ALL THE PRESIDENT'S SCANDALS
Commerce security
under Daley a 'joke'
Gore's campaign chair spent money
for post-Huang upgrades on retreats
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By Paul Sperry
© 2000 WorldNetDaily.com
WASHINGTON -- When Al Gore's campaign chairman, William Daley, took over the reins at the Commerce Department more than three years ago, he came under immediate pressure to tighten security in the wake of reports of major security lapses, including loose handling of classified information, at the department.
The problems came to light during congressional investigations of former Commerce official John Huang, a convicted Clinton-Gore fund-raiser with close ties to Beijing.
In 1997, a special security task force recommended sweeping improvements in the way the department handles employee security clearances and classified information. In a July 1997 internal memo, Daley agreed to make the recommended changes.
But few of the changes have been made, and some of the money budgeted for fixes has been "wasted" by the department's security office on employee retreats, seminars and outside consultants, security officials told WorldNetDaily.
"Daley agreed to the security improvements, but they never happened," said a former Commerce security specialist. "He just paid lip service to the recommendations."
"Security there is a joke," said another official who also wished to go unnamed.
In fact, a secret report by the department's inspector general takes the security office to task for failing to carry out many of the security fixes, citing several continuing "problems." WorldNetDaily obtained a copy of the March 1999 report, which still has not been cleared for public release.
The security office is run by David Holmes, the former top Secret Service agent for Gore's White House security detail. In February 1998, Daley installed him in the newly created position of deputy assistant secretary of security to "reorganize" the office.
"We found problems with the office of security's planning for the reorganization and communications with the field units," the inspector general's report said. "We also found several problems in the areas of information technology management and systems security."
In 1997, the Senate Governmental Affairs Committee criticized Commerce for letting Huang keep his top-secret clearance after he left the department in 1996 to raise funds in the Chinese-American community (as well as overseas, it turns out) for the Democratic National Committee.
The Senate panel also questioned whether Huang, a China-born immigrant who was spared a full background check, shared classified information with China through his former employer, the Lippo Group, and whether he was forced to return all classified documents, as required, when he left the government.
The "former political appointee brought a great deal of attention to the management of security at the Department of Commerce," the still-secret report said. To "restore any loss of confidence in the department's security program," the task force recommended revising the way it handles security clearances and classified materials.
Before issuing security clearances, supervisors are now supposed to justify an employee's "need to know." And political appointees are no longer supposed to be granted clearances willy nilly.
But those rules haven't been followed, security officials say.
"Holmes allows every political appointee who comes in there to get clearance, regardless of derogatory information (in their background files), and there are quite a few who came over from the White House to Daley's office with problems," said a former official who worked under Holmes.
"Once we started digging into these clearances, we found it's just a mess," the official said. "People have access, but don't have clearances. People have clearance but have no need to have access."
Look no further than new Commerce Secretary Norman Mineta, sources say.
Mineta, the first Asian-American member of a U.S. Cabinet, "is now accessing sensitive compartmented information and has no clearance to view it," said a security specialist. SCI contains code-word information and is a level of classification higher than top secret.
The task force also recommended that Commerce do a better job of accounting for classified documents, tracking their whereabouts in the building, and making sure they don't leave the building with employees.
"At least annually, and also upon departure, OES [Office of Executive Support] should notify employees of the documents the log indicates are in their possession and should require them to certify their disposition (destroyed, retained, returned, reassigned)," the 1997 task-force report said. "Employees should not be cleared to leave employment if any discrepancies are outstanding."
A lot of back-dating
"That was never done, at least not on a routine basis," a former security specialist said. "People would depart and then we'd find out afterwards that they left, and then we would have to back-track and see if forms were signed, which in most cases they were not. The records down there will show a lot of back-dating."
Even in the rare instances where there have been debriefings, the forms that departing employees signed certifying they no longer possessed any classified documents are "a joke," one security official said.
"You could put them in your attache case and take them home with you, and all you have to do is say, 'Yeah, I destroyed them.' Then you just sign and date (the form), and that's it -- you're out the door," the official said.
"Instead of accounting for them, they just trust people," the official added. "No one asks how they destroyed them. Did they shred them? Burn them? Flush them down a toilet?"
And Commerce only tracks secret and top secret information. It doesn't control documents marked "confidential," yet such information "would give a foreign power information they don't need to know," the official said.
Senate investigators revealed that Huang routinely carried documents in a brief case across the street to the Willard Hotel, sometimes on days he got CIA briefings. Fax records show he sent documents from a hotel office to China and Indonesia.
Huang wasn't the only official who walked out of Commerce with documents that should have been kept locked in office safes.
Commerce special counsel Ira Sockowitz, who worked for Gore during the '92 campaign, took 136 files totaling 2,800 pages out of his safe, put them in a box and walked out the door when he left the department during the '96 campaign.
The trove contained classified data vital to U.S. security -- and valuable to rival nations like China.
Sockowitz, who held a top secret clearance, walked out with documents on satellite encryptions, remote sensing satellites, presidential waivers for satellite launches and space commerce, as well as country files on China, Russia and India.
Encryption data are used by U.S. intelligence to keep government communications -- including instructions sent to satellites or nuclear missiles -- secret.
William Ginsberg, the late Commerce Secretary Ron Brown's chief of staff, kept papers detailing state secrets, including information on satellite surveillance, intelligence personnel and capabilities, and notes of a National Security Council meeting, among other classified information.
