An Assessment of the Aldrich H. Ames Espionage Case and Its Implications for U.S. Intelligence, Part 2

Senate Select Committee on Intelligence
01 November 1994
Part TWO

KGB Efforts to Divert Attention from Ames:

Beginning in October 1985 and continuing sporadically over the next several years, the KGB undertook a concerted effort to make the CIA and the FBI believe that the sources compromised by Ames were either still alive and well or had been lost because of problems unrelated to a human penetration of the CIA.

According to testimony of CIA officials, over time these efforts took several forms:

- The KGB appears to have made a conscious effort to spread the word inside the KGB that Howard was principally to blame for the sudden compromises;

- The KGB deliberately gave misinformation to sources, whom they knew from Ames were working for the CIA, to explain why other sources had previously been arrested. Subsequently, the sources who passed this misinformation were themselves arrested;

- The KGB used those sources, already compromised by Ames and under arrest, in various operational schemes to make it look as if the individuals were alive and well. For instance, one compromised source under Soviet arrest contacted an individual in the United States, in an effort to lead the FBI to believe that he was having no security problems; and)

- The KGB had Soviet officials pass information in contacts with CIA officers which suggested that some of the previous compromises had resulted from poor tradecraft or from personal shortcomings on the part of CIA employees.

For the officers in the CIA and FBI task forces, each of these ploys had to be evaluated on its own merits. Some were viewed with skepticism by the CIA at the outset; others appeared more plausible and required additional time to evaluate. Some proved unverifiable altogether, their significance becoming clear only with the hindsight provided by Ames's arrest. As these ploys were occurring, CIA counterintelligence staff realized that something unusual was taking place, but did not know precisely what these diversionary ploys meant. The recognition that these diversionary tactics could be part of a pattern of KGB behavior developed as early as late 1986.

Minutes of the off site meetings between the FBI ANLACE Task Force and the CIA Special Task Force document that the two agencies shared information about these ploys, and, indeed, that the two task forces expended considerable energy attempting to re solve the discrepancies during the 1986-1990 time period. Yet it does not appear from the record that even when investigators saw a ploy as a ploy -- a phony effort to mislead the CIA did they move any closer to concluding that the KGB was trying to divert attention from a human penetration of the CIA.)

A Related Counterintelligence Investigation:

At about the same time, the CIA and FBI task forces also concerned themselves with the progress being made in a separate but possibly related counterintelligence investigation. CIA had received vague information, believed to be reliable, which appeared to suggest that the KGB might have been able to penetrate a particular office of the CIA which did not have access to the Soviet operations known to have been compromised. The CIA hypothesized, however, that if a penetration had occurred, the person working there might later have moved into a position with such access. The ensuing investigation consumed considerable attention and resources within the CIA, and the minutes of the meetings of the CIA and FBI task forces reflect that the task forces regularly reviewed its progress.

The case remained unresolved, however, and in 1990, became a serious distraction at a crucial juncture in the inquiry involving Ames.

CIA and FBI Attempt to Identify New Sources:

In September 1987, at about the time the CIA Special Task Force had begun to conclude that the Lonetree case could not explain the earlier compromises, the FBI ANLACE Task Force concluded that it could go no further with its own analysis. While it believed that Edward Lee Howard could have been the source for one of its two compromised operations, it found no explanation for the compromise of the other source.

In May 1987, a joint meeting was held to discuss progress on solving the mystery of the compromises. In an effort to develop new leads, CIA and FBI officers agreed to launch a new initiative to recruit Soviet intelligence officers who could shed some light on the problem. The two agencies would attempt to identify Soviet intelligence officers worldwide who might currently be, or may formerly have been, in positions that gave them access to information regarding the 1985-86 compromises. It was recognized that such information might well come only at a high price.

This recruitment initiative, began in 1987, continued until the time of Ames's arrest in 1994. Despite repeated efforts to develop sources, the program succeeded in producing relatively marginal results over the period of its existence. Meanwhile, the news on the 1985-86 compromises worsened when, towards the end of 1987, the CIA learned that three additional Soviet sources, all recruited before 1985, had been arrested, and that one had been executed.

