FBI Says Spy Case Harm Is Isolated

By Greg Krikorian

May 10, 2003 12 AM PT

Times Staff Writer

After three years of investigation, the FBI has turned up no proof that damage from the Chinese spy scandal extends beyond the cases made public in indictments this week, a senior FBI official said Friday.

While acknowledging harm to the bureau’s counterintelligence efforts, Larry Albert, special agent in charge of counterintelligence and counterterrorism for the FBI in Los Angeles, cautioned against linking the case to any other security compromises during the 20 years that former agent James J. Smith and Katrina Leung worked together.

“There is a tendency to rush to judgment in matters like this, a tendency to wrap up all the security violations with one case,” Albert said, referring to the highly publicized charges against Smith and Leung.

“But there is no indication at this time that there are national security compromises other than what these people have been charged with,” Albert said. “At this time, there is no evidence that the case goes beyond what has been charged in the indictment.”

Albert’s comments come on the heels of news reports suggesting that Smith’s purported affair with Leung and her alleged work as a Chinese double agent may have damaged numerous U.S. secrets. Reports have suggested that Leung may have alerted China about U.S. intelligence efforts to bug China’s presidential plane, embassy and consulates in the United States.

Leung, considered by some U.S. officials as the FBI’s premier counterintelligence source on China, has been charged with illegally obtaining two national defense documents. One related to a “Secret” FBI electronic communication, the other to the FBI’s investigation of Peter Lee, a Manhattan Beach scientist convicted in 1998 of providing Chinese scientists with classified information that might have aided that nation’s nuclear weapons program.

Leung, 49, of San Marino, also was charged with unauthorized possession of a third FBI document -- a five-page transcript of her taped conversations with a Chinese intelligence official in late 1990 and early 1991.

Smith, former supervisor of the Los Angeles FBI office’s so-called “China Squad” in counterintelligence, was indicted this week for gross negligence in handling classified documents, as well as vouching for Leung’s trustworthiness when he knew as early as 1991 that she had made unauthorized contact with China’s Ministry of State Security.

While Smith’s attorney had no comment on the remarks by the FBI’s Albert, Leung’s co-counsel, Janet I. Levine, said: “We have said from the beginning that Katrina Leung has acted in the best interests of the United States. That she has not and would not compromise or endanger the security of this country.”

Thom Mrozek, spokesman for the U.S. attorney’s office in Los Angeles, declined comment on Albert’s statements.

“The indictment speaks for itself,” Mrozek said. “The charges in the indictment reflect the allegations that have been brought up to this point, and I am not going to speculate on how the case may or may not change in the future.”

With their post-indictment arraignments scheduled for Monday, Smith and Leung are expected to be in federal court in a case that FBI officials have long acknowledged will have far-reaching implications in the handling of counterintelligence sources.

Los Angeles is one of six FBI offices nationwide where inspectors are looking at not only counterintelligence programs, but also the handling of so-called assets such as Leung.

While the reviews have been undeniably “disruptive,” Albert said, they have also been vital in helping the FBI strengthen its internal procedures in intelligence matters.

“We need to know where we could have done better, what triggers should have prompted a closer review of the situation,” he said.

“The [FBI] director has made it clear that counterterrorism and counterintelligence are the No. 1 and No. 2 priorities today for the FBI,” Albert said.

And while complimenting the work of FBI agents in the office, Albert said, “we have to get better.

“We have to make sure we are providing the leadership and direction to be better in our operations,” he said.

The case “knocked the wind out of us,” Albert said, “but we are regrouping.”