Alarming as these security breaches are, employees can still walk out of Commerce with classified documents, according to Donald Forest, who heads Commerce's China desk and has access to top-secret and code-word information.
"When department employees take classified documents out of the building, do they have to clear it with anyone? Do they have to show anyone what it is they're taking out of the building?," Forest was asked by Judicial Watch in a deposition taken last year.
"No," Forest replied, "not to my knowledge."
Found in the basement
Former security officials also complain that security containers, or safes, storing classified information are not properly tracked.
"No one controls the hundreds of containers out there that may or may not have classified material," one official said.
A container being scrapped, for instance, was recently found in the basement of the Commerce building with classified material still in it, department sources say.
Forest also was asked if he knew of any changes in security procedures since 1997, when the Huang-related lapses came to light.
"I'm not aware of any," Forest testified, except for the recent distribution to individual offices of "shredders to destroy classified documents."
Security officials say that Daley, despite his public vows to tighten security, is not security-minded.
A recent eye-opening statement by Daley during a TV interview bears that out.
"In the three years I've been at Commerce, one of the things I've noticed is there is an incredible amount of material that is classified, way beyond what is necessary," Daley said in a June 8 appearance on CBS' "Face the Nation." "There is just way too much material that's considered classified."
"People think these are the great national security (secrets)," he added. "But I think security and the classification of material is something that's got to be looked at by the government."
Daley's comments caused many jaws to drop among the department's security and counterintelligence agents.
But they say his views help explain why Holmes, Daley's hand-picked security chief, hasn't implemented many of the 1997 upgrades for protecting classified trade and military secrets.
In fact, some say the anti-security politics can be traced back to the vice president's office.
"Holmes is a trusted Gore guy. He used to be his detail leader. The security interview panel passed on him when he first applied for the job. Gore made sure he was hired through Daley's direct appointment," said one former Commerce security official. "He was given to Daley to mitigate these security changes so they wouldn't slow the conduct of political business and they could get whomever they needed in and out of the Office of the Secretary and ITA (International Trade Administration)," where Huang worked and many other Chinese-Americans with classified clearance still work.
The official says Holmes, who is said to still be close to Gore, was able to keep Commerce clear of a congressional investigation of lax security at federal buildings. Agents for the General Accounting Office, which conducted the undercover sting, were able to penetrate 19 government installations using fake law-enforcement badges.
Virginia Beach retreat
"Even the big security sting conducted by GAO this year did not hit Commerce, because of Holmes' connections," the Commerce official said. "He claimed he had trained many of the agents who worked the sting."
Holmes' office got its own line item in Commerce's budget starting with fiscal year 1999. Congress set aside $8 million in fiscal 1999 to help Commerce reorganize the office and beef up security.
But security specialists who worked in the office say at least $100,000 of the money has been "wasted" on retreats, training seminars and contracts with consultants.
"Money Congress gave them after the John Huang situation to beef up security and consolidate operations was pretty much squandered by Holmes and other directors going to these high-priced executive-training courses in West Virginia, which can run as high as $5,000," said one former official.
And several employee retreats and seminars, costing up to $30,000 each, proved to be "just a waste of time and money," the official said.
For example, Holmes took the security staff on a week-long retreat in Virginia Beach, Va., in May, and gathered them together again in July for a two-day seminar on team communication in Gaithersburg, Md.
"They also hired (consulting firm) Booz-Allen & Hamilton to tell us stuff we already knew, rather than spend the money on actually beefing up security," the source said. "They could have hired more people to do background checks (for security clearances) with that money, or put in place an electronic system for tracking all security containers in the department."
"One of the biggest problems after Huang was the tracking of these documents and determining who got to see them," the official added.
The secret inspector general's audit cited staffing shortfalls in the security office which have led to deficiencies in building security, classified-information security and counterintelligence.
Part of the problem is that security personnel are constantly pulled off their core duties to travel with the secretary as his bodyguards on the many campaign-related trade junkets, including ones to China, that this administration has led.
A table in the secret report shows how many times 11 eligible security agents and managers had to drop their regular duties to serve on Daley's protective detail.
"In the period from September to December 1998, much of the protection burden fell on four special agents who have worked 20 weekdays or more on protective detail," the report said. "Because there are so few staff eligible for protective detail, the office of security countermeasures (in which two information security specialists are employed) and the office of security operations (in which the building security coordinator is employed), consistently bear the greatest responsibility for executive protection."
"To the extent that they are used repeatedly," the report concluded, "the special agents' other responsibilities receive lower priority and are delayed, creating disruption to their OSY (office of security) units."
Though he agreed to do so, Commerce press secretary Morrie Goodman still has not responded to requests made last month to review the security office's reorganization plan and budget. Phone calls to Holmes' office were not returned. Calls to the Gore campaign also were not returned.
Daley left Commerce July 15 to run Gore's presidential campaign. In a Gore White House, sources say he'd be in line for a top post, such as chief of staff. In fact, when Gore called to ask him to take over his campaign, Daley reportedly thought for a moment that he might be asking him to be his running mate.
Responding to concerns about the Wen Ho Lee nuclear case, Daley assured the public in September that "our secrets are protected."
"Americans have no reason to fear anything right now," Daley told "Face the Nation" host Bob Schieffer. "We're in great shape from a national security perspective."
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