Cited under fair use for non-profit educational use.
Published in Washington, D.C.. . . . . . . . Vol. 13, No. 36 --
Sept. 29, 1997 . . . . . . . . www.insightmag.com
Snoops, Sex and Videotape
___________________________________________________________________
By Timothy W. Maier
___________________________________________________________________
Intelligence sources say Clinton ordered bugging of his summit
guests and that information obtained on international deals was
provided through cutouts to enrich corporate friends of the DNC.
I t comes as no surprise to national-security specialists -- except
in the magnitude of the operation -- that the FBI and other U.S.
intelligence agencies conducted a sweeping electronic-espionage
mission in the fall of 1993 during a summit meeting of the
Asia-Pacific Economic Cooperation, or APEC, meeting in Seattle
hosted by President Clinton.
. . . . It also may come as no surprise to anyone who has been
following the fund-raising scandals that information from this
covert national-security operation -- first reported by Insight
last week -- subsequently may have been leaked to politicos at the
White House. They, in turn, are suspected of passing such
classified data to Democratic National Committee, or DNC, officials
and outside attorneys working for the Democratic Party --
information of great importance to high-stakes private business
deals with Asian countries.
. . . . But what does come as a surprise is an apparent failure by
federal law-enforcement and intelligence authorities to pursue
allegations of kickbacks to FBI agents involved in the sweeping
intelligence operation and separate allegations involving underage
boys provided as prostitutes to visiting dignitaries attending the
weeklong November conference of 15 Asia-Pacific nations.
. . . . One reason for the alleged coverup -- and that may be the
only term appropriate, according to high officials in and out of
government who claim direct and indirect knowledge of the APEC
bugging -- is that those said to have engaged in kickbacks
involving thousands of dollars include FBI agents through suppliers
with whom they worked to procure electronic audio- and
video-surveillance equipment.
. . . . As for the allegations of juvenile prostitution, sources
who spoke to Insight on the condition they not be further
identified say the reason these "crimes" were not pursued is that a
probe would have exposed the Top Secret national-security
operation.
. . . . Put on the record, it is a different story. Official
spokesmen for federal authorities variously decline comment or say
they have no knowledge of any such enterprise. Seattle FBI
spokes-man Ray Lauer says, "I am not aware of the operation."
Secret Service spokesman James Mackin says, "We cannot provide you
with any information." National Security Council, or NSC, spokesman
P.J. Crowley says, "The White House declines comment." And other
White House and DNC spokesmen say they know nothing.
. . . . Julie Miller, a spokesman at FBI headquarters, says:
"Unfortunately, we can't comment on this. I know that's not what
you are looking for, but we can't comment. I'm sorry." When asked
whether she denies such a surveillance operation occurred, Miller
says: "No, I can't deny it. We can't comment."
. . . . Robert Bucknam, the chief of staff for FBI Director Louis
Freeh, refused to come to the phone when Insight called repeatedly.
Ultimately, Bill Carter, a senior FBI spokesman, said that while he
could not confirm or deny the existence of any national-security
operation, he is very concerned about the allegations of crimes not
being pursued involving prostitution and kickbacks.
. . . . "To be honest, I don't know what you're talking about,"
said Carter. However, after several minutes of conversation, he
said without hesitation that if any allegations of wrongdoing were
forwarded to him he personally would see that it is "forwarded to
the appropriate office.... We certainly would look into it." He
added that "we take it very seriously" and said that while it is
the policy of the FBI neither to confirm nor deny the existence of
any national-security operation, he would respond with any
available information. At press time, he had not.
. . . . Told of the reactions of these spokesmen, Insight sources
were appalled and amused. Those claiming direct knowledge say this
is why they came to Insight, and that only action by the
appropriate congressional committees and a federal grand jury can
get to the bottom of allegations involving official crimes and a
national-security operation gone awry.
. . . . It was allegations of White House leaks of classified
information to the DNC and/or its political operatives that led
Insight to the allegations of kickbacks to FBI agents in the field
and, in turn, to the information concerning alleged juvenile
prostitution.
