TIME: Almanac 1993/TIME Almanac 1993.iso/time/071089/07108900.038

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                                                                                NATION, Page 26

The Moscow Bug Hunt


After a two-year investigation, U.S. security experts are
convinced that Marine guards did not let Soviet spies put taps
in the embassy

By Jay Peterzell


    Caspar Weinberger called it "the worst spy case of the
century." As Secretary of Defense in the spring of 1987, he was
confronted with evidence that Marine guards at the U.S. embassy
in Moscow had not only "fraternized" with Soviet women but also
allowed KGB agents to break into the inner sanctum of the
embassy -- the code room, from which sensitive messages are sent
to Washington.

    There on Weinberger's desk was a confession by Corporal
Arnold Bracy, a 21-year-old Marine who had been stationed in
Moscow the previous year. Bracy's statement convinced virtually
the entire Government that there had been a nightmarish security
breach. By planting bugs in the embassy's communications
equipment, the Kremlin may have compromised CIA operations and
gained advance knowledge of U.S. negotiating positions. The
scandal led to paralysis, paranoia and recrimination. Electronic
communication to and from the Moscow embassy stopped dead. Tons
of equipment were torn out of the building and returned to the
U.S. for analysis. After a distinguished career, Arthur Hartman,
who was U.S. Ambassador to Moscow at the time of the suspected
penetration, left the Foreign Service under a cloud. Hundreds
of Marines who had served as embassy guards in East bloc
countries were grilled b-y agents of the Naval Investigative
Service; dozens confessed to fraternizing, black-marketeering
or other security violations.

    But then one case after another fell apart. The Great
Marine Spy Scandal had started in December 1986, when another
Moscow embassy guard, Sergeant Clayton Lonetree, told a CIA
officer that he had given low-grade classified information to
the Soviets. And that is where it ended: Lonetree was the only
Marine to be prosecuted for espionage. Whatever the reasons for
Bracy's confession -- in which he claimed he had helped Lonetree
let the KGB into the embassy -- it was later disclosed that he
had recanted just minutes after signing it. And Government
investigators eventually realized that key parts of Bracy's
statement were demonstrably false. All charges against him were
dropped for lack of evidence. By late 1987 security officials
began to concede, a little sheepishly, that no bugs had yet been
found in the equipment removed from the Post Communications
Center, or PCC, as the code room is known. (The room is
sometimes referred to as the CPU.)

    Four months ago, however, the Moscow embassy scsy scandal
was back in the headlines: the thrust of the story was that
there had been a cover-up within the U.S. Government. That
allegation is at the heart of Moscow Station, a book by Ronald
Kessler, a former Washington Post reporter. It was excerpted in
TIME and is the basis for a television mini-series expected to
air next year.

    According to Kessler, the National Security Agency did
indeed find Soviet bugs in the code room in August 1987. The KGB
had replaced key circuit boards in the printers; it had also
replaced the power line to the communications center. The
reprogrammed circuit boards sent an uncoded copy of the text of
all State Department and CIA message traffic to the new power
line, which could carry it out of the embassy and into the hands
of the KGB.

    How did the Soviets get into the communications vault? The
Marine guard posted down the hall controlled the only alarm
system for the code room, Kessler explained. Since the system
did not record the time the alarm went off, the Marine could
give the KGB undetected access to the PCC for hours at a time,
then lie about what time the system was triggered and claim it
was a false alarm.

    The damage from this "intelligence debacle" was topped off
by a further scandal, said Kessler: the NSA and CIA had
concealed their findings from the State Department. And to this
day, Kessler contends, they have continued to suppress evidence
of the most serious U.S. intelligence breach of the past 25
years.

    This dramatic account added one more layer of controversy
to a case that has troubled the intelligence community for two
years. But as with Bracy's confession, Government investigators
have nothing to substantiate it. In yet another twist to the
controversy, a highly classified intelligence-community
assessment that circulated in the Government several months ago
concluded that there is no credible evidence that the Moscow
code room was penetrated. Perhaps only the KGB will ever know
for sure. But on the basis of more than 60 interviews with
diplomatic, intelligence and military officials, including many
of those involved in the inquiry, TIME has reconstructed the
U.S. intelligence community's own investigation of the Moscow
embassy case.

