itself, and we are very, very appreciative of the work that has been done. We will share these-Senator Metzenbaum and others overlap with us on the Judiciary Committee recommendations and transmit them to the Judiciary Committee. I have already mentioned them to Senator Biden who has had, of course, service on this Committee. Senator Leahy chairs the appropriate Subcommittee and really had planned to be here. He is a previous Vice Chairman of this Committee. They are very interested in these recommendations which I am very optimistic will be vigorously pursued as part of the legislative agenda this year. I am going to have to exit very quickly-I apologize to go chair a meeting that may be far more dangerous than the area of espionage, and that is campaign finance reform negotiations. But please accept my appreciation and that of Senator Cohen and all the members of the Committee for the outstanding work that you have done. We have to tell you we are not going to let you off the hook yet. There are obviously still some other items that we want you to look at for us. And as we go through the legislative process, we also want to be able to return to you to bounce some ideas, refinements perhaps, for a fine tuning of these recommendations. We would value your input as we go forward in the legislative process with these recommendations. Thank you all, very, very much. We'll stand in recess. [Whereupon, at 4:11 pm., the Committee stood in recess.] HEARING ON S. 2726 TO IMPROVE U.S. THURSDAY, JULY 12, 1990 U.S. SENATE, SELECT COMMITTEE ON INTELLIGENCE, Washington, DC. The Select Committee met, pursuant to notice, at 2:09 p.m., in room SH-216, Hart Senate Office Building, the Honorable David L. Boren, (chairman of the committee), presiding. Present: Senators Boren, Metzenbaum, Cohen and Specter. Also present: George Tenet, Staff Director; James Dykstra, Minority Staff Director; Britt Snider, Chief Counsel; Kathleen McGhee, Chief Clerk; and Keith Hall, David Holliday, Fred Ward, John Elliff, James Wolfe, Andre Pearson, James Currie, Edward Levine, Connell Sullivan, Larry Kettlewell, Blythe Thomas, Chris Straub, Chris Mellon, Charles Battaglia, Marvin Ott, Sarah Holmes, Mary Sturtevant, Regina Genton and Rosemarie Nahrgang, Staff Members. PROCEEDINGS Chairman BOREN. We have other Members of the Committee that are expected to attend, but we're going to go ahead and proceed because all our witnesses are already present today. The Committee convenes today to receive testimony concerning a bill the Vice Chairman and I introduced on June 13, the Counterintelligence Improvements Act of 1990. We are pleased that a number of the Members of the Committee are cosponsors of this proposal, as well as the distinguished Chairman and Ranking Minority Member of the Judiciary Committee, Senators Biden and Thurmond. The bill under consideration, S. 2726, embodies the recommendations made to the Committee on May 23 by a distinguished panel of private citizens, chaired by Eli Jacobs, a New York businessman with extensive participation on panels in the defense and foreign policy areas. The Panel also included former NSA Director and Deputy Director of Central Intelligence, Bobby Inman; former Deputy Secretary of State and former Deputy Attorney General Warren Christopher; former Counsel to President Carter, Lloyd Cutler; former Counsel to President Reagan, A.B. Culvahouse; former Director of Central Intelligence, Richard Helms; former Ambassador to the Organization of American States, Sol Linowitz; former Ambassador and State Department official, Seymour Weiss; and Columbia University of Law Professor Harold Edgar. (116) Senator Cohen and I commissioned this group last fall to review the Government's capabilities to deal with the problem of espionage. Working without compensation and on their own initiative, they took as their first task a review of the statutory framework which governs the investigation and prosecution of espionage. In 6 months of meetings with Executive branch officials and briefings by the Intelligence Community, they focused upon the most serious espionage cases of the last 15 years. The Panel then arrived, with considerable deliberation, at 13 separate recommendations which they presented to the Committee several weeks ago. Indeed, many proposals were rejected by the Panel because they failed to strike the correct balance between actions required to effectively deter espionage and the rights of Americans. As Ambassador Sol Linowitz stated in his appearance before the Committee, "It's clear enough that every time you try to work in the security field, you have got to be careful that you don't pass over the line into infringement on rights which people have been guaranteed. My own view is that the proposals as they now have been presented to you will not raise any questions of significance with respect to the abuse or infringement of either constitutional rights or civil liberties." Those were the words of Ambassador Linowitz that I just quoted. The Panel emphasized at that time that their proposals could be improved upon. They also made the point that their proposals by no means covered the waterfront in this area and there are other areas and concerns still to be addressed. Following the hearing, Senator Cohen and I decided it was important that we start with a bill which embodied the Panel's recommendations without substantial change, recognizing that such change may well grow out of the legislative process and out of hearings as we are having today. So, while we certainly are in accord with the objective of these proposals, we keep an open mind as to how they might be best accomplished and to refinements and changes that might be made to these recommendations. Let me re-emphasize, as Senator Cohen and I have both said, we want to be particularly mindful that these proposals could cause concern for civil liberties. While I know that the Panel itself was acutely sensitive in this regard, we want to accommodate any such lingering concerns wherever possible. So, in this regard, we welcome today the testimony of Mort Halperin representing the American Civil Liberties Union. Let me also emphasize that we recognize that many of these proposals fall within the jurisdiction of other Committees. We intend to seek their views before taking action ourselves on these proposals. The first proposal, in section 2 of the bill, would establish by statute uniform minimum requirements for everyone granted a TOP SECRET security clearance. At the present time, there are no uniform procedures and they vary from agency to agency. Section 3 of the bill is intended to strengthen the