. . . . Beyond the fact that such crimes may have been committed,
some of those in government posts contacted by this magazine
repeatedly raised the same hue and cry about how such a large-scale
operation as the Seattle APEC espionage caper could have remained
secret for so long with so many agencies involved.
. . . . The reason for the long silence, according to sources who
claim direct knowledge (and provided Insight with hard
documentation on aspects of the operation) is that the assignment
was presented as being for the good of the country. National
security was at stake. Some claiming direct involvement say they
are outraged and are willing to come forward and tell what they
know under oath before a grand jury or congressional committee.
Others, fearful of reprisal and career damage, will not step into
the limelight but are deeply troubled by what they did -- or what
they did not do.
. . . . Here then, told for the first time, is the story likely to
provide an outline for any federal investigation. Undoubtedly there
will be recriminations and finger-pointing, and where it leads has
yet to be determined. But to start, federal investigators will have
to secure copies of reported audio- and video-surveillance tapes
secured by the FBI while monitoring downtown Seattle hotels in
which visiting dignitaries stayed during the conclave. These tapes
were collected in "real time" by surreptitious devices placed in
private rooms of APEC officials. In one series of tapes, they show
underage boys engaging in sexcapades with men in several rooms over
a period of days.
. . . . Despite the protestations by FBI agents who uncovered this
exploitation, supervisors in the Seattle field office of the FBI --
as well as supervisors and managers at FBI headquarters in
Washington -- refused to mount a criminal investigation or support
local prosecution. Instead, according to one source, the FBI agents
"were told to forget about it" because arresting the men involved
with the children "would jeopardize the national-security mission."
. . . . Frustrations were then compounded when intelligence
officials learned about alleged political dissemination of
classified information obtained covertly from the economic
conference. According to sources with direct knowledge, and others
who were told by senior U.S. officials, the espionage data were
turned over to attorneys working closely with the DNC. Outraged
intelligence professionals had nowhere to go because this had been
a covert spy operation that in the eyes of Washington never
existed.
. . . . Intelligence sources describe the espionage operation as
collecting raw economic data on Asian businesses through the FBI;
the Customs Service; Naval Intelligence; the Air Force Office of
Special Investigations; the National Security Agency, or NSA; and
the NSC.
. . . . Some federal agents routinely accepted thousands of dollars
in kickbacks from technical-equipment contractors during this
operation that began about four months prior to the five-day summit
in November. The FBI agents justified the kickbacks as a means to
offset hundreds of hours of overtime that never were compensated.
In one case, an agent received a check for $16,000, according to
sources familiar with the scheme. Seattle FBI agents had been under
attack from prior cases in which a grand jury investigated similar
allegations but did not indict. According to a source close to that
probe, it had the effect of forcing everyone "to keep cleaner
books." As another intelligence source says, "I got rid of all my
books."
. . . . The FBI agents themselves were part of a clique called the
"Footprinter's Club," which began as a social gathering among
members of other federal agencies but grew into a means by which to
share information. "They would learn how to do things off the
books," a high official tells Insight, "but that's not the real
crime here. These are good guys. They are doing what they are told
needs to be done. They're not the bad guys. They were taking a few
thousand dollars compared to the billions in contracts that were
awarded. This Seattle operation is about keeping the people at the
top in power politically."
. . . . Such "honest graft" and other shenanigans angered some of
the players involved in the espionage mission. They say they were
astonished that the Clinton administration used the result of their
spying for political purposes. In fact, these sources claim the
classified information was not leaked but deliberately provided
through a complex chain of agencies and operatives for the sole
purpose of retaining political power. Much of the information was
real-time data that went directly to the NSA via satellites, while
other confidential information was taken by FBI couriers to the
NSA. In total, 10,000 to 15,000 conversations were recorded.
. . . . Some of that information was sifted by 20 to 30 NSA
officials to and with coordination by a senior-level NSA manager
who turned over this data to a senior NSC official and two
mid-level NSC staffers. It was this screened information that then
was provided to two West Coast law firms that had worked off the
books for the DNC. The DNC was able to use that information to
create business and financial opportunities and as part of
fund-raising operations.
