement that the Navy 
always said the matter was classified, it is not true. And he 
then comes back to a comment that Dr. Schuster raised a 
question about classification. And it is not true that the 
nuclear matters were all declassified or that the submarine 
detection was all in the public domain. And when the assertion 
is made about being barred by the statute of limitations, there 
is an immediate correction on that by Senator Leahy himself 
that there was no statute of limitations to bar section 794.
    But since Senator Leahy has absented himself, there is not 
much point in continuing the dialogue in his absence.
    Senator Torricelli had said he did not have an opening 
statement, but let me call on you.
    Senator Torricelli. Well, Mr. Chairman, I am just anxious 
because of the constraints of time to get to our witnesses. 
There are things I would like to say, but I think it is better 
we proceed to the witnesses before we lose members of the 
committee.
    Senator Specter. Fine. Thank you very much, Senator 
Torricelli.
    Mr. Jonathan Shapiro, would you step forward? And you have 
an attorney with you. He is welcome to come.
    Mr. Robinson. Mr. Chairman, may I inquire? I understood 
that I was going to be allowed to make a brief statement.
    Senator Specter. Well, you will be, but that will be when 
you come forward with your own witnesses at that time.
    Mr. Shapiro, will you raise your right hand, please? Do you 
solemnly swear that the testimony you will give before this 
subcommittee of the Judiciary Committee of the U.S. Senate will 
be the truth, the whole truth, and nothing but the truth, so 
help you God?
    Mr. Shapiro. I do.
    Senator Specter. Mr. Shapiro, at the outset, I thank you 
for meeting with me in Los Angeles on February 15 and for 
responding to an entire series of questions. We appreciate your 
coming in today, and as I said to you at the time of our 
session on February 15, with respect to your participation, 
there is no criticism, expressed or implied, and that we have 
questions which we appreciated your answering before and we 
appreciate your answering now.
    There has been an issue raised by your attorney as to some 
classified matters which you may have to refer to, and if you 
do, we will defer those answers, and we will conduct that 
inquiry in a closed session to protect any area of 
confidentiality. We think that this is a very important case on 
its own, and it is a very important case as to how espionage 
cases have to be handled and a very important case as an 
example as to what Senate oversight means in this country.
    Mr. Shapiro, if you would identify your counsel, I would 
appreciate it.

    STATEMENT OF JONATHAN S. SHAPIRO, FORMER ASSISTANT U.S. 
  ATTORNEY, CENTRAL DISTRICT OF CALIFORNIA, LOS ANGELES, CA; 
              ACCOMPANIED BY TOM CONNOLLY, COUNSEL

    Mr. Shapiro. I would like to introduce my attorney, Mr. Tom 
Connolly, who has a brief statement he would like to make.
    Mr. Connolly. Mr. Chairman, good morning.
    Senator Specter. Your name, sir, again, is what?
    Mr. Connolly. My name is Tom Connolly. Good morning, Mr. 
Chairman and other members of the subcommittee. I represent Mr. 
Shapiro, Jonathan Shapiro, a former Assistant United States 
Attorney in the Central District of California, who was an 
integral member of the prosecution of Peter Lee.
    We are honored to appear before you today. I volunteered to 
represent Mr. Shapiro because of my longstanding admiration for 
him as a prosecutor and as a person. I believe he chose me as 
his attorney because of my experience as a Federal prosecutor.
    I had the honor, gentlemen, of also prosecuting espionage 
cases. In the last few years, I prosecuted two of the most 
significant espionage cases in this country: the case of James 
Nicholson, who was a CIA spy, the highest-ranking CIA officer 
ever convicted of espionage, and DavidSeldon Boone, who was--we 
prosecuted him. He was an NSA cryptologist who provided documents to 
the Russians.
    Mr. Shapiro is here with my help with recognition that 
espionage cases are inordinately complex and difficult. I don't 
think there is any question about that. The Peter Lee case also 
was very complex. I believe, however, after the subcommittee 
hears from Mr. Shapiro shortly and has the full story of this 
case, there is no question that his conduct in this case was 
extraordinary in an effort to bring Peter Lee to justice.
    Now, Mr. Shapiro has prepared his own opening statement. I 
respectfully ask that he can read that, and after he reads 
that, he will be available to answer any questions. I will 
note, however, for the record the following: We are not--I do 
not represent the Department of Justice. I am not--we have not 
fought this battle with respect to Mr. Shapiro appearing before 
you. He has appeared, sir, in front of Senator Specter for 
interview. He has answered, I believe, any question posed to 
him by Senator Specter in that interview. And the subcommittee 
has a full transcript of that interview before it.
    He is now available--he is volunteering today--it is a 
voluntary appearance today before this subcommittee, and I just 
want to note that for the record.
    Senator Specter. Thank you, Mr. Connolly.
    Mr. Shapiro.
    Mr. Shapiro. Mr. Chairman, distinguished members of the 
committee, my name is Jonathan S. Shapiro. I am currently the 
chief of staff for California Lieutenant Governor Cruz M. 
Bustamante, and I am also an adjunct law professor at the 
University of Southern California School of Law, where I teach 
criminal procedure. I am a 1985 graduate of Harvard University 
where I received my bachelor's and master's degree in history. 
I received a Rhodes scholarship in 1987 and studied at Oriole 
College, Oxford University, where I received my second master's 
degree. I am a graduate of the University of California-
Berkeley, Boalt Hall School of Law, 1990, and while I was in 
law school, I also worked full-time as a staff writer for the 
San Francisco Recorder newspaper covering the courts.
    In 1990, I received what I consider to be the finest 
opportunity of my life. I was hired as a trial attorney with 
the U.S. Department of Justice Criminal Division through the 
Honors Program. To my parents' horror and pride, I turned down 
a high-paying job with a Los Angeles law firm to make what I 
believe was $23,000--it may have been $27,000--a year. After 
approximately 2 years of service, I transferred home to the 
U.S. Attorney's Office for the Central District of California, 
where I served as an assistant U.S. attorney.
    During my 8 years as a Federal prosecutor, I handled 
countless cases, every kind of drug, fraud, violent crime, 
civil rights violation, gambling, government procurement case. 
I received numerous awards and commendations. But like most 
prosecutors, the cases that I am most proud of were the tough 
ones, the cases where, but for my work, the defendant would 
have escaped justice.
    When California officials declined to pursue a gynecologist 
who sexually abused his patients, I spent 2 years building a 
fraud case against him, convicted him at trial, and brought 
some justice to his victims.
    When local officials declined to pursue two sheriff's 
deputies accused of civil rights violations, I pursued the case 
and obtained convictions based on irrefutable evidence that 
they beat confessions out of suspects.
    I spearheaded what became the prosecution of the largest 
HUD fraud in the history of California. I obtained the first 
convictions that stuck against operators of illegal gaming 
establishments. I was always willing, I was eager to try tough 
cases, and I was always willing to lose them if I thought the 
case merited prosecution.
    My last case as a prosecutor, I attempted to convict an 
officer, a police officer accused of excessive force against a 
victim who was a heroin addict. The jury hung. But I am very 
proud that I tried that case, and I am very, very proud of the 
work I did in helping to bring Peter Lee to justice.
    It is no secret that in the Peter Lee prosecution I 
strongly advocated for the most aggressive approach in pursuing 
Mr. Lee on charges of espionage. It is also no secret that I 
had disagreements with my supervisors at the U.S. Attorney's 
Office and with the Department of Justice about how the case 
should be investigated and charged.
    I took a more aggressive approach. I do not believe my 
supervisors were operating in anything other than good faith. 
And I would like to emphasize four points.
    First, there has been a suggestion that, as a line 
assistant U.S. attorney, I made charging and plea decisions in 
this case. This is not true. As reflected in the March 23, 
2000, letter from Mr. Robinson, chief of the Criminal Division, 
to Senator Hatch, these decisions were made by my supervisors, 
each of whom the subcommittee has already interviewed. 
Moreover, the Department's supervisory personnel and not its 
line attorneys make prosecution decisions in espionage cases.
    Second, there has been a suggestion that the Department of 
Justice officials negotiating the plea did not appear to have 
consulted with the FBI or the Department of Defense. This is 
not true. The committee has before it hundreds of pages of 
documents, numerous declarations, witness statements, court 
filings, and correspondence showing that I and members of DOJ 
were in extensive and constant contact with both the FBI and 
the Department of Defense. Indeed, every step I took was in 
concert and consultation with the FBI and my supervisors at 
DOJ.
    Third, there has been a suggestion that the seriousness of 
Peter Lee's conduct was not brought to the attention of the 
sentencing judge. This is not true. The subcommittee has before 
it my personal numerous, extensive sentencing position papers 
in which I outlined in detail all of the criminal conduct 
described to the committee, including impact statements from 
the FBI, the Department of Energy, Dr. Richard Twogood, who was 
my witness, and others.
    Furthermore, the subcommittee has before it the entire 
sentencing transcript in which I again articulated the 
seriousness of the crimes, and I urge you to read it. I am 
proud of the advocacy that you will read in that transcript.
    Moreover, an independent branch of the criminal justice 
system, the U.S. Probation Department, produced a lengthy pre-
sentence report to the judge, which, as I recall, is about 70 
pages long and which I do not have access to as a former 
prosecutor, in which the judge was provided yet another 
detailed analysis of the seriousness of the crime.
    Finally, there has been a suggestion that DOJ entered into 
the plea agreement before a sufficient damage assessment was 
conducted. Let me make this point as clearas I possibly can. 
This is not true. I am eager to explain why I can make that assertion 
in full confidence. However, I cannot--I cannot do so in an open public 
setting for reasons that we have explained to staff because of my 
continuing sworn obligation to maintain the security of specific 
classified information. That is why, as late as yesterday, we urged 
that at least a portion of these hearings be conducted in closed 
session.
    Representing the United States of America was more than a 
job for me. It--it was the greatest honor of my life. No one 
cared more about the results. No one fought harder for the 
client. And I am very proud of the work that I did, both in the 
Peter Lee case and in the hundreds of other cases that I 
handled.
    Senator Specter. Thank you very much, Mr. Shapiro.
    I repeat that we appreciate your being here. We appreciated 
your responding to questions on February 15, and there is no 
criticism, expressed or implied, as to anything you have done. 
And all we seek to do is to inquire to find out what happened 
here, both as to this case and as to a guide for future cases.
    Mr. Shapiro, as you have emphasized, you wanted to 
prosecute under section 794. Would you state briefly what 794 
provides and why you felt you had a case to proceed under 794?
    Mr. Shapiro. My attitude about the case, Senator--and I 
appreciate your comments--I think were expressed pretty clearly 
by Senator Sessions. In my view, coupling the 1985 charge with 
the 1997 charge with what I thought was a dead-bang case--and I 
think there is total agreement on the false statement, the 1001 
case. Those counts added together I felt I was going to convict 
him of something, and I had a very strong sense that at 
sentencing all that information could have been considered by 
the judge.
    My frustration with this case--and I have made reference to 
the fact that I took an aggressive approach in this case--was 
that unlike the hundreds of other cases I prosecuted, I did not 
have a free hand in making these decisions. The line assistant 
in an espionage case wouldn't. In my experience as a Federal 
prosecutor, there were a handful--there were three cases where 
I didn't have----
    Senator Specter. Mr. Shapiro, before you come to that, 
would you focus on the provisions of 794, what they are, and 
why you felt the evidence was worth prosecuting under 794?
    Mr. Shapiro. Well, at what point? Because I do want to be 
clear on one fact. My feelings about the case--and I can't--I 
don't know that the subcommittee has focused on this. My 
attitude about the case has got to be understood a little bit 
in the context of when I got involved, when we got involved. 
There apparently was a FISA investigation of Peter Lee. 
Obviously, the U.S. Attorney's Office was not involved in that. 
FISA is not a tool for obtaining evidence in criminal 
prosecution.
    My involvement in the case started when Peter Lee's wife 
found a listening device in their phone. At that point the FBI 
came to the U.S. Attorney's Office and explained the situation 
and asked: Is there anything we can prosecute this man for?
    At that point, the only count that was available to us was 
1001. There had been no confession at that point. So at that 
point, I didn't know or really have any reason to think that 
there could be a 794 count.
    As the case developed, I began to think perhaps the 
elements could be met, the elements being that an individual, 
the defendant, provided information of a classified nature that 
could help a foreign nation or could be a hindrance to the 
United States with the specific intention of doing so, and, in 
fact, did so.
    As far as the 794 in this case, both in 1985 and 1997, the 
information was to have referred to nuclear weaponry--would 
have had to have referred to nuclear weaponry. So those were my 
elements. And as the Federal prosecutor, I don't classify 
information. I can't testify. We needed to find a witness who 
would say this stuff is classified, this nuclear weapon 
material.
    Now, if this was your run-of-the-mill drug case or if this 
was your run-of-the-mill fraud case, I personally would have 
gone out and gotten the evidence together and pursued my case. 
Because of the nature of the espionage case, this went to 
Internal Security, and it was their responsibility to get the 
classifications, although----
    Senator Sessions. Security in Washington, DC, Department of 
Justice.
    Mr. Shapiro. Yes, that's right. And I have to say beyond 
that there is more I can say on this issue, and I'd like to do, 
and I think it gives a good context to what happened. But I 
cannot in an open session.
    Senator Specter. Well, when you talk about the 
classification, we will proceed later into closed session to 
hear that testimony.
    Isn't it true, Mr. Shapiro, that you were only given 
authorization to prosecute under 1001, false official 
statement?
    Mr. Shapiro. I was given authority to pursue a plea 
agreement and obtain a plea agreement on 793 for the 1985 
offense, if I could manage to get the defendant to waive the 
statute of limitations and take that plea, and the count of 
1001. Had I had authority, Senator, to charge 794, I would have 
charged 794.
    Senator Specter. Mr. Shapiro, were you aware of an FBI 
document dated November 25, 1997, which states in part--and 
this will be made a part of the record.
    [The document follows:]
    [GRAPHIC] [TIFF OMITTED] T3205A.001
    
