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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." Click here to go back to the top of this article. HOME | FREE OFFER! | LETTERS | LINKS Copyright © 1997 News World Communications, Inc. [ISMAP]
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