Investigative Developments in 1988 and 1989:

In February 1988, yet another joint conference was held between the FBI and the CIA task forces. Minutes of the meeting indicate that while the task forces had concluded that Lonetree in all likelihood had not allowed the Soviets to enter the U.S. Embassy in Moscow, the conferees remained focused on the possibility that a technical penetration of the Embassy could explain the majority of the earlier compromises. It is also clear from the minutes that the joint meetings of the CIA and FBI task forces now covered a wide range of counterintelligence topics, not all of which related to the 1985 86 compromises. A representative of the CIA Special Task Force did note a continuing effort to analyze Soviet operations by computer to determine the reason for the 1985 86 compromises, but little tangible progress was cited.

In the spring of 1988, CIA opened an investigation of an SE Division employee who had access to some, though not all, of the compromised cases. The employee had made numerous damaging admissions during the course of previous polygraph examinations (none relating to security issues per se), and had difficulty generally getting through routine polygraph examinations over the course of his CIA employment. Relying upon a 1988 tip from a CIA employee that this officer was spending large amounts of money at a level not explained by his salary, the CIA Office of Security (OS) opened a financial investigation of the individual. While the investigator determined that the employee had, indeed, spent far in excess of his salary, the employee was able to demonstrate that the money had come from a spouse's inheritance. The CIA decided to remove this individual from access to sensitive operations. This year-long investigation, which proved to be unrelated to the 1985-86 compromises, had significantly diverted the sole investigator assigned to the compromised cases.

The staff of the Special Task Force was also diverted during this period by the effort required to create a new coordinating office for counterintelligence. Announced on April 1, 1988 by DCI William Webster, a new DCI Counterintelligence Center (CIC) was established to improve the planning, coordination, management, and effectiveness of counterintelligence (CI) activities within the CIA and the Intelligence Community. Centralized management of CI issues was considered essential to provide clear focus and direction to fragmented internal CIA efforts and provide a CIA focal point for dealing with other U.S. departments, agencies, and foreign liaison services regarding CI matters.

As part of the reorganization of counterintelligence into the CIC, the CIA Special Task Force looking into the 1985-86 compromises, which had been part of the CI Staff of the Directorate of Operations, was subsumed within a new Investigations Branch of the Security Group within the Counterintelligence Center. This branch had responsibility for all cases involving possible human penetrations of the CIA. The Deputy Chief of the Security Group and, concurrently, head of the new Investigations Branch, was the same CIA officer who had previously been in charge of the Special Task Force.

In June 1988 -- three years after Ames's most damaging disclosures to the KGB -- the KGB instituted the most elaborate of its ploys to direct attention away from Ames. The KGB had one of its officers pass information to the CIA concerning five of the cases Ames had compromised. In essence, the information suggested that each of the cases had been compromised due to poor tradecraft on the part of either the sources itself or the CIA officers involved. While the opinion of CIA officers varied as to whether the new information was genuine, it clearly created a stir and required time consuming analysis over the next two years. (For the denouement of this episode, see below.)

Recognition of this diversionary tactic also appears to have motivated a briefing of Deputy DCI Robert Gates on the compromises of 1985 86 by the head of the Investigations Branch on July 1, 1988.

When the CIA-FBI task forces met again on 20 July 1988, the minutes reflected that "not much has transpired" due primarily to the efforts required in setting up the new Counterintelligence Center. But the minutes did include a more detailed status report on where the investigative effort stood than had previous records of such meetings. The minutes indicate the CIA had concluded (in mid-1988) that 16 recruited assets had been compromised in the 1985 1986 period. The memo noted that the CIA had concluded that Edward Lee Howard had certain knowledge of only three of the cases, and potentially might have known details about seven others. That left six cases that he could not have known anything about. The minutes reflected that the CIA had been interviewing all employees with access to the compromised cases, and "some...appear more or less likely to be possible suspects." In any event, the minutes reflected that "the conference was concluded with the note that something had happened, of either a human or technical nature, which caused the KGB to take action not only against newer sources but also against others who had been under investigation (by the KGB) for a long time."

On October 13, 1988, the CIA and FBI task forces held another meeting to discuss the compromises. The minutes of this meeting (which recite for the most part only the results of the meeting) reflected that the purpose of the meeting had been to review the results of the one or more investigations into leads that might explain the compromises.

At this meeting, officials discussed the progress of the related counterintelligence investigation, described above, which was attempting to ascertain whether the KGB had been able to penetrate a particular office of the CIA. The investigator assigned to the case reported that he had thus far reviewed the access of 90 employees assigned to the office in question. While reporting the investigation had produced 10 suspects, the investigator noted "there are so many problem personalities...that no one stands out."