    Senator Specter. ``According to J.J.''--who is J.J. Smith 
of the FBI--``ISS/Dion said that if R.T.''--referring to Dr. 
Lee--``doesn't accept the plea proffer, then he gets charged 
with 18 U.S.C. 794,'' the heftier charge.
    When you handled this case, had you been aware of that 
document?
    Mr. Connolly. Pardon me, Senator. Mr. Shapiro just got his 
security clearance reinstated on Monday. We have been hampered 
in our efforts to get every single document before him because 
we did not have an opportunity because of classification issues 
to provide everything. I believe Mr. Shapiro has seen that 
document, but maybe only on one occasion, and that was in the 
last day or so.
    If there is a copy available, I would ask that the Senator 
provide a copy to Mr. Shapiro to talk on it, because I don't 
think he has a familiarity with this, having not seen something 
in three and a half years.
    Senator Specter. Mr. Connolly, the subcommittee provided 
both of those copies on Monday, which was as early as we could 
do it.
    Mr. Connolly. No blame whatsoever do I suggest to your 
staff or anyone else, Your Honor. I am just suggesting that I 
don't want him to answer any questions on a document that he 
doesn't have before him.
    Senator Specter. Fine.
    Mr. Shapiro. Thank you. Senator, I saw this document for 
the first time on Monday.
    Senator Specter. Referring now to a document from Acting 
Assistant Secretary of Defense to the Secretary of Defense and 
the Deputy Secretary of Defense--and I believe this was 
provided to you on Monday as well. We did that as soon as we--
--
    Mr. Shapiro. Senator, can I ask you a question about the 
first document? Because as you've been talking, I just got it 
and I just read it.
    As I said, I saw this document for the first time Monday. I 
don't know who created it, and I don't know where it came from. 
I do note that it says, ``I told J.J.''--which you just, I 
think, quoted, and that's J.J. Smith who I worked with--``that 
he must remind AUSA Shapiro vigorously and repeatedly that the 
FBI is much more interested in the intel yet to be garnered 
than in punishing felons.''
    And I bring this to your attention because I don't--again, 
I don't know who generated this, but this sentence reflects, I 
think, an important point for the subcommittee, which is from 
my experience, part of my problem in this case was there were 
individuals who weren't interested in prosecuting Peter Lee so 
much as they were interested in, as they say here, garnering 
intel, getting intelligence.
    And that was one of the fundamental frustrations that the 
Department of Justice and I faced, particularly with the FBI, 
but also with other agencies. I'm--I'm a one-trick pony. I do 
one thing. I prosecute cases. They bring them to me. I 
prosecute them, I investigate them. I'm not an intelligence 
gatherer.
    Senator Specter. It is not inconsistent with having a tough 
prosecution to get intelligence. That sentence refers to a line 
which the FBI has expanded upon otherwise that they wanted him 
convicted so that there would be leverage to get intelligence 
information. They----
    Mr. Shapiro. Absolutely.
    Senator Specter. They weren't adverse to a conviction or a 
jail sentence.
    Mr. Shapiro. I completely agree. I just wanted to point 
out--and perhaps you could give me, provide to us the expansion 
of the FBI's statement. But this I think is an important point 
for the subcommittee's consideration.
    Senator Specter. The point that I want to come to--and want 
to come to in fairly short order, because there are many other 
Senators to question and we have got a vote which has now been 
moved up to 10:45, but we will be back. Referring to the DOD 
document, which is about the same, the second full paragraph, 
``Should Lee decline the offer, the U.S. Attorney will seek an 
indictment against him for violation of Section 794.''
    Have you ever seen that document before this week?
    Mr. Shapiro. I don't know what document you're referring 
to. I will--I will tell you that without more information I am 
a little hamstrung in commenting on it. If it's the document 
that--I mean, you know, maybe you could give me a document so I 
could see it.
    Senator Specter. Mr. Shapiro, I believe you have had the 
document just at the same time you had the companion document.
    Mr. Shapiro. Again, Senator, I'm sorry. I don't have it. 
Could you show me----
    Senator Sessions. It is in that next to the last paragraph, 
alternative situation, down toward the bottom. You may have 
missed that language in the----
    Mr. Shapiro. I'm sorry. It's another document, Senator 
Sessions. But I see it.
    Again, the first time I saw this memo, your staff person 
was the one who showed it to me, I believe.
    Senator Specter. Well, had you ever been told, Mr. Shapiro, 
by the supervisors, your supervisors in the Department of 
Justice or anyone else, that if Dr. Lee didn't accept the plea 
bargain, you had the authority to charge him under 794?
    Mr. Shapiro. In reference to this document?
    Senator Specter. Well, I first covered the documents you 
hadn't seen.
    Mr. Shapiro. Yes.
    Senator Specter. And now the question is: Beyond that, did 
anybody tell you that if Dr. Lee did not accept the plea 
bargain, you had authority to prosecute him under 794?
    Mr. Shapiro. Again, Senator--and I think we covered this 
when I spoke to you in Los Angeles.
    Senator Specter. We covered it in great detail.
    Mr. Shapiro. And I remember it well. But I don't--as I said 
then and as I say now, I never had authority to charge 794. If 
I had it, I'd have charged it. And if anyone told me I had 
authority to charge 794, I'd have charged it.
    Senator Specter. When Dr. Lee lied after the plea bargain 
was entered into and the plea bargain required his cooperation, 
I had asked you in some depth--I am going to try to abbreviate 
this so we can turn to other Senators. I had asked you in some 
detail about why you didn't go after him on the lies and seek a 
tougher sentence. At that time you told me--and I just want to 
confirm it now--that you didn't because you had nothing to fall 
back on, because if you didn't get the limited plea bargain 
which you had with the limitations on it, that you couldn't 
charge on anything else, that you couldn't charge him on 794 or 
any tougher charge. Is that correct?
    Mr. Shapiro. I think I said two things. I said that and, in 
fact, I think I went further. I said it would have been--it 
would have been asinine, it would have been stupid for me to 
withdraw a plea agreement where in doing so I would have lost 
the most significant charge I had obtained. If I withdraw the 
plea agreement, Senator, the statute of limitations barred me 
going on the 793 for the 1985 offense. And I never would have 
done that. I'd have been up in front of OPR if I had done that.
    Senator Specter. And since you had no 794 authority, you 
had nowhere to go.
    Mr. Shapiro. Well, the second thing I told you was, if I 
had authority to charge 794, I'd have charged it. I mean, 
that's what I was spending my days and nights trying to get.
    Senator Specter. Abbreviating the conclusions again here, 
Mr. Shapiro, when I questioned you in detail about why you 
asked for a short period of incarceration, your explanation was 
that you couldn't do anything more because that is the best you 
could get on the plea agreement where you had no authority to 
charge 794. Is that correct?
    Mr. Shapiro. Well, I think I even said more than that, 
Senator. I said that was the best I was going to do in front of 
Judge Hatter. And you must understand the context. Senator 
Sessions, I really appreciate what you said aboutthe line 
assistant in the field. You know, we know the judges because we're in 
front of them all the time. Judge Hatter, a wonderful man, is a man 
who, from the U.S. Attorney's Office--and I can say this because I'm no 
longer there--is seen as being a little lenient at sentencing. I'm 
saying that with all due respect, and I'm--I'm minimizing it.
    To be in front of Senator Hatter----
    Senator Torricelli. With all due respect.
    Mr. Shapiro. With all due respect, in light of the strong 
advocacy I made at sentencing, in which I laid out all the 
lies, in which I provided all the evidence that any judge in my 
view would have needed to hammer him for the lies--the judge 
knew about the failed polygraph. The judge knew about the lies. 
The judge knew about the e-mails. I very strenuously noted that 
he had passed nuclear weapons research material. I talked about 
how in Los Angeles our economy is very much tied into national 
defense and how scientists throughout the Southland have a 
responsibility to keep the secrets, and Peter Lee violated 
those. I thought Judge Hatter had more than enough to hammer 
him. You know that he didn't. I'm not the first prosecutor to 
not be happy with the sentence.
    Senator Specter. Well, didn't Chief Judge Hatter say that 
he found out more about this case after it was over than he did 
before he imposed sentence?
    Mr. Shapiro. Not to me. He didn't say that to me.
    Senator Specter. Mr. Shapiro----
    Mr. Shapiro. And I must say, I've had lunch with Judge 
Hatter since, and he didn't say it to me.
    Senator Specter. Mr. Shapiro, why was there no damage 
assessment, if you know, by the Department of Defense prior to 
the plea bargain?
    Mr. Shapiro. Senator, thank you for asking me that because 
it gives me a chance to say again, to suggest there was no 
damage assessment is wrong. And in order for me to tell you why 
that's wrong, I need to be in closed session. And I don't want 
to be in closed session, but as late as Monday, the Department 
of Justice asked me to once again sign, to reaffirm an oath 
that I didn't need to reaffirm because I know that oath follows 
me for the rest of my life, which is to maintain classified 
information. And I'm not going to release it in an open setting 
here, but I'd be more than happy----
    Senator Specter. Well, Mr. Shapiro, nobody is asking you 
to. The fact is----
    Mr. Shapiro. But I can't answer that question, Senator, 
unless you allow me to do so.
    Senator Specter. If you think you can't, I will accept 
that.
    Mr. Shapiro. Thank you.
    Senator Specter. There was a damage assessment made by Dr. 
Twogood of the Department of Energy. Can you answer that?
    Mr. Shapiro. Which--and I don't mean to be funny here, but 
which assessment from Dr. Twogood are you referring to?
    Senator Specter. I am referring to a damage assessment made 
by Dr. Twogood November 17, 1997.
    Mr. Shapiro. Mr. Connolly informs me I don't have it front 
of me. Maybe someone could----
    Senator Specter. Well, we will proceed with this in another 
way, but the facts are and the subcommittee is prepared to 
establish that Dr. Twogood of the Department of Energy had a 
damage assessment classifying what Dr. Lee disclosed as secret, 
and that, in fact, Dr. Lee had confessed to disclosing matters 
about the submarine detection beyond what had been in the 
public domain, and that the Department of Defense did not have 
any damage assessment and did not make one until this 
subcommittee asked that one be made.
    Mr. Shapiro. Senator, that's not true. I don't know what 
you're referring to. What I put in the affidavit and what I as 
an officer of the court swore to and what Gil Cordova swore to 
as my affiant was the damage assessment that Dr. Twogood issued 
that I believe classified the information as confidential.
    I'll also tell you as a prosecutor that as a witness Dr. 
Twogood--who was, by the way, the best I could come up with. I 
mean, there was a host of scientific angels on the other side 
who were prepared to testify, and you have the documents 
because the defense lawyer gave them to the judge that the 
stuff that he passed wasn't classified.
    Nevertheless, I had Twogood and I was going to use Twogood. 
However, I had a bit of a Brady problem with Twogood, I think, 
in that Dr. Twogood's opinion evolved. And this happens. I 
don't think it's inappropriate so long as any inconsistencies 
are provided to the defense, and I fully intended to provide 
them. I know the defense was aware of it. But Dr. Twogood, in 
my view, would have gone down in blue flames on cross-
examination.
    Now, I still think I'd have gotten by based on the 1985, 
the 1997, the 1001. But, you know, Dr. Twogood--the Navy didn't 
give me anybody. I was stuck with Dr. Twogood.
    Senator Specter. Well, if you are disagreeing with what I 
said, I said that Dr. Twogood made a damage assessment 
classified secret, and you say it was confidential.
    Mr. Shapiro. And you have the document. It's Gil Cordova's 
affidavit and it lists Dr. Richard Twogood giving his 
classification.
    Senator Specter. And then I also said that the Department 
of Defense did not make a damage assessment until this 
subcommittee asked the Department of Defense to a little 
while----
    Mr. Shapiro. And I said that--I said that was wrong, and I 
can explain why that's wrong if you'll allow me to go into 
closed session.
    Senator Specter. We certainly will, but we have the facts 
to the contrary. But we will be glad to listen to what you have 
to say on that subject, and that the matters related to the 
nuclear disclosures were secret until 1993, and some of them 
remained secret after partial declassification in 1993.
    And my question to you is: Was there a significant damage 
to the United States security interest by having matters 
disclosed in 1985 by Dr. Lee even if they were partially 
declassified in 1993?
    Mr. Shapiro. Senator, my view was that what he did in 1985 
was a viable 794, and to me, I'd have prosecuted it. And I 
wanted to.
    The response of Main Justice is, you know, valid, I guess, 
because, frankly, if you're going to pursue--and Senator 
Leahy's point is well taken. If you're going to pursue an 
espionage case which is about secrets, you'regoing to have a 
tough time in Los Angeles in front of a jury where the secret that 
you're accusing the guy of is available on the Internet, and not only 
available on the Internet, we were going to have--and I recognize 
this--a bunch of scientists who were going to say--and, in fact, I 
got--you know, this criticism today is not the first criticism I 
received. We heard from scientists----
    Senator Specter. But those scientists, Mr. Shapiro, were 
character witnesses for Dr. Lee.
    Mr. Shapiro. No, I'm talking about those, Senator. I'm 
talking about the scientists who called me up to complain that 
I was destroying First Amendment academic freedoms by 
prosecuting a guy for being a scientist and accused me of 
racism on top of it.
    I'm talking about the other criticism of all the scientists 
who worked at Lawrence Livermore and Los Alamos, and, frankly, 
I kind of wish the subcommittee would consider that issue 
because that's why this case was so important. It was the lax 
attitude of the scientific community----
    Senator Specter. We are--we are considering that issue.
    Mr. Shapiro. I think that is----
    Senator Specter. But there were disclosures made by Dr. Lee 
in his confession above and beyond what was on the Internet. 
Isn't that correct?
    Mr. Shapiro. You would have--again, Senator, we agree that 
the 1985 charge was a viable 794, and if they had given me 
authority, I'd have charged it.
    Senator Specter. And with respect to the 1997 disclosures, 
there were matters confessed to by Dr. Lee beyond what was in 
the public domain and on the Internet.
    Mr. Shapiro. Again, my view of the 1997 disclosure was that 
it was a viable 794.
    Senator Specter. Senator Torricelli.
    Senator Torricelli. Thank you, Mr. Chairman, very much.
    Mr. Shapiro, thank you very much for being with the 
committee today. I think it bears repeating that it is not the 
interest or intention of this committee to involve itself in 
the prosecution of individual cases. It is not our role or 
responsibility to provide oversight to individual line 
attorneys.
    This Senate does confirm appointees of the President of the 
United States to senior positions at the Justice Department. It 
is our constitutional responsibility to ensure that they are 
doing their duty, that the laws are being enforced, and that 
the Department is run consistent with the objectives of elected 
officials of this Government.
    Now, that is important because I don't want other line 
attorneys to think that in each and every case in which they 
are involved there is an elected official looking over their 
shoulder. But I do want everyone confirmed by the Senate to 
understand we are looking over their shoulder.
    So that goes to the heart of the issue here about the 
judgments that were made. Judgments could be right or they 
could be wrong. We are interested in whether they were made for 
the proper reason and on an informed basis as a matter of 
policy, because this is not only illustrative of the past, it 
is instructive for the future.
    I want to go to inquire then into where decisions were made 
in addition to, as Senator Specter has attempted, whether or 
not they were proper. Were your contacts at the Department 
limited to Mr. Liebman and Mr. Dion in your communications 
about the judgments to be made in prosecuting the case?
    Mr. Shapiro. I'm only hesitating--my initial answer is yes. 
I'm only hesitating because I reached out to other prosecutors 
in the Department of Justice throughout the country who had 
done espionage cases to obtain SEPA information----
    Senator Torricelli. That wasn't really the thrust of my 
question.
    Mr. Shapiro. I'm sorry.
    Senator Torricelli. But in terms of the judgments that were 
being made, the counseling that you were getting from 
superiors, that was generally limited to Mr. Liebman and Mr. 
Dion?
    Mr. Shapiro. Yes.
    Senator Torricelli. During your conversations with them, as 
they related the policy judgments being made about prosecuting 
the case, is it your belief that those judgments were resting 
with Mr. Dion and Mr. Liebman, or they simply were transmitting 
decisions made elsewhere?
    Mr. Shapiro. Certainly at Mr. Dion's level or higher up.
    Senator Torricelli. So, indeed, you believe Mr. Dion 
himself was receiving instructions elsewhere about the policy 
judgments to be made?
    Mr. Shapiro. Well, and I could speak more fully on that 
issue in closed session, but yes.
    Senator Torricelli. Do you believe that Mr. Liebman and Mr. 
Dion had, in retrospect, access to everything that was at your 
disposal? Indeed, did you allow them to make a full, fair, and 
complete judgment based on everything that you had learned and 
you now know the FBI knew about the case?
    Mr. Shapiro. Absolutely. I had an obligation to do so in 
this kind of a case, and they had access to everything I had.
    Senator Torricelli. In retrospect, do you believe that you 
could have as a matter of law succeeded with the 794 case?
    Mr. Shapiro. Look, every trial lawyer thinks he can win 
every case, and I thought I could win the case. But I have--I 
have----
    Senator Torricelli. But you retained some doubts?
    Mr. Shapiro. Well, I--I'm not a magician, but I thought I 
would have had a pretty good shot.
    I should also say I viewed my role in this chain of command 
as being the grunt who advocated for the most serious charge 
that he thought he could support, and I did that.
    Senator Torricelli. Was it made clear to you that the 
decision by your superiors not to proceed with the case was a 
questioning of whether the evidence was sufficient to prevail 
or whether it was a policy judgment for some other reason not 
to pursue the case?
    Mr. Shapiro. Oh, I should also say--when you asked--just 
before I answer that, I was also reporting to my supervisors at 
the U.S. Attorney's Office as well as Mr. Dion and Mr. Liebman. 
So that was Mr. Drurian and the U.S. Attorney.
    But in answer to your question whether it was evidence or 
policy, at least I felt it was--it was evidence. But I never 
know when the next questions----
    Senator Torricelli. In your conversations with them, it 
was--that is your impression. But in your conversations with 
Mr. Liebman and Mr. Young, it was not made clear that, for 
example, notwithstanding the evidence and their extraordinary 
confidence in you personally, nevertheless, for a policy reason 
they decided not to pursue the case.
    Mr. Shapiro. Well, you're talking about--my difficulty is 
you're talking about a mixed question of evidence and policy. I 
thought their decisions----
    Senator Torricelli. That is the way life works, and I am 
asking you to make a judgment.
    Mr. Shapiro. It's the way it seems to work here, but the 
fact of the matter is there was policy based on the evidence, I 
think. And what they conveyed to me was they didn't think the 
evidence was as strong as I saw it. They also saw other 
problems with the case, particularly with the open source 
questions, and so to the degree Internal Security has policies 
about when they let line assistants go forward, I guess that 
evidentiary consideration informed their policy decisions. But, 
to me, it was evidence.
    Senator Torricelli. In fact, you are giving me a mixed 
answer, that there was a question of confidence in the evidence 
and sustaining the case, but there were elements of a policy 
decision not to proceed as well.
    Mr. Shapiro. You asked me a mixed question. I gave you a 
mixed answer.
    Senator Torricelli. OK; so----
    Senator Specter. Senator Torricelli, time has elapsed on 
the vote, and we are now in the 5-minute overtime. So my 
suggestion would be that we go vote and we will be able to do 
both of them very close and come right back.
    We will stand in recess for just a few minutes.
    [Recess 11:02 a.m. to 11:30 a.m.]
    Senator Specter. The subcommittee will resume.
    Senator Torricelli has not yet returned, but in 
consideration of our limited time, I think we will proceed with 
Senator Sessions, and then we will return to Senator Torricelli 
at the conclusion of Senator Sessions so that Senator 
Torricelli may finish.
    Senator Sessions.
    Senator Sessions. Thank you, Mr. Chairman.
    Mr. Shapiro, I have seen over the years instances in which 
good prosecutors--and I consider you one. You are experienced; 
you have tried a variety of cases. That is the kind of 
background you need to make a tough decision in any case, in my 
view, whether it is a complex white-collar fraud cause or an 
espionage case. Once the statute is studied a little bit, it is 
pretty clear what you have got to prove, isn't it? It is not 
that complex. The statute said whoever with reason to believe 
this information could be used to injure the United States or 
to the advantage of another nation.
    So I think, first of all, that your experience and judgment 
on this matter strikes me as precisely correct. And Mr. Dion 
testified before, and I respect him. He has been there for a 
long time. I am sure he knows all kinds of things about the 
intricacies of espionage law. But in answering my question, he 
has never tried a case, and he is not prepared to, in my view, 
make the kind of judgment on the ground that you were able to 
make uniquely.
    The question about proceeding with 794 in the memo that was 
raised to you before that indicated that the FBI had said that 
794 could be charged if the plea was rejected, from what I 
understand you to be saying, you were flying back to 
Washington, calling on a daily basis, asking for the right to 
charge 794, and you were really not likely to be mistaken about 
that, are you?
    Mr. Shapiro. I don't feel I am mistaken about that.
    Senator Sessions. And if they had told you that if this 
plea bargain attempt you had to make, last-ditch plea attempt 
fails, you can charge 794, you would have gone in with a lot 
different attitude, wouldn't you?
    Mr. Shapiro. Well, I was----
    Senator Sessions. You would remember that, wouldn't you?
    Mr. Shapiro. Yes, and I was given--I was given the 
authority to use the 794 as leverage. I do need to make that 
clear, although I think the subcommittee understands that I was 
not flying solo here. Main Justice was involved in all the 
decisions, including the decision to allow me to use the 794 as 
leverage in the plea agreement.
    The question as to whether I had authority to charge 794, 
no, I think I'm very clear on that.
    Senator Specter. You are very clear that you did not have 
authority to charge 794 even if the plea bargain broke down?
    Mr. Shapiro. I did not believe I did.
    Senator Specter. OK.
    Mr. Shapiro. But I do believe that--I know I had authority 
to use 794 as leverage in plea negotiations, and I know both of 
you understand the distinction----
    Senator Specter. Well, pardon me for interrupting, Senator 
Sessions.
    That is an important distinction. You can talk about 794, 
but the critical factor--and you have already answered this--is 
that if the plea bargain broke down, you did not know you had 
authority to charge 794.
    Mr. Shapiro. I think I have answered that before, yes, that 
is right.
    Senator Specter. My statement is correct?
    Mr. Shapiro. Yes.
    Senator Specter. Thank you.
    Senator Sessions. And that was the hammer that could allow 
you to drive the plea agreement on the terms that you were 
concerned with?
    Mr. Shapiro. That is right.
    Senator Sessions. And as it went down, not having that even 
when you are in the process of the plea and the defense lawyer 
said some things that I think you were not happy with and 
minimized the defendant's involvement in matters beyond justice 
and fairness, you are still handicapped because you know 
ultimately you are not able to bring the one charge that could 
have brought order to the chaos you were involved in.
    Mr. Shapiro. I think that is right. I should also add, as a 
former U.S. attorney, I am sure you can appreciate if you have 
an espionage case in your office, you know about it. And I was 
reporting to the first assistant U.S. attorney, Richard 
Drurian, every step of the way, and I kind of want to clear 
this up because I want to make sure Senator Torricelli's answer 
is clear.
    I was not just trying to serve supervisors at Main Justice. 
I was also serving, more pointedly, the supervisors at the U.S. 
Attorney's Office, Richard Drurian, the first assistant, and 
Nora Minella, the U.S. attorney.And they approved everything, 
as did Main Justice. Now, you know, I don't particularly like having a 
lot of supervisors; it is something I dislike.
    It is my right, as a guy who never became a supervisor, to 
complain about it, and in this case I had more supervisors than 
you could imagine. I mean, I had my supervisors at the U.S. 
Attorney's Office who I was reporting to several times a day. I 
had the supervisors at Main Justice, not all of whom I was even 
talking to.
    Senator Sessions. Well, let me ask you about there in the 
U.S. Attorney's office, your direct supervisor, Mr. Drurian. 
Did he also believe you should not charge 794? Was that his 
position?
    Mr. Shapiro. Mr. Drurian, again--and I said before, I will 
say it again--I thought my supervisors, who were also my 
friends, and the people at the Department of Justice all 
operated in good faith. We disagreed, and an absolute brutal, 
no-holds-barred disagreement among prosecutors is not only 
common, it is appropriate, because if we don't fight it out, we 
are going to get killed in front of the jury.
    Senator Sessions. Well, I would just say to you that this 
concern over the Schuster memorandum that waffles by the Navy 
whether or not there was a classification, this Web site matter 
and some of the other Brady material matters, I believe you 
would have handled.
    I believe Mr. Schuster couldn't withstand your cross-
examination because I believe he virtually couldn't withstand 
Senator Specter's examination. It was classified material, and 
the facts were the truth would have come out in a fully 
contested trial. And if any of these scientists had come in 
there with their half-baked ideas that this was some sort of 
free speech question, I think you would have handled them, 
also, and I believe the jury would have seen a fair and 
complete picture.
    And I am absolutely confident that he would have been 
convicted on 794, and I believe your people, at best--the best 
spin I can put on the Department of Justice view is they took 
counsel of their fears. They are over there worried about all 
these, oh, there is Brady material, oh, oh, oh. But sometimes 
when you have got an important case, you have got to take it to 
the jury.
    Let me ask you this. Was the standard they were utilizing 
on to what extent the classifications were violated--was that 
standard based on what he admitted to having given to the 
Chinese?
    Mr. Shapiro. They will have to answer that. My 
understanding was they were considering everything that I 
provided them, as well as the open source material.
    Senator Sessions. Well, it is a complex point, but the 
point is this. To my way of thinking, Mr. Lee undoubtedly gave 
a lot more than he said he gave. In evaluating the case from a 
strictly legal point of view, you may have to say, well, we 
ought to consider only what he has admitted giving, but I am 
confident he gave more than that.
    My experience is they never tell everything they have done. 
Do you agree with that?
    Mr. Shapiro. I do, and that is why it is frustrating for me 
to sit here because I have information that I could provide the 
committee that would alleviate those concerns, because they 
alleviated them for me. And I will tell you, in the many cases 
I had with a cooperating defendant or a defendant who pled 
guilty who was debriefed, I never had the kind of information 
to corroborate what was said as I did in this case. And, you 
know, I have traveled 3,000 miles to be here voluntarily and I 
am looking forward to the chance to go another 28 feet in a 
closed session so that I can tell you why I can say that with 
total confidence.
    Senator Sessions. Well, I want you to talk about some 
things here in public, and maybe we have done it. The point, I 
believe, is the Department of Justice was in error. I believe 
you were correct. Everybody has made mistakes. I have made 
mistakes in my career. But I believe when you shake this down, 
there wasn't but one clear decision, and that is to charge him 
with espionage. And if he got a light sentence, it would be 
because of serious cooperation.
    As it turned out, the FBI said they wanted intelligence. 
That was even more important to them than a plea, but they 
didn't get intelligence, did they?
    Mr. Shapiro. You would have to--again, you would have to 
ask them that, but I take your point.
    Senator Sessions. But it appears that his cooperation was 
less than candid and less than complete. You wouldn't dispute 
that, would you?
    Mr. Shapiro. I would agree with your statement that very 
often it isn't.
    Senator Sessions. And had he been facing the most serious 
charge that could have even carried a death penalty, perhaps 
the clarity of that event would have caused him to be fully 
cooperative. As a professional, isn't it true that when you are 
negotiating a plea, you have to get the defendant's full 
attention because they generally don't like to talk about what 
they have done?
    And to obtain that cooperation, they have to be faced with 
a choice and cooperating has got to be less painful than not 
cooperating. And you were not allowed to proceed with the 
leverage that you had, and two bad things occurred. You did not 
get full and honest cooperation. And, number two, you got a 
sentence too light, in my opinion.
    Mr. Shapiro. Well, Senator, I would let--DOJ and my 
attorney supervisors at L.A. could answer this as well. From my 
standpoint, the most important leverage that we could have had 
on Peter Lee was through an arrest, and it was my desire to 
arrest him as soon as the confession was obtained.
    Again, just on my experience, the period of time where the 
cuffs are placed on the suspect very often, particularly in 
this case, I think would have produced perhaps more 
information. Again, in any other case I would have been the 
person calling the shots and I would have made the--in fact, I 
did fill out the arrest complaint. Gil Cordova's affidavit was 
initially an affidavit in support of an arrest warrant and a 
search warrant.
    Senator Sessions. And what caused the arrest not to go 
forward? You could have arrested him on 1001.
    Mr. Shapiro. And that is what we intended to do. The 
original complaint----
    Senator Sessions. And 1001 is, just for the record, a false 
statement on a travel voucher or any false statement to the 
Government, which carries a maximum of 2 years still?
    Mr. Shapiro. Yes, I believe so, and it would have been--but 
it would have been sufficient for our purposes, which was to 
put the cuffs on him and let him taste incarceration. Because 
this was an espionage case, even the decision to arrest was not 
mine, nor was it one that mysupervisors at the U.S. Attorney's 
Office could make on their own, nor was it one, frankly, that my 
supervisors at the U.S. Attorney's Office were comfortable in making 
without DOJ approval. And so my frustrations in this case began when I 
wasn't allowed to hook Mr. Lee up.
    Senator Sessions. I think that is correct, and your 
judgment strikes me as being correct on that issue, also, and 
it is unfortunate that did not occur because later you did get 
cooperation, and so forth, or at least progress toward that.
    Mr. Chairman, I don't want to take too much of your time.
    Senator Specter. We will come back to you, Senator 
Sessions.
    Senator Sessions. Could I proceed with one more thing, lest 
it gets off my mind?
    Senator Specter. Sure.
    Senator Sessions. In the sentencing disclosures to the 
judge, there was excised from the sentencing memorandum Agent 
Cordova's original--lines from his original affidavit referring 
to the 1997 activities. Was that your decision or was that a 
decision from any other source?
    Mr. Shapiro. I am not quite sure what we are referring to. 
I don't have the document in front of me. I will tell you that 
my actions at the sentencing hearing were informed primarily by 
the information that I cannot reveal in open setting.
    Senator Sessions. Well, I will just the original arrest 
converted affidavit had this sentence in it: ``Peter Hoong-Yee 
Lee admitted to knowing this lecture, in 1997, was providing 
information to the PRC scientists which was classified 
confidential.'' That was left out of the----
    Mr. Shapiro. But it was contained in the position papers 
that I provided, and was also contained, as I recall, in the 
pre-sentence report. And I think if you look at my allocution 
at sentencing, I made reference to the 1997 material very 
clearly. As a matter of fact, I recall Mr. Henderson talking 
about the submarine material first.
    Senator Sessions. Well, our review of the record indicates 
there is nothing in the record that indicates that Lee had 
actually confessed to passing classified information.
    Mr. Shapiro. I am very confident it was in the pre-sentence 
report. And I think if you look at the sentencing allocution, 
both Mr. Henderson's comments and my comments, and the judge's 
comments, I do think it is in there.
    Senator Sessions. It seems almost the affidavit of March 
1998 was crafted to avoid saying that he confessed.
    Mr. Shapiro. And to that point, Senator, I would like to 
answer that point on that issue, but I cannot in this setting.
    Senator Sessions. Well, very good, thank you.
    Senator Specter. Senator Grassley.
    Senator Grassley. Thank you, Mr. Chairman.
    Going back to his second to the last question, why weren't 
you allowed to arrest Mr. Lee, and did Main Justice have a 
rationale?
    Mr. Shapiro. As I recall, Senator, the request was made of 
Main Justice from the U.S. Attorney's Office after my 
supervisors at the U.S. Attorney's Office reviewed the matter 
for some period of time. The affidavit was sent to Main Justice 
and the decision to not go forward with the arrest, as I 
recall--and I don't have documents here, but as I recall, the 
decision was based in part because of the need for an 
assessment of the information that Peter Lee passed; that is, 
Main Justice did not want to proceed with an arrest warrant 
until they had had an opportunity to assess what it is that he 
passed to determine, first of all, if, in fact, it was 
classified because I think they felt if you are going to arrest 
somebody on 1001 but you are going to make reference to 
potential 794 charges, this becomes a very public case.
    My feeling was obviously that the complaint and the arrest 
warrant would be sealed and that we wouldn't necessarily have 
to get into that. Nevertheless, DOJ had to go to the Navy, had 
to go to the Department of Energy, and had to get the 
information before they could make an assessment as to the 
damage before they could give me the approvals.
    As a result, I asked, and the FBI agreed at some expense, 
to place Mr. Lee on 24-hour, 7-day-a-week surveillance, my fear 
being that he would flee. And so my concern from that period of 
time in the case was that we not lose him and allow him to 
avoid prosecution entirely.
    Senator Grassley. Do you agree with Main DOJ's rationale in 
this matter?
    Mr. Shapiro. I don't know how to answer that. I had my 
position. I didn't have the authority to make the call. They 
made their call and my job was to accept it. I recognized that 
they had concerns, and I think the concerns were in good faith. 
And I must tell you, when I complained about it to my 
supervisors at the U.S. Attorney's Office, which I did with 
some regularity, my supervisors at the U.S. Attorney's Office 
did agree with that decision.
    Senator Grassley. I want to go back to prior to the vote 
and a word you used in answering a question for Senator 
Specter, the word ``evolved.'' It was in regard to Dr. 
Twogood's assessment. You said it evolved. What did you mean by 
``evolved?'' Explain what you mean by ``evolved.''
    Mr. Shapiro. Well, Senator, it was my feeling, and it is 
not an uncommon experience particularly in dealing with 
complicated issues--and I had never dealt with a case with so 
many complicated scientific issues. Either because I am not 
asking the right questions or perhaps the person is not focused 
on what I am asking, Dr. Twogood's initial position on the 
classification was different than what his ultimate decision on 
the classification was.
    I have been told that at some point he has said recently 
that it was secret, and that is news to me. I will also tell 
you that Dr. Twogood, who was a witness that I put in my 
affidavit and I would have put up, used a specific form of 
classification, a mosaic form of classification, which was not 
the form of classification that people in the Navy used.
    I will tell you--and I know Senator Sessions will 
understand this--you know, sometimes witnesses' egos get 
involved, and the more one side says it is A, the harder the 
other side says it is B. Sometimes you wonder if it is on the 
merits or if it is based on other reasons, but Dr. Twogood's 
opinion evolved. And I think it is in the paperwork that I have 
seen, the documents, that it has evolved. You have documents 
where he says at one point it is confidential and at another 
point it is something else.
    And I in no way am casting aspersions because this is not 
uncommon. Nevertheless, it is material for a defenselawyer, 
which I would have turned over and which he knew about, that would have 
been brutal on Dr. Twogood. But I would have prepared him for trial and 
we would have gotten through it.
    Mr. Connolly. Senator, may I have just one moment with Mr. 
Shapiro?
    [Witness conferring with counsel.]
    Mr. Shapiro. Senators, if I could just add one more--
Senator Sessions, my attorney has provided to me the 
affidavit--oh, I am sorry. My sentencing position paper of 
March 26, 1998, which I provided to Judge Hatter and which has 
been provided to this committee, it was my response to the 
defendant's position with regard to sentencing factors. And at 
page 16, paragraph 30, which takes all of 16, 17, and 
paragraphs 31, 32, I do discuss the issue that we talked about, 
namely the submarine information and Peter Lee's giving the 
lecture, his admissions about it, and so forth.
    That was my recollection, and I brought up Mr. Henderson 
having brought it up first because in my mind I recall it was 
sort of a counter-punch to what Mr. Henderson was saying and it 
was my response to his position paper.
    Senator Sessions. Well, it was omitted from Agent Cordova's 
two sworn affidavits of February 27, and March 23, 1998, for 
some strange reason.
    Mr. Shapiro. And I can tell you why, I think, without 
violating classification, and I think you will understand it if 
I say it. I took it out of his declaration and put it in my 
papers so that he could not be cross-examined at sentencing on 
that issue.
    Senator Grassley. Despite the evolution of Dr. Twogood's 
position, why did you still have confidence in him as a 
witness?
    Mr. Shapiro. Well, two reasons. One, he was the only one I 
had. And, two, he was, in my view, sincere in his beliefs. I 
did not think he was dishonest. I felt he was a truth-teller. I 
would never put him up there if I thought he was a liar.
    Having said that, you put witnesses on the stand sometimes 
who have inconsistent statements that you are going to have to 
deal with, and he had those. Now, I do know that my supervisors 
at the U.S. Attorney's Office were particularly because they 
said, if he is your whole case, doesn't he have to basically be 
unimpeachable? And I was never fortunate enough to have 
unimpeachable witnesses, so I was prepared to go forward with 
Twogood. And, again, the 1985, with the 1997, with the 1001--
even I would have convicted him of something. I am sure of it.
    Senator Grassley. I appreciate your testimony and your 
candor, and I thank you for helping the subcommitte with its 
work of oversight.
    Thank you, Mr. Chairman.
    Senator Sessions. Mr. Chairman, can I ask one little 
follow-up on that?
    Senator Specter. Sure.
    Senator Sessions. It strikes me that on examination, study, 
and what you could have brought out on cross-examination, Dr. 
Twogood was correct. Even the defendant himself admitted that 
it was classified information. He never waffled on whether or 
not it was classified information, and I think the danger from 
all that is exaggerated. I think you could have handled that 
fine at trial.
    Senator Specter. Thank you, Senator Grassley. Thank you, 
Senator Sessions.
    Mr. Shapiro, coming back to what Dr. Twogood said at what 
time, there is a document which I have asked to be provided to 
you which is dated November 10, 1997, which goes to some of the 
points which we have raised here that Dr. Twogood had a 
conclusion that this material was secret at the very outset.
    Now, the subcommittee did not get this information until 
late yesterday. And may I inquire of you, Mr. Iscoe, why so 
late in coming? Mr. Iscoe, why is this memorandum dated 
November 10 so late in coming to the subcommittee?
    Mr. Iscoe. Can I see that memorandum, Senator?
    Senator Specter. Would you identify yourself for the 
record, Mr. Iscoe?
    Mr. Iscoe. Craig Iscoe from the Department of Justice.
    I have a memorandum in front of me dated 11/13/97 addressed 
to Michael, James J. Smith at the bottom. I don't see one with 
a November 10 date on it.
    Senator Specter. Well, part of this sequence is a 
memorandum dated----
    Mr. Iscoe. I have just been handed another one dated 
November 10, 1997. I received these----
    Senator Specter. Aren't they all together, Mr. Iscoe?
    Mr. Iscoe. Well, they were not in the way they were handed 
to me, Senator.
    Senator Specter. But aside from the way they were handed to 
you, don't they all fit together as part of the same memo 
transmission?
    Mr. Iscoe. I am not certain. I have a fax cover sheet that 
is page 2 of 34. The November 10 one is page 6 of 34, and the 
November 13 one is page 3 of 34. I haven't been able to 
determine how they fit together. I received these for the first 
time, Senator, at approximately 5 p.m., as the date line on the 
fax indicates, ``OPCA front office.'' That, Senator, is the 
FBI's congressional and public affairs front office.
    I received them for the first time at the time indicated, 
April 4, 2000, and then when I got those I promptly transmitted 
them to the Senate Judiciary Committee. I had not seen them 
before that time, Senator. That is the most I can say as to my 
knowledge of how they came to get to us. I can say that upon 
learning that they were in my office, I immediately transmitted 
them to the Judiciary Committee.
    Senator Specter. Well, would you make an inquiry as to why 
you didn't get them until the time you specified, because this 
subpoena has been outstanding for a long time and we got them 
on the eve of the hearing today and the subcommittee would like 
to know what the sequence was in their coming to light and why 
we got them so late.
    Mr. Iscoe. Well, Senator, we will be glad to do that. It 
may be other witnesses can shed light on that as well, but I do 
want to assure the committee that as soon as we obtained these 
documents, we did provide them to you.
    Senator Specter. OK, let's find out the details behind 
that.
    Mr. Shapiro, these three documents have been presented to 
me as going together and it is a maze and a labyrinth to find 
out exactly what is what, but the representation made to my 
staff is that they go together.
    We are going to make these as 1, 2, 3, and the one marked 
number 1 will be the one of November 10th, which atthe bottom 
says, ``This is in response to Jonathan Shapiro's request of 10/30/
97,'' and the subject is radar ocean imaging.
    There is a second document which shows that the matter is 
to DOJ/ISS, attention Michael Liebman. And the third page has 
on item number 3, ``Application of classification Crimson Stage 
experimental data and analyses.'' And it is represented to me 
that this is the analysis by Dr. Twogood and says, ``Processing 
techniques which, when applied to unclassified or classified 
data, yield a significant enhancement and signature 
detectability which might apply to the submarine case, Secret/
Crimson Stage.''
    [The documents referred to follow:]
    [GRAPHIC] [TIFF OMITTED] T3205A.002
    
    [GRAPHIC] [TIFF OMITTED] T3205A.003
    
    [GRAPHIC] [TIFF OMITTED] T3205A.004
    
    Senator Specter. Had you seen these documents before today?
    Mr. Shapiro. This is the first time I have seen these 
documents, I can guarantee you, in the past 2\1/2\ years. As 
far as whether I have seen them before, I have difficulty 
saying. You know, this is some time ago.
    Senator Specter. Well, I can understand that. We are going 
to go into closed session this afternoon at 3:00, so we will be 
able to talk about the other materials.
    Mr. Shapiro. I think the subject matter, as I just perused 
it, would be appropriate to talk about in closed session. I 
think I could add something.
    Senator Specter. Well, I made a representation earlier and 
I have confirmed it with Dobie McArthur that we have the 
classified details from Dr. Twogood on a secret level. But 
these documents confirm what Mr. McArthur had pointed out to me 
earlier this morning that Dr. Twogood had made the 
classification of secret as early as November 10, and that it 
had been transmitted to the attention of Mr. Liebman. We will 
have to ask him whether he ever saw it. And as noted, it was, 
``in response to Jonathan Shapiro's request of 10/30/97.''
    So you are really not in a position to say with certainty 
whether you had seen this before or not?
    Mr. Shapiro. Well, I wouldn't want to without having a 
greater recollection. I will tell you that I was constantly 
requesting that the Bureau obtain from Dr. Twogood a clear 
classification, as I was asking the Bureau to get clear 
classifications from the Navy and from the Department of 
Energy. I mean, those were the elements that I needed to meet. 
This was the stuff of my case. And I see that these were sent 
at my request, which doesn't surprise me because I was making 
these requests of everybody all the time.
    Senator Specter. Well, this is a clear classification of 
secret.
    Mr. Shapiro. I will read the document. I will tell you that 
the affidavit that Gil Cordova signed under oath, where he said 
that the information was confidential, Gil Cordova was telling 
the truth absolutely. And I recall when Dr. Twogood said the 
information was confidential classified. Now, if that changed 
or if that evolved----
    Senator Specter. What was the date of Agent Cordova's 
statement?
    Mr. Shapiro. You have it, Senator. It is the declaration 
both in support of the arrest search warrant and also part of 
the declaration in regard to sentencing.
    Senator Specter. Well, I am advised by Mr. McArthur that it 
was October 21. So there may have been--well, we will have to 
find out from Agent Cordova what the basis was for his saying 
confidential as opposed to secret. But as of November 10--that 
is a short time after Agent Cordova's affidavit--Dr. Twogood 
says it is secret.
    Mr. Shapiro. And as we talk about this, I also recall in 
the context of trying to get the Navy to come forward me 
saying, you know, we think this stuff is secret. I mean, my 
approach to the Department of Defense and Navy was always I 
think this stuff is secret. That was my understanding, probably 
based, the more I think about it, on talking to Dr. Twogood 
ultimately and others.
    But the reason we were going to the Navy is we wanted them 
to say the stuff is secret. That was going to be the witness, 
in my view, was the Navy. The Navy should have been the witness 
in this case.
    Senator Specter. Let me read into the record at this point 
Dr. Twogood's testimony from last week. My question: ``Did you 
have occasion to examine the transcript and videotape of Dr. 
Lee's confession?'' ``Mr. Twogood: yes.'' ``Senator Specter: 
And what was the appropriate classification for the kinds of 
information that he turned over to scientists from the People's 
Republic of China?'' ``Mr. Twogood: Peter himself admitted that 
he had passed confidential information and stated it was 
confidential. When I saw the videotape and the audiotape, my 
immediate response was that it is at least confidential and I 
thought it was likely DOD secret.'' ``Senator Specter: You say 
you thought it was secret?'' ``Mr. Twogood: Yes, that is how I 
would have classified it.''
    Mr. Shapiro. And, Senator, I will completely agree that 
that evolution was exactly what I recall, Dr. Twogood seeing 
the tape, saying it is confidential, then growing into a belief 
that it was secret. Those problems aside, as I have said a 
number of times, and you have the documents, Dr. Twogood was my 
witness. When I went to the Navy asking for someone to step 
forward and say it was secret so I could try my case, it was 
Dr. Twogood that I was using.
    So as I see these documents, my memory is refreshed, and 
that is why in answer to Senator Sessions' question I was 
willing to try the case with Dr. Twogood, despite the warts 
that he may have had.
    Senator Specter. Well, if by evolution you mean as early as 
November 10, which was pretty early in the process, then I 
understand what you are saying because at least the information 
we have is that by November 10 he had submitted to Main Justice 
and Mr. Liebman the document classifying it as secret.
    Mr. Shapiro. But I had been in touch with Dr. Twogood for a 
period of time before that. I mean, I had gone to Lawrence 
Livermore. I had talked to him and to others, and so this 
document, you know, to me, reflects sort of the end of the 
process. I had been talking to Dr. Twogood----
    Senator Specter. But by November 10?
    Mr. Shapiro. If that is what the date is, certainly.
    Senator Specter. But that is well in advance of the plea 
bargain agreement.
    Mr. Shapiro. And well after I first talked to Dr. Twogood, 
in my recollection. I mean, we were trying to push the process, 
push the Navy into stepping up and provided a witness, and I 
was using Dr. Twogood to do that. And the way I was able to do 
that was by talking to Dr. Twogood.
    Senator Specter. Well, the plea agreement was entered into 
on December 8, so you had at least Dr. Twogood's classification 
of secret subject to the considerations you have already 
raised. And you have testified that you thought you could have 
defended your witness, but I just wanted to put on the record 
these documents we got last night.
    When we talk about the Navy--we will have this one marked 
No. 4--you have the memorandum from--I am not sure whether it 
is Mr. Schuster or Dr. Schuster, so I am going to call him Dr. 
Schuster, dated November 14, 1997, which we have talked about 
at length before and is the height of ambiguity on its face.
    We questioned Dr. Schuster about this at length last week, 
and then we questioned him about the classification that the 
Department of the Navy and the Department of Defense finally 
put on this matter as confidential--that is dated March 9, not 
even a month ago, March 9, 2000--which they finally did at the 
request of this subcommittee. And we will be interested to hear 
in closed sessions your comments about any other classification 
that you have from the Department of Defense.
    [The memorandum referred to follows:]
    [GRAPHIC] [TIFF OMITTED] T3205A.005
    