    Sherlock Holmes once solved a mystery by noticing that a
certain dog had not barked at night. In Moscow the role of the
dog that did not bark was played by a series of secret sensors
that were hidden inside the embassy -- a crucial fact unknown
to the Marine guards. Additional systems protected other
sensitive areas. "There was a whole panoply of things around the
embassy, none of which showed any evidence of penetration," says
a senior security official. "The Soviets might be able to avoid
some devices, but not all of them. Nobody is that good." Other
key points established by TIME's investigation:

    The CIA had a secret device to monitor the time of alarms.
If a Marine let someone into the PCC and lied about the time of
the CIA alarm, several sources say, this recording device would
have exposed the lie.

    There was no correlation between the dates of "false
alarms" involving the PCC and times when Bracy, Lonetree or any
other suspect was on night duty. This was a key reason the
prosecution of Bracy was dropped.

    Exhaustive analysis of equipment from the Moscow code room
found no evidence of bugs. Authoritative officials at the NSA,
CIA and State Department -- including sources who saw daily
reports of the joint three-agency investigation -- are unanimous
on this point.

    No unauthorized replacement of the power line to the PCC
was found. Moreover, even if the power line had been replaced,
the new wire could not carry electronic signals out of the
embassy, sources say. Reason: the power line to the PCC is
filtered to eliminate all such signals, and monitored to detect
any possible radio transmission.

    In an unusual, on-the-record statement, the CIA has said
that "the intelligence community in its investigation could not
substantiate any unauthorized penetration" of the code room.
The National Security Agency endorsed that conclusion in a
letter to TIME. "No information was, or is being, withheld" from
the State Department, the NSA said.

    The U.S. had spent two years and tens of millions of
dollars investigating the scenario in Bracy's confession -- and
come up with nothing. The Government had been right to take the
case seriously. Bracy had been sent home from Moscow after
reporting that he had become entangled with a Soviet woman who
was trying to recruit him as a KGB spy. Perhaps things had gone
further than anyone suspected. A number of people involved in
the investigation are still tormented by Bracy's 1987
confession: No one, they say, would admit to espionage if he was
not guilty.

    There are, however, other possible explanations for Bracy's
statement. Bracy may have had a guilty conscience: he had left
Moscow under a cloud. Some intelligence experts believe he may
have gone so far as to meet a KGB officer or provide some
information before his abrupt departure from the Soviet Union.
Another possibility: Navy investigators leaned hard on Bracy to
provide any evidence he had against Lonetree. Says Bracy: "If
it was going to relieve the pressure, get me away from those
guys, that's what I was going to do." Indeed, the statement
Bracy signed declares that he merely helped his fellow Marine
let the KGB into the embassy. Recalls a security officer: "Bracy
thought he was a hero that day. It was all helping prosecute
this Marine (Lonetree) who had turned bad." Since there is no
way to look into Bracy's heart, his statement will remain an
imponderable loose end in the Moscow embassy case.

    One thing is clear, though: the intensity, scope and
expense of the Government's reaction to Bracy's March 1987
statement would have been far different if the stage had not
been set by a series of interagency disputes about security in
Moscow.

    The most acrimonious of these had begun in the early 1980s
with a push by the FBI to reduce the number of Soviet diplomats
in the U.S. The State Department had resisted the bureau's
initiative on the ground that the Soviets would retaliate by
cutting the number of local Soviet employees allowed at the U.S.
embassy in Moscow. That led to bitter disputes about the
espionage threat posed by these local employees and about other
security issues. By 1985 low-level warfare had broken out
between Ambassador Hartman and security officials in Washington.
"There was bad blood; there's no question about that," recalls
a diplomat who served at the embassy. The 1987 Marine spy
scandal appeared to vindicate the security experts' warnings.
What's more, several other espionage cases involving the CIA and
the military had made the U.S. Government painfully aware of its
vulnerability on this score.