According to the minutes of the meeting, it was reported that none of the 10 suspects could be connected at that point to the 1985-86 compromises. It was clear, however, that this investigation was occupying a large proportion of the investigative effort allocated to the compromises at that time. The lone investigator involved was at the same time the only investigator assigned to the investigations of the compromises.

The record reflects no significant developments from the standpoint of the investigation from December 1988, until the return of Ames from Rome in September 1989.

August 3, 1989 to February 1994

Ames Career Progression at the CIA:

Despite his mediocre to poor performance in Rome, and the evidence of flagrant alcohol abuse, Ames returned to CIA headquarters in September 1989, to fill a position in the SE Division.

The IG report notes that according to one officer, the Chief of the SE Division had strong negative feelings about Ames's return. One individual recalls that when a personnel placement board met to discuss the assignments for numerous officers in the summer of 1989, including Ames's request to serve in the SE Division, the Chief of SE Division advised the senior personnel officer that he did not want Ames in his Division, he would not have him, and the personnel officer was to get rid of him. Despite the negative reaction by the SE Division Chief, however, Ames managed to be assigned as Chief of the Western Europe branch of the Division. According to the IG report, no one recalls how this occurred. Ames served in this position for three months. During this period he was exposed to virtually all SE Division operations in this region, and was in a position to compromise numerous operations involving Soviets or Eastern Europeans who traveled to, or lived in, Western Europe. Ames later remarked that this position should have been one of the last places he should have been assigned to if the CIA had suspicions about him.

Because the SE Division was reorganizing, Ames served only a short time as the Western European Branch Chief, and instead was made Chief, Czechoslovakia Operations Branch. Ames served in this position from December 1989 until August 1990.)

With the collapse of the Communist government in Czechoslovakia, however, Ames found his new assignment too mundane, and, sometime after December 1989, approached his supervisors saying he wanted to return to a position where he could handle sensitive Soviet cases again. His supervisor subsequently stated that he thought Ames approach was "brazen," and advised Ames he would get back to him. The supervisor never did. In fact, the post arrest investigation found that Ames tried several times to improve his access to CIA's most sensitive Soviet cases. For example, soon after his return from Rome he advised his management that he would be willing to create a special analysis group which would look at all CIA Soviet cases from a counterintelligence perspective. Ames also approached another supervisor and stated his desire to become the Deputy Chief of Station in Moscow, a position Ames characterized as a "fitting finale" to his career.

In October 1990, Ames was reassigned to the Counterintelligence Center Analysis Group. According to the IG report, the Chief of the SE Division wanted Ames out of the division, both because of the security concerns that had been raised about him and because of his poor performance. He thus selected another officer to fill Ames's position as Chief of the Czechoslovakia Branch, forcing Ames to find a position elsewhere.

Before Ames left the Czechoslovakia Branch, however, he was appointed to a promotion panel for all GS-12 operations officers of the Directorate of Operations, thus giving him access to the identities and personnel records of all GS-12 operations officers of the Directorate of Operations.

Following service on the promotion panel, Ames located a position in the Counterintelligence Center (CIC). Although the Chief of the CIC and the Chief of the Analysis Group were aware of the security concerns related to Ames as well as his poor performance record, the Analysis Group was in need of a case officer from the Directorate of Operations. The head of the Analysis Group was told in vague terms by the Deputy Chief of CIC of the general suspicions regarding Ames's trustworthiness but believed Ames's assignment was "manageable."

Ames remained in this position for almost a year, until August 1991. As part of this assignment Ames had access to extremely sensitive data, including data on U.S. double agent operations, i.e. cases involving controlled U.S. agents who had ostensibly been recruited by foreign intelligence services.

In September 1991, despite having been effectively forced out of the SE Division a year earlier, Ames managed to obtain the approval of the same Division Chief to be Chief of a KGB Working Group in the SE Division. While this position did not entail access to ongoing operations, it did give Ames access once again to SE Division personnel and records.

Ames's return to the SE Division lasted for only three months. He was reassigned in December 1991 to the CIA's Counternarcotics Center (CNC) where he remained until his arrest February 1994. This appears to have been the first assignment Ames was given that took into account the security concerns that had been raised about him. However, Ames's supervisors in the CNC were not made aware that he was the subject of a counterintelligence investigation until shortly before the FBI opened an intensive investigation on him.