. . . . The Clinton administration, in particular the late commerce
secretary Ron Brown, allegedly used the information to arrange
more-favorable credits and banking deals for Asian countries,
according to intelligence sources. For example, the FBI-led APEC
intelligence mission gleaned from the bugging operation that
Vietnam desired at least two 737 freighter aircraft and passenger
jets to promote tourism. An American entrepreneur had located used
jets, but that deal was queered by the Clinton administration when
it dangled a better one by offering lower interest payments for new
planes. This, in turn, ingratiated the Clinton administration to
the beneficiary countries and both they and the contractors
allegedly were given reason to support the DNC. Says a source close
to the Vietnam deal, "The Chinese got the benefits, the contracts,
and this information was not coming from Chinese intelligence. It
was American intelligence."
. . . . Could such claims be true? Where is the line between
conjecture and fact? In this odd and spooky world of intelligence
gathering, sometimes it is difficult to tell. Based on a survey of
players and documents, Insight has been able to confirm some -- but
not all -- aspects of the suspected DNC "leaks" and business
ventures previously reported. One reason is that most of the
intelligence agents involved in the spy operation had no idea where
the end product went. They all were told it was a national-security
mission and that the surveillance was to protect the 15 or more
leaders of nations attending the conference. Never mind that the
targets were rarely the leaders of the nations, but their
assistants and staffers, referred to as "secondary people," because
that's who cut the deals. If the bugs were found, there was
plausible denial: Any country could be responsible for the bugs;
and the Secret Service was known to have cameras and videotape
surrounding the conference for the protection of the president and
other participants.
. . . . The operation was huge -- more than 300 locations were
bugged, including a chartered boat Clinton and other national
leaders used to visit Blake Island for a salmon feast and Indian
dance at Tillicum Village. According to intelligence sources, the
federal government privately contracted at least three security
companies to provide additional equipment. Nearly $250,000 was
spent on technical equipment alone, according to classified records
reviewed by Insight. Such equipment is a rarity in Washington state
because of severe criminal penalties imposed on those taping
conversations without a two-party consent or court order. Most of
the audio equipment was purchased from a New York City specialist.
"Normally, no one touches that stuff, but it was for the FBI, so
everyone figured it was okay," says an intelligence source with
direct knowledge.
. . . . The government paid for the sophisticated snooping devices
through a series of agencies, including Customs, the FBI Finance
Division in Fort Worth, the Justice Department, the Navy, the
Treasury Department and through sham invoices and purchase orders
supplied by hotels to purchase "special" cameras under a ruse that
hotel security needed to be brought up to federal standards. Other
payments came from personal accounts set up by FBI agents. "There
was a lot of creative billing done," says an intelligence source
familiar with the schemes.
. . . . Payments often were made in cash, leaving few paper trails
to follow. However, based on ledgers and other classified records
reviewed by this magazine, individual cash payments ranged from
$800 to $17,000. Treasury wrote some checks, but that was rare.
Sources tell Insight that most of the cash transactions were made
during the lunch hours. "They'd go out for lunch and come back with
thousands of dollars. It was quite a lunch."
. . . . In each case the FBI received "top-of-the-line" equipment.
Prices for microphones could be as little as $100 to thousands of
dollars for specialty directional mikes that fit in a salt shaker
or zoom in on target locations. The sensitive listening devices
sometimes were so tiny they could be placed inside someone's ear
with a plastic tube resembling a hearing aid. Other devices were
put into flowerpots, lamps, rental cars and hotel suites
--including one on the top floor of the Hilton where there was a
problem with a camera. Much of the equipment was wireless and
handheld. The monitoring stations usually were inside the Secret
Service perimeter where cameras and equipment already were in
place. "The Secret Service was not part of the operation but was
probably aware of it," says an intelligence source. In some cases,
monitoring stations were at naval facilities -- and much of the
information was real-time data bouncing from satellite to satellite
to the NSA. After the convention the FBI retrieved many of the
bugs, and recently some of the same equipment was spotted at a
Seattle Drug Enforcement Agency office.
. . . . Now, nearly four years after the operation, there is a
growing resentment among those who participated, as well as a
common thread of distrust. As one intelligence source puts it,
"These were good guys, doing what they thought was right in the
name of national security."
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