    Senator Specter. With respect to the disclosures from 1985, 
I think we have already covered your judgment that there were 
very serious disclosures detrimental to the U.S. Government on 
the nuclear matters, the hohlraum, disclosed by Dr. Lee in 
1985. Even though some of it was declassified in 1993, that 
interim did substantial damage to the national security 
interests of the United States Government.
    That is correct?
    Mr. Shapiro. My feeling on that, and I will say it again, 
was supervisors at the U.S. Attorney's Office and the 
Department of Justice did know--and I think it is still true--
that a hundred percent of what Peter Lee passed was 
declassified. And the Department of Energy wasn't going to do 
me any good when I am trying to convict a guy of passing a 
secret that is on their Web site.
    However, to me--and I was the defense procurement fraud 
coordinator at the time for the U.S. Attorney's Office--I 
thought that the message had to be sent to the scientific 
community that works on these defense projects that whether the 
stuff has been declassified or not, you have an obligation to 
keep it secret. And as I said at sentencing, we don't leave it 
up to the individual scientist to make that call, and that, to 
me, was why that case had great validity.
    Senator Specter. Well, when Dr. Lee disclosed the 
information in 1985, it hadn't been declassified.
    Mr. Shapiro. That is just my point, that is just my point, 
Senator. And as I told Judge Hatter at sentencing, this is 
precisely the kind of case we ought to prosecute. I mean, 2\1/
2\ years after I have left the U.S. Attorney's Office, not even 
you, with all due respect, Senator, can make me divulge 
something that I have been told is secret, and I won't. For 
Peter Lee to do it, in light of the access that he had, was 
wrong.
    And I have to tell you, the reason I am proud of having 
brought Peter Lee to justice is because if it hadn't been for 
the work of the FBI in Los Angeles, Michael Liebman at DOJ, 
Peter Lee would not have been brought to justice. He would have 
walked on that 1985 and no one would have known about it.
    So I don't say that I am proud of that case for no reason. 
My father was a Russian language specialist for 4 years in the 
U.S. Air Force 17 miles off the Siberian coast monitoring 
Soviet air traffic during the Korean War. In my family, we take 
these secrets kind of seriously.
    Senator Specter. Well, Mr. Shapiro, everything that you 
have testified to shows your diligence in your pursuit in 
trying to bring Dr. Lee to justice. I just don't want to be 
silent here for my participation in agreeing that he was 
brought to justice. I think you did what you could, but we have 
to pursue the matter further because I do not think he was 
brought to justice.
    I had asked you this question before, but I think it is 
worth putting on the record now. Do you think there is some 
possibility, however slight, that Peter Lee could still be 
prosecuted for the 1997 disclosures?
    Mr. Shapiro. If they were coupled--I end with where I began 
this whole case. If the 1997 count had been coupled with the 
1985 count and the 1001 count, I think that that was a viable 
prosecution. I say that and recognize that the Navy's Schuster 
memo was a knockout punch in some ways as a piece of Brady if 
one was just going to charge the 1997, and that we were going 
to have a whole lot of scientists on the other side for the 
defense, as well as apparently nobody from the Navy for Mr. 
Lee.
    Senator Specter. Well, my question doesn't go to whether it 
is viable. He cannot be prosecuted now for the 1985 matter 
because he has been prosecuted. That is barred by double 
jeopardy, or the 1001. And I understand your point on viable if 
they were joined together; they can't be.
    But there is a different question as to whether he could 
technically be prosecuted for the 1997 disclosures, and that is 
my question to you.
    Mr. Shapiro. You would have to ask the lawyers of 
theDepartment of Justice, of whom I am no longer one, unfortunately.
    Senator Specter. Well, they might not have the final answer 
either.
    On the 1985 matters, Mr. Shapiro, you have testified that, 
or as I understand your testimony--or perhaps I should ask you, 
do you think that everything that Peter Lee told the PRC in 
1985 was declassified in 1993, because we got information just 
last night, again very late--and I would ask Mr. Iscoe to have 
the same pursuit as to why we got this late.
    And I will ask that these pages be marked in sequence, a 
DOE fax which itemizes the declassification. It has a 1993 fax 
stamp and then an April 4, 2000, fax imprint. And on page 2, it 
refers to some information which has not been declassified that 
Dr. Lee disclosed. ``There is some inertial confinement fusion 
information that will remain classified.'' This relates to 
weapons research, and there is a chart which shows the percent 
of matters declassified.
    [The document referred to follows:]
    [GRAPHIC] [TIFF OMITTED] T3205A.006
    
    [GRAPHIC] [TIFF OMITTED] T3205A.007
    
    [GRAPHIC] [TIFF OMITTED] T3205A.008
    
    Senator Specter. Prior to today, have you ever seen that 
before?
    Mr. Shapiro. Even to this moment, I haven't seen it. I 
don't have it in front of me and I don't know what you are 
talking about.
    Senator Specter. Well, would you take a look at it and----
    Mr. Shapiro. As soon as I get it, I would be happy to.
    Senator Specter. You don't have a copy?
    Mr. Connolly. If you would identify it by the fax number 
page, because that is where we got lost here.
    Senator Specter. Ok; these are fax pages 19/34, 20/34, 21/
34.
    Mr. Connolly. Very good, thank you. And, again, we 
understand the Senator got this information late last night and 
this is the first time we have had an opportunity to see this. 
Your staff has been very kind in getting information as it has 
come across the transom and we don't suggest otherwise. I just 
wanted to make that note.
    Mr. Shapiro. I have the document in front of me, Senator, 
and I--is your question have I ever seen this before?
    Senator Specter. Well, that is question one, and I know the 
answer is no. And you are looking at it now, and on page 2, to 
try to abbreviate this--and I don't know that you can really 
add much to the statement, but would you confirm that page 2 
says, ``There is some inertial confinement fusion information 
that will remain classified which relates to weapons 
research?''
    Mr. Shapiro. It does seem to say that on page 2.
    Senator Specter. Well, OK, let's leave it there. You really 
can't add anything to that. This goes to the issue which the 
subcommittee concludes, or this Senator concludes and I think 
the subcommittee will ultimately, that some of the materials 
passed in 1985 were not ultimately declassified in 1993.
    And you just don't know about that, correct?
    Mr. Shapiro. That is right.
    Senator Specter. When Senator Torricelli's line of 
questioning was interrupted, he was asking you about 
supervisors disagreeing on policy. And again to abbreviate, you 
and I went into this at some length on February 15, and at that 
time you had said that they wouldn't authorize the case, one, 
either already available in the public domain, and that it was 
not nearly enough classified for them to pursue it.
    This is on page 60 of a long answer, big paragraph, 
starting about a third of the page down. The question is that 
your view as to why you couldn't get authority from Main 
Justice to go forward on the 794.
    Mr. Shapiro. Well, the answer I gave was in response to 
your question about the limited approach and whether it would 
have satisfied the Navy's interests. And I attempted to answer 
your question regarding dealing with the Navy in Washington and 
the problems with classification and I----
    Senator Specter. Well, you answered a little more broadly, 
and you----
    Mr. Shapiro. Yes, I did.
    Senator Specter [continuing]. Included Internal Security's 
view as well, as you see there.
    Mr. Shapiro. Yes, and my purpose in doing so was to explain 
to you, as I have, that Internal Security and the U.S. 
Attorney's Office supervisors looked at the case, and as I 
recall it, among the problems they had with it was the open 
source material, the fact that so much of the stuff was out 
there.
    I must tell you there was also some concern about the judge 
we were in front of and the sort of evidentiary rulings we 
might get. Not uncommon, as you know, to consider those things, 
I guess, if you're a supervisor.,
    The Internal Security Office, besides the open source 
information, was concerned about the fact the Navy would not 
step up and give us a classification. And as I think I 
reflected, is reflected here in the transcript, I told you that 
I gave them the--I forwarded all the information I had, 
including, I specifically told you, the Twogood information.
    Senator Specter. And you also forwarded them the tapes of 
Dr. Lee's confession and the transcript of the tapes of Dr. 
Lee's confession.
    Mr. Shapiro. That's right. And I--that's right.
    Senator Specter. Well, at that stage, you did not have a 
damage assessment by DOD?
    Mr. Shapiro. At what stage?
    Senator Specter. At the stage that you were testifying 
about on page 60?
    Mr. Shapiro. I don't think we were talking about a 
particular stage then, Senator. I was answering your question 
about the Navy at that point.
    Senator Specter. Well----
    Mr. Shapiro. I'm happy to answer the question, but what 
stage are you talking about?
    Senator Specter. At what stage did you--you say you did 
have a damage assessment by the Department of Defense.
    Mr. Shapiro. I had a damage assessment which I cannot 
relate or refer to in this hearing, and I won't----
    Senator Specter. Well, I understand that, but can you tell 
me when you had it?
    Mr. Shapiro. My understanding in consultation with DOJ is 
to--to even tell you--I can give you the date, but to do that 
even is classified. And I don't like that.
    Senator Specter. It is classified. I am not asking you to 
say anything that is classified.
    Mr. Shapiro. I understand that, and----
    Senator Specter. I recall your statement that even I 
couldn't get you to say something was classified.
    Mr. Shapiro. Right, and that includes the date----
    Senator Specter. But even I wouldn't try.
    Mr. Shapiro. I appreciate that. But that even includes 
dates of things that are classified, so I'm not going to answer 
that.
    Senator Specter. Well, let me just say, not as to you, but 
that is ridiculous as to a date of classification.
    Mr. Shapiro. Well, Senator, your staff, when this issue 
came up, did say that it's your feeling or the staff's feeling 
that this classification issue specifically is ridiculous. But 
I got to tell you, I'm in no position, just like Peter Lee was 
in no position, to on my own declassify information.
    Senator Specter. OK; I agree, and we will handle that 
through the Senate. The Senate can declassify information over 
the objection of the executive branch. We have ways to do that. 
We don't do it lightly, but we can do that. But we have found 
the Department of Defense hiding behind a tremendous amount of 
material which they classify. We have the Attorney General's 
June 8, 1999, testimony so badly redacted you couldn't tell 
anything. You have the LaBella report so badly redacted you 
couldn't tell anything. And we are getting it unredacted, and 
it is a slow laborious, tortuous process, but we are doing it.
    Mr. Shapiro, would it be convenient for you to come back 
into closed session at 3 o'clock this afternoon?
    Mr. Shapiro. Senator, whatever you'd like. Although it 
would be more convenient to do it sooner, I would do it 
whenever would be convenient for you.
    Senator Specter. Well, it is 12:22 p.m. now, and there are 
other--I have other commitments in the Senate. But what I would 
like to do is do it at 3 p.m. and get you out as soon as we 
can.
    Mr. Shapiro. I'll be here.
    Senator Specter. It is going to be in S-407. Mr. Connolly, 
do you have a statement you want to make?
    Mr. Connolly. Just for scheduling purposes. Mr. Shapiro--I 
just want to make this clear--is not hiding behind 
classification for any subject matter. He is more than willing 
to share with this subcommittee information that he has that he 
believes would take less than 5 minutes to share with the 
subcommittee. We just want to make that clear in terms of 
scheduling at 3 o'clock. We don't think it will take any longer 
than 5 to 10 minutes for him to get the information out. And, 
more importantly, we want to make it clear that he is not 
hiding behind this----
    Senator Specter. Well, that is fine. I would like to do it 
in 5 minutes or 10 minutes. Mr. Shapiro and I haven't been able 
to get too much done in 5 or 10 minutes up until now, but I 
would be willing to accept the responsibility for that, or at 
least part of it.
    Mr. Shapiro. Well, I'll accept part of it, too.
    Senator Specter. We are going to be in S-407, and we will 
do it--we have S-407 at 3 o'clock.
    Mr. Robinson, we are going to have to proceed with the 
testimony of Mr. Dion and Mr. Liebman at a later date. We just 
cannot do it now. And if you want to make a statement now, I 
would be glad to entertain it, or if you want to wait until we 
come back, we can do it then, at your pleasure.
    Mr. Robinson. I would leave it to the Senator in terms of 
when you would like me to do it. I would like to make a brief 
statement.
    Senator Specter. Ok; fine. Thank you very much, Mr. Shapiro 
and Mr. Connolly. Thank you, Mr. Connolly, for representing Mr. 
Shapiro. Thank you, Mr. Shapiro, for all of the good work you 
have done for the U.S. Government.
    Senator Specter. Yes, come forward.

  STATEMENT OF JAMES K. ROBINSON, ASSISTANT ATTORNEY GENERAL, 
CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE, WASHINGTON, DC; 
   ACCOMPANIED BY JOHN C. KEENEY, DEPUTY ASSISTANT ATTORNEY 
    GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE, 
                         WASHINGTON, DC

    Mr. Robinson. Senator, I want to thank you for affording me 
this brief opportunity to make our position clear on the 
subject of the subpoenas. I know there is some disagreement. I 
know the Senator has strongly held views, and Senator Sessions, 
and I respect that and I hope you will respect my concern and 
the fact that I would like to----
    Senator Specter. Mr. Robinson, I think you should have an 
opportunity to say whatever you want to publicly and put it on 
the record, and we will take it from there.
    Mr. Robinson. Thank you very much.
    Senator, as you know, since you were there at my 
confirmation hearing, I have been the Assistant Attorney 
General for the Criminal Division since June of 1998. I am here 
today with Deputy Assistant Attorney General John Keeney, who 
was Acting Assistant Attorney General for the Criminal Division 
during the Peter Lee prosecution. My purpose in making these 
brief remarks is to express the Department's continuing concern 
about the subpoenas issued to non-supervisory line prosecutors.
    In my view, the actions of the subcommittee in forcing line 
prosecutors under the threat of subpoena to testify in a public 
proceeding for actions that they took in their official 
capacities in a particular case is contrary to the public 
interest. These are career prosecutors, not political 
appointees or supervisors.
    There was a time in this country, thankfully, many, many 
years ago, when with each change of national administration 
United States Attorneys would replace on a patronage basis 
Assistant United States Attorneys throughout the country. 
Fortunately, for the last 30-plus years, that method of 
selecting our Nation's prosecutors has been abandoned, and 
these critical positions have been filled on the basis of merit 
without regard to political considerations.
    The career prosecutors in this country served the people of 
America well under both Republican and Democratic 
administrations, and I think that Mr. Shapiro's testimony here 
today indicates that we have outstanding prosecutors serving in 
these capacities.
    The power of public prosecutors is awesome. They decide who 
to investigate. They decide how intrusive those investigations 
will be. They decide who to charge with crimes and for what 
alleged crimes. They determine what terms to accept in plea 
agreements. They decide whatpunishment to seek from the courts 
and what consideration, if any, will be given for cooperation with the 
Government.
    These are difficult, delicate, quasi-judicial judgment 
calls. The fairness of our system, in my view, depends on 
entrusting this power to people who will not be making these 
important decisions on the basis of any factors other than the 
merits of the case at hand, and I know the Senator agrees with 
that.
    Certainly, political considerations can have no place in 
the process, and I know the Senator agrees with that as well.
    It is critical that prosecutorial decisions by line 
prosecutors not be made in a climate where those decisions by 
line prosecutors--not supervisors, not political appointees, 
who I think are expected and given the Senate's oversight to 
come up here and answer the questions, but to line prosecutors 
who are not making these judgment calls. I believe that the 
rights of persons who may be subject to Federal investigation 
can be seriously implicated by the measures we take as a 
Government to insulate career prosecutors, non-supervisory 
prosecutors from the political process.
    There are ample ways of responding to the needs of 
congressional oversight, in my view, without subjecting these 
dedicated prosecutors to the glare of public second-guessing of 
some of their decisions.
    The objections to this process have been bipartisan. Former 
Attorneys General Barr and Civiletti have argued against it, as 
has former Acting Attorney General Stuart Gerson. The American 
Bar Association has also argued against it. The ABA made the 
point worth repeating here that congressional oversight ``must 
be carried out in a manner that is consistent with this 
country's longstanding commitment to the doctrine of separation 
of powers and prosecutorial independence from political 
interference.''
    The bipartisan National Association of Former United States 
Attorneys in a letter to me yesterday, which has been shared 
and the Senator has commented on, made the point that the 
effect on the morale and ability to perform of Assistant United 
States Attorneys as a result of the awareness of the 
possibility that they may be called before a congressional 
committee to explain their decisions could be devastating to 
the prosecutorial process.
    The National Association of Former United States Attorneys 
is a bipartisan organization of former presidentially appointed 
United States Attorneys from every administration since that of 
President Eisenhower. I was honored to have once served as the 
president of the National Association of Former United States 
Attorneys.
    In my view, the public examination of line prosecutors is 
not necessary for congressional oversight. The information they 
have, however, should be made available. We shouldn't be hiding 
from that, and there ought to be as I think over the years 
efforts have been made to accommodate the tension between 
congressional oversight, a very real and important 
responsibility the Congress has to conduct that oversight and 
this very different issue of whether line prosecutors should be 
here.
    I also understand that the Senator has been of the view 
that the Department has not been as responsive in responding to 
the subcommittee's requests as it should have been. We have 
some disagreements about the extent of that cooperation. We 
have provided volumes of materials, made our key supervisory 
people available for interview and testimony, and we are 
willing to do more and to try harder to accomplish that result.
    My visa, if you want to call it that, as a politically 
appointed official in the Government will no doubt expire one 
day, and perhaps for those sooner rather than later, but, 
nevertheless, I will return to private life. I will not, 
however, rest easier, and I believe that no American should, 
knowing that thousands of Federal prosecutors throughout the 
country will be making their sensitive prosecutorial decisions 
knowing that if Members of Congress disagree with them, their 
judgment may well be second-guessed, they may be subpoenaed to 
a public proceeding to explain why they failed to authorize a 
particular search of someone's home, why they failed to seek a 
tap on someone's phone, why they failed to seek an indictment 
or seek particular charges, why they sought to seek the maximum 
punishment available under the law.
    It is for these reasons, unrelated to this matter, which is 
quite appropriate for this subcommittee to inquire into, that I 
am here to express support for the line prosecutors and to 
express the reasons why we continue to object, as we will in 
other matters as well, to the examination of non-supervisory 
line prosecutors and hope that in the future we can work out an 
accommodation with this subcommittee as to how they can get 
their information necessary to conduct the oversight without 
subjecting these line prosecutors to these kinds of 
proceedings.
    I appreciate the Senator's willingness to allow me to 
express these views, and I know we are in disagreement on these 
matters. But I do appreciate your willingness to hear me out. 
Thank you.
    Senator Specter. Mr. Robinson, I have great respect for you 
individually and for your position, and I have a very sharp 
disagreement with the response of the Department. And we had 
the subpoenas authorized and issued back in November, and there 
are many documents which are being dribbled in at the last 
minute, and it has been extraordinarily difficult to deal with 
the Department in many, many ways. And I handed the Attorney 
General personally a list yesterday and put it in the 
Congressional Record, but her appearances before Senate 
committees, both this committee and the Governmental Affairs, 
where I am also a member, are available to her to go through.
    And when you made a request yesterday to appear here and to 
make a statement, you got a response within a matter of 
minutes. Now, I didn't have to rummage through any documents, 
but I thought you were entitled to know exactly what my view 
was, and I got back to you immediately.
    And we are all on the same team, and that is the way I 
think it ought to be.
    Mr. Robinson. Yes.
    Senator Specter. And when you defend line attorneys, I know 
that is your responsibility, but there is an enormous body of 
authority for line attorneys to testify. And the Governmental 
Affairs Committee subpoenaed one last June 9th, and on 
September 22nd FBI agents, who are even more sensitive than 
line attorneys, or as sensitive, and there are a whole string 
of investigations which go back to 1992 and 1994 and the DOJ's 
influence on the Environmental Protection Agency, in 1992 Rocky 
Flats, and Iran-contra and Watergate in 1975, the FBI, DOJ 
domestic intelligence, andthe Congressional Research Service 
has said that, ``A review of congressional investigations that have 
implicated DOJ or DOJ investigations over the past 70 years, from 
Palmer Rates and Teapot Dome to Watergate, through Iran-contra, Rocky 
Flats, demonstrates that DOJ has been consistently obliged to submit to 
congressional oversight regardless of whether litigation is pending''--
which is always the defense DOJ makes--``so that Congress is not 
delayed unduly in investigating misfeasance, malfeasance, or 
maladministration in DOJ or elsewhere.''
    Then continuing a little later, ``In a majority of 
instances reviewed, the testimony of subordinate DOJ employees 
such as line attorneys and FBI field agents was taken, formally 
or informally, and included detailed testimony about specific 
instances of the Department's failure to prosecute alleged 
meritorious cases.''
    Now, we aren't just interested in political appointees, and 
the Attorney General used the word ``politicize'' yesterday, 
which I strenuously resented because espionage is not a matter 
for politicization. And I think my record as an individual 
stands beyond that. I have cooperated with President Clinton on 
many, many matters and continue to do so and cross party lines 
with regularity. And this inquiry is being conducted 
meticulously and scrupulously to avoid any sense of 
politicization. And we have worked against extraordinary 
difficulties without any staff, without any funding.
    And as I said yesterday, the Governmental Affairs Committee 
was worn out by the responses of the minority and the responses 
of the people who came in from the Government. And we are not 
going to be worn out.
    Mr. Robinson. I am sure that is true, Senator. We are, by 
the way, working on being responsive to the list you provided 
yesterday, and I do have a list I can share with the Senator of 
the materials provided related to this matter to the 
subcommittee, which----
    Senator Specter. Listen, I know you have given us a lot of 
materials, but sometimes all the material isn't too helpful. 
Sometimes it is a data dump. But McArthur goes through 
documents like a meat grinder. So we read them all.
    Listen, we will continue to work with you, and I am sorry 
to not be able to finish the hearing today. I did not know that 
Mr. Keeney was involved in this matter. I thought that he had 
not been involved in the Peter Lee case, but has he been?
    Mr. Keeney. I was the final decisionmaker in the plea 
agreement.
    Senator Specter. Well, I had thought that you had recused 
yourself. It may be, Mr. Keeney, that you and I ought to talk 
in advance of the next hearing.
    Mr. Keeney. I am in no way----
    Senator Specter. I can't hear you.
    Mr. Keeney. Senator, I am no way recused in this matter. My 
participation was limited in that I was Acting Attorney General 
and gave the final approval to the plea agreement.
    Senator Specter. Well, I think it would be useful if you 
and I talked in advance of the next hearing, if that is 
agreeable with you. And you are signifying it is.
    Thank you.
    Mr. Robinson. Thank you for your courtesy.
    Senator Specter. We will be in touch further as to the next 
hearing date. That concludes the session.
    [Whereupon, at 12:38 p.m., the subcommittee was adjourned.]

 
                           THE PETER LEE CASE

                              ----------                              

                       WEDNESDAY, APRIL 12, 2000

                           U.S. Senate,    
       Subcommittee on Administrative Oversight    
                                        and the Courts,    
                                Committee on the Judiciary,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:32 a.m., in 
room SH-216, Hart Senate Office Building, Hon. Arlen Specter, 
presiding.
    Also present: Senators Grassley and Sessions.

 OPENING STATEMENT OF HON. ARLEN SPECTER, A U.S. SENATOR FROM 
                   THE STATE OF PENNSYLVANIA

    Senator Specter. The hour of 9:30 having arrived, the 
Judiciary Subcommittee on Department of Justice oversight will 
now proceed.
    This is our third hearing inquiring into the matter of Dr. 
Peter Lee, who had confessed to two serious incidents of 
espionage involving the disclosure of nuclear secrets to 
scientists of the People's Republic of China in 1985 and the 
disclosure of important detective devices for locating 
submarines in 1997. And there was a plea bargain entered, and 
Dr. Lee received community service, probation, and a fine, and 
no jail.
    At the outset I again raise my concerns with the Department 
of Justice on the very tardy response to a subpoena which has 
been outstanding for many weeks. Yesterday, the Department of 
Justice turned over some 800 pages of documents which required 
a last-minute review by a very limited staff. This same issue 
was raised last week when some critical documents were turned 
over at the last minute right before last Wednesday's hearing 
with the attempted explanation that the Department of Justice 
thought the documents were in the hands of the subcommittee 
from the FBI. The same excuse was offered yesterday, although, 
in fact, many of the documents were not in the possession of 
the FBI at any time but were all Department of Justice 
documents.
    It raises a natural question as to whether there are still 
documents which have not been turned over in response to the 
subpoena, which would be a very serious matter, could amount to 
obstruction of justice. And the subcommittee intends to get to 
the bottom of that in the course of these proceedings.
    There has been some comment about the issue of line 
attorneys being made available to testify at these hearings, 
which is a little hard for me to understand in light of the 
long line of precedents where line attorneys have testified. 
They testified on the hearings in 1992 through 1994 on the 
Department of Justice's influence on the Environmental 
Protection Agency; in 1992 on Rocky Flats; in 1995 in theFBI-
Department of Justice domestic intelligence issues; on Iran-contra, in 
Watergate, going all the way back to Teapot Dome, which led the 
Congressional Research Service to conclude, ``In the majority of 
instances reviewed, the testimony of subordinate DOJ employees such as 
line attorneys and FBI field agents was taken, formally or informally, 
and included detailed testimony about specific instances of the 
Department's failure to prosecute alleged meritorious cases.''
    There was an issue raised last week about whether there had 
been a damage assessment before the plea bargain was entered 
into, and we had a closed session, and in the closed session, 
there was nothing to contradict the subcommittee's earlier 
conclusion that there had been no damage assessment prior to 
the entry of the plea bargain. The only damage assessment was 
one by the Department of Energy as to the nuclear issue from 
the 1985 transmission of material to the People's Republic of 
China scientists. And there has never been a damage assessment 
on the submarine disclosures. There had only been conclusions 
by Dr. Twogood about the classification of the information 
which was disclosed, but not a damage assessment as to what 
injury was caused to the U.S. Government.
    We had a meeting with Mr. Keeney and, after talking to Mr. 
Keeney, decided to include him as a witness today when he told 
us that had he known that there would be a recommendation by 
the trial assistant of only a ``short period of 
incarceration,'' he would not have approved the plea bargain. 
And then his concern about using an attempt charge as opposed 
to a substantive offense, which is an issue which has concerned 
the subcommittee since there was not an attempt but, rather, 
the completed act of espionage and the disclosure of materials 
in both 1985 and 1997 to the scientists from the People's 
Republic of China.
    With that very brief introduction, I would like to call Mr. 
John C. Keeney now. If you would step forward, Mr. Keeney, and 
raise your right hand? Do you solemnly swear that the testimony 
which you are about to present to this subcommittee of the 
Committee of the Judiciary of the United States Senate will be 
the truth, the whole truth, and nothing but the truth, so help 
you God?
    Mr. Keeney. I do.
    Senator Specter. Please be seated. I know you have a 
prepared statement, and we will proceed at this time with 
whatever opening statement you care to make. Your full 
statement will be made a part of the record.