protection of cryptographic information which basically means codes and coding machines. The key element of the section would require that all Government communicators, in whatever agency they might be employed, be subject to the possibility of a very limited counterin telligence scope polygraph examination during the period of their employment in communications. Section 4 would give the Director of the National Security Agency discretionary authority to provide certain assistance to employees for up to 5 years after they leave NSA to help them cope with personal or economic problems which we've learned often lead to people being tempted into espionage. Section 5 would amend the right to Financial Privacy Act to permit persons with TOP SECRET clearances to provide their consent to the appropriate Government authorities to obtain access to certain of their financial records. It strengthens our ability to have financial background information about people during the course of their employment. Section 6 would make it a crime to possess espionage devices where the intent is to violate the espionage statutes. Section 7 would make it a crime to sell to a person representing a foreign power documents or materials that are marked or otherwise identified as TOP SECRET. Without the Government having to prove as an element of the offense that the classification marking had been properly applied. Section 8 of the bill would add a new provision to that part of the Criminal Code which deals with the responsibilities of Government employees. It would create a new misdemeanor offense for any Government employee who knowingly removes TOP SECRET documents without authority and retains them at unauthorized locations, so-called stockpiling of classified information with the intent to possibly later misuse that information. Section 9 would extend an existing statute which provides for the forfeiture of profits associated with violations of 18 U.S.C. 794, the so-called Son of Sam law, to other types of espionage convictions. Section 10 would permit the Government to deny retirement pay to U.S. retirees, convicted of espionage in foreign courts which involve U.S. national defense information, from the Civil Service Retirement System, the Federal Employees Retirement System, the CIA Retirement System or any other Federal retirement system. Section 11 would amend the Fair Credit Reporting Act to permit the FBI to obtain consumer credit reports on persons who are certified by the Director of the FBI as suspected of being agents of foreign powers. Section 12 of the bill would amend the Electronic Communications Privacy Act of 1986 to permit the FBI to obtain limited identifying information about persons with unlisted telephone numbers who are called by foreign powers or agents of foreign powers. Section 13 of the bill would amend the existing statute which provides discretionary authority to the Attorney General to pay rewards for information concerning terrorism, to permit him to provide similar rewards for information leading to an arrest or conviction for espionage or the prevention of espionage. Section 14 would extend the court order procedure for electronic surveillances, established by the Foreign Intelligence Surveillance Act of 1978, to physical searches done for national security purposes which are now undertaken without a court order under a claim of inherent presidential authority. As I said at the time the Panel appeared before us, I believe they performed an extraordinary public service in developing these proposals for us. I congratulate them and want to thank them once again for their fine effort. We are pleased to have with us this afternoon three witnesses, each of whom will testify separately and provide us with his or her views on this bill. We will hear first from Mary Lawton, Counsel for Intelligence Policy at the Department of Justice. After Mary Lawton, we will hear from the Director of the Washington Office of the American Civil Liberties Union, Morton Halperin, as I have mentioned. And our final witness will be Kenneth E. deGraffenreid, who handled counterintelligence matters as a former member of the National Security Council staff under President Reagan, and who continues to write on such matters in the context of his association with the National Strategy Information Center in Washington. I welcome all of our witnesses. We appreciate your taking the time to be with us today and share your very special expertise in this area with us. We are seeking constructive suggestions as to how we can improve the proposals that have been made and we are certainly open to any suggestions which you might make to us. I'd like to ask, before we begin, Senator Cohen if you have any additional comments that you would like to make? Senator COHEN. Just a few comments, Mr. Chairman. For the benefit of the public, this is one of the few times that the Intelligence Committee has conducted its business in a public forum. I regret to say that we ordinarily have a much greater attendance in private than we do here today in public. Attendance may even be diminished further, Mr. Chairman, because we have a unique situation in which the Senate Armed Services Committee is currently conducting its markup of the Defense Authorization Bill, which is of great importance to this Committee. And Senator Nunn intends to finish the markup by midnight tonight. So immediately after I make a few comments, I intend to depart this Chamber and head over to the Armed Services Committee to try and conclude the business there. So the timing is not exactly propitious, on the one hand, and being the two-handed economists that we all are, on the other hand, it may be precisely that. Because I know that since the Berlin Wall is down, Marcus Wolfe, head of the East German intelligence is in Moscow, maybe on his way back now according to latest reports; and the Cold War is over; many are asking, “Why do we need this particular piece of legislation?" First of all, I want to point out, as the Chairman has as well, that we have to keep an open mind on this legislation. We ought to proceed with due caution in terms of crafting any improvements in this measure. Our minds are not closed on this subject. We think that the Jacobs Panel has really done an enormous public service. And because of the makeup and the composition of that particular Panel, I think, that we have taken into account not only our national security needs, but also legitimate concerns about the right to privacy. But we are open to any recommended changes that would improve this legislation, not only to make it more consistent with our |