    For other reasons, the twelve intelligence experts who
rushed to Moscow in the wake of Bracy's confession were also
predisposed to believe the Soviets had got into the code room.
In late 1983 French intelligence had told the NSA that a Soviet
bug had been found in a coding machine at the French embassy in
Moscow. The French warned that the Soviets might also have
bugged communications at the U.S. embassy.

    The NSA seized on this tip as a chance to expand its
responsibility for the security of uncoded communications at
U.S. embassies, a traditional CIA and State Department domain.
"Basically, NSA did an end run around (director of Central
Intelligence William) Casey," says a senior security official.
The NSA went straight to the White House, and persuaded
President Reagan to let it replace all U.S. communications
equipment in Moscow. In the spring of 1984 Operation Gunman
discovered Soviet bugs in 17 embassy typewriters. "NSA's stock
rose tremendously after that," recalls a former senior technical
security expert.

    One NSA official involved in GUNMAN concluded that since
some of the typewriter bugs were battery powered, the Soviets
must have had a way of getting into secure areas of the embassy
to replace these batteries. Remaining in Moscow to figure out
how this might be done, this official wrote a report warning
that a Soviet Spider-Man was scaling the embassy wall at night,
squeezing through a tiny window and making his way to the code
room. He also warned that the Soviets had enlarged the flues
built into the embassy walls, and that KGB technicians were
using them to climb up to the secure floors. The report declared
-- categorically -- that the KGB was penetrating the PCC.
Returning to Washington, the NSA superspook eventually briefed
President Reagan. The President was "very concerned," says a
former official who attended the briefing.

    The superspook's colleagues were more concerned about his
judgment. A joint CIA-State Department team dispatched to
Moscow in response to his report found that the problems he had
identified did not exist. The suspect window had been nailed
shut, and 20 years of Russian bird droppings had accumulated on
it. An examination of the walls quickly showed that the flues
had not been enlarged. Still, the White House would not forget
this early, grim warning that the KGB had burrowed into the
heart of the Moscow embassy.

    Meanwhile, U.S. counterspies thought they could checkmate
the bugging system the Soviets appeared to be installing in the
new U.S. embassy being built in Moscow. Instead, the U.S. had
fallen far behind. Construction had stopped in mid-1985, when
American security experts admitted they might not be able to
find all the Soviet bugs. The sophistication of the overall
system made the Americans realize they had underrated the
Soviets; they weren't even sure how the various electronic parts
they had found worked together. The Bracy confession landed in
this explosive environment like a lighted match in a munitions
dump. "There was a hysteria about it," says a recently retired
official. "There had been a series of underestimations of what
the Soviets could do. So when someone comes in and dramatically
overestimates, anyone who criticizes that is put in the same
category as those who underestimated it in the past."

    And yet it was the technical investigation that eventually
convinced officials that there was no evidence of a devastating
communications breach in Moscow. In the wake of Bracy's
statement, an interagency team led by the CIA began shipping
suspect equipment back to Washington. Machinery was returned to
the U.S., taken apart and painstakingly studied under a program
code-named Operation Merit. Most of the equipment went to a CIA
facility in Virginia; communications gear was sent first to NSA
headquarters at Fort Meade, Md., then joined the rest of the
freight at the CIA warehouse.

    In the early months of the investigation, a number of
smoking guns were found in this equipment. But one by one they
turned out to be innocuous. The first was a circuit board that
had been replaced but not sprayed with a special plastic that
"tagged" it as an authorized repair. American officials were
afraid the KGB had installed this circuit board to reroute
uncoded U.S. message traffic. But the device was tested by NSA
experts, who found that it did nothing improper. Security
officials later discovered that some State Department
technicians had never been told about the secret tagging program
and had not used the spray.

    Another smoking gun was found attached to the machine that
decoded incoming State Department messages; a
suspicious-looking wire led through the shielded side of the box
that enclosed the equipment to prevent signals from escaping.
"When they found it, the NSA technicians thought they had
something really exciting," says a senior expert with a chuckle.
It turned out that a communications officer had installed the
device; it was a buzzer that alerted him whenever cables came
in for processing. The rig was thoroughly tested by the NSA and
found harmless.