    STATEMENT OF JOHN C. KEENEY, PRINCIPAL DEPUTY ASSISTANT 
    ATTORNEY GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT OF 
                    JUSTICE, WASHINGTON, DC

    Mr. Keeney. Thank you, Mr. Chairman.
    I appreciate the opportunity to appear here to clarify the 
position of the Department of Justice with respect to the Dr. 
Peter Lee case.
    As you know, Senator, I am the Principal Deputy----
    Senator Specter. Mr. Keeney, would you pull the microphone 
closer to you and speak into it, please?
    Mr. Keeney. OK; is that better?
    Senator Specter. Yes.
    Mr. Keeney. OK; thank you.
    I am the Principal Deputy Assistant Attorney General in the 
Criminal Division of the Department of Justice. At the time 
that Peter Lee pled guilty, the position of Assistant Attorney 
General was vacant, and as the Principal Deputy, I became the 
Acting Assistant Attorney General, and it was I who approved 
the accepting of the plea from Peter Lee.
    I will return to the plea agreement in a minute, but before 
doing so, I would like to clarify, if I may, the relationship 
between the U.S. Attorneys' Offices and Main Justice with 
regard to espionage cases.
    The U.S. attorney's manual provides that in espionage 
cases, the U.S. attorney must consult with, and seek approval 
from, Main Justice. The reason for this is clear. These cases 
are the among the most sensitive and difficult faced by Federal 
prosecutors. They require close coordination and expert advice.
    That expert advice is provided by the Internal Security 
Section of the Criminal, and that section has helped secure so 
many important espionage convictions over the years, and that 
is due in no small measure to the efforts of John Dion, who 
will appear today as a witness. He is the Acting Chief of the 
section.
    Although he would be too modest to cite his achievements to 
you himself, Senator, Mr. Dion is one of the most outstanding 
public servants I have known during my service at the 
Department of Justice. He has served in the Internal Security 
Section for 20 years. During that time he has played a central 
role in this Nation's most critical espionage cases.
    He has been repeatedly recognized by both Republican and 
Democratic administrations for his espionage prosecutions. In 
1987, Attorney General Meese awarded him the John Marshall 
Award for Outstanding Achievement for his work on the 
prosecution of John Walker and his confederates for espionage 
on behalf of the Soviet Union. He received a second Marshall 
Award in 1997 for his work in two other prosecutions: Special 
Agent Earl Pitts of the FBI and CIA Case Officer Harold 
Nicholson, the latter--both for espionage on behalf of the 
Soviet Union and the Russian Federation. In 1995, the Director 
of Central Intelligence awarded him the Intelligence Community 
Seal Medallion.
    John has also been consistently praised by the U.S. 
attorneys and assistant U.S. attorneys who have worked with 
him. I would request that you allow me, Senator, to make part 
of the record correspondence sent to the Department by a U.S. 
attorney and two former assistant U.S. attorneys praising 
John's role in the Squillacote prosecution.
    Senator Specter. Praising his role in which prosecution?
    Mr. Keeney. Squillacote.
    [The correspondence follows:]

                                     Santa Cruz, CA, April 4, 2000.
Hon. Orrin G. Hatch,
Chairman, Committee on the Judiciary, U.S. Senate, Washington, DC.
    Dear Chairman Hatch: I am writing to you concerning the upcoming 
hearings into the Justice Department's handling of the investigation 
and prosecution of Peter Lee. I left the Justice Department last year 
to work for a private company on the West Coast, and had no direct 
involvement in the Lee matter. Nonetheless, as a former supervisory 
federal prosecutor who has handled a number of national security 
prosecutions, I would like to share my views with you about the 
outstanding work done by the Justice Department's Internal Security 
Section and its Acting Chief John Dion.
    I joined the U.S. Attorney's Office in the Eastern District of 
Virginia in 1987, and from 1994 through 1999 I served as the head of 
that office's major crimes unit. In that capacity, I personally 
supervised or handled more than twelve national security prosecutions, 
including the prosecutions of C.I.A. employees Aldrich Ames and Harold 
James Nicholson, and F.B.I. Special Agent Edwin Earl Pitts. Through a 
coincidence of timing, my position offered me the opportunity to work 
with the Internal Security Section on more national security related 
cases than any other Assistant U.S. Attorney in the country during the 
last decade. I offer these observations based on my numerous 
experiences with Mr. Dion and the Internal Security attorneys on his 
staff.
    The Internal Security Unit was, to me, the most important section 
in the Justice Department. I found espionage cases to be the most 
complex matters I ever handled as a prosecutor, more difficult than 
complex wire frauds, bankruptcy frauds or computer crimes. They present 
difficult legal issues that do not exist in most criminal cases, and 
sensitive issues in dealing with intelligence agencies and national 
secrets. These cases are often handled in the glare of the public 
spotlight, with enormous pressures. In these difficult circumstances, 
federal prosecutors need experienced, capable support from the 
Department. We always got that support from John Dion and his team.
    In particular, John Dion was always there in difficult cases with 
unerring good judgment and advice. Even in my last year as a 
prosecutor, with a number of espionage cases under my belt; I would not 
take any significant step in any national security matter without 
discussing it thoroughly with John Dion. Often, he recommended tough, 
aggressive positions; at times, when appropriate, he counseled 
restraint. On many occasions, he saved me from making legal mistakes 
and poor strategy decisions, and he presented new angles to issues that 
I never considered. I don't ever recall him being wrong on any issue. 
Incredibly, I don't ever recall him stepping out of the background and 
taking credit for a successful prosecution, even though he deserved 
that credit more than I did.
    I have been informed that, in connection with this committee's 
review of the Lee prosecution, some have suggested that the Internal 
Security Section was insufficiently aggressive. I know little about the 
Lee case, but I do know John Dion. In all my experiences with John 
Dion, he was never afraid to take a tough position, to insist that more 
serious charges should be sought, to urge a harder stance in a plea 
negotiation, or to take a national security case to trial. John Dion 
and his staff were always dedicated to the aggressive prosecution of 
national security cases, even in the face of opposition from national 
security agencies. In all my dealings with the Internal Security 
Section. I never saw a lack of prosecutorial zeal or aggressiveness.
    I can appreciate that dedicated public servants may have honest 
differences about the appropriate disposition in a particular criminal 
case: I was involved in dozens of such disputes during my time as a 
prosecutor. I've been on the harder line side in some of the debates. 
But I've learned that a decision to charge a lesser offense is not 
necessarily a sign of weakness or lack of zeal, but is often a sign of 
good judgment that can protect larger, more important interests. I've 
learned that the person arguing for a tougher stance is not necessary 
the better prosecutor, but perhaps the more inexperienced one. The best 
lawyers, the ones like John Dion, demonstrate both zeal and good 
judgement.
    I write this letter to you reluctantly. I don't write letters to 
Congress, and my days as a public servant worrying about particular 
cases and inter-office battles are behind me. No one in the Justice 
Department asked me to write this, or even knows that I'm writing it. 
And I'm not writing it because of any personal relationship I have with 
John Dion or his staff. I've never met John Dion's family, never been 
to his house, and rarely saw him outside of our offices. I haven't 
spoken to him or his staff in months. I'm writing because I know that 
John Dion is the Department of Justice's most important asset, and the 
finest attorney I served with. His judgment, his experience, and his 
knowledge are badly needed in this critical area. I benefited 
tremendously from the advice of John Dion and his staff at critical 
points in some of the most sensitive criminal prosecutions of the last 
decade.
    Thank you for the opportunity to share these views with your 
Committee. If you have any questions, or if I may provide any further 
information, please contact me.
            Sincerely,
                                                 Robert C. Chesnut.

    Mr. Keeney. In short, I know of no prosecutor in the United 
States who has had more experience in handling espionage cases 
than John Dion. But, of course, John does not work alone. The 
success of our espionage cases--and there has been tremendous 
success in espionage cases, Senator, as you well know, over the 
last 15 years. Prior to that, we brought very, very few 
espionage cases because of the classification problems related 
to such prosecution.
    The success of our espionage cases has turned on the work 
of the younger trial attorneys in the Internal Security 
Division--Section. I say ``division'' because it used to be a 
division, and when it was a division, I was part of that. I 
worked there. One of the finest of these attorneys has been 
Michael Liebman.
    As you can see from my statement, he has an outstanding 
academic record at the University of Michigan and at the George 
Washington Law School. He served as a clerk--he served a 
clerkship and then he came into the Department of Justice under 
the Honors Program, the same year as Jonathan Shapiro came in, 
whom you had heard from last week.
    In his time in the Internal Security Section, Mr. Liebman 
has helped prosecute some of the Nation's most important 
espionage cases, most important cases of the 1990s. These 
include: Steven John Lalas, a Department of State employee 
sentenced to 14 years for spying for Greece; Aldrich Ames, the 
CIA officer sentenced to life for spying for the Soviet Union 
and Russia; Robert Stephan Lipka, a former NSA analyst 
sentenced to 18 years for spying for the Soviet Union; and 
former DOD lawyer Theresa Squillacote, and her husband, Kurt 
Alan Stand, who were sentenced just last year to 20 years and 
18 years, respectively, for spying for East Germany and the 
Soviet Union and South Africa.
    I mentioned Michael has received commendatory letters from 
a number of people, and I would like to offer those for the 
record.
    He is currently assigned to two of our most important 
cases: Wen Ho Lee, and the McDonnell Douglas export violations 
case. As the members of the subcommittee know, he has had to 
put off his preparations for these critical prosecutions in 
order to prepare for these hearings. Indeed, as you are aware, 
Senator, Mr. Liebman was supposed to argue this morning on 
behalf of the United States in a hearing in the McDonnell 
Douglas case. In deference to the subcommittee's request, the 
Department has made him available to appear here instead.
    Let me just add this: As his record indicates, no one has 
ever suggested that Michael Liebman is afraid of a tough case. 
He has helped to send more spies to jail than any other lawyer 
of his generation.
    Needless to say, the efforts of the U.S. Attorneys' Offices 
are also essential to these prosecutions. We rely on them for 
their expertise in trial work. You had as your witness last 
week Jonathan Shapiro, who, as you probably will appreciate, is 
an outstanding--or was an outstanding AUSA. And, Senator, you 
had a chance to speak to him former supervisor, the former 
First Assistant United States Attorney.
    Let me turn now to my involvement in this case. My contact 
with the case was relatively brief. As Acting Assistant 
Attorney General, I was responsible for all the matters in the 
Criminal Division. Nonetheless, I do recall being briefed about 
this case by Mark Richard, who at the time was the Deputy 
Assistant Attorney General who supervised the Internal Security 
Section.
    In his briefing, Mr. Richard made clear that he thought the 
proposed two felony plea was a good disposition of this case 
since there were potential serious obstacles to prosecution. I 
relied heavily on the advice of Mr. Richard, who was a 30-year 
veteran of the Criminal Division and who supervised all our 
espionage cases for much of that time.
    As you know, Mr. Chairman, from my discussions with you, at 
the time I approved the proposed plea agreement, I was not 
aware that it would call for only a short period of 
incarceration or would charge only an attempted 793 charge. Had 
this been our opening position in the plea negotiations, I 
doubt that I would have approved it, particularly the ``short 
period of incarceration.''
    But I should add----
    Senator Specter. Mr. Keeney, on that point, you had said to 
me that had you known there would have been a request of 
sentencing only for a ``short period of incarceration,'' you 
would not have approved the plea.
    Mr. Keeney. I would not have approved it, and I would have 
told our people to go back to the table and carry on further 
discussion.
    Senator Specter. So you would not have approved the plea 
bargain under those terms.
    Mr. Keeney. Under those terms at that time, on what I knew 
at the time. Now, there were subsequent developments and there 
was input from the U.S. Attorney's Office, and they were of the 
view that--they and our people were of the view that this was a 
difficult case, we might or might not be successful, and we 
were getting as much out of it as we could get.
    On that basis, with some reluctance, if it came before me 
now with all that before me, I would have approved it, 
reluctantly, because I still don't like the idea of a short 
period of incarceration for somebody who's charged with 
espionage.
    Senator Specter. But at the time you made the judgment and 
made the approval, you did not know there would be a request 
for only a short period of incarceration, and at that time you 
would not have approved that.
    Mr. Keeney. Would not have approved it as such. No, I would 
have sent them back to the table.
    Senator Sessions. Could I ask about that?
    Senator Specter. Sure.
    Senator Sessions. Well, Jack, who is supposed to tell you 
that? You are supposed to be--were you the highest official to 
be briefed on the plea?
    Mr. Keeney. I was.
    Senator Sessions. And isn't it incumbent on those briefing 
you to tell you all the facts about the case?
    Mr. Keeney. As far as I know, Senator Sessions, they did 
not know about this short period of incarceration provision at 
the time the matter was presented to me.
    Senator Sessions. Are you saying that was a decision made 
by the prosecutor on the ground and was not conveyed to the----
    Mr. Keeney. It was a decision made by the prosecutor on the 
ground. It was conveyed at some point to our people, Mr. Dion 
in particular, but----
    Senator Sessions. They didn't bother to check with you?
    Mr. Keeney. I think--you're going to have to ask him.I 
think he----
    Senator Sessions. No, you are the responsible highest 
official, and you made a decision based on incomplete evidence.
    Mr. Keeney. Right.
    Senator Sessions. And I want to know why you didn't have 
the complete evidence.
    Mr. Keeney. Well, I didn't, Senator, and my understanding 
is that they became aware of the short period of incarceration 
period at a later date when the thing had been agreed to.
    Senator Sessions. Well, you would then admit the system did 
not work well if the approving authority, you, wasn't given the 
complete information about what was to occur?
    Mr. Keeney. Well, it wasn't perfect, Senator, but as you 
know, we U.S. attorneys have a great deal of discretion, and we 
do defer.
    Senator Sessions. Not in espionage cases.
    Mr. Keeney. Well, even in espionage cases, Senator, we give 
a great deal of deference.
    Senator Sessions. Well, do you dispute the fact that the 
prosecutor was denied the right to proceed under 794?
    Mr. Keeney. He was never given the authority to proceed 
under 794. It was left open. He could discuss 794 with counsel 
for the defendant, but he did not have authority to proceed 
under 794. If it came down to an issue of 794, he was supposed 
to come back and discuss it further with us. We didn't rule it 
out, but----
    Senator Sessions. You don't dispute, then, that he wanted 
to proceed under 794 and you didn't hesitate to tell him no on 
that, and now you are criticizing him apparently for using 
language of a short sentence when you denied him the 
ammunition, the strength that he needed to negotiate a tough 
plea?
    Mr. Keeney. No, we didn't, Senator. That's what I was 
trying to make clear. We left on the table for him to discuss 
with defense counsel 794. We didn't rule it out at that----
    Senator Sessions. But he knew he couldn't proceed with it. 
He----
    Mr. Keeney. We didn't authorize him to proceed with it, but 
we left it open he could come back to us if he thought that he 
wanted to press on 794. But he could discuss it with defense 
counsel.
    Senator Sessions. Well, I am just going to tell you, if you 
got a prosecutor out on the front line and he knows he doesn't 
have the right to charge the one charge that would allow him to 
negotiate a good plea or proceed to victory, which I think he 
would have----
    Mr. Keeney. Well, I'm not sure----
    Senator Sessions. He has been undermined, and it is hard--
it is unbelievable to me you are criticizing him now for not 
being able to negotiate a tough plea. I think that is 
unacceptable.
    Mr. Keeney. I am not criticizing him, Senator. I am just--
--
    Senator Sessions. Who are you criticizing? You said it is 
not Mr. Richard didn't tell you the truth. You are suggesting 
he didn't tell you----
    Mr. Keeney. I'm telling you that what the facts were with 
respect to the chronology, and I'm saying that I did not 
approve the short term of incarceration. He worked that out and 
he concluded that that was the best deal he could get.
    Senator, looking back now, I think he got the best deal he 
could get, and I stand behind the plea agreement. But I still 
don't like the idea of anybody pleading guilty to espionage and 
not getting a jail term.
    Senator Sessions. He didn't--he couldn't charge the 794, 
the espionage count.
    Mr. Keeney. That's----
    Senator Sessions. No wonder he was unable to negotiate a 
good plea.
    Mr. Keeney. Well, he negotiated on the basis that the 794 
was an open issue.
    Senator Sessions. Well, he knew he didn't have the ultimate 
leverage, and he had to--you all wanted a plea, and he got a 
plea, the best he could do, in my view. He should have been 
charged and indicted with it, and then he could negotiate with 
some strength. Don't you agree?
    Mr. Keeney. Senator, don't let me mislead you. I think that 
knowing all the facts as I do now, I think the disposition was 
a good one. And I'm not at all positive--and I know you don't 
share this--that we would have convicted this guy. But that's 
my judgment. We----
    Senator Sessions. He met in two motel rooms with Chinese 
top scientists in China and admitted to sufficient facts to 
justify a guilty plea.
    Mr. Keeney. Senator, there are a lot of----
    Senator Sessions. He thought our case was going to be lost 
before a jury, and I know Mr. Dion, you say, is experienced, 
but he hasn't been in a courtroom ever, I don't think. And I 
have. And so had the prosecutor in this case, and he wanted to 
go forward with it.
    Mr. Keeney. Mr. Dion is----
    Senator Sessions. I am sorry, Mr. Chairman. Mr. Keeney is a 
great member of the Department of Justice. He has even had the 
burden of defending me, when I was U.S. attorney, before 
congressional hearings, and he is a great man. And I am sorry 
to suggest I may not have anything but the greatest respect. 
Thank you, Jack.
    Mr. Keeney. Thank you.
    Senator Specter. Mr. Keeney, it is my view to let you 
finish your opening statement. I wanted you to clarify that one 
point, and, of course, Senator Sessions is welcome to raise the 
questions which he has. But what the subcommittee intends to do 
is to hear your opening statement----
    Mr. Keeney. Well, I have pretty much----
    Senator Specter. Let me finish----and then to proceed with 
Mr. Liebman and Mr. Dion, and then come back to you for some 
policy matters. But you may continue, unless you have finished 
your statement.
    Mr. Keeney. Senator, in response to your questions and 
Senator Sessions, I pretty much stated what I wanted to say 
with respect to these--to the disposition in this case, my 
confidence in the people who were handling it. And I might also 
just in conclusion point out that Mr. Shapiro's superiors in 
the United States Attorney's Office in Los Angeles agreed 
finally that the disposition that was obtained was the best 
that could be obtained.
    Senator Specter. We have been joined by the distinguished 
chairman of this subcommittee. We will turn to Senator 
Grassley.
    Senator Grassley. Mr. Chairman, I think that lastweek's 
hearing with Mr. Shapiro was a good case study on why we should have 
access to line attorneys. I think we learned a lot from him that we 
didn't know before. Of course, there are legitimate reasons for the 
Justice Department to be concerned about Congress talking to line 
attorneys. We should take great care, of course, not to politicize law 
enforcement or even to leave the perception that we are politicizing 
law enforcement.
    However, in special circumstances, it is very important to 
get a line attorney's perspective of a case, and I think Mr. 
Shapiro gave us valuable information and a perspective that we 
have been unable to get from either the Department of Justice 
or the FBI. And this was the information about that late 
October 1997 meeting that he and others attended at the FBI. 
There was certain information he gave that we have been unaware 
of, despite 7 months of briefings, meetings, and testimony from 
the Department of Justice and the FBI.
    That information was provided by him in a closed session 
and, of course, is classified. But to me it is very significant 
and might alter our views of how this case was handled.
    Today, we hear from another line attorney, Mr. Liebman, and 
I think his testimony should also fill in a lot of holes that 
we still have in the Peter Lee case. So I hope we remember this 
experience and the importance of having access to line 
attorneys in certain situations in the future, because 
sometimes it helps break through the bureaucratic views of what 
happened and helps us better understand the truth. And I think 
this is an example that hopefully is an example of why Members 
of Congress have some cynicism about the legitimacies of 
certain bureaucracies not wanting to give information and 
something that could have been handled with Senator Specter in 
a very early stage and a very open--very open with Senator 
Specter, albeit the information is classified, could have been 
given and we wouldn't have had all these problems and built up 
the distrust that there might be between branches of 
Government.
    Mr. Keeney, what was the reason why Mr. Shapiro was not 
given authority to pursue a 794 charge?
    Mr. Keeney. The judgment was made--and I think you ought to 
pursue this better with Mr. Dion--that we couldn't succeed, 
that the probabilities of success on a 794 were pretty low.
    Senator Grassley. Considering the fact that you are a high-
ranking official in the Justice Department, how closely do you 
read and examine plea agreements prior to approving?
    Mr. Keeney. I do not go into them in great detail where I'm 
the Acting Assistant Attorney General and there is a Deputy 
Assistant Attorney General who has charge of the responsibility 
for that particular section.
    Now, if--I am the Deputy Assistant Attorney General and I 
have responsibility for organized crime, public integrity, 
appellate, and our Office of Enforcement Operations. Now, if 
any of those litigation sections had come with a plea 
agreement, I would feel it incumbent upon me to look at them 
much more closely because I didn't have the benefit of the 
views of the supervisor of that group.
    The answer is it depends on what my position is, Senator.
    Senator Grassley. Ok; you were present at the closed 
hearing last week at which Mr. Shapiro testified about the 
significance of the late October 1997 meeting between the 
Department of Justice and FBI officials. Did you feel that Mr. 
Shapiro properly interpreted the significance of that meeting 
in regard to how it relates to the prosecution of Peter Lee?
    Mr. Keeney. I'm sorry, Senator. I don't fully understand 
what you're getting at. I'm sorry.
    Senator Grassley. Well, you were present last week.
    Mr. Keeney. I was, yes, sir.
    Senator Grassley. And you heard what Mr. Shapiro said about 
the significance of that October 1997 meeting.
    Mr. Keeney. With respect to the briefing that he got----
    Senator Grassley. Yes.
    Mr. Keeney [continuing]. And new information, yes.
    Senator Grassley. So my question, then, let me repeat, is: 
Did you feel that Mr. Shapiro properly interpreted the 
significance of that meeting in regards to how it relates to 
the prosecution of Peter Lee?
    Mr. Keeney. I think so. I think he came away from that, as 
I understand it, impressed with the seriousness of what we were 
dealing with.
    Senator Grassley. That is the end of my questions.
    Senator Specter. Well, Mr. Keeney, during that session, 
Senator Grassley had other commitments and couldn't be there, 
but he was represented by staff. But you told us at that time 
that you didn't place the same emphasis on the information that 
Mr. Shapiro had. Didn't you tell us that?
    Mr. Keeney. I didn't place the same?
    Senator Specter. The same emphasis or consider it as 
important as Mr. Shapiro had? Senator Grassley has broached an 
important subject here which we have to handle in a circumspect 
way because it was classified. But on the meeting which we had 
last week, you told me and staff that you didn't agree with Mr. 
Shapiro and didn't place the same emphasis on the information 
that Mr. Shapiro had. I think that is the point that Senator 
Grassley is getting to here.
    Mr. Keeney. Well, Senator, if I said that, I misspoke 
because I thought that the briefing we got was very important. 
It impressed upon all of us the importance of the prosecution, 
but it didn't add anything whatsoever to the viability of the 
prosecution.
    Senator Specter. Well, I think that is what Senator 
Grassley was looking for. It didn't add anything to the 
viability of the prosecution. It was a collateral point, didn't 
have anything really to do with the merits of the case, or the 
viability of the prosecution, as you just said.
    Mr. Keeney. Well, I make a distinction between the 
viability and the merits of the case. It left me with the idea 
that what we were doing was right, Senator.
    Senator Specter. OK; what do you mean by viability, then?
    Mr. Keeney. The ability to prosecute successfully.
    Senator Specter. OK; I would call that merits, but one way 
or another, it is semantics.
    Mr. Keeney, if you would stay at the hearing, because there 
are some other questions we are going to want to come to in 
just a moment, but the subcommittee would now like to turn to 
Mr. Michael Liebman.
    Mr. Keeney. You want me to step back?
    Senator Specter. Yes, would you step back, please?
    [The prepared statement of Mr. Keeney follows:]

                  Prepared Statement of John C. Keeney

    Mr. Chairman, Members of the Subcommittee, I appreciate the 
opportunity to appear before you today in connection with the Peter Lee 
case.
    I am the Principal Deputy Assistant Attorney General in the 
Criminal Division of the Department of Justice. At the time that Peter 
Lee pled guilty I was the Acting Assistant Attorney General of the 
Criminal Division. In that position, I approved accepting a plea from 
Peter Lee on two felony counts, one under 18 U.S.C. 793(d)--willfully 
transmitting national defense information to a person not entitled to 
receive it--and the other under 18 U.S.C. 1001--false statements.
    In a moment, I will return to that plea agreement. Before doing so, 
however, I would like to clarify the nature of the relationship between 
United States Attorneys' Offices and Main Justice with regard to 
espionage cases like that involving Peter Lee. The United States 
Attorney's Manual provides that in espionage cases, the United States 
Attorney must consult with, and seek approval from, Main Justice. USAM 
9-90.020. The reason for this is clear: these cases are among the most 
sensitive and difficult faced by federal prosecutors. They require 
expert advice.
    That expertise is located in the Internal Security Section of the 
Department of Justice. That the Internal Security Section has helped 
secure so many important espionage convictions over the years is due in 
no small part to John Dion, the Acting Chief of the Internal Security 
Section, who is one of the witnesses appearing before you today.
    Although he would be too modest to cite his achievements to you 
himself, Mr. Dion is one of the most outstanding public servants I have 
known during my 49 years of service at the Department of Justice. Mr. 
Dion himself has served in the Internal Security Section for 20 years. 
During that time he has played a central role in this nation's most 
critical espionage cases.
    John has been repeatedly recognized by both Republican and 
Democratic Administrations for his espionage prosecutions. In 1987, 
Attorney General Meese awarded Mr. Dion the John Marshall Award for 
Outstanding Achievement for his work on the prosecution of John Walker 
and his confederates for espionage on behalf of the Soviet Union. John 
received a second John Marshall award in 1997 for his work in two other 
prosecutions: those of FBI Special Agent Earl Pitts and CIA case 
officer Harold Nicholson for espionage on behalf of the Soviet Union 
and the Russian Federation. In 1995, the Director of Central 
Intelligence awarded John the Intelligence Community Seal Medallion.
    John also has been consistently praised by the United States 
Attorneys and Assistant United States Attorneys who have worked with 
him. I would request that you make part of the record a letter sent to 
the Department by the United States Attorney for the Eastern District 
of Virginia praising John's role in the Squillacote prosecution. I also 
would request that you make part of the record two unsolicited letters 
sent to Senator Hatch by two former senior Assistant United States 
Attorneys who worked with John.
    In short, I know of no prosecutor in the United States who has had 
more experience in prosecuting espionage cases than John Dion. But, of 
course, John does not work alone. The success of our espionage cases 
also has turned on the work of the younger trial attorneys in the 
Internal Security Section. One of the finest of those attorneys has 
been Michael Liebman.
    Mr. Liebman graduated magna cum laude from the University of 
Michigan and with honors from the George Washington Law School, where 
he was an editor of the Law Review. After a clerkship, he joined the 
Department of Justice in the Honors program in 1990, the same year as 
Mr. Jonathan Shapiro. In addition to serving in the Internal Security 
Section, Mr. Liebman has been a Special Assistant United States 
Attorney, and is currently a Reserve Officer in the Army's Judge 
Advocate General's Corps.
    In his time in the Internal Security Section, Mr. Liebman has 
helped prosecute some of the nation's most important espionage cases of 
the 1990s. Those cases include: Steven John Lalas, a Department of 
State employee sentenced to 14 years for spying for Greece; Aldrich 
Ames, the CIA Officer sentenced to life for spying for the Soviet Union 
and Russia; Robert Stephan Lipka, a former NSA analyst sentenced to 18 
years for spying for the Soviet Union, and former DOD lawyer Theresa 
Squillacote, and her husband Kurt Alan Stand, who were sentenced just 
last year to 22 years and 18 years, respectively, for spying for East 
Germany, the Soviet Union, Russia, and South Africa. In connection with 
his role as a member of the Squillacote trial team, Mike was awarded 
last year the Attorney General's Award for Excellence in Furthering the 
Interests of National Security.
    Mike is currently assigned to two of our most important cases; Wen 
Ho Lee; and the McDonnell Douglas export violations case. As the 
members of the Subcommittee know, Mike has had to put off his 
preparations for these critical prosecutions in order to prepare for 
these hearings. Indeed, as you are aware, Mr. Liebman was supposed to 
argue this morning on behalf of the United States in a hearing in the 
McDonnell Douglas case. In deference to the Subcommittee's request, 
however, the Department has made him available here instead.
    Let me just add this: As his record indicates, no one has 
ever suggested that Michael Liebman is afraid of a tough case. 
Mike Liebman has helped send more spies to jail than any other 
lawyer of his generation.
    Needless to say, the efforts of the United States 
Attorneys' Offices are also essential to these prosecutions. We 
rely on the United States Attorneys' Offices for their 
outstanding trial lawyers and their knowledge of the local 
courts. You had as your witness last week Mr. Jonathan Shapiro, 
who, as you know, was one such outstanding AUSA. And, Senator 
Specter, you have had a chance to speak to his former 
supervisor, another highly-experienced trial lawyer who at the 
time was the First Assistant United States Attorney in Los 
Angeles.
    Let me turn now to my involvement in this case. My contact 
with the case was relatively brief. As Acting Assistant 
Attorney General, I was responsible for all matters coming 
before the Criminal Division--which is a tremendous volume of 
cases. Nonetheless, I do recall being briefed about this case 
by Mark Richard, who at the time was the Deputy Assistant 
Attorney General who supervised the Internal Security Section.
    In his briefing, Mr. Richard made clear that he thought the 
proposed two felony pleas was a good disposition of this case, 
since there were potential serious obstacles to prosecution. I 
relied heavily on the advice of Mr. Richard, who was a 30-year 
veteran of the Criminal Division, and who had supervised all of 
our espionage cases for much of that time.
    As you know, Mr. Chairman, from my discussions with you, at 
the time I approved the proposed plea agreement I was not 
aware, so far as I recall, that it would call only for a short 
period of incarceration or would charge only an attempted 793 
charge. Had this been our opening position in plea 
negotiations, I doubt that I would have approved it, 
particularly, the ``short period of incarceration.''
    But I should add that this does not mean that I disagree 
with the ultimate plea agreement. I stand by that plea. It is 
critical in plea negotiations to permit the local United States 
Attorneys' Office to have some leeway. Mr. Shapiro explained to 
you his reasoning in accepting the short period of 
incarceration language: that this was the best that could be 
hoped for given the sentencing practices of the courts in the 
Central District of California.
    Indeed, since speaking to you I have been informed that the 
term ``short period of incarceration'' was a term of art in use 
at the time in pleas in the Central District of California. In 
making recommendations, the USAO could choose one of three 
alternatives: probation; a short period of incarceration; or a 
long period of incarceration. I certainly think that it was 
proper to allow the USAO--in a decision that I understand was 
ratified by Mr. Shapiro's experienced supervisors in that 
Office--to elect the alternative that reflected an assessment 
of what realistically could be achieved before the Court.
    In closing, let me state the obvious: nobody wishes more 
than the Department of Justice does that Peter Lee had been 
incarcerated for his crimes. I promised you, Mr. Chairman, that 
I would look again at this case, and I have. After reviewing 
the record, I remain convinced that the plea negotiated here 
was a good one. It is my view as a 49-year career prosecutor 
that any trial might well have resulted in an acquittal in 
light of at least three factors: the subsequent 
declassification of the information Lee revealed in 1985; the 
information publicly available on the Lawrence Livermore Web 
Site, and elsewhere, relating to the disclosures Lee made in 
1997; and the highly damaging statements of the Navy in the 
Schuster memorandum. As you are aware, of course, there are 
also factors that would have greatly complicated this 
prosecution that cannot be discussed in an open hearing. Mr. 
Dion and Mr. Liebman are prepared to discuss these factors in 
greater detail.
    In short, in my judgment, Lee might have escaped conviction 
had he gone to trial. Instead, against the odds, we secured a 
plea to two felonies--one of which was barred by the statute of 
limitations. Even more importantly, we brought an end to the 
possibility that Lee might disclose further secrets. Imagine, 
if you will, that we had taken Lee to trial, and lost, allowing 
him to continue his employment. I dare say that we would be up 
here before you explaining how we could have such a result come 
to pass.
    I understand that you, Mr. Chairman, and other members of 
the Committee may disagree with my analysis. But I hope that we 
all can agree that, while reasonable minds can differ about the 
likelihood of success of any prosecution, that is all that is 
at issue here--the disagreement of reasonable minds. Indeed, 
there was some such disagreement, obviously, at the time, 
between Mr. Shapiro, on the one hand, and his supervisor in the 
United States Attorneys' Office and at Main Justice, on the 
other.
    But there was no abuse here; no bad faith of any kind. 
Instead, this is a case in which highly talented, and highly 
dedicated, public servants--including the two witnesses 
appearing before you today--worked long hours, under difficult 
circumstances, in order to achieve the best result they 
believed possible for the United States. John Dion, Michael 
Liebman, Jonathan Shapiro, and the FBI agents who worked with 
them, all did their best to end Peter Lee's espionage career. 
They did end that career. In my opinion, we should be here to 
praise their hard work on this and many other espionage cases--
work that too often goes unrecognized. Our nation is safer 
because of their efforts.

    Senator Specter. Mr. Liebman, would you step forward? Would 
you raise your right hand, please? Do you solemnly swear that 
the testimony and evidence you are about to give to this 
subcommittee of the Committee on the Judiciary of the U.S. 
Senate will be the truth, the whole truth, and nothing but the 
truth, so help you God?
    Mr. Liebman. I do.
    Senator Specter. Mr. Liebman, at the outset, the 
subcommittee thanks you for rearranging your schedule to be 
here today, and I believe you have a prepared statement, and 
you may proceed at this time, as you wish.

