Intelligence

By Massimo Calabresi and Adam Zagorin/Washington

MADELEINE ALBRIGHT is furious--and embarrassed. It is bad enough the State Department had to admit that a notebook computer with sensitive material had vanished last January from its ultrasecure internal spy shop after Albright's inspector general warned about lax security there just months before. Now, intelligence sources tell TIME that the laptop in the Intelligence and Research Bureau contained critical data on weapons proliferation: the spread of missiles and nuclear, chemical and biological weapons. Some of that intelligence came from signals intercepts classified as "Gamma"-level Sensitive Compartmented Information (SCI), two levels above Top Secret.

If the laptop has fallen into the wrong hands--and not just those of a petty thief--it would not only reveal much about what the U.S. knows of the spread of weapons around the world, but also could alert adversaries that the U.S. is spying on them and how. Said a former senior intelligence official: "If it is Gamma, then the fact of its substance being known could also blow an intercept source. It could blow someone's cover."

Intelligence sources also said that the laptop may have been missing for two weeks before anyone noticed. After that, another two weeks passed before State's in-house security service was called in. The congressional committees that monitor intelligence (and which by law must be informed of potential espionage) were only notified in mid-April. "Security is synonymous with the conduct of an effective foreign policy," says Benjamin Gilman, chairman of the House International Relations Committee. "This serious lapse calls that into question."

State's record is not encouraging. Last year, in another case, FBI agents found a Russian bug in a room that TIME has learned was used by CIA officials to discuss intelligence. And State's inspector general's report, produced last September, singled out the Intelligence and Research Bureau for loose handling of SCI material, recommending its control over it be taken away. As for the laptop, the search continues, but hopes are not high. Says a U.S. security official: "Nobody has any f______ idea where that laptop is, and they may never find it." Ever more desperate feds are scouring Washington-area pawn shops in the hope that an unknowing thief tried to cash the notebook in. Their fear: foreign spies may beat them to the sale.

--By Massimo Calabresi and Adam Zagorin/Washington