Spying to Support a Life-Style

By Amy Wilentz

His father and uncle were former FBI agents, and when Christopher Boyce was investigated for security clearance, he came up clean. TRW, a major CIA contractor, hired the young man with the genius IQ, and Boyce went to work in the company's code room. Now serving a 40-year sentence for selling spy-satellite information to the U.S.S.R., Boyce, 32, told a Senate subcommittee last week that once he was granted top-secret clearance and saw how inefficient security procedures were, he "decided the intelligence community was a great, bumbling, bluffing deception."

Boyce, the real-life Falcon of the book and movie called The Falcon and the Snowman, claims the security check he underwent in 1974 "was a joke." If investigators had talked to just one his friends, he testified, they would have found a "room full disillusioned longhairs, counter culture falconers, druggie surfers, several wounded, paranoid vets, pot-smoking, anti-Establishment types." Instead, Boyce was not only hired but was assigned to monitor secret worldwide communications between TRW and the CIA.

Security was also lax inside the company, Boyce stated. He broke the seals on code books and photographed them; the tampering was noticed but ignored. Clerks in TRW's "black vault," where National Security Agency codes were stored, "used the code-destruction blender for making banana daiquiris and mai tais."

TRW, whose embarrassed executives have since tightened security controls, has not been the only defense contractor victimized by employees turned traitors. An increasing number of spies are raking in East bloc money by selling secret information on microelectronics, computers and signal-processing techniques. "Science and technology is the largest growth industry" in espionage, says Edward O'Malley, an FBI assistant director in charge of the intelligence division. Some recent examples: a Northrop engineer pleaded guilty in March to attempting to transmit Stealth technology to the Soviets for $55,000; the husband of a worker at a Silicon Valley defense firm used his wife's access to sell high-tech documents on ballistic-missile research to Polish intelligence for some $250,000; and in a trial that began last Friday in Los Angeles, Svetlana and Nikolai Ogorodnikov, two Soviet emigres, are accused of attempting to buy secrets from Richard Miller, an FBI agent who was allegedly tempted by a promise of $65,000 in cash and gold. The list goes on: in the past 15 months, 15 people in the U.S. have been arrested for spying. "We have more people charged with espionage right now than ever before in our history," FBI Director William Webster said recently.

Boyce testified at a hearing of the Senate's Permanent Subcommittee on Investigations, which is examining how the U.S. and its defense contractors are equipped to deal with the current assault on their industrial secrets. Not very well, it seems. Security clearances have been handed out to some 4.2 million people in the U.S., an unmanageable amount that cannot be effectively monitored. "The scope of the problem is just unbelievable," said Georgia Senator Sam Nunn. So many people seek clearance these days that the sheer numbers seem to have overwhelmed the agencies responsible. The Defense Investigative Service will conduct about 220,000 investigations this year and also complete 900,000 nonsensitive clearance checks for federal agencies. In the past decade, its work load has increased by 40%. Some security clearance requests seem frivolous: companies seek them for janitors or other low-level employees. In many instances, the Government's security investigations appear cursory. The Office of Personnel Management, a smaller Government security agency, investigated 138,252 cases between 1980 and 1984: only 108 were refused clearance. "That suggests," said Tennessee Senator Albert Gore, "either that virtually all applicants are of sterling character, or that we have a system which is basically ineffective."

Many have slipped through this system. A case in point: P. Takis Veliotis, a former executive vice president at General Dynamics, who is alleged to have taken $1.3 million in kickbacks from a subcontractor while he was managing the Quincy, Mass., shipyards in the early '70s. During his security check, few of the claims Veliotis made about his background in Greece could be confirmed. He provided no birth certificate, and his Greek naval service could not be corroborated. Nonetheless, Veliotis was granted secret clearance. Furthermore, since Defense Department rules prohibit immigrant aliens from running top-secret facilities, the General Dynamics shipyards at Quincy and Groton, Conn., were downgraded to secret status to allow Veliotis access.

Checking the background of many foreigners--even those who, like Veliotis, are naturalized Americans--can be exceptionally difficult. Sometimes U.S. investigators have language problems; often foreign governments are not cooperative. Subcommittee Staff Investigator Fred Asselin says that frequently when information from abroad proves hard to find, it is simply not checked: "Every time they can't verify something, they say, 'Let's assume he's telling the truth.' "U.S. military contractors now employ 10,675 emigres from Communist countries who have been cleared by security agencies or are in the process of being cleared. Among those are 121 Soviet emigres with top-secret clearance, giving them access to information that the Pentagon says can cause "exceptionally grave damage to national security."

Because scientific espionage has become such a serious problem, the FBI has started a program called DECA (Development of Counter-intelligence Awareness) to alert some 14,000 American defense contractors to what may be going on behind their doors. DECA operatives teach security managers at defense firms to watch for potential espionage risks: workers who have money problems or other personal difficulties or who want to take revenge on an employer. Contact between a Soviet agent and the target starts casually and gradually moves to the clandestine. Eventually, betrayal can take place for the most mundane of reasons. "People are willing to sell out to support a life-style," says San Francisco FBI Agent Raymond Mislock. "And the Russians have been able to exploit this." --By Amy Wilentz. Reported by Anne Constable/Washington

With reporting by Reported by Anne Constable/Washington