STATEMENT OF MICHAEL LIEBMAN, LINE ATTORNEY, INTERNAL SECURITY 
    SECTION, CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE, 
    WASHINGTON, DC; ACCOMPANIED BY BRUCE C. SWARTZ, DEPUTY 
ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT 
                   OF JUSTICE, WASHINGTON, DC

    Mr. Liebman. Thank you, Senator. Mr. Chairman and 
distinguished members of the subcommittee, good morning. I just 
have a few brief opening remarks.
    As Mr. Keeney noted, since joining the Internal Security 
Section in 1991, I have worked on some of the major espionage 
cases of the 1990's: the Lalas case, the Ames case, the Lipka 
case, and the Squillacote case. All of these cases were 
prosecutions under section 794, and all resulted in prison 
sentences for the defendants ranging from 14 years to life.
    Of these, I am most proud of a case that actually doesn't 
get much press coverage these days--or even at the time--and 
that's the Lipka case, where I helped build an historical case 
where the investigation did not even begin until roughly 25 
years after the crime. And Mr. Lipka received an 18-year prison 
term.
    I also take pride in the 1998 Squillacote and Stand case, 
where I was part of the trial team for a 2-week jury trial 
against a well-financed defense, which resulted in guilty 
verdicts on all counts and sentences of 22 years and 18 years, 
respectively. In connection with that trial, I was awarded last 
year the Attorney General's Award for Excellence in Furthering 
the Interests of U.S. National Security. Finally, I am, of 
course, proud of the Ames case, for which Mr. Dion and I 
received an award from the U.S. Attorney for the Eastern 
District of Virginia.
    Turning to the Peter Lee case, at the time of Peter Lee's 
admissions in October 1997, I fully expected that they would 
lead to another case in my string of section 794 cases.
    Within about 2 or 3 days after Peter Lee made his 
admissions in early October 1997, I flew out to Los Angeles and 
I met with prosecutors from the U.S. Attorney's Office and FBI 
special agents from the Los Angeles Division to discuss the 
case. Our office, the Internal Security Section, had first been 
briefed on the case in August 1997, when it was still just a 
false statement case because Lee at that time had merely 
admitted to telling lies. In my trip in October, I spent 
several hours meeting with then-Assistant U.S. Attorney 
Jonathan Shapiro and FBI Special Agents Gil Cordova and Serena 
Alston at the Los Angeles Division FBI Office, where we also 
listened closely to the tapes of the October 1997 interviews.
    To the best of my recollection, it was then that I first 
learned that the information Lee had compromised in 1985, while 
classified secret then, was no longer classified in 1997, and 
that the information Lee compromised in 197 was, for the most 
part, only classified under a mosaic theory and only at the 
confidential level. By mosaic theory, I mean, of course, that 
the items of information considered separately are 
unclassified, but when grouped together they somehow become 
classified.
    I also recall that, with respect to the 1997 compromise, 
the FBI in Los Angeles showed me a copy of a 1995 document 
authored in part by Lee that was marked confidential. It 
concerned research into detecting the wakes of surface ships 
conducted under Department of Defense auspices through the use 
of radar directed at the ocean's surface.
    Although the overall document was classified confidential, 
every single portion of the document was separately marked 
unclassified, with one exception. The exception was a single 
paragraph on the first page that explained that, considered as 
a whole, the document was ``sensitive.''
    Later, after I returned to Washington, I obtained tapes of 
Lee's October confession and determined that as to the 1997 
compromise, the 1995 confidential document essentially 
contained all the significant information Lee had confessed to 
giving the Chinese in May 1997, with one important exception: 
The 1995 document was all about using radar to detect surface 
ship wakes. It said nothing about using radar to detect 
submarines or anything below the surface of the ocean. I knew 
that Lee had admitted to the FBI that he had told the Chinese 
in May 1997 that the radar technique discussed in the 1995 
document could be used to detect submarines, although he 
minimized that disclosure by telling the FBI that the Chinese 
already knew this.
    In my estimation, both then and now, the weakness in the 
case was the questionable significance of the information Lee 
compromised, both in 1985 and in 1997. As to Lee's 1985 
disclosure, I knew, for instance, that the Department had never 
prosecuted a case under 794 where the compromised information, 
as in the case of Lee's 1985 disclosure, had been declassified 
prior to the crime being discovered. Let me emphasize this. The 
information Lee admitted disclosing in 1985 has been 
declassified. While some aspects of the government's research 
in this area might remain classified, as shown by updated 
classification guides, what Lee confessed to disclosing 
regarding inertial confinement fusion research in 1985 was 
fully declassified by 1993.
    Furthermore, what I later determined was that 
theinformation was actually declassified over the 1990 to 1993 time 
period, not just in 1993. Department of Energy documents I believe this 
committee has show that inertia confinement fusion research, including 
details disclosed by Lee to the PRC, began being declassified on March 
21, 1990, for reasons that included the fact that the rest of the world 
was catching up in this important field.
    Another reason for the declassification, I was told, was 
that DOE considered it in the U.S. national interest to educate 
countries on how to simulate nuclear weapons explosions in a 
laboratory setting in order to discourage them from actually 
detonating nuclear devices. Moreover, I was advised--and, 
again, this is documented--that the debate over 
declassification in DOE had actually begun at least as early as 
January 1989, only 4 years after Lee's disclosures and 8 years 
before the confession.
    Now, why is any of this relevant? Why does it matter that 
the information was declassified after the crime? Because 
section 794 does not penalize disclosure of classified 
information. It does not use that term. What it penalizes is 
the disclosure or attempted disclosure of items, documents, and 
information related to the national defense. And what the case 
law, including Supreme Court case law, says is that this is a 
jury issue, not to be decided by a classifier merely testifying 
that certain information or was classified at the time of the 
offense.
    The Government needs to be able to describe how a 
disclosure of classified information might benefit an enemy of 
the United States, and publicly available information that 
tends to suggest that the classified information is not all 
that significant may well be found by a court to be relevant 
and admissible in an espionage prosecution.
    The DOE documents indicated to me that there would be a 
significant issue at any trial whether the ICF disclosures Lee 
made in 1985 related to the national defense at the time he 
made them. Most alarming to me was the notion that Lee could 
claim that he made the disclosures to encourage China not to 
conduct nuclear weapons tests in the field, and he would likely 
be supported by internal Government documents or even testimony 
of former U.S. Government or Livermore officials that that was 
actually one of the reasons the U.S. Government declassified 
the information beginning in 1990.
    In other words, Lee would have been able to credibly argue 
that his actions were in the U.S. national interest.
    I soon discovered there were similar obstacles to bringing 
a section 794 prosecution based on the 1997 disclosure. To 
analyze this, it is helpful to begin with the 1995 confidential 
document, every last substantive part of which, when considered 
independently, is unclassified. Recall that this document 
discusses a radar technique in which the wakes of surface ships 
can be detected by bouncing radar signals off the surface of 
the ocean.
    I have a copy of this document right here today. I have it 
double wrapped.
    The best way to explain the problem with basing a 
prosecution on this document is as follows: Under the 
classification guidance on this document, I could remove any 
single paragraph in here, just cut it out, maybe even a line, 
and then take the remainder of the document over to that press 
table, and I would not be guilty of a crime. I would not even 
be guilty of a security violation because this document is only 
classified when it is intact as a whole. Remove any single 
paragraph from it, and you have a group of unclassified 
paragraphs.
    Now, I recognized that problem with the 1997 compromise as 
soon as I got to Los Angeles. But there was one crucial piece 
of Lee's admissions that I thought at the time could make the 
case viable, even viable under section 794. Lee had confessed 
to telling the Chinese scientists that the technique described 
in the document could also be used to detect submarines. 
Surely, I thought, it must be a well-kept secret that the U.S. 
Government is investigating the detection of submerged 
submarines by utilizing radar aimed at the ocean's surface.
    When I returned to Washington, as I said, I began analyzing 
the confession in some detail. Approximately 2 weeks after 
returning, on October 23, 1997, I attended a meeting in the 
Main DOJ building with the FBI, Criminal Division attorneys, 
and Mr. Shapiro and his supervisor, then First Assistant U.S. 
Attorney Richard Drooyan. The problems with the information 
which I just described were discussed, along with other issues 
in the case. Immediately after that meeting, I attended a 
briefing by the FBI in the case along with Mr. Shapiro, and I 
believe Mr. Drooyan as well, and I will not go into that 
briefing here in open session.
    A few days after that meeting, I attended a meeting with 
DOD officials to discuss the 1997 information. I have recently 
been reminded by the testimony of DOD and Navy officials to 
this subcommittee last month that that meeting occurred on 
October 28, 1997.
    The main purpose of that meeting from my perspective was to 
inquire of DOD as to what publicly available information could 
potentially undermine an espionage prosecution for the 1997 
compromise.
    Another issue for me was what could the Government say 
about the program generally in a public forum if the case were 
to go to trial. I did not know, for instance, if I could have 
said at a trial what I just said a few minutes ago about the 
program.
    About a week after the meeting, I received a stack of 
public articles from DOD related to the radar ocean imaging 
generally. One thing they also sent me was extremely 
surprising. Among the articles was a printout from a Lawrence 
Livermore National Laboratory Website, last updated in March 
1995, well in advance of Lee's 1997 trip to China. I have a 
copy of the printout right here.
    I quickly confirmed after receiving it that the Website was 
a public one and available to anyone in the world with a 
computer and a modem. I offer it into the record now, and I 
would like to read some portions of it out loud.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] T3205A.009
    
    [GRAPHIC] [TIFF OMITTED] T3205A.010
    
    Mr. Liebman. The title of the page is ``Radar Ocean 
Imaging,'' and the first line of tests states, ``This project 
focuses on the detection by radars of surface manifestations of 
moving submerged submarines.'' Later it says that as a result 
of ``achievements'' in the project, ``there is now no 
controversy within the community that radars offer any 
potential for this problem''--that is, to detect submarines. It 
concludes, ``This program has made impressive advances in 
understanding and exploiting radar remote sensing of the ocean 
for important national defense needs.''
    In addition, a few days after receiving the Website 
printout, DOD gave me a copy of the prepared remarks of Dr. 
Twogood of the Lawrence Livermore National Laboratory 
presenting in open session to a subcommittee of the House Armed 
Services Committee in April 1994. I also have a copy of that 
testimony, and I would like to offer it into the record and 
quote from significant portions of it.
    [The information follows:]
   Statement on the Independent Non-Acoustic Anti-Submarine Warfare 
                                Program
                            submitted to the
  research and technology subcommittee house armed services committee
     (By Dr. Richard E. Twogood of the Lawrence Livermore National 
                        Laboratory, April 1994)
    Madam Chairwoman, I appreciate the opportunity to appear before 
your subcommittee to testify on the technical and programmatic aspects 
of the Independent Non-Acoustic Anti-submarine Warfare (INAASW) 
Program.
    I manage the Imaging and Detection Program at the Lawrence 
Livermore National Laboratory. My primary responsibility is to serve as 
the technical program leader for the Joint United Kingdom/United States 
Radar Ocean Imaging Program, the single largest project in this DoD 
program.
    The Joint UK/US Radar program has made important progress in the 
development of methods to detect submarine signatures with remote 
sensing radars, especially over the last two years. While the details 
are classified, the following can be said:
    (1) We have discovered new phenomena that are not fully understood, 
nor explained by any known models, that appear to be very important to 
the sensing of surface effects produced by undersea disturbances. These 
new phenomena are also likely to be important in the development of 
environmental remote sensing techniques by radar. We have planned a 
vigorous program to investigate these phenomena.
    (2) We have developed new signal processing and detection 
techniques that, to our knowledge, have never before been successfully 
applied to this problem.
    (3) We have applied these new methods in both classified and 
unclassified experimental settings. Results have been achieved that I 
believe are not only impressive, but also offer great promise for 
future improvement of these capabilities.
    (4) These discoveries bring into question the validity of all 
previous assessments that were based on models that did not include 
these effects. In addition, the nature of our results also raises the 
possibility that certain claims by Russian scientists and officials 
that they have achieved non-acoustic ASW successes with radars merits 
serious consideration.
    Our results have been briefed extensively at high levels in both 
the United Kingdom and the United States. The UK view is exceptionally 
supportive of this work, and concluded that ``the program has provided 
new insights into submarine detection and is well balanced and soundly 
structured.'' In addition, the UK is devoting significant resources 
into this Joint UK/US program, and the Ministry of Defence has made a 
3-year commitment (through 1996) for its continued funding. We have 
received uniformly positive feedback from U.S. officials that the 
results appear significant and merit further work. I would welcome the 
opportunity to provide a classified briefing on these results to 
members of the committee or anyone else you wish be briefed. I have 
with me a copy of such a recent briefing, at the SECRET level, should 
you desire a copy. Researchers in this program are also publishing 
these new results in both the classified and unclassified literature.
    I have been told that the Congress in general, and this committee 
in particular, is very concerned about the status of this program due 
to recent actions in the DoD that have impacted our progress. I am 
familiar with some of these concerns in some detail, but have only 
peripheral knowledge of others. The main concern of immediate 
importance to me as the Joint UK/US Technical Program Leader is the 
failure of the DoD to provide funding for our work this year. As of 
this date, we have received no FY94 funding despite the fact that 
Congress appropriated the funding. This is a recurring problem, and 
these delays have had major negative impacts on the UK/US program. I 
have documented these impacts in memos to the DoD program manager, 
copies of which I have with me.
    In conclusion, I would like to say that I appreciate the support 
and concern this committee has demonstrated. We have achieved important 
new scientific and detection results, and I urge you to take the steps 
needed to continue this research.