    Next, investigators looked into whether the Soviets had
been able to penetrate the PCC electronically without setting
foot inside, either by drilling a hole or by placing a device
on the outside wall of the code room. "If they could touch it,
they could penetrate it," says former official. "At least,
that's what our guys say we can do. Our best offensive and
defensive guys spent a lot of time looking at this. They
concluded it was not a problem."

    The last possibility was that KGB agents had entered the
code room and installed some kind of device. One of the Marines
posted just down the hall could have let the Soviets into the
embassy. He might also have been able to help the KGB learn the
combination to the vaultlike front door of the PCC. But once
inside, Soviet operatives would have been faced with several
locked doors, one of which led to the CIA's area: that would
have been the target. Inside that room was a subvault that
housed the CIA's printers, communications and coding machines.

    U.S. investigators determined that it would take KGB
safecrackers one to four hours to crack each lock inside the
code room. Opening the CIA vault would trigger another set of
sensors that would ring at the Marine post. It would also be
recorded by a device that counted the number of times the door
was opened and closed. This counter was displayed inside a
tamperproof box: if a KGB spy tried to open it and change the
number, he would destroy certain indicators inside the device.
Having destroyed them, he would not be able to examine them in
order to duplicate and replace them. Sources say the CIA had
also installed an "event recorder" in its area that recorded the
time when the main CIA alarm went off. Finally, there were
covert "traps" on both the CIA and State Department
communications equipment designed to indicate any tampering.

    It was easy enough to determine that those devices
reflected no evidence of penetration. The alarms for the main
State Department vault and the CIA area had never gone off on
the same night -- as would be expected if someone had entered
the PCC, walked through the main room and entered the CIA
subvault. Although there were some anomalies in the records for
various monitors (for example, the door counter sometimes
registered twice if the door was slammed hard), these never
matched up with one another in any meaningful way.

    Under normal circumstances, investigators might have
stopped there and at least re-examined Bracy's confession. When
they did so later, they discovered that Bracy was wrong about
how some alarms worked. In the spring of 1987, however,
investigators were convinced that Bracy's confession was
authentic. They saw the Moscow case much the way a detective
might see a locked-room mystery in which the only occupant of
a sealed chamber has been murdered. "We assumed it had
happened," recalls one leader of the embassy investigation. "So
there must have been a way."

    It is an elemental assumption in the intelligence game that
no security system is foolproof. U.S. investigators reasoned
that if the KGB's best technical experts had access to the PCC
repeatedly for several hours at a time, they might be able to
devise ways to spoof or bypass one device after another.
Eventually, they might make it all the way to the equipment
inside the State Department and CIA communications vaults
without being detected. But, says an official directly involved
in this analysis, "I never saw a scenario that was credible."
Declares another source: "If there had been a penetration, it
would have been detected."

    But it was Clayton Lonetree, the Marine who started the
whole fuss, who inadvertently laid the PCC-penetration theory
to rest. In August 1987 Lonetree was sentenced to 30 years in
prison on espionage charges. In exchange for a five-year
reduction in his sentence, he agreed to talk. His debriefing
began in October 1987 and continued for four months. He took
repeated polygraph tests. A dozen military and intelligence
officers watched him through a one-way window. By the time the
interrogation was over, everyone involved was convinced that
Lonetree had been telling the truth when, contrary to Bracy's
confession, he said he had never let Soviets into the embassy
or involved Bracy in any espionage activities. More important,
investigators concluded, even if Bracy had been a spy, without
Lonetree's cooperation he could not have given the Soviets
enough access to the code room to allow them to bug it and leave
no trace.

    "I'm sure the Soviets have enjoyed watching us do this to
ourselves," muses a security officer involved with the case. In
fact, the greatest benefit to the KGB from the whole affair may
have been the spectacle of the U.S. Government tearing itself
apart over what turned out to be a phantom.