    Mr. Liebman. ``The Joint US/UK Radar Program has made 
important progress in the development of methods to detect 
submarine signatures with remote sensing radars, especially 
over the last 2 years.'' It also states, ``We have developed 
new signal processing and detection techniques that, to our 
knowledge, have never been successfully applied to this 
problem. We have applied these new methods in both classified 
and unclassified settings. Results have been achieved that I 
believe are not only impressive but also offer great promise 
for future improvement.''
    So there it was. There was no secret at all that the U.S. 
Government was working on a program to detect enemy submarines 
with radar aimed at the ocean's surface. There was not even any 
secret that we had achieved a potential breakthrough. The 
Website and Dr. Twogood's testimony, coupled with the fact that 
the underlying 1995 document was only classified under a mosaic 
theory, convinced me that there was no section 794 case on the 
1997 compromise. In my estimation, Senators, it was not even a 
close call.
    I arrived at that conclusion even before I received the 
Schuster memorandum of November 14, 1997. That memo only served 
to reaffirm my position. Particularly significant was the 
Navy's determination that it could not support the confidential 
classification of the 1995 document, and that, in any event, 
Peter Lee's disclosure did not cause significant damage. I 
would note that the Schuster memorandum had the concurrence of 
the Vice Chief of Naval Operations, the second highest ranking 
Navy official.
    Now, just because a compromise of classified information 
cannot be prosecuted under section 794, it does not mean that 
there are no other statutes with serious criminal penalties 
that might apply. There are other provisions of the espionage 
code, specifically, 18 U.S.C. 793 and 798. In addition, there 
is the Internal Security Act, specifically, title 50, U.S.C. 
section 783. Each of these carries a 10-year penalty. The 
problem was that none of them applied. Section 793 was out 
because it, too, used the term ``national defense 
information,'' just like section 794. Section 798 was out 
because it applies only to communications intelligence and 
crytopgraphic information. And the Internal Security Act was 
out because it applied only to defendants who ere U.S. 
Government employees or employees of U.S. Government-owned 
corporations. That was the biggest disappointment, and I 
remember discussing that with Mr. Shapiro over the phone 
following my trip out to Los Angeles. The statute does not 
apply to employees of Government contractors, such as a TRW 
employee.
    Shortly thereafter, I recommended to Mr. Dion that we offer 
a plea to Lee under 18 U.S.C. 793 or section 224(b) of the 
Atomic Energy Act of 1954 for the 1985 compromise. Both 
statutes carry a maximum penalty of 10 years and would require 
Lee to waive the statute of limitations. The U.S. Attorney's 
Office elected to offer Lee the plea under 18 U.S.C. 793.
    At some point in early 1997, it became apparent that Lee 
was balking at a plea with a potential 10-year exposure for the 
1985 incident. I then recommended to Mr. Dion that, although 
the section 794 case for that incident in 1985 had problems, it 
was sufficiently robust that we could ethically use it as 
leverage. This was communicated to the U.S. Attorney's Office 
by Mr. Dion, I believe, in a phone call, I think at this point 
to Mr. Shapiro himself.
    Shortly thereafter, the plea agreement was entered. Lee, in 
fact, did waive the statute and plead guilty to section 793, 
along with a violation of section 1001 of title 18 for lying 
about the circumstances of his 1997 travel to China.
    It goes without saying, I hope, that I was extremely 
disappointed that Peter Lee was not sentenced to prison. It is 
the only espionage prosecution I have worked on that did not 
result in a prison term. But let me add that I am proud of my 
work on that case and proud that Jonathan Shapiro and I ensured 
that Peter Lee would not remain free to continue to make 
sensitive disclosures to foreign governments.
    That concludes my remarks.
    Senator Specter. Mr. Liebman, would you refer to two 
memoranda which will be provided to you----
    Mr. Jennings. Excuse me for interrupting. My name is Jon 
Jennings, the Deputy Assistant Attorney General in Legislative 
Affairs. It was our understanding that this was to be a panel 
of Mr. Dion, Mr. Keeney, and Mr. Liebman. I respectfully 
request the subcommittee to allow Mr. Bruce Swartz to sit with 
Mr. Liebman as his counsel, and he is also a supervisor of Mr. 
Liebman.
    Senator Specter. We would be glad to have Mr. Swartz 
present. No problem with that at all.
    Mr. Jennings. Thank you, sir.
    Mr. Swartz. Thank you, Mr. Chairman.
    Senator Specter. There were no commitments given as to a 
panel, although I don't understand the relevancy of the comment 
as an introduction to asking Mr. Swartz to be here, but the 
subcommittee would be pleased to have Mr. Swartz sit with Mr. 
Liebman.
    Mr. Swartz. Thank you, Mr. Chairman.
    Senator Specter. Mr. Liebman, referring to a memorandum 
which is dated November 25, 1997, at about three-fourths of the 
way down--and I know you are familiar with this----
    Mr. Liebman. A few minutes, Senator. November 25th 
memorandum.
    Senator Specter. It is marked in the upper righthand 
corner.
    Mr. Liebman. I have a memo for the Secretary of Defense----
--
    Senator Specter. I am referring now to a memorandum from 
Michael Doris----
    Mr. Liebman. I found it, Senator.
    Senator Specter. And referring only to one section here to 
try to get to the crux of the matter and move ahead, the line, 
``According to JJ''--referring to JJ Smith--``ISS/Dion said 
that if RT''--which refers to Dr. Lee--``doesn't accept the 
plea proffer, then he gets charged with 18 U.S.C. 794, the 
heftier charge.'' And now referring to the DOD memo, the line 
you had referred to earlier, ``Should Lee decline the offer, 
the U.S. Attorney will seek an indictment against him for 
violation of 794.''
    Now, those documents state, obviously, that there was 
authority to charge Dr. Lee with U.S.C. 794 if he doesn't 
accept the plea proffer. And my question to you is: Why wasn't 
that information conveyed to Mr. Shapiro?
    Mr. Liebman. These documents do not accurately reflect the 
state of affairs at the time, actually. What Mr. Shapiro had 
authority to do was to use a section 794 prosecution in 
leverage for plea negotiations. Had the plea broken down, we 
would then have regrouped, hashed it out,and perhaps considered 
a section 794 prosecution for the 1985 compromise.
    Senator Specter. So these documents are flat-out wrong?
    Mr. Liebman. Not flat-out wrong. I would say they're 
slightly wrong.
    Senator Specter. But they are wrong that there was no 
authorization to proceed under section 794?
    Mr. Liebman. On that point, they are wrong. And I would 
note they're written by people who were not involved in the 
discussions between our office and the U.S. Attorney's office.
    Senator Specter. Well, that is the big question. Since you 
brought it up, who were the people involved in the discussions? 
Tracing from Mr. Shapiro to you to whom? Something we have 
tried to find out very hard, but your unavailability and the 
unavailability of documents until the last minute and the 
representation by many people in the Department of Justice and 
the Department of Defense and the Navy that there were no 
documents has made it very, very difficult for this 
subcommittee to find anything out. But now----
    Mr. Liebman. Well----
    Senator Specter. Let me finish. But now when you say these 
people didn't know better, what these documents say is wrong, a 
subject we will get into in great detail, who was privy to the 
discussions? Who did you talk to in the Department of Defense?
    Mr. Liebman. Mr. Shapiro, Mr. Drooyan, myself, and Mr. Dion 
I think were the central figures in discussing the plea 
negotiations that were going on----
    Senator Specter. Do you recall my question?
    Mr. Liebman. Yes. I think I just answered it, sir.
    Senator Specter. Whom did you talk to in the Department of 
Defense?
    Mr. Liebman. As to the plea discussions? Absolutely no one.
    Senator Specter. And whom did you talk to in the Department 
of Defense about anything?
    Mr. Liebman. Whom did I talk to, sir?
    Senator Specter. That is my question.
    Mr. Liebman. I met with Department of Defense officials on 
October 28, 1997, at a meeting. Since--I believe it was people 
like who testified before this subcommittee last month.
    Senator Specter. You believe it was people like who 
testified before the subcommittee last month? Do you have any 
records as to whom you talked to in the Department of Defense?
    Mr. Liebman. I have some documents I got in November 1997 
that were faxed to me indicating the various public record 
information that was available on the 1997 compromise, and I 
believe the documents came from Donna Kulla in the Department 
of Defense, and I think she was also at the meeting in late 
October.
    Senator Specter. Could you produce those documents for this 
subcommittee?
    Mr. Liebman. I think you have those, Senator.
    Senator Specter. Why do you think we have those?
    Mr. Liebman. If you're talking about the public record 
documents----
    Senator Specter. I don't know what I am talking about. This 
is something you mentioned. I don't know what you are talking 
about. That is what I am trying to find out.
    Mr. Liebman. There was a thick stack----
    Senator Specter. If I say I don't know what I am talking 
about, I am asking you to produce documents which I have no 
knowledge of which you have referred to. So don't ask me where 
the documents are.
    Mr. Liebman. I don't think I did that, sir. These documents 
were public documents relating to the 1997 compromise.
    Senator Specter. What do you mean by public documents?
    Mr. Liebman. These are various articles and research pieces 
about--from scientists on the issue of radar ocean imaging and 
directed at the ocean surface.
    Senator Specter. Mr. Liebman, I am trying to find out whom 
you talked to in the Department of Defense, and my question to 
you, when you make a generalized reference like people who 
testified before, and you mentioned Ms. Donna Kulla, I am 
asking you: Are there any records which specify whom you talked 
to in the Department of Defense?
    Mr. Swartz. Mr. Chairman, perhaps I could help clarify 
this. The documents that Mr. Liebman is referring to are the 
documents that were faxed to him. This subcommittee has them, 
and they refer to one of the people he spoke to at the 
Department of Defense on this matter.
    Senator Specter. They were faxed to the subcommittee when?
    Mr. Swartz. No, no. I am sorry. They were provided to the 
subcommittee. They were faxed to Mr. Liebman.
    Senator Specter. When were they provided to the 
subcommittee?
    Mr. Swartz. I believe--for some time. I would have to 
check, but----
    Senator Specter. Are you talking about--Mr. McArthur gives 
me a thick pack that were handed to him this morning. Are these 
the ones you are talking about?
    Mr. Swartz. No, Mr. Chairman. These are the documents that 
I believe you have seen before for some period of time.
    Senator Specter. Now, wait a minute. Don't tell me about 
the documents that I have seen, please. These are the documents 
that you have seen before, Mr. Chairman?
    Mr. Swartz. I believe so----
    Senator Specter. Please do not tell me what I have seen.
    Mr. Swartz. I am sorry. These are documents provided to the 
subcommittee some period of time ago that we have referred to--
that have been referred to throughout these hearings. These are 
the Web pages from the Lawrence Livermore Lab that refer to the 
ocean imaging. Those are the documents that Mr. Liebman is 
referring to.
    Senator Specter. Well, we will not pursue this further, but 
we will handle it with staff after the session is over. Mr. 
McArthur, who has done a phenomenal job going through 800 pages 
yesterday that were presented, hands me this thicket of papers 
about an inch thick with a notation, ``These were handed to me 
this morning.''
    Now, I will say for the record I haven't seen the notes, 
but we do want to see what records there are. But for the 
moment, in the interest of time, we will proceed to ask Mr. 
Liebman whom he talked to at the Department of Defense.
    Mr. Liebman. I believe, in addition to Donna Kulla, I think 
Earl Dewispelaere was there. He also testified beforethis 
subcommittee last month, and I think in his statement he mentions that 
he was at the meeting as well.
    I know--I cannot recall the other people from the 
Department of Defense who were there. I know Gil Cordova from 
the FBI was also there.
    Senator Specter. Did you make a record notation of that 
meeting which would include the identification of the people 
who were at the meeting?
    Mr. Liebman. No, I did not, sir.
    Senator Specter. Why not?
    Mr. Liebman. It didn't strike me as a crucial piece of 
information at the time.
    It was also the preliminary meeting. Had the case had gone 
forward, that would have led to many, many more additional and 
much more important meetings where I would have kept better 
track of who I was talking to and when.
    Senator Specter. Well, since you didn't have any other 
meetings and since you were looking to the Navy and the 
Department of Defense for an evaluation as to this matter, why 
do you classify it or say it is a meeting which wasn't of 
sufficient importance to maintain some sort of a written record 
as to what happened?
    Mr. Liebman. It is not my habit and it is not our office's 
habit to maintain detailed written records of all the meetings 
we have with the Department of Defense and the Intelligence 
Agency, and----
    Senator Specter. Well, I am not talking about detailed 
records. I am just talking about a record which would give you 
the date, the people who were present, and a generalized 
statement as to what they said.
    Mr. Liebman. Well, the purpose of the meeting, Senator, was 
merely to get a general idea of what kind of public information 
might be out there that would affect the viability of a section 
794 prosecution of the 1997 compromise as well as to find out 
what we could say generally about the program if we were to go 
to trial. It was a very preliminary meeting, in my estimation, 
and had we gotten over those initial hurdles, there would have 
been many more meetings of much more significance.
    Senator Specter. But that was the only meeting you ever had 
with representatives of the Department of Defense.
    Mr. Liebman. It was the only meeting, but I do recall 
speaking to Donna Kulla after the meeting and getting some 
additional documents.
    Senator Specter. But that was the only meeting?
    Mr. Liebman. Correct, sir.
    Senator Specter. And did you inquire at that time as to 
what damage was done in the view of the Department of Defense 
by these disclosures?
    Mr. Liebman. No, I did not, and let me explain. That is not 
something we typically do. We don't ask the Department of 
Defense to do damage assessments before we answer a plea or 
consider an indictment.
    Senator Specter. Well, it seems to me that it is pretty 
important to know what the Department of Defense thinks about 
the matter and how badly they have been damaged.
    Mr. Liebman. But not----
    Senator Specter. Let me finish.
    Mr. Liebman. I thought you were finished. I'm sorry.
    Senator Specter. Very briefly, so that you have some 
assessment as to what the damage is to national security, an 
issue which you have raised, before you preclude a prosecution 
by a plea bargain.
    Mr. Liebman. A formal damage assessment, which is something 
we never ask for prior to a plea or prior to an indictment, is 
something that takes at least, in my experience, over a year. 
It is an all intelligence community assessment of the damage 
caused in a case. It usually results in a very thick, highly 
classified report that we cannot disclose to defense counsel or 
the defendant, and that is why we do not ask the agencies to do 
a damage assessment.
    We will, however, if the case is moving forward and we see 
that there is some viability to it, meet with the owners of the 
information to have them articulate to us why the information 
is classified, why it relates to the national defense.
    Senator Specter. But it is possible, Mr. Liebman, to get a 
damage assessment in much less than a year, isn't it?
    Mr. Liebman. Not in my experience. Not the kind of 
formalized damage assessments that have been done in other 
espionage cases.
    Senator Specter. So you have gotten formalized damage 
assessments in other espionage cases?
    Mr. Liebman. I am aware they have been done. They've all 
been done after the conviction, which is the standard practice 
because at that point there is usually more information that 
has come out.
    Senator Specter. Well, we will take a look at your standard 
practices, Mr. Liebman, but when we have the discussion with 
Mr. Keeney, we will get into this later, there, I think, is 
agreement among the upper echelons at the Justice Department 
that there need to be some fundamental changes in what you do, 
that there has to be a better understanding by the agency, like 
the Department of Defense, about the Confidential Information 
Protection Act and a more formalized understanding if these 
cases are to be plea bargained and not to be decided without 
some real inquiry and pursuit as to what the Department of 
Defense thinks. But we will get into that in due course. And we 
will take a look at the length of time it takes and what 
information a prosecutor ought to have before he enters a plea 
bargain to know what the case is all about. But we have heard 
your view, and we will proceed with our assessment of that.
    Just a couple more questions, Mr. Liebman, before yielding 
to my colleagues.
    Mr. Shapiro testified about his determination--he 
characterized it his ``aggressiveness''--to move under 794, 
thinking that he could get a conviction under 794. That 
attitude by Mr. Shapiro was conveyed to you, wasn't it?
    Mr. Liebman. Yes, it was.
    Senator Specter. But you disagreed with it?
    Mr. Liebman. Yes, I did.
    Senator Specter. Mr. Liebman, when you talk about the issue 
of classification, you did know that beyond the information 
which was in the confession that the FBI was aware of other 
information that Dr. Lee had revealed that was not 
declassified. For example, a June 1998 FBI report cites three 
other instances in which Dr. Lee revealed classified 
information. And another FBI document indicates that in the 
early 1980's Dr. Lee gave the Chinese classified information 
that greatly assisted their nuclear weapons program.
    You were aware of that, weren't you?
    Mr. Liebman. Senator, I am reluctant to go into that in 
open session. I was aware----
    Senator Specter. I am not asking you to go into anything. I 
am asking you to respond to a very carefully calibrated 
question which does not disclose any classified information.
    Mr. Swartz. Mr. Chairman, I do believe that this is 
something, to allow Mr. Liebman to respond to fully, we would 
have to be in closed session.
    Senator Specter. Then we will proceed into closed session.
    Mr. Swartz. Thank you.
    Senator Specter. We will honor that request because we are 
not going to take any chances, although I think that question 
calls for a simple ``yes'' or ``no'' answer, but we will have a 
closed session.
    Mr. Liebman, you make a big point about the materials being 
declassified at some later point, but isn't it true that when 
you have a multibillion-dollar program like this and the 
scientists from the People's Republic of China have access to 
the information for a period of time, from 1985 to 1990, 1991, 
1992, 1993, 1994, that there is substantial value in having at 
that time--although the Government later declassifies it, it is 
not really up to Dr. Lee to make a disclosure or to claim an 
excuse that it was later declassified. At the time it is 
disclosed, there is a serious espionage breach, isn't there?
    Mr. Liebman. It certainly is--I am not going to dispute 
that there might have been a substantial benefit to the Chinese 
to get this information in 1985. Nor do I think Dr. Lee, or 
Peter Lee--I don't think he is deserving of that title 
anymore--is entitled to use it as an excuse. However, I do 
think the declassification and the reasons for the 
declassification are quite relevant to whether the information 
was national defense information at the time he disclosed it.
    Senator Specter. Well, why is that? The time of disclosure 
is a critical time. We agree on that, and it was classified at 
that time. And the damage assessment which was made--the impact 
statement which was made on February 17 of 1998, the 
declaration of technical damage to the United States national 
security assessment in support of U.S. v. Dr. Peter Lee from 
Dr. Cook which is in February of 1998, well short of the year 
you talk about, or the impact statement of February 17, 1998, 
signed by Messrs. Staffin, Trulock and Mahaley, specified the 
damage to U.S. national security at the time they were 
disclosed.
    Mr. Liebman. But there are other documents, Senator, 
talking about the reasons for the declassification and the 
debate that began in 1989 specifically about the fact that the 
rest of the world was catching up. If the Department of Energy 
was discussing the fact that the rest of the world was catching 
up in 1989, I think a reasonably competent defense attorney 
will be able to scour the public record in this country and 
other countries to point out that some of the same information 
the Department of Energy was relying upon to declassify the 
information in 1990, to begin talking about it in 1989, was 
available also in 1985.
    Now, I am not saying that reasonable people can't disagree 
about the viability of a section 794 case on the 1985 
compromise. I fully understand that, and that is why I 
recommended to Mr. Dion that we use the section 794 potential 
charge for the 1985 compromise as leverage in plea 
negotiations. And had those plea negotiations broken down, 
there would have been further meetings that might have led to 
an assessment to actually go forward with that 1985 compromise.
    Senator Specter. Well, just two more questions before 
yielding. All of that means that you didn't have an insurance 
policy for a conviction, but trial prosecutors don't 
necessarily have insurance policies for a conviction. You had 
Mr. Shapiro, who was an experienced trial attorney, and I am 
not doubting your credentials, Mr. Liebman, and I am pleased to 
hear about your good work and I have only the highest respect 
for you as an attorney. I don't know what the relevance of all 
of that is to our proceeding, but I am pleased to have it put 
the record, as Mr. Keeney wanted to put it in the record. But I 
think it would be relevant to contrast you and Mr. Shapiro to 
put on the record your experience as a trial attorney.
    Mr. Liebman. In conducting trials, Senator? Well, I would 
first like to also point out that my position on the section 
794 charge was matched by experienced prosecutors in the U.S. 
Attorney's office, as well as my own superiors.
    Senator Specter. Could you focus on my question first and 
then----
    Mr. Liebman. Yes, I will.
    Senator Specter [continuing]. Make any amplification you 
think helps your case?
    Mr. Liebman. I had significant trial experience, as I 
define the term, in 1991 when I was a special assistant U.S. 
Attorney, numerous bench trials and two jury trials over a six-
month period. I also was on the trial team for the only section 
794 prosecution in the last 12 years.
    Senator Specter. How many espionage cases have you tried?
    Mr. Liebman. Have I tried, Senator?
    Senator Specter. Yes.
    Mr. Liebman. There has only been one espionage trial, as I 
define the term, under section 794 since I came to the 
Department of Justice and I was----
    Senator Specter. Would you answer my question and then 
amplify?
    Mr. Liebman. And I was on that trial team.
    Senator Specter. You were on the trial team. How many 
lawyers were there?
    Mr. Liebman. I believe there were two assistant U.S. 
Attorneys and myself.
    Senator Specter. Mr. Liebman, when you testify about what 
was on the Web site, you are aware of the fact that Dr. Lee's 
confession went far beyond what was on the Web site, and that 
on information provided to you by Dr. Twogood--and I believe 
you have this document marked in the upper righthand corner 
P12-34.
    Mr. Swartz. Mr. Chairman, can you give us a reference to 
that? We have a numbered set of documents here. I don't know if 
you have got the same provided by your subcommittee.
    Senator Specter. Number 3, quote, ``processing 
techniques''--this is referring to what Dr. Lee confessed 
turning over to the PRC scientists--``processing techniques, 
which, when applied to classified or unclassified data, yield a 
significant enhancement in signature detectability which might 
apply to the submarine case (secret/Crimson Stage),'' which was 
Dr. Twogood's classification that above and beyond what was in 
the public domain, that the materialdisclosed by Dr. Lee were 
secret. You are aware of that?
    Mr. Liebman. I am aware of that. It went above and beyond 
the Web site. It did not go above and beyond the mosaic 
document that is only classified at the confidential level. And 
as I said before, there are numerous----
    Senator Specter. Did not go beyond what?
    Mr. Liebman. It did not go above and beyond this document 
right here, which is classified confidential only under a 
mosaic theory. There are so many unclassified paragraphs in 
that document, I could recite them out loud and this committee 
would not be committing a security violation, and I would not 
be going beyond what Peter Lee confessed.
    Senator Specter. Can you identify the document you are 
referring to in the double-wrapped envelope?
    Mr. Liebman. Yes, I can.
    Senator Specter. Why do you have it in a double-wrapped 
envelope if you are going to take it out now?
    Mr. Liebman. Pardon me, sir?
    Senator Specter. Why do you have it in a double-wrapped 
envelope if you are going to take it out now?
    Mr. Liebman. I wasn't sure you wanted me to take it out, 
and it is a classified document. It has a cover sheet.
    Senator Specter. I just asked you to identify it. I didn't 
ask you to take it out.
    Mr. Liebman. I can't recall the title of the document 
offhand, Senator. It is written on the document.
    Senator Specter. Well, let's move into that, and we can 
give my colleagues a chance to question, but the point is that 
knowing all that Dr. Lee had said publicly and what was in the 
public domain, what he had written and what was on the Web 
site, Dr. Twogood said that his confession disclosed secret 
information. Didn't Dr. Twogood come to that conclusion?
    Mr. Liebman. I know that Mr. Shapiro had his own doubts 
about Dr. Twogood's opinions and their evolution, but also I 
think Dr. Twogood's opinions have to be measured against the 
opinions of the Navy----
    Senator Specter. Do you remember my question?
    Mr. Liebman. Yes, I do.
    Senator Specter. What was my question? My question was, 
isn't it true Dr. Twogood classified this as secret?
    Mr. Liebman. I don't think he has original classification 
authority. He may have opined that it was secret. And whether 
not it is secret or confidential, the fact is every single 
paragraph that this document--that Peter Lee confessed to 
disclosing is marked unclassified.
    Senator Specter. Mr. Liebman, we will take your statement 
that he opined that it was secret. I think that is all anybody 
can do. Even those people across the street in the Supreme 
Court of the United States who hand down life-and-death 
decisions put the classification under opinions----
    Mr. Swartz. Mr. Chairman----
    Senator Specter. Wait just a minute.
    Mr. Swartz. Thank you.
    Senator Specter. Just an observation, Mr. Liebman. What 
this subcommittee is trying to do is find out the facts, but so 
frequently when I ask you a question, you give me a thesis on 
why what you did was correct, such as asking you about Dr. 
Twogood's classification, his evaluation, his judgment, his 
opinion, his statement that it was secret. You tell me why it 
is not worth anything.
    But all I am trying to find out is whether you knew that he 
opined that it was secret.
    Mr. Liebman. Yes, I did, Senator.
    Senator Specter. You did?
    Mr. Liebman. I did know that.
    Senator Specter. OK, thank you.
    Senator Sessions?
    Senator Sessions. I think Senator Grassley----
    Senator Grassley. He said I could go first.
    Senator Specter. That is fine.
    Senator Grassley. It is my understanding that Peter Lee 
multiple times confessed to disclosing classified information. 
I want to know--and remember I am a non-lawyer, but why wasn't 
that confession in and of itself enough to convict him of a 794 
or a 793, based on the 1997 disclosures?
    Mr. Liebman. Senator, both section 793 and 794 require that 
the Government prove there was a compromise of national defense 
information. It is not enough that the information or the 
document at issue merely be classified. And even though the 
Department of Defense may, in good faith and full propriety, 
classify a document or classify certain information, if, in 
fact, the information is not significant, if, in fact, there is 
substantially the same information available to the public, 
then it is not national defense information, and therefore not 
a violation of those provisions.
    Senator Grassley. The Department of Defense officials have 
stated that Peter Lee documents provided by your office for 
determination of classification was an unclassified FBI 
affidavit of Agent Cordova. They have repeatedly stated in 
hearings and briefings in this subcommittee that they were not 
supplied with the videotape confession of Peter Lee. FBI Agent 
Sayner testified that the Department of Defense was supplied 
with the Cordova affidavit, as well as the videotaped 
confessions.
    Since you were a liaison between Justice and the DOD on 
this Peter Lee case, what exactly did you supply to the 
Department of Defense in order for them to make their 
classification? And I would like to have the names of those 
individuals at the Department of Defense that you supplied the 
information to.
    Mr. Liebman. The purpose of my initial meeting with the DOD 
in late October 1997 was not to get a formal classification 
determination. So I did not supply any information to DOD for 
that purpose. The people I did give some information to while 
we were at that meeting, I believe, include Captain 
Dewispelaere and Donna Kulla, because I think now they were at 
that meeting.
    And the information I provided was a draft affidavit from 
the FBI which summarized, in my estimation, the important 
points of the confession of October 1997, and also made note of 
the fact that the confession had been taped. So if the 
Department of Defense or the Navy had desired a tape, they knew 
one existed and they could have asked for one.
    Senator Grassley. Then you did not transmit the videotaped 
confession to the Department of Defense?
    Mr. Liebman. No, sir.
    Senator Grassley. My staff advised me, why not?
    Mr. Liebman. Because at that point, at the initial meeting, 
the purpose was not to get a final classificationdetermination 
or even a preliminary classification determination on the information. 
It was only to find out one of two things: what publicly available 
information might be out there that could potentially compromise a 
section 794 prosecution on the 1997 compromise, and what could we say 
about the program generally, as I have here today, in an open trial 
setting.
    Senator Grassley. Mr. Shapiro testified last week in a 
closed hearing that his prosecution of Peter Lee was greatly 
impacted by the October 1997 meeting that he had with the FBI 
and the Department of Justice officials here in Washington. He 
says you were at that meeting. Was your interpretation at that 
meeting the same as Mr. Shapiro's, and did you think that 
meeting had an impact on the prosecution of Peter Lee?
    Mr. Liebman. Excuse me, Senator.
    [Witness conferring with Mr. Swartz.]
    Mr. Liebman. I would say I was in the meeting, so that is 
correct, sir. And I think it did have an impact, and I would be 
happy to go into that specifically in closed session.
    Senator Grassley. The chairman will follow up on that in a 
closed meeting because I won't be able to be present.
    Mr. Shapiro stated last week that a Department of Defense 
memo written by Mr. Schuster was, quote, ``a body blow to the 
prosecution.'' What follow-up action did you take, if any, with 
the Department of Defense regarding what is known as the 
Schuster amendment? In other words, did you seek clarification 
from the Department of Defense or the Navy?
    Mr. Liebman. No, I did not seek any further clarification, 
sir. My opinion had pretty much been fully decided even prior 
to getting the Schuster memorandum. And once I got the Schuster 
memorandum--and I would agree with previous testimony that it 
was a body blow. Mr. Shapiro said a knock-out punch, I think. 
And therefore based on what I knew about the case already, and 
this memorandum, I quickly was satisfied there was no section 
794 case on the 1997 compromise, particularly where the 
Schuster memorandum has the concurrence of the Vice-Chief of 
Naval Operations.
    Senator Grassley. Thank you, Mr. Chairman.
    Senator Specter. Thank you, Senator Grassley.
    Senator Sessions.
    Senator Sessions. Thank you, Mr. Chairman.
    On Mr. Shapiro's views and yours, the chairman asked you 
about trials. As I understand it, you were on the trial team of 
one 794 trial, is that correct?
    Mr. Liebman. That is correct, sir, but as I----
    Senator Sessions. Have you ever tried another case before a 
jury?
    Mr. Liebman. Yes, I have.
    Senator Sessions. How many?
    Mr. Liebman. Two other cases.
    Senator Sessions. What kind of cases?
    Mr. Liebman. Immigration and drug cases.
    Senator Sessions. Mr. Shapiro had 8 years as a trial 
attorney and tried a lot of complex cases, had he not?
    Mr. Liebman. Yes, he did, obviously, sir.
    Senator Sessions. And he was aware of the Schuster memo?
    Mr. Liebman. Yes, sir.
    Senator Sessions. And he was prepared to proceed with 794?
    Mr. Liebman. Yes, he was, but apparently he didn't have 
the----
    Senator Sessions. I just asked you, he was prepared to 
proceed, was he not?
    Mr. Liebman. Yes, he was, sir.
    Senator Sessions. Now, you have examined witnesses.
    We don't have a lot of time; we have to just ask a few 
questions.
    So he was prepared to proceed. Who made the decision that 
he could not proceed with 794?
    Mr. Liebman. It was Mr. Drooyan, the first assistant U.S. 
attorney at the U.S. Attorney's Office, Mr. Shapiro's 
supervisor. It was Mr.----
    Senator Sessions. Wait a minute. Let me ask you this: the 
authority to approve a 794 is not with his supervisor in that 
office, is it? The authority is in the Department of Justice, 
isn't it, in Washington?
    Mr. Liebman. I believe it is at the Assistant Attorney 
General level.
    Senator Sessions. In Washington, DC?
    Mr. Liebman. Yes, sir.
    Senator Sessions. Who in Washington, DC, made the decision 
to not allow him to go forward with 794?
    Mr. Liebman. I believe Mr. Keeney testified that he 
approved the plea agreement which had in it that there would 
not be a section 794 prosecution.
    Senator Sessions. Mr. Keeney didn't know a lot about the 
case and said he wouldn't have had the same decision had he 
known more about it. Were you the person that was in charge of 
collecting the data for some officials to make final decisions 
on?
    Mr. Liebman. I wouldn't say I was in charge of that, sir.
    Senator Sessions. Who was?
    Mr. Liebman. I think it was a combination of the U.S. 
Attorney's Office and our office, the Internal Security 
Section.
    Senator Sessions. Well, Mr. Chairman, I think one thing is 
absolutely clear. In this whole process, everybody is passing 
the buck. Mr. Keeney is passing the buck, Mr. Dion is passing 
the buck, Mr. Liebman is passing the buck, and now they want to 
blame the U.S. Attorney's Office. But the fact is, and I will 
repeat again--and I know how this works because I had them tell 
me no on cases where the Department of Justice has final 
authority.
    The Department of Justice had final authority, not the U.S. 
Attorney's Office, did they not?
    Mr. Swartz. Senator Sessions, may I clarify on this issue, 
if I may for a moment?
    This is a case, as you know, that went up through the U.S. 
Attorney's Office, not just Mr. Shapiro but also through the 
first assistant and the U.S. attorney to the Internal Security 
Section. No one is passing the buck in that regard, Senator. 
The decision was made at Main Justice, but was concurred----
    Senator Sessions. All right. That is why I am asking.
    Mr. Swartz. But it was concurred in----
    Senator Sessions. The U.S. attorney's opinion is worthless 
when it comes to the authority to make the decision, 
responsibility to make the decision.
    Mr. Swartz. The U.S. attorney can concur in or disagree 
with section opinion, and here the U.S. attorneyagreed with--
and so did the first assistant--that decision. The person who did not 
agree, of course, as you know, was Mr. Shapiro.
    Senator Sessions. And you disagreed with Mr. Shapiro?
    Mr. Liebman. Yes, I do, Senator.
    Senator Sessions. And Mr. Dion disagreed with Mr. Shapiro?
    Mr. Liebman. I have talked to him about it. Yes, I believe 
he does, sir.
    Senator Sessions. Now, the Schuster memo laid out there as 
a detriment to the case for sometime. Did anybody ever seek to 
get another analysis of it? I saw Senator Specter examine Mr. 
Schuster, and I will tell you what I concluded from that 
examination. Mr. Schuster's memo was wrong, and he was in 
error, and he acted too hastily. And he had never seen the 
confession on tape, and he didn't know hardly anything about 
the case. And I know at first glance--and I have tried a lot of 
cases and supervised lawyers trying cases, and I have seen them 
panic over bad memos in the file. But you have to go beyond 
that. This is a matter of great importance to me.
    Did you ever attempt to get any other analysis from the 
Department of Defense contrary or different from Mr. 
Schuster's?
    Mr. Liebman. I didn't, sir, but I know that the Department 
of Defense--or the Navy, that is--did re-analyze this issue for 
the Cox committee last year.
    Senator Sessions. Well, but when you were making a decision 
of whether or not to prosecute, you allowed this half-baked 
memo to lie out there and be an excuse not to proceed with the 
case, it seems to me, without ever proceeding. Isn't it true, 
Mr. Liebman, that a case like this would have had the potential 
to embarrass the Department of Defense?
    Mr. Liebman. I'm not so sure about that, but----
    Senator Sessions. Well, you are not sure about it. Okay.
    Mr. Liebman. That's correct, sir.
    Senator Sessions. All right. But you went through here and 
described for us some things I thought were pretty stunning 
that you found that were on public record that I got the 
impression you were dubious about whether it should have ever 
been made a part of the public record. Would you express an 
opinion about that?
    Mr. Liebman. What part of the public record should I not 
have----
    Senator Sessions. You were saying some of these matters had 
subsequently been made public on the Web site and other things 
and that the Department of Defense had released some of these 
matters and that the Department of Defense actually wanted 
other countries to know some of these things.
    Is that accurate? It sounded like to me----
    Mr. Liebman. No, sir----
    Senator Sessions [continuing]. The Department of Defense--
--
    Mr. Liebman. No, sir, that's not accurate.
    Senator Sessions [continuing]. Being critical of the 
Department of Defense.
    Mr. Liebman. No, sir. What I was referring to was the 1985 
compromise in terms of what I was told that the Department of 
Energy had factored into the declassification of that 
information, not the Department of Defense with respect to the 
1997 compromise.
    Senator Sessions. All right. Well, with regard to the--I 
find it very difficult to understand how you could suggest that 
this was not a Department of--this was not a national security 
information.
    Mr. Liebman. Which information precisely?
    Senator Sessions. I mean, it clearly went to serious 
national defense issues. It wasn't a matter about something you 
could debate, say it is computers, it had commercial and 
military applications. This was purely a defense-type security 
question, was it not, had no civilian uses?
    Mr. Liebman. You're talking about the 1997 information now, 
Senator?
    Senator Sessions. Well, 1985, too.
    Mr. Liebman. Well, in the 1985, I think I testified that it 
was a little bit of a closer case, which is why I recommended 
it be used as leverage----
    Senator Sessions. Well, I think 1985 was closer because 
your basis there for saying it was originally when he released 
it, it was classified secret, was it not?
    Mr. Liebman. It was classified secret, but I'm not sure it 
would have been ultimately found to be national defense 
information at the time he compromised it.
    Senator Sessions. Well, what was it about?
    Mr. Liebman. National defense information, sir, is a term 
of art under the espionage statute. It's the subject of 
numerous--several court opinions. While it may relate to the 
national defense in the colloquial sense, I think there was 
significant doubt, and there was a significant doubt in my 
mind, whether it related to national defense for the purposes 
of the espionage statute.
    Senator Sessions. Well, what was the subject of the 1985 
disclosures?
    Mr. Liebman. The 1985 disclosure, the subject was the 
hohlraum, inertial confinement fusion, and the use of----
    Senator Sessions. Nuclear weapons.
    Mr. Liebman. Nuclear weapons research, that's----
    Senator Sessions. Testing, yes, and if that is not national 
security, I don't know what is. And I don't believe there is 
any law anywhere that would say that kind of information is 
not.
    Mr. Liebman. Senator, I think there is, actually, and I 
would refer to the Supreme Court's opinion in Gorin, the 
opinion of Judge Learned Hand in Hein, and I would like to say 
I argued this precise issue before the Fourth Circuit last 
month, so I'm pretty well up to speed on it.
    Senator Sessions. Well, Messrs. Staffin, Trulock, and 
Mahaley said, ``In summary, Dr. Lee has confessed to 
compromising classified nuclear weapon design information. This 
information was properly classified at the time of compromise, 
and U.S. intelligence analysis indicates that this information, 
in conjunction with other information, was of material 
assistance to the People's Republic of China in advancing their 
nuclear weapons program. Compromise of this information 
reasonably could be expected to cause serious damage to United 
States national security.''
    So I don't believe there is any case law that would get 
around that.
    Mr. Liebman. I'd respectfully disagree, Senator.
    Senator Sessions. And Mr. Shapiro testified, I think 
correctly, that whereas it had subsequently been declassified 
perhaps, maybe not all of it, but say it was, then it was still 
classified at the time. And you could----his phrase was, after 
the D Day invasion, you could reveal the plans of the D Day invasion, 
but not before. Timing is a critical factor, is it not?
    Mr. Liebman. It is, Senator. However, the D Day invasion 
analogy, which, by the way, was my analogy when I discussed the 
general issue of national defense with Mr. Shapiro, is not apt 
in this case. Certainly on June 7, 1944, the timing and place 
of the D Day invasion is no longer an issue. However, in this 
case, there was gradual and--gradual release or gradual 
catching up of the rest of the world in this area of research, 
which is why the Department of Defense ultimately decided to 
begin declassifying it in 1990. It was a gradual scientific 
process. It is not----
    Senator Sessions. It wasn't declassified in 1985.
    Mr. Liebman. Correct, but it's got to be national defense 
information.
    Senator Sessions. And if you reveal--the element of the 
offense is you reveal classified documents relating to--all 
right. Counsel is over here shaking his head. State it for me, 
counsel. What are the elements of the offense?
    Mr. Swartz. National defense information, Senator.
    Senator Sessions. All right. So the elements of the offense 
of 794 was met when he revealed that information, and he 
confessed and admitted that it was classified, had he not?
    Mr. Liebman. I'm not sure the elements of the offense were 
met because of my subsequent study of DOE documents for the 
reason of the declassification. It was a questionable case. I 
recommended we use the 794 prosecution as leverage in plea 
negotiations, and had the plea agreement broken down, had 
negotiations broken down, we would have revisited the issue.
    Senator Sessions. Did you convey that to Mr. Shapiro?
    Mr. Liebman. I conveyed it to Mr. Dion, who I believe 
conveyed it to Mr. Shapiro.
    Senator Sessions. So you don't know whether Mr. Dion 
conveyed it or not to Mr. Shapiro?
    Mr. Liebman. I guess you can talk to him about that, 
Senator.
    Senator Sessions. But you didn't convey it to Mr. Shapiro?
    Mr. Liebman. Precisely the fact that he had leverage to use 
section 794?
    Senator Sessions. No. Whether or not he could charge it if 
the plea negotiations broke down. The implication of your 
testimony to what you told Mr. Shapiro was that he couldn't do 
it if the negotiations broke down. Ethically, you felt he could 
bluff with it, basically is what you said in your written 
statement.
    Mr. Liebman. That's not what I said, Senator. What I said 
was that if plea negotiations broke down, we would have 
regrouped and reconsidered the issue. He was never told that 
had plea negotiations broken down in advance--he wasn't told in 
advance that he could then charge with 794.
    Senator Sessions. Well, all I want to do is get the truth 
on this matter, and I think we are going around in circles here 
on it. But I think in your statement you don't say that you 
ever told him he could go forward. In fact, you suggest just 
the opposite.
    Well, let me just say this: In my view, the elements of the 
charge were met on the 1985 disclosure; that you were basing 
your analysis primarily on what he admitted that he disclosed. 
Is that not correct?
    Mr. Liebman. That's correct, and it's because we couldn't 
prove anything else, Senator.
    Senator Sessions. I know that, but we are rational human 
beings. We can expect he may have disclosed more than that. 
Don't you agree?
    Mr. Liebman. As to what else he might have disclosed or 
did, in fact, disclose, I'm happy to address that in closed 
session.
    Senator Sessions. Well, this is the way I would analyze the 
case, and I think this is the way Mr. Shapiro analyzed it, and 
he was one that would be the lead trial attorney, would he not?
    Mr. Liebman. I'm not sure if he would have been the lead or 
Mr. Drooyan would also have been the lead.
    Senator Sessions. He would have had to carry--he was 
prepared to carry the burden, put his neck on the line and 
litigate the case, and he believed he had sufficient evidence 
to proceed. That is what he testified in his testimony.
    Mr. Liebman. He also testified that his own supervisor 
disagreed.
    Senator Sessions. I understand that, which is an 
interesting question. But I think what we are doing here is 
looking back over it, and looking back over it, I think Mr. 
Shapiro was correct. You had national security information. You 
had meetings in a private hotel room. You had the defendant--
you had it classified secret at the time it was revealed, and 
you had the defendant himself admitting on tape that he had 
revealed classified information.
    Now, I believe you can get to a jury with that, and I 
believe that case should have been charged as 794, and if the 
legal technicalities gave you trouble, I believe that you could 
have been able to negotiate a much better plea agreement. But, 
frankly, I believe the case could have gone forward, and 
perhaps the Department of Defense and Navy would have been 
embarrassed at the way they had been releasing information. 
Perhaps Lawrence Livermore Lab and these people who think they 
have a right under free speech to say what they want to would 
have had to have come forward and explained some of the 
declassifications that occurred, which I think is unjustified, 
and I don't think a jury would have had a hard time with this 
case, Mr. Chairman. I think a jury would have sized this up in 
a heartbeat and figured that--and I believe you would have had 
a conviction on 794 and it would have been upheld on appeal.
    I thank you.
    Senator Specter. Thank you, Senator Sessions.
    Mr. Liebman, from the tenor of your testimony, I conclude 
you disagree with Senator Sessions that the jury would have 
convicted in a heartbeat, but do you disagree with former U.S. 
Attorney Sessions that there was a jury question on 794?
    Mr. Liebman. As to the 1985 compromise, I think it was a 
very close call. Perhaps it was a jury question. And I think 
reasonable prosecutors can disagree on whether we should have 
gone forward with the 794 prosecution.
    Senator Sessions. And the decision in the Department of 
Justice denied the jury the right to make that call.
    Senator Specter. That is the 1985 matter?
    Mr. Liebman. Yes.
    Senator Specter. But how about the 1997 matter? 
Juryquestion?
    Mr. Liebman. Respectfully, Senator, I don't think so. I 
think it's not even a close call. I think it would have been a 
Rule 29 before it went to the jury.
    Senator Specter. You referred in response to Senator 
Sessions' question as to other DOD documents which undercut the 
1997 incident. Are those matters you would want to discuss in 
closed session?
    Mr. Liebman. No. Those are publicly available documents, 
Senator.
    Senator Specter. Fine. Well, what documents are you 
referring to?
    Mr. Liebman. That's the big thick stack I think Mr. 
McArthur was showing to you earlier of articles, and, frankly, 
Senator----
    Senator Specter. This is the stack that you opened?
    Mr. Liebman. I'm not sure, Senator.
    Senator Specter. It says, ``These were handed to me this 
morning.'' McArthur is a speed reader, but not that speedy. May 
the record show I thumbed the papers.
    Mr. Liebman. Senator, actually, those documents weren't all 
as troubling as the Twogood testimony in open session of the 
Armed Services Committee and the Web site. They were just 
additional--they're additional documents about--public 
documents about radar ocean imaging that's out there in the 
public literature.
    Senator Specter. All right. The subcommittee will consider 
your testimony on that.
    As to the issue about Dr. Lee's disclosures going well 
beyond the article and what was on the Web site, there are two 
documents: one, November 17, 1997, and another dated November 
21, 1997, the second of which we got just--we don't have that 
yet. Mr. McArthur says we saw it last night for the first time, 
but we will go into that in a closed session.
    I had handed to Senator Sessions a couple of documents when 
he was questioning you, Mr. Liebman, and one of them is an 
impact statement signed by Staffin, Trulock, and Mahaley that I 
referred to, February 17, 1998, which concluded--or I will read 
the paragraph. It is short. ``In summary, Dr. Lee has confessed 
to compromising classified nuclear weapon design information. 
The information was properly classified at the time of 
compromise, and U.S. intelligence analysis indicates that this 
information, in conjunction with other information, was of 
material assistance to the People's Republic of China in 
advancing their nuclear weapons program. Compromise of this 
information reasonably could be expected to cause serious 
damage to U.S. national security.'' With the emphasis on 
``Compromise of this information reasonably could be expected 
to cause serious damage to U.S. national security.''
    Do you disagree with their conclusion about damage to U.S. 
national security, Mr. Liebman?
    Mr. Liebman. I don't disagree, Senator, but there are other 
DOE documents that put that kind of statement--other DOE 
documents that would have been relevant at a trial that would 
have made this a much closer issue.
    Senator Specter. So it would be a jury question?
    Mr. Liebman. For the 19--this impact statement is as to the 
1985 compromise, and as I said before, I think it was a close 
question, a close call, and reasonable minds could differ on 
the propriety of going forward with the section 794.
    Senator Specter. OK, but it was a jury question as to what 
Staffin, Trulock, and Mahaley concluded was national security 
information.
    Mr. Liebman. Senator, just because it's a jury question 
doesn't mean we should bring a section 794 prosecution.
    Senator Specter. There you go again. I just asked you if it 
was a jury question. It doesn't mean that because it is a jury 
question you are going to bring it. I just asked you if it was 
a jury question.
    Mr. Liebman. Under the case law----
    Senator Specter. Why so defensive, Mr. Liebman?
    Mr. Swartz. Mr. Chairman, he wasn't being defensive. He's 
already answered that he believed it was a jury question 
before. He was just amplifying on that.
    Senator Specter. No, he had answered it overall, but not as 
to the national security question, Mr. Swartz. It was a jury 
question as to the national security matters, Mr. Liebman?
    Mr. Liebman. As a matter of law, it's always a jury 
question whether information relates to the national defense.
    Senator Specter. Oh, now, Mr. Liebman, it isn't always a 
matter of law it is a jury question. Judges take a lot of 
issues away from the jury and do not make them jury questions 
as a matter of law. Isn't that correct?
    Mr. Liebman. Not with respect to the espionage statute, and 
I would refer you to United States v. Gorin, a Supreme Court 
opinion.
    Senator Specter. Senator Sessions' staff would like to have 
this question asked, which I will read. Wouldn't the fact that 
discussions began in 1989 about declassification because the 
rest of the world was catching up be aggravating evidence 
rather than mitigating because Lee helped them catch up?
    Mr. Liebman. There was no--Senator, there was no 
information that DOE documents that the rest of the world was 
catching up because of the compromise by Peter Lee. In fact, 
the intelligence community had no knowledge of the 1985 
compromise prior to Peter Lee's confession in October 1997.
    Senator Specter. Mr. Liebman, in taking a look at 793 and 
794, without reading the whole sections, 793 contains the 
clause ``relating to the national defense or information 
relating to the national defense,'' which is virtually 
identical, at least in one portion, to 794, ``information 
relating to the national defense.''
    So when you say that there was a requirement in 794 that 
couldn't be met as to national defense, but you could proceed 
under 793, aren't the requirements as to that element of proof 
the same in the two sections?
    Mr. Liebman. Yes, Senator, but he pled guilty to 793. He 
would not have pled guilty to 794. We would have had a trial on 
that issue.
    Senator Specter. But the point that you made, at least as I 
understood it, was that you didn't have an evidentiary base to 
meet all of the requirements of 794, which is why you didn't 
charge it, because you couldn't prove that it related to 
national defense; whereas, you did proceed as to 793. You think 
you couldn't have proved it as a 793 either if he hadn't 
entered a guilty plea?
    Mr. Liebman. No. I think we could have proved it, butI do 
think a trial would have been extremely difficult and might not have 
resulted in a conviction had there been a trial issue on----
    Senator Specter. As to 793 either.
    Mr. Liebman. Had we gone to trial, Senator, we would not 
have gone to trial under 793.
    Senator Specter. Would you have not authorized a trial, a 
prosecution under 793?
    Mr. Liebman. We did authorize a prosecution under 793, 
Senator.
    Senator Specter. Would you not have authorized going 
forward to trial if there hadn't been a plea bargain?
    Mr. Liebman. There could not--we could not have gone 
forward, Senator, because the statute of limitations had run on 
section 793.
    Senator Specter. But you could have gone forward under 794 
because there was no statute of limitations.
    Mr. Liebman. That's correct, Senator, had we thought the 
elements could have been proven beyond a reasonable doubt.
    Senator Specter. Are you aware, Mr. Liebman, that when the 
Navy finally got around to looking at the tapes of Dr. Lee's 
confession that Schuster, Wayne W. Wilson, and Donna Kulla 
wrote an unequivocal, albeit brief, conclusion, quote, the 
statements saying that it was at the confidential level?
    Mr. Liebman. Are you referring to the March 2000 document, 
Senator?
    Senator Specter. Yes.
    Mr. Liebman. Could I just have a brief--could I look at 
that? I think it have it here.
    Senator Specter. Sure.
    [Pause.]
    Mr. Liebman. Yes, I am aware of that letter, Senator.
    Senator Specter. Mr. Liebman, I congratulate you on your 
decision to be in public service in the Department of Justice. 
I think it is a very high calling, and there is no doubt that 
an attorney of your ability could earn a great deal more 
somewhere else. And when we are conducting these hearings, 
there is no suggestion of any sort of any challenge to your 
competency. Of course, there is no challenge to your integrity 
or your ability or your good faith. We want to find out what 
happened here.
    I think there are certain areas of disagreement, and our 
oversight function is to take a look at what you have done and 
to see if we can recommend improvements. When we finished up 
with the Foreign Intelligence Surveillance Act matters under 
Wen Ho Lee, we introduced legislation which has been sponsored 
by almost everybody, thinking that we have added a little bit 
to improving your procedures, and we may be in a position to do 
that again here. We are going to get into some of that with Mr. 
Keeney.
    And we don't like to interrupt any of your work because you 
are doing important work, regardless of what you are doing, but 
I understand you are doing extremely important work at the 
present time. But we have our responsibilities on oversight, 
something that the Congress does precious little of. And we 
have gotten into a fair amount of controversy on line 
attorneys, and I was a line attorney once.
    Somebody asked me once if the best job I had was Senator, 
and I said, no, being district attorney was better than 
Senator. And they said, was disrict attorney the best job you 
ever had? And I said, no, being assistant district attorney was 
better than being district attorney.
    So I have some appreciation of what it is like to be a line 
attorney. And I know the Department regulations frown on line 
attorneys, and I have already put into the record all the line 
attorneys who have testified. One testified before the 
Governmental Affairs Committee last June. I am on that 
committee as well.
    And if you would care to make a comment, you appeared here 
under subpoena, which is the rules of the Department of 
Justice. And when we sought to talk to you in advance of your 
appearance here, you declined, and you had every right to 
decline. We thought it might be easier if we had an informal 
discussion to let you know what we were looking for, but we 
respect your declination.
    My own thinking is that it is a healthy thing, not an 
unhealthy thing, from time to time to have men like you in your 
position testify beyond what Mr. Keeney testifies to or Mr. 
Dion testifies to, because you are an important link. And your 
testimony about why you did what you did and your limited 
contact with the Department of Defense, this is the first time 
I knew about that. And we can only get that from you.
    Somebody said that the subcommittee had made an arrangement 
that if line attorneys appeared that we wouldn't call them in 
the public session. We never made any such arrangement. I 
wouldn't make any deal like that, or really any other deal.
    And there is no way for somebody in my position to make a 
judgment about what ought to be public until I know what it is. 
And if it is classified, sure, it is going to be in closed 
session.
    To repeat, I respect what you said about the classified 
information. But if you would care to give an opinion, I would 
be interested in your views, and this violates the cardinal 
principle about never asking a question that you don't know the 
answer to. But do you think this is generally in the public 
interest for the Senate to find out why you did what you did, 
say specifically with respect to not conferring further with 
DOD officials?
    Mr. Liebman. Senator, I actually leave it to my superiors 
to--who are more up to speed on the reasons for--behind the 
line attorney policy. I'd rather not comment on that.
    Senator Specter. Fine.
    Mr. Liebman. But I would like to point out that the 
decision not to meet with you in advance was made by my 
superiors.
    Senator Specter. Oh, I know that. No, I am not--as I said, 
I respect it and I am in no way being critical. We are going to 
have to decide the line attorney issue on other matters, and I 
respect your statement that the policies in your view ought to 
be articulated by somebody else.
    We made arrangements to go into the Intelligence Committee 
room adjacent when we finish Mr. Dion's testimony. So if you 
will stand back, we will do that. It is a small room for having 
a hearing, but we can accommodate ten people, and we are going 
to draw lots to see who gets to go into the closed session. 
Maybe I will be lucky and draw the short lot and won't be able 
to get to go in.
    [The prepared statement of Mr. Liebman follows:]

                 Prepared Statement of Michael Liebman

    Mr. Chairman and distinguished members of the subcommittee, good 
morning/afternoon. I'd like to make a few opening remarks, after which 
I look forward to answering your questions.
    As Mr. Keeney noted, since joining ISS in 1991, I have worked on 
some of the major espionage cases of the 1990s--the Lalas case; the 
Ames case; the Lipka case; the Squillacote case. All of these cases 
resulted in prison sentences ranging from 14 years to life.
    All of these were prosecutions under 18 U.S.C. Sec. 794. Of these, 
I am most proud of the Lipka case, where I helped build an historical 
case where the investigation did not even begin until roughly 25 years 
after the crime. I also take pride in the 1998 Squillacote/Stand case, 
where I was part of the trial team for a two-week jury trial against a 
well-financed defense, which resulted in guilty verdicts on all counts 
and sentences of 22 years and 18 years. In connection with that trail, 
I was awarded last year the Attorney General's Award for Excellence in 
Furthering the Interests of U.S. National Security. Finally, I am, of 
course, proud of the Ames case, for which John Dion and I received an 
award from the U.S. Attorney for the Eastern District of Virginia.
    At the time of Peter Lee's admissions in October 1997, I fully 
expected that they would lead to another case in my string of Sec. 794 
cases. But almost from the outset I encountered significant obstacles.
    Within about two or three days after Lee made his admissions in 
early October 1997, I flew out to Los Angeles and met with prosecutors 
from the USAO and FBI special agents from the LA Division to discuss 
the case. Our office had first been briefed on the case in August 1997, 
when it was still just a false-statements case because Lee had merely 
admitted to telling lies. In my trip in October, I spent several hours 
meeting with then-AUSA Jonathan Shapiro, and FBI special agents Gil 
Cordova and Serena Alston, at the LA Division FBI office, where we also 
listened closely to the tapes of the October interviews. To the best of 
my recollection, it was then that I first learned that the information 
Lee had compromised in 1985, while classified ``Secret'' then, was no 
longer classified in 1997, and that the information Lee compromised in 
1997, was, for the most part, only classified under a mosaic theory and 
only at the ``Confidential'' level. By mosaic theory, I mean that the 
items of information considered separately are unclassified, but when 
grouped together they become classified.
    I also recall that, with respect to the 1997 compromise, the FBI in 
Los Angeles showed me a copy of a 1995 document authored by Lee that 
was marked ``Confidential.'' It concerned research into detecting the 
wakes of surface ships, conducted under DOD auspices, through the use 
of radar directed at the ocean surface. Although the overall document 
was classified ``Confidential,'' every single portion of the document 
was separately marked ``Unclassified,'' with one exception. The 
exception was the single paragraph on the first page that explained 
that considered as a whole the document was ``sensitive.''
    Later, after I returned to Washington, I obtained tapes of Lee's 
October confession and determined that as to the 1997 compromise, the 
1995 ``Confidential'' document essentially contained all the 
significant information Lee had confessed to giving the Chinese in May 
1997, with one important exception. The 1995 document was all about 
using radar to detect surface ship wakes; it said nothing about using 
radar to detecting submarines or anything below the surface. I knew 
that Lee had admitted to the FBI that he told the Chinese in May 1997 
that the radar technique discussed in the 1995 document could be used 
to detect submarines, although he minimized the disclosure by telling 
the FBI that the Chinese already knew this.
    In my estimation, both then and now, the sole weakness in the case 
was the questionable significance of the information Lee compromised, 
both in 1985 and 1997. As to Lee's 1985 disclosure, I knew, for 
instance, that the Department had never prosecuted a case under 794 
where the compromised information, as in the case of Lee's 1985 
disclosure, had been declassified prior to the crime being discovered. 
Let me emphasize this: the information Lee admitted disclosing in 1985 
had been declassified. While some aspects of the government's research 
in this area might remain classified, as shown by updated 
classification guides, what Lee confessed to disclosing regarding ICF 
research in 1985 was fully declassified by 1993. And on this issue, I 
would refer the subcommittee to the FBI's October 15, 1997 interview of 
Dr. Roy R. Johnson, of Lawrence Livermore National Laboratory.
    Furthermore, what I later determined was that the information was 
actually declassified over the 1990-93 time period, not just in 1993. 
DOE documents that I believe this subcommittee has shown that ICF 
research, including details disclosed by Lee to the PRC, began being 
declassified on March 21, 1990, for reasons that included the fact that 
the rest of the world was catching up. Another reason for the 
declassification, I was told, was that DOE considered it to be in the 
U.S. national interest to educate countries on how to simulate nuclear 
weapon explosions in a laboratory setting, in order to discourage them 
from actually detonating nuclear devices. Moreover, I was advised, and 
again this is documented, that the debate over declassification had 
begun at least as early as January 1989, only four years after Lee's 
disclosures.
    Why is any of this relevant? Why does it matter that the 
information was declassified after the crime? Because section 794 does 
not penalize disclosures of classified information. It does not even 
use that term. What it penalizes is the disclosure, or attempted 
disclosure, of items, documents and information related to the national 
defense. And what the caselaw, including Supreme Court caselaw says is 
that this is a jury issue, not to be decided by a classifier merely 
testifying that certain information is or was classified at the time of 
the offense. The government needs to be able to describe how a 
disclosure of classified information might benefit an enemy of the 
United States. And publicly available information that tends to suggest 
that the classified information is not all that significant may well be 
found by a court to be relevant and admissible in an espionage 
prosecution.
    The DOE documents indicated to me that there would be a significant 
issue at any trial whether the ICF disclosures Lee made in 1985 related 
to the national defense at the time he made them. Most alarming to me 
was the notion that Lee could claim that he made the disclosures to 
encourage China not to conduct nuclear weapons tests in the field, and 
he would likely be supported by internal government documents or even 
testimony of former USG or Livermore officials that that was actually 
one of the reasons the U.S. government declassified the information 
beginning in 1990. In other words, Lee would have been able to argue 
his actions were in the national interest.
    I soon discovered that there were similar obstacles to bringing a 
Sec. 794 prosecution based on the 1997 disclosure. To analyze this, it 
is helpful to begin with the 1995 ``Confidential'' document, every last 
substantive part of which, when considered independently, is 
unclassified. Recall that this document discusses a radar technique in 
which the wakes of surface ships can be detected by bouncing radar 
signals of the ocean surface. I have a copy of it right here today.
    The best way to explain the problem with basing a prosecution on 
this document is as follows. Under the classification guidance on this 
document, I could remove any single paragraph, perhaps even a single 
line--just cut it out--and then take the remainder of the document over 
to that press table, and I would not even be committing a security 
violation, because the document is only classified when considered as a 
whole.
    I recognized that problem with the 1997 compromise as soon as I got 
to Los Angeles. But there was one crucial piece of Lee's admissions 
that I thought, at the time, could make the case viable, even viable 
under section 794. Lee had confessed to telling the Chinese scientists 
that the technique described in the document could also be used to 
detect submarines. As I've said, that goes beyond the document. Surely, 
I thought, it must be a well-kept secret that the U.S. government is 
investigating the detection of submerged submarines by utilizing radar 
aimed at the ocean surface.
    When I returned to Washington, as I said, I began analyzing the 
confession in some detail. Approximately two weeks after returning, on 
October 23, 1997, I attended a meeting at the Main DOJ building with 
the FBI and other Criminal Division attorneys, along with Mr. Shapiro 
and his supervisor, then-FAUSA Richard Drooyan. The problems with the 
information, which I've just described, were discussed, along with 
other issues in the case. Immediately after that meeting, I attended a 
briefing by the FBI on the case, along with Mr. Shapiro and I believe 
Mr. Drooyan. I will not go into that briefing here in open session.
    A few days after that meeting, I attended a meeting with DOD 
officials to discuss the 1997 information. I've recently been reminded, 
by the testimony of DOD and Navy officials to this subcommittee last 
month, that the meeting occurred on October 28, 1997. The main purpose 
of that meeting, from my perspective, was to inquire of DOD as to what 
publicly available information could potentially undermine an espionage 
prosecution for the 1997 compromise. Another issue for me was what 
could the government say about the program generally, in a public 
forum, if the case were to go to trial.
    About a week after the meeting, I received a stack of public 
articles from DOD related to radar ocean imaging generally. One thing 
they also sent me was extremely surprising. Among the articles was a 
print-out from a Lawrence Livermore National Laboratory web site, last 
updated in March 1995, well in advance of Lee's 1997 trip to China. I 
have a copy of the print-out here. I quickly confirmed, after receiving 
it, that the web site was a public one and available to anyone in the 
world with a computer and a modem. I offer it into the record now and 
I'd like to read some portions of it out loud.
    The title of the page is ``radar ocean imaging.'' The first line of 
text states: ``This project focuses on the detection by radars of 
surface manifestations of moving, submerged submarines.'' Later, it 
says that as a result of ``achievements'' in the project, ``[t]here is 
now no controversy within the community that radars offer any potential 
for this problem,'' that is, to detect submarines. It concludes: 
``[t]his program has made impressive advances in understanding and 
exploiting radar remote sensing of the ocean for important national 
defense needs.''
    In addition, a few days after obtaining the website printout, DOD 
gave me a copy of the prepared remarks of Dr. Richard E. Twogood of the 
Lawrence Livermore National Laboratory, presented in open session to a 
subcommittee of the House Armed Services Committee in April 1994. I 
have a copy of those remarks and I offer it into the record now, and 
I'd like to quote from the most significant portions: ``The Joint US/UK 
Radar program has made important progress in the development of methods 
to detect submarine signatures with remote sensing radars, especially 
over the last two years.'' It also states: ``We have developed new 
signalprocessing and detection techniques that, to our knowledge, have 
never been successfully applied to this problem. We have applied these 
new methods in both classified and unclassified settings. Results have 
been achieved that I believe are not only impressive, but also offer 
great promise for future improvement.''
    So there it was. There was no secret at all that the USG was 
working on a program to detect enemy submarines with radar aimed at the 
ocean surface. There was not even any secret that we had achieved a 
potential breakthrough. The website and Dr. Twogood's testimony, 
coupled with the fact that the underlying 1995 document was only 
classified under a mosaic theory, convinced me that there was no 
section 794 case on the 1997 compromise.
    I arrived at that conclusion even before I received the Shuster 
memorandum of November 14, 1997. The memo only served to reaffirm my 
position. Particularly significant were the Navy's determination that 
it could not support the ``Confidential'' classification of the 1995 
document and that, in any event, Peter Lee's disclosures did not cause 
significant damage. I would note that the Shuster memorandum had the 
concurrence of the vice chief of naval operations, the second highest 
ranking Navy official.
    Now, just because a compromise of classified information cannot be 
prosecuted under section 794 does not mean that there are no other 
statutes with serious criminal penalties that might apply. There are 
other provisions of the espionage code, specifically 18 USC 793 and 
798. In addition, there is the Internal Security Act, specifically 50 
USC 783. Each of these carries a ten-year penalty. The problem was that 
none of them applied. Section 793 was out because it too used the term 
national defense information, just like section 794. Section 798 was 
out because it applies only to communications intelligence and 
cryptographic information. And the Internal Security Act was out 
because it applied only to defendants who were USG employees or 
employees of USG-owned corporations. That was the biggest 
disappointment, and I remember discussing that with Mr. Shapiro over 
the phone following my trip out to Los Angeles. The statute does not 
apply to employees of government contractors, such as TRW.
    Shortly thereafter, I do not recall precisely when, I recommended 
to Mr. Dion that we offer Lee a plea under 18 USC 793 or section 224(b) 
of the Atomic Energy Act of 1954 (42 USC 2274(b)) for the 1985 
compromise. Both statutes carry a maximum penalty of ten years, and 
would require Lee to waive the statute of limitations. The USAO elected 
to offer Lee the plea under 18 USC 793.
    At some point in early December 1997, it became apparent that Lee 
was balking at a plea with a potential ten-year exposure for the 1985 
incident. I then recommended to Mr. Dion that, although the section 794 
case for that incident had problems, it was sufficiently robust that we 
could still ethically use it as leverage. This was communicated to the 
USAO by Mr. Dion, I believe, in a phone call to Mr. Drooyan. Shortly 
thereafter, the plea agreement was entered. Lee did in fact waive the 
statute and plead guilty to a violation of 18 USC 793, along with a 
violation of 18 USC 1001 for lying about the circumstances of his 1997 
travel to China.
    It goes without saying, I hope, that I was extremely disappointed 
that Peter Lee was not sentenced to prison. It is the only espionage 
prosecution that I have worked on that did not result in a jail 
sentence. But let me add that I am proud of my work on the case, and 
proud that Jonathan Shapiro and I ensured that Peter Lee would not 
remain free to continue to make sensitive disclosures to foreign 
governments.
    That concludes my remarks.

    Senator Specter. OK; Mr. Dion. Will you step forward? Mr. 
Dion, would you raise your right hand, please? Do you solemnly 
swear that the testimony you are about to give before this 
subcommittee of the Committee of the Judiciary of the U.S. 
Senate will be the truth, the whole truth, and nothing but the 
truth, so help you God?
    Mr. Dion. I do.
    Senator Specter. Now, Mr. Dion, is Mr. Swartz an interloper 
or do you want him sitting there?
    Mr. Dion. Mr. Chairman, Mr. Swartz is my supervisor.
    Senator Specter. Well, that still doesn't answer my 
question.
    Mr. Dion. I would like to have him with your leave, sir.
    Senator Specter. OK; may the record show that Mr. Swartz 
continues to accompany the witness, Mr. John Dion.
    Mr. Swartz. Thank you, Mr. Chairman.
    Senator Specter. Mr. Dion, I know you have an opening 
statement, and we would be pleased to hear from you, and you 
may proceed now in any way you see fit.

    STATEMENT OF JOHN DION, ACTING CHIEF, INTERNAL SECURITY 
    SECTION, CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE, 
    WASHINGTON, DC; ACCOMPANIED BY BRUCE C. SWARTZ, DEPUTY 
ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT 
                   OF JUSTICE, WASHINGTON, DC

    Mr. Dion. Thank you, Mr. Chairman.
    Mr. Chairman and members of the subcommittee, I am the 
Acting Chief of the Internal Security Section. I held that 
position in the fall 1997 as the Peter Lee case was being 
considered for prosecution. As Mr. Keeney noted, I have devoted 
most of my career to prosecuting espionage cases. In all, I 
have been involved in the prosecution of more than 70 
defendants charged with espionage or related offenses.
    Let me discuss briefly the background of my involvement in 
the Peter Lee case. In August 1997, I was advised by an FBI 
agent from headquarters that Lee had recently been interviewed 
by agents of the Los Angeles FBI office and was believed to 
have made false statements. I asked that steps be taken to get 
the United States Attorney's office briefed on the case, and I 
assigned Mr. Liebman, the line attorney in the section with the 
most experience in espionage cases, to monitor developments in 
the investigation.
    When we learned of Lee's admissions in his interviews with 
the FBI in October, I asked Mr. Liebman to travel to Los 
Angeles to work directly with Mr. Shapiro and the agents. Over 
the ensuing weeks, I had numerous conversations with Mr. 
Shapiro, and I was kept apprised by Mr. Liebman of the 
inquiries being made on classification issues and the searches 
of open source materials. I should note that these inquiries 
are made in every espionage case considered for prosecution. In 
turn, I regularly briefed my supervisor, Deputy Assistant 
Attorney General Mark Richard on all significant developments.
    On October 23, 1997, I attended a meeting at the 
Department, chaired by Mr. Richard, to discuss the case with 
Mr. Shapiro and his supervisor, Mr. Drooyan, and agents from 
Los Angeles and FBI headquarters. The facts and issues as we 
understood them at the time were discussed at length.
    In late November or early December, I received approval 
from Mr. Richard to authorize Mr. Shapiro to engage in plea 
negotiations with counsel for Lee in the following terms. Mr. 
Shapiro was authorized to seek a plea of guilty by Lee to a 
violation of 18 U.S.C. Sec. 793(d) for his 1985 disclosures and 
to a violation of the false statement statute, 18 U.S.C. 
Sec. 1001. As such a plea would require Lee to waive the 10-
year statute of limitations, Mr. Shapiro was authorized to 
advise counsel that no final decision had been made as to the 
prospect of charging Lee with a violation of section 794. I 
conveyed these terms to Mr. Shapiro by telephone.
    Senator Specter. You say no final decision had been made--
--
    Mr. Dion. That's correct.
    Senator Specter [continuing]. As to whether he would be 
charged with 794?
    Mr. Dion. That's correct, sir.
    In closing, I would note that we fully anticipated that Lee 
would receive a sentence of incarceration for his plea. I 
believe that Mr. Shapiro vigorously represented the Government 
in the papers filed with the court and in his allocution. We 
were, of course, extremely disappointed in the sentence 
imposed. But I am proud that we put a stop to Mr. Lee's 
disclosures, and I am very proud of the work done on the case 
by Mr. Liebman and Mr. Shapiro.
    That concludes my statement, sir.
    Senator Specter. Thank you, Mr. Dion.
    Mr. Dion, when you say no decision had been made--and I 
interrupted you at that point--as to what would happen if the 
plea bargain broke down, Mr. Shapiro testified very 
emphatically that he wanted to proceed with 794 but was told 
that all he could do was do the best he could under the 
authorized plea bargain, so that is why he proceeded as he did, 
asking only for a short period of incarceration and not taking 
action when Dr. Lee lied on his polygraph and did not give 
further answers. But are you suggesting, if that plea bargain 
had broken down, that you might have reconsidered and 
authorized a 794 prosecution?
    Mr. Dion. We definitely would have reconsidered our course 
of action, sir.
    Senator Specter. Well, did you tell Mr. Shapiro that?
    Mr. Dion. I don't recall specifically if we discussed that 
or not. We did discuss that no final decision had been made on 
the 794 and that he should proceed with plea negotiations on 
that basis.
    Senator Specter. But, Mr. Dion, that is a very important 
point. If Mr. Shapiro knew that if the plea broke down he would 
have a shot at 794, he testified that he was very unhappy with 
what Main Justice had done, that he wanted to go on 794, that 
he didn't have an insurance policy or a guarantee, as none of 
us trial attorneys ever does, but he wanted to proceed under 
794, and he really felt hamstrung. I don't know that he used 
the word ``hamstrung,'' but felt that he had to take what he 
could get and that he couldn't ask for a longer sentence of 
jail, he couldn't complain about lies which Dr. Lee told, at 
least as disclosed by the polygraph. So he had no inkling, 
according to his testimony, as I understood his testimony, that 
there was a possibility that he could go under 794. I think he 
would have liked to have chucked the plea bargain and gone on 
794.
    But you say you never really told him or you don't recall 
telling him that he could have gone under 794 if the plea 
bargain broke down.
    Mr. Dion. Well, I definitely did not tell him that he had 
approval to go forward on a 794 if plea negotiations 
terminated. I would also say, though, that we never had a 
conversation at the time where he told me that he or his 
office--and he did testify that he was reporting regularly, in 
fact, many times a day to Mr. Drooyan, that they felt that 
their position in plea negotiations was hamstrung if they did 
not have that final authority. If that had been the position of 
the office that they could not have engaged in vigorous 
negotiations without that final authority, then I think we 
would have had to reconsider our position.
    Senator Specter. Well, do you agree with Mr. Keeney that if 
you had known he was going to ask for a ``short period of 
incarceration'' that you wouldn't have approved the plea 
bargain?
    Mr. Dion. That Mr. Keeney would not have approved the plea 
bargain?
    Senator Specter. Well, Mr. Keeney said he wouldn't have 
approved the plea bargain if he had--Mr. Keeney is in the room 
at the time hearing me say this--that he wouldn't have approved 
the plea bargain if he had known that there was going to be a 
request of a trial prosecutor for only a ``short period of 
incarceration.'' My question to you is: Would you have approved 
the plea bargain had you known of that recommendation as to 
sentencing?
    Mr. Dion. I knew that recommendation was in the plea offer 
as the offer proceeded and neared the end, that that was the 
concession that Mr. Shapiro had made, and it was one that----
    Senator Specter. It was a concession, you say? I didn't 
hear what you said.
    Mr. Dion. It was a concession in the sense that it--that he 
did not ask for a long period of incarceration, which was the 
other formulation that his office used in pre-guidelines pleas. 
But it was a thing negotiated by Mr. Shapiro when we left it to 
him to negotiate the plea.
    Senator Specter. So you did----
    Mr. Dion. It was approved by his superiors as well.
    Senator Specter. So you did approve the plea bargain 
knowing that it was a short period of incarceration?
    Mr. Dion. I did.
    Senator Specter. Now, Mr. Keeney says that after the fact 
he doesn't disagree with the conclusion, but at the time he 
would not have approved the plea bargain. But you did. All 
right. If that is your testimony, that is your testimony.
    Were you aware that Mr. Shapiro felt he was unable to go 
back at Dr. Lee for the lies he told because he had no 
alternative but to take the authorized plea bargain or he would 
have nothing else to fall back on?
    Mr. Dion. My understanding is that during the closed 
session that I attended, Mr. Shapiro discussed the difficulties 
in seeking a breach of the agreement because of the reasons of 
classified information.
    Senator Specter. Would you repeat that, please?
    Mr. Dion. During the closed session last week, Mr. Shapiro 
discussed the difficulties in seeking a breach of the agreement 
because of the reservations that the agents had in the 
polygraph failures as to Mr. Lee's cooperation, that there were 
classified information issues at stake with respect to going 
forward and seeking a breach of the plea.
    Senator Specter. Well, there is no doubt, in my mind, at 
least--and I think the specifics of the testimony will bear it 
out--that Mr. Shapiro wanted to go forward with 794 and 
accepted all of these concessions because he had no greater 
authority. But the long and short of it is--and this is 
repetitious, but I think worth repeating--that you never told 
Mr. Shapiro that if the plea bargain broke down, you would 
reconsider a prosecution under 794.
    Mr. Dion. I don't know that we ever had that conversation, 
Senator.
    Senator Specter. OK; there are these----
    Mr. Dion. May I amplify a previous answer, though?
    Senator Specter. You may say anything you choose, Mr. Dion.
    Mr. Dion. Thank you, sir. I appreciate that.
    I would note that in Mr. Shapiro's testimony last week, in 
response to a question to you, he said that he thought that he 
was--you asked him about asking for the short period of 
incarceration, and he stated in response that that was the best 
he was going to do in front of Judge Hatter.
    Senator Specter. Well, that was one of the factors, but 
only one of the factors, as other of his testimony will show.
    These two statements, Mr. Dion, one quotes you directly 
from the memo from Michael Doris, dated November 25, 1997, 
``According to JJ''--J.J. Smith--``ISS/Dion said that if RT''--
referring to Lee--``doesn't accept the plea proffer, then he 
gets charged with 18 U.S.C. 794, the heftier charge.''
    Is that statement incorrect?
    Mr. Swartz. Mr. Chairman, could we get that document?
    Senator Specter. Yes.
    Mr. Swartz. Thank you.
    Mr. Dion. I have had an opportunity to read that passage, 
sir. It is not correct.
    Senator Specter. It is not correct?
    Mr. Dion. I'm sorry. Reading that--I think I've been 
confused by reading the first sentence and then the sentence 
that's marked down at the bottom here. The sentence that you 
read me, as I understand it, sir, was, ``According to JJ, ISS/
Dion said that if RT doesn't accept the plea proffer, then he 
gets charged with 18 U.S.C. 794, the heftier charge.'' That 
decision had not been made.
    Senator Specter. And the accompanying memorandum from the 
Department of Defense, undated--and it is hard to understand 
how these documents float around undated, but I know you have 
the document before you, or let me inquire if you do.
    Mr. Dion. You're referring to the second full paragraph on 
the page, sir?
    Senator Specter. Yes. ``Should Lee decline the offer, the 
U.S. Attorney will seek an indictment against him for violation 
of section 794.''
    Mr. Dion. Yes, sir. Again, that authority had not been 
given to Mr. Shapiro or his office.
    Senator Specter. Shapiro was never told that if Dr. Lee 
turned down the plea bargain, he could proceed under 794.
    OK; we will make the interpretation of all this conflicting 
testimony as best we can sort through it.
    Mr. Dion, were you aware that Dr. Lee had given the PRC 
scientists a great deal more information than wasencompassed in 
his confession on the 1985 disclosures?
    Mr. Dion. I am not sure I understand your question, sir.
    Senator Specter. Well, we went into this with Mr. Liebman, 
and we can go the long route, but I cited certain documents 
which represented that Dr. Lee had given the PRC scientists a 
great deal more information about the hohlraum nuclear power 
than was contained in his confession. Were you aware of that?
    Mr. Dion. I think that's a matter that would require us to 
go into closed session. I think that Mr. Liebman is familiar 
with that.
    Senator Specter. Go into closed session and Mr. Liebman is 
familiar with that, but you are not?
    Mr. Dion. No. Mr. Liebman is more directly familiar with 
that information than I am, and I recall him requesting that we 
go into closed session to discuss it.
    Senator Specter. Do you disagree with this assessment made 
by Staffin, Trulock and Mahaley that compromise of the 
information relating to the nuclear energy ``compromise to this 
information'' reasonably could be expected to cause serious 
damage to U.S. national security?
    Mr. Dion. We are looking for the document, sir.
    I have no reason to dispute that passage, sir.
    Senator Specter. Do you disagree with the statement made by 
Dr. Cook, again, which was read to Mr. Liebman, the second full 
paragraph? ``Information contained in the classified DOD 
document that Peter Hoong-Yee Lee admits to having transferred 
to the PRC, represents the scheme for interpreting temperature 
measurements made with X-ray detectors''--are you with me on 
this?
    Mr. Dion. I am reading with you, sir.
    Senator Specter. [continuing]. ``on radiation emerging from 
a plasma in a hollow cavity''--references to the paper 
document, Lee--``formal participation and broad classified 
inertial confinement fusion, ICF, diagnostic development 
programs. These programs had specific classified objectives 
including the measurement of material properties necessary for 
benchmarking classified computer code simulations, calibration 
of underground nuclear test at infusion laboratories and 
adaptation of ICF diagnostic techniques for use in UGT. Some 
technologies with which Peter Hoong-Yee Lee was associated are 
now unclassified because of academic developments in ICF 
research. Others remain classified in nuclear weapon science 
with emphasis on `others remain classified in nuclear weapon 
science.' '' Do you disagree with that, Mr. Dion?
    Mr. Dion. I have no basis to dispute the statement that he 
was associated with both classified and unclassified 
information.
    Senator Specter. Mr. Dion, Senator Thurmond's staff has 
asked that a question be propounded as to whether you knew 
about the lies that Dr. Lee had told at least as disclosed by 
the polygraph and whether you had considered trying to abrogate 
the plea bargain on that basis. For a variety of reasons, Mr. 
Shapiro decided not to, but did you join in that decision not 
to seek to abrogate the plea agreement in the light of those 
lies?
    Mr. Dion. I was familiar that Dr. Lee had shown deceptive--
deception on the polygraph. I did not have any discussion that 
I can recall with Mr. Shapiro or anyone else where the issue 
was directly raised should we seek to breach the plea 
agreement.
    I think the reason for that was--as you know was disclosed 
in Mr. Shapiro's closed-session testimony.
    Senator Specter. Mr. Dion, as with Mr. Liebman, I 
congratulate you. Thank you for being in public service. You, 
like virtually everyone in the Department of Justice, could do 
a lot better financially. Public service is a very high 
calling, and to repeat what I said to Mr. Liebman, he had asked 
me to testify where no way challenging your competency, 
obviously not challenging your integrity or your dedication. 
And I know the policy of the Department of Justice is not to 
object to talking to somebody in your position.
    How do you define and distinguish your role from the so-
called line attorneys?
    Mr. Dion. I am the first-level supervisor for line 
attorneys in our section.
    Senator Specter. You are a first-level supervisor?
    Mr. Dion. Yes. We have a very small section, Senator. We 
only have 10 employees.
    Senator Specter. So, if you are a supervisor, that takes 
you out of the category of line attorney?
    Mr. Dion. Sir, I am not so familiar with the line attorney 
policy that I would be able to answer.
    Senator Specter. Neither am I. That is what I am trying to 
find out, but I am learning more. It is a tough learning curve.
    Would you care to comment on the utility of your appearing 
here today to answer questions on Senate oversight? Do you 
think it is a good idea?
    Mr. Dion. I don't care to comment, sir.
    Senator Specter. Okay. Thank you very much, Mr. Dion.
    [The prepared statement of Mr. Dion follows:]

                    Prepared Statement of John Dion

     Mr. Chairman and members of the Subcommittee, I am the Acting 
Chief of the Internal Security Section. I held that position in the 
fall of 1997 as the Peter Lee case was being considered for 
prosecution. As Mr. Keeney noted, I have devoted most of my career to 
prosecuting espionage cases. In all I have been involved in the 
prosecution of more than 70 defendants charged with espionage or other 
Internal Security offenses.
    Let me discuss briefly the background of my involvement in the 
Peter Lee case. In August 1997, I was advised by an FBI agent from 
headquarters that Lee had recently been interviewed by agents of the 
Los Angeles FBI office and was believed to have made false statements. 
I asked that steps be taken to get the United States Attorney's Office 
briefed on the case and I assigned Mr. Liebman, the line attorney in 
the Section with the most experience in espionage cases, to monitor 
developments in the investigation.
    When we learned of Lee's admissions in his interviews with the FBI 
in October, I asked Mr. Liebman to travel to Los Angeles to work 
directly with Mr. Shapiro and the agents. Over the ensuing weeks, I had 
numerous conversations with Mr. Shapiro and I was kept apprised by Mr. 
Liebman of the inquiries being made on classification issues and the 
searches of open source materials. I should note that these inquiries 
are made in every espionage case considered for prosecution. In turn, I 
regularly briefed my supervisor, Deputy Assistant Attorney General Mark 
Richard on all significant developments.
    On October 23, 1997, I attended a meeting at the Department, 
chaired by Mr. Richard to discuss the case with Mr. Shapiro and his 
supervisor, Mr. Drooyan, and agents from Los Angeles and FBI 
headquarters. The facts and the issues as we understood them at the 
time were discussed at length.
    In late November or early December I received approval from Mr. 
Richard to authorize Mr. Shapiro to engage in plea negotiations with 
counsel for Lee in the following terms. Mr. Shapiro was authorized to 
seek a plea of guilty by Lee to a violation of 18 U.S.C. Sec. 793(d) 
for his 1985 disclosure and to a violation of the false statement 
statute, 18 U.S.C. Sec. 1001. As such a plea would require Lee to waive 
the ten-year statute of limitations, Mr. Shapiro was authorized to 
advise counsel that no final decision had been made as to the prospect 
of charging Lee with a violation of 794. I conveyed these terms to Mr. 
Shapiro by telephone.
    In closing, I would note that we fully anticipated that Lee would 
receive a sentence of incarceration for his plea. I believe that Mr. 
Shapiro vigorously represented the government in the papers filed with 
the court and in his allocation. We were, of course, extremely 
disappointed in the sentence imposed. But I am proud that we put a stop 
to Mr. Lee's disclosures. And I am very proud of the work done in this 
case by Michael Liebman and Jonathan Shapiro.

    Senator Specter. Mr. Keeney, you are being recalled, 
briefly.
    Mr. Keeney, you don't want Mr. Swartz at the table with 
you, do you?
    Mr. Keeney. No, thanks.
    Senator Specter. Do you care to call any other attorney?
    Mr. Keeney. No. No, thank you, Senator. I appreciate the 
courtesy, though.
    Senator Specter. Mr. Keeney, before I got to the meeting 
last Thursday, you had had an extended discussion with Mr. 
Dobie McArthur who has done such an outstanding job in 
reviewing reams of documents here, and you had a discussion 
with him at some length. And then you and I had a very brief 
discussion about what may be learned from this process, and I 
would like to put on the record what we were talking about.
    Do you think it would be a good idea to get a written 
classification review by the agency involved whose secrets were 
taken before decisions were made with regard to a plea? And I 
refer to the kind of documents that Dr. Cook prepared here, the 
document which Staffin, Trulock and Mahaley prepared, and at 
least a reflected judgment by the Navy on whether it was 
confidential which we finally got from Schuster and others. Do 
you think that that would be a desirable procedure for handling 
future espionage cases?
    Mr. Keeney. I think it would be a desirable procedure to 
clarify under the extent that we can get a written statement 
with respect to the agency's position on the classification and 
impact on national security of disclosure of that information.
    Senator Specter. So that the Department of Justice would at 
least know what the security classification was? That is 
important?
    Mr. Keeney. It is important, and, Senator, just if I may, 
my understanding is that we do this--we do this review, and we 
do have the contact with the agencies. We may not have 
formalized it as much as would be desirable.
    Senator Specter. Do you think it would be desirable to 
formalize it, to have that done in writing by the agency so 
there is no doubt as to what they view the classification of 
the compromised material and the impact on national security?
    Mr. Keeney. I would--yes. I would prefer to have their 
assessment in writing.
    Senator Specter. And another item which was discussed last 
Thursday was to formalize the procedures for ensuring that the 
agency understands the Classified Information Protection Act 
which allows court cases to go forward even where they involve 
classified information so that there is an assessment by the 
Justice Department and the agency as to what the disclosures 
would be. Do you think that is desirable?
    Mr. Keeney. That is desirable in--you know, we do get into 
that at some point in our evaluation process, but it is 
something that should be done, and we do it. But maybe it 
should be clarified as to what stage we do it and tell them 
what we are going to have to put into evidence in order to 
maximize the likelihood of conviction and determine from them 
what that information or evidence has to be protected under 
CIPA.
    Senator Specter. Do you think that that ought to be 
formalized in writing, too, so there is no misunderstanding as 
to what the Department of Justice can protect and what has to 
be disclosed, so the Department of the Navy, as in this case, 
would understand what their risks were on public disclosures?
    Mr. Keeney. I don't know that we have to do that in 
writing, Senator, but we ought to lay it out to them in the 
discussions with them when we--when they know what evidence we 
are going to have to utilize.
    Senator Specter. If you do not do it in writing, then do 
your line attorneys have to make notes as to whom they talked 
to and what they said so that there is some check as to what 
was done?
    Mr. Keeney. Well, I think there should be some record of 
what the agreement was with respect to the utilization of CIPA, 
the necessity to utilize CIPA.
    Senator Specter. Wouldn't the simplest way be to do it in 
writing so that there is a statement by the Department of 
Justice as to what can be protected and a statement by the 
Department of Defense as to what they can live with?
    Mr. Keeney. Senator, I agree that it would be desirable to 
have it in writing. What I am hedging a little bit and maybe 
being a little hesitant about is requirements as to what has to 
be in writing, how much detail has to be in writing.
    What we need is a meeting of minds so that the agency, 
intelligence agency, knows what exposure they have if we go 
ahead, and that should be communicated.
    Senator Specter. And a meeting of the minds so each knows 
what the other is saying and there is some way that you can 
have some congressional oversight instead of guessing as to 
what was said at these meetings years ago where no notes are 
maintained.
    Mr. Keeney. Well, it is desirable to have records, but as I 
think you are getting from the sense from these hearings that 
there is a reluctance with respect to certain matters to take 
notes, and I think you will agree with respect to some of the 
matters that have come out in this hearing that it would be 
inappropriate to take notes.
    So I do not want to put us in a vise here, Senator.
    Senator Specter. Well, I think that the documents have to 
be carefully constructed, but even if they move over into the 
classified section, if they are available only to the 
Department of Justice and the Department of Defense, you 
representatives of those two agencies see secret and classified 
documents all the time and then the Senate can see them or the 
House can see them under appropriate procedures. It does not 
have to be in the public domain, but wouldn't it be desirable 
to have it in writing so there is no misunderstanding about the 
positions of either agency?
    Mr. Keeney. It is desirable to have the things in writing 
so there is no misunderstanding, Senator. I agree with that, 
and we are certainly happy to look at our procedures and see if 
they can be clarified and made more useful to everybody.
    Senator Specter. Where should the ultimate decision be, Mr. 
Keeney, if the Department of Defense says we do not want to go 
forward and the Department of Justice says we can protect this 
information, and if there is a trial ruling--cases are 
frequently withdrawn when a trial judge will rule that more 
information has to be presented. So the Government always has 
the option of withdrawing the prosecution if there would be 
disclosure of something whichwould be deemed more serious for 
the Government than the loss of the prosecution.
    Mr. Keeney. Yes, that is true.
    Senator Specter. So who ought to have the judgment as to--
or let me lead you just a little. Should it be the Department 
of Justice judgment as to whether you go forward after 
considering what the Department of Defense has to say?
    Mr. Keeney. If there is a disagreement between the 
Department of Justice and the--another agency, Department of 
Defense in this case, the matter should be raised at the 
Cabinet level for a decision.
    Senator Specter. Raised at the Cabinet level?
    Mr. Keeney. Yes, sir.
    Senator Specter. And decided by the National Security 
Council?
    Mr. Keeney. National Security Council or the President, if 
it is appropriate.
    Senator Specter. With all of the confusion as to the plea 
bargain in this case, wouldn't it be a good idea that on 
matters of espionage, you don't have so very many of these 
that----
    Mr. Keeney. Senator, could I just make a comment----
    Senator Specter. Sure.
    Mr. Keeney [continuing]. With respect to--you have been 
asking questions, and Senator Sessions was, with respect to how 
many of these cases have been tried.
    You know, a very significant number of these are the 
subject of pleas, and have been in the last 10 years. I just 
wanted to make that point. I do not think that was clear.
    Senator Specter. Well----
    Mr. Keeney. And these people have been involved deeply----
    Senator Specter [continuing]. You mentioned Senator 
Sessions. Do you see how fast he reappeared?
    Mr. Keeney. Yes, he has come back. Welcome back, Senator.
    Senator Sessions. I have to keep an eye on him.
    Senator Specter. May the record show that Senator Sessions 
had other pressing business and absented himself briefly, and 
here he is again. Mr. Keeney--these men have a long 
relationship, when Mr. Keeney was Mr. Sessions' boss.
    I just want to close up, and then I will turn to Senator 
Sessions--see if you agree that on espionage cases, you do not 
have all that many and they are decided a lot of times by 
pleas. Shouldn't there be a writing as to whether a man like 
Mr. Shapiro knows that if the plea bargain falls through on 
793, the Department will reconsider 794 instead of having 
misambiguity and confusion?
    Mr. Keeney. Well, if I understand what you are saying, 
there should be some communication to the United States 
Attorney or Assistant indicating the extent of his authority in 
this matter, and in this case, that would include you are not 
at this point authorized to go on 794. You are authorized to 
not take it off the table insofar as plea discussions are 
concerned. If the plea breaks down and you want to go 794, you 
are going to have to come back and we are going to have to look 
at the whole matter.
    Senator Specter. Right. Shouldn't that be in writing so 
that Mr. Shapiro knows what is in Mr. Dion's mind?
    Mr. Keeney. It will be desirable to have it in writing, 
Senator, but I would like to look at this as to whether or not 
we want to insist upon it being in writing in every situation.
    Senator Specter. Well, I am not saying in every situation, 
but in every situation----
    Mr. Keeney. It is desirable.
    Senator Specter [continuing]. Where you have espionage and 
the potential for the death penalty?
    Mr. Keeney. I think we ought to be very clear where we are 
considering the utilization of the death penalty provision, 
yes.
    Senator Specter. I had 500 homicide cases a year when I was 
District Attorney, but if the death penalty was required, that 
was a judgment which I thought the District Attorney ought to 
make, nobody else.
    We are in the process of taking a look at some remedial 
legislation, and we will submit it to you, but if you say it is 
desirable to have it in writing, I think it ought to be 
mandatory, but we will take it from there.
    Senator Sessions, you have the last word----
    Senator Sessions. Well----
    Senator Specter [continuing]. Before the closed session.
    Senator Sessions. All right. Mr. Keeney, when I ask about 
trial experience, I was not referring to espionage cases. All 
espionage cases--is just a complex trial.
    Mr. Keeney. Right.
    Senator Sessions. I think if you are in a big espionage 
case, I hope you do not limit the attorneys who are going to 
prosecute it to those who have had experience in espionage 
trials because there are not enough of them to get any 
experience. What you need is an experienced litigator, someone 
who is ready to go to court, and you had that in Mr. Shapiro, a 
Harvard graduate, Rhodes Scholar, 8 years on the firing line, 
tried every kind of cases. They could do that. He was ready to 
go forward, and people reading the paper who had not that kind 
of litigating experience made the decision. And I believe it 
was not a good decision.
    I also am troubled to see the Department of Justice attempt 
to pass the buck a bit.
    Mr. Keeney. Senator, I don't think we are passing the buck. 
I have told you from my standpoint that if I had seen the 
original--at the initiation of those proceedings, I would have 
said do not agree to that, go back to the table again, don't 
agree to that short period of----
    Senator Sessions. Who was to blame for you not having the 
right information?
    Mr. Keeney. Well----
    Senator Sessions. Who is responsible for it?
    Mr. Keeney. It got lost, but the ultimate thing is, 
Senator, what I was saying----
    Senator Sessions. It was not Mr. Shapiro's fault because he 
was trying to push for 794 and go forward with it.
    Mr. Keeney. Right. And there was a disagreement both within 
his office and back with the Internal Security Section with 
respect to that.
    Senator Sessions. I want to talk about this responsibility. 
I think the chairman----
    Mr. Keeney. Senator, could I--all right. Go ahead. I'm 
sorry.
    Senator Sessions. In certain cases, the Department of 
Justice takes unto itself the litigating authority and 
responsibility for decision-making cases. They are involvedin--
Hobbs Act cases have to be approved or extortion cases have to be 
approved in the Department of Justice. RICO has to be approved in the 
Department of Justice.
    Mr. Keeney. RICO does, yes.
    Senator Sessions. I have been told no by the Department of 
Justice on cases I wanted to go forward with. It was my neck on 
the line, but I accept that ultimate authority. With espionage, 
ultimate authority and responsibility lies within the 
Department.
    Now, did the Attorney General of the United States know 
about this case?
    Mr. Keeney. I do not know. I didn't discuss it with her. 
Mark Richard may well have mentioned it to her, but I did not.
    Senator Sessions. Now, who is Mark Richard?
    Mr. Keeney. Mark Richard is the--he was the Deputy 
Assistant Attorney General who supervised, as Mr. Swartz does 
now, the Internal Security Section.
    Senator Sessions. All right. And you supervise----
    Senator Specter. On that point, will you get back to us? It 
is my understanding that Attorney General Reno did not know 
about the case.
    Mr. Keeney. To my knowledge, she did not, Senator. Let me 
put it----
    Senator Specter. We had a session with Senator Hatch, and I 
asked her about it. She declined to answer the question, which 
is not unusual, but would you get back to us? Because if she 
did know about it, we will want to hear from her on the facts, 
and if she did not, we would like to have that of the record.
    Mr. Keeney. She didn't hear about it from me. She may have 
been--what we have--we have frequent meetings with the Attorney 
General, and she is brought up to date with respect to 
important cases. Mark may have done that. I did not.
    Senator Specter. We would like to know what the facts are.
    Mr. Keeney. OK.
    Senator Specter. Senator?
    Senator Sessions. I don't want to take too much of your 
time. Do I have a few minutes?
    Senator Specter. Sure.
    Senator Sessions. OK; to pursue that, what about Mr. 
Holder? WAS he your supervisor?
    Mr. Keeney. Yes, sir.
    Senator Sessions. Did he know about this? Was he briefed on 
the case?
    Mr. Keeney. He wasn't briefed by me, Senator.
    Senator Sessions. And to your knowledge, he was not briefed 
on the case?
    Mr. Keeney. There are certain things that are--the 
Assistant Attorney General from the Criminal Division can make 
the decision and does not have to go upstairs with it and 
certain other things, if they think the Deputy or the Attorney 
General should be apprised of it, we do that.
    Senator Sessions. Well, I am just trying to----
    Mr. Keeney. But there were no----
    Senator Sessions. So you were the highest official to 
have--to your knowledge that had a formal briefing on the 
matter?
    Mr. Keeney. Yes.
    Senator Sessions. And how long was that?
    Mr. Keeney. It was very brief, Senator, at the----
    Senator Sessions. But then you do not deny that the 
responsibility for this case was yours?
    Mr. Keeney. Yes.
    Senator Sessions. The final decision was yours?
    Mr. Keeney. Yes, it was.
    Senator Sessions. And you don't deny that from a legal 
point of view that the U.S. attorney and the assistant attorney 
did not have the authority to decide whether to go forward with 
794 or not?
    Mr. Keeney. That's right.
    Senator Sessions. And you do not deny that the Department 
of Justice declined to allow Mr. Shapiro, the trial attorney, 
to charge 794?
    Mr. Keeney. That's right.
    Senator Sessions. And if 794 had been charged, don't you 
think that would have enhanced the ability of Mr. Shapiro to 
negotiate a good plea agreement?
    Mr. Keeney. It might, yes.
    Senator Sessions. It probably have, would it not?
    Mr. Keeney. It would put additional pressure on the 
defendant. It would make him probably more receptive, yes. I 
have to agree with that.
    Senator Sessions. And I think you would agree that in one 
sense, he had one hand tied behind him when he went into the 
negotiations when he was not able to charge 794?
    Mr. Keeney. No. Senator, I don't--I don't agree with that. 
Now, he was entitled and authorized to discuss with defense 
counsel a plea or a charge, and 794 was not taken off the 
table, but he was told that if this breaks down and you want to 
bring 794, you are going to have to come back to Washington and 
we are going to have to discuss it. So it was not taken off the 
table.
    Senator Sessions. Let's get that straight now.
    Mr. Keeney. As far as his negotiations were concerned, the 
defendant was not told that 794 was not on the table.
    Senator Specter. Mr. Keeney, he was not told that. Nobody 
has testified to that, that Mr. Shapiro was told--you can ask 
the question.
    Senator Sessions. Well, I was going to ask. Isn't it a fact 
that Mr. Shapiro has not stated and as--stated that he did 
not--he was not told he could ultimately charge 794? He was 
told he could not charge 794?
    Mr. Keeney. He was told he could not charge 794, but he was 
told that if the negotiations broke down and he still wanted to 
charge 794, he would have to come back to Washington.
    Senator Specter. Well, who told him that, Mr. Keeney? 
Nobody has testified to that.
    Mr. Keeney. Well, I had understood Mr. Dion had testified 
to that, Senator.
    Senator Specter. No, he did not testify to that. Mr. Dion 
is still here.
    Mr. Keeney. Well, I am mistaken, then.
    Senator Specter. He said he does not--he did not recollect 
having any conversation with Mr. Shapiro that if the plea 
bargain broke down that Mr. Shapiro could come back and they 
would reconsider a----
    Mr. Keeney. He is the one that told them, Senator. You will 
have to take his testimony. I am just getting information into 
the record.
    Senator Specter. Well, we will take his testimony or 
anybody else who was present and was a party to a conversation.
    Mr. Keeney. I was not. So----
    Senator Specter. OK; well, may the record show that Mr. 
Dion is still in the room.
    Senator Sessions. The matter strikes me--did you have any 
indication from the Defense Department that they did not want 
to proceed with this case because of a potential embarrassment 
to them?
    Mr. Keeney. Well, we had what has been discussed here. We 
had the reservations that have been indicated, yes.
    Senator Sessions. Those are security type?
    Mr. Keeney. Yes.
    Senator Sessions. Well, what about the way they had handled 
security information in general, the laxity of their rules, the 
fact that there was matter on the Internet that were apparently 
still classified and issues like that? Is that a reason for 
them not to want this case to go forward?
    Mr. Keeney. It might be a reason in their mind, but I saw 
no indication of objections on that ground, Senator. Somebody 
else may have.
    Senator Sessions. As an experienced person within the 
Department of Justice, am I wrong to say you are the most 
experienced member of the Department of Justice?
    Mr. Keeney. I am one of the more experienced.
    Senator Sessions. As an experienced member there, isn't it 
true the Department of Justice is the one that has to stand 
tall for justice because when agencies are involved, oftentimes 
they have parochial agency interests that tend to undermine the 
pursuit of justice?
    Mr. Keeney. I think it is our responsibility to go forward 
if we think the prosecution is appropriate.
    Senator Sessions. And the Department of Justice has to say 
no, I know you would like to plead this case out, but this is a 
not sufficient sentence, or this case has got to be charged, or 
sometimes it cannot be charged even if you want to charge it.
    So, when you are dealing with an agency, it is not often--I 
mean, it is not unusual that you have to go back to them if 
they are dragging their feet on a case.
    Mr. Keeney. Yes.
    Senator Sessions. Do you think the Department of Justice 
was aggressive enough in assisting that authoritative persons 
objectively analyze this data and provide information that 
would have confirmed or perhaps discounted the Schuster memo?
    Mr. Keeney. I think it was sufficient. We looked at, 
Senator--and we had--we had information indicating that the 
position of the agency with respect to classification was not 
crystal-clear, and----
    Senator Sessions. And it never got clarified?
    Mr. Keeney. It got clarified by a plea.
    Senator Sessions. But the plea was weakened because of the 
ambiguity of the Navy and their lack of interest in seeing the 
case go forward, it seems to me.
    Mr. Keeney. Well, I don't know about the lack of interest 
in seeing it go forward, but----
    Senator Sessions. Wouldn't you say that basically was true 
here?
    Mr. Keeney. Well----
    Senator Sessions. Wouldn't you say the Navy wanted this 
case to go away?
    Mr. Keeney. Well, that's--I'm sorry. Yes, they did indicate 
at one point that they were not enthusiastic about it, right.
    Senator Sessions. You know, Mr. Chairman, it is easy to go 
back and blame these lawyers and everybody for what happened. I 
would say that a couple of things that are a problem to me--one 
is that the people making these decisions that the most 
experienced and the highest level were not engaged and that 
even the people above Mr. Keeney--it should have been probably 
in this case--were not even aware of it.
    With regard to the others, I believe there is a lack of 
trial experience in the highest levels of the Department of 
Justice, individuals who have the highest integrity or legal 
skill, but are not familiar with the dynamics of a courtroom. 
And in a big case like this, you really needed to call this 
case, in my view, with a litigator who understands the dynamics 
of a courtroom. It strikes me that Mr. Peter Lee would have a 
hard time convincing a jury that his acts were not espionage 
and they should have been charged with it, and if that had 
happened, you would have either tried the case and probably got 
a conviction or convict him on the lesser offenses and got a 
bigger sentence than you got now or the plea bargain would have 
been healthier, and that this Department of Justice allowed the 
Department of Defense, who had a lack of interest in proceeding 
with this case, for what I would consider fundamentally to be 
they didn't want to be embarrassed. And they were not required 
and forced to come forward with sufficient information to 
strengthen your case that I believe was there as you have 
brought out in this hearing.
    Mr. Keeney. Senator, may I just make a comment? Several 
times you have mentioned the fact of lack of the experienced 
litigators in the--in the Internal Security Section. We don't 
claim that these people are extensive, active litigators. We 
claim that they are good lawyers and they are experts in their 
field.
    With U.S. attorneys, you will notice Shapiro was the lead 
attorney, Shapiro or his first assistant. That is the 
arrangement that the Internal Security has in the espionage 
cases. We provide the expertise. United States Attorneys who 
are our litigators provide the expert litigators who are the 
chief litigators in the case. I thought that was worth making 
the point because we do not claim to have, particularly in the 
Internal Security Section, very--people spend a lot of time in 
cases.
    Now, Michael Liebman has been our expert on a number of 
these cases, but he has not been the lead prosecutor. We have 
an experienced litigator from the United States Attorney's 
Office.
    Senator Sessions. You need that before you tell an 
experienced litigator no. Somebody who tells him no ought to 
also have a good level of trial experience.
    Mr. Keeney. Right, and----
    Senator Sessions. I know the chairman has got to go 
forward.
    Senator Specter. We have got to go into the closed session. 
We are going to have to conclude that by 12:30 p.m.
    I would ask you to provide to us for the record whether 
Attorney General Reno personally participated in the decisions 
in this case.
    Mr. Keeney. Well, I will give you the answer to that. She 
did not personally participate in the decision.
    Was she aware of it? I will have to get that.
    Senator Specter. Well, give us the specifics as to what her 
actions were or wherever--whatever specifics, andalso as to the 
Deputy Attorney General, and those are the only others in the chain of 
command, right?
    Mr. Keeney. Yes, sir.
    Senator Specter. I asked you this question when we met 
informally, and I know it is an up-in-the-air question, but 
let's put it in the record. Could Dr. Lee still be prosecuted 
for the 1997 incidents?
    Mr. Keeney. I don't think so, sir. We get into all sorts of 
problems----
    Senator Specter. Well, that is a different answer than you 
gave me when we talked about it informally.
    Mr. Keeney. Theoretically, I am not sure. Practically, I am 
sure that he could not be--we could not mount a successful 
prosecution.
    Senator Specter. Well, let us ask you to give us a formal 
opinion on that, Mr. Keeney.
    Mr. Keeney. OK.
    Senator Specter. We are going to go into Room 219 which is 
right down the hall for the closed session, and all the 
staffers who want to come, let's see how many we can squeeze 
into the room. We will try to accommodate everybody.
    [Whereupon, at 12:09 p.m., the committee was adjourned, to 
reconvene in closed session.]
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