According to the CIA IG report, even after the special task force involved in the "mole hunt" had firm information implicating Ames, no conscious effort was made to limit his access to classified information while he was in CNC. Further, no direction was provided to CNC management in this regard by anyone and none was sought. For example, CIA officials did not take any specific precautions to minimize Ames's computer access to information within the scope of his official duties. In fact, in the fall of 1993, as a result of changes in the CIA computer system, Ames obtained additional classified CIA information. He used his work computer to electronically download onto floppy disks CIA operational cables and finished intelligence only marginally related to his office responsibilities. Ames was able, through his computer, to access cables dealing with world events, and electronically selected cables dealing with Russian and European political and economic events. Fortunately FBI and CIA records show Ames did not have a personal meeting with any KGB contacts between November 1993 and when he was arrested, and he was unable to pass this windfall of information to his Soviet contacts.

Ames's Personnel Evaluations by the CNC:

While Ames displayed serious personal flaws and poor work habits, the performance evaluations by his CNC supervisors continued to portray an employee who was more than adequate. According to the CIA IG report, while Ames's immediate supervisors in CNC were aware of his occasional problems with alcohol abuse, his proclivity to sleep at this desk, and his unwillingness to handle issues and projects that did not interest him, his annual performance appraisals consistently rated him a strong performer.

According to the recollections of Ames's colleagues, Ames became so intoxicated during a liaison meeting with foreign officials in September 1992 that he made inappropriate remarks about CIA operations and personnel, and passed out at the table.

Nonetheless, his immediate supervisors failed to make this and similar actions a part of any official record, or to recommend counseling for him. He continued to be judged as meeting the norms for an operations officer of his grade, and, in fact, received strong narratives and overall grades that indicated he exceeded the work standard. On the other hand, at annual reviews of all GS-14 operations officers, which determined promotions, Ames continued to be ranked in the bottom sixth.

Rosario's Knowledge of Ames's Relationship with the Russians:

In interviews with CIA officers, both Aldrich and Rosario Ames claim that she did not learn of Ames's relationship with the KGB until the summer of 1992. At that time, she found a vague note in her husband's wallet. From that, she concluded that Rick had involved her or her family in an intelligence operation. Rosario admitted to FBI officials that Rick told her he had received cash from the Russians for providing CIA information to the Russians.

Ames has said that eventually Rosario understood the true nature of this relationship with the KGB. He claims she begged him to sever the tie, but he convinced her that they would be endangered by doing so, and that her mother in Colombia would be financially disadvantaged.

In 1993, the FBI monitored telephone conversations between Ames and Rosario which indicated that she knew about two prior face-to-face meetings with the KGB and confirmed her knowledge of Rick's unsanctioned espionage links to the Soviets. These conversations also showed she was aware Ames was employing impersonal means of communicating with the Soviets, using dead drop sites and leaving chalk signals for the Soviets to read. According to FBI officials, the telephone intercepts of conversations between Rosario and Rick Ames indicate that Rosario was a supportive conspirator encouraging the crimes of her husband in order to allow her to continue to enjoy the financial benefits.

Ames's Contacts with the KGB:

Once he returned from Rome, after years of regularly passing classified information via face-to-face meetings with his Soviet intermediaries, Ames no longer had such meetings in the United States. Instead he began relying on "dead drops" and signal sites, and personal contacts abroad. Ames would leave a signal -- such as a chalk mark on a mailbox to indicate to the Soviets that he would "load" a dead drop site. Then he would provide classified information and messages to the KGB by placing a package somewhere in a hidden, secure area in the Washington, D.C. area. Similarly, the KGB used signals and dead drop sites to pass money and instructions to Ames. Ames and the KGB identified the sites in messages back and forth by using cover names to protect their locations in case a dead drop site was ever compromised.

From 1990 until 1993, face-to-face meetings with his KGB handlers took place only outside the United States. Ames met "Vlad" in Vienna in June 1990, but missed an October 1990 meeting because Ames mistakenly went to Zurich rather than Vienna. In December 1990, Ames made his next contact in Bogota, where he was introduced to his second KGB case officer, called "Andre." A few months later, Ames was scheduled to meet Andre again in Vienna but the meeting never occurred again, because Ames confused the meeting place. Ames did see Andre again in Bogota in December 1991 and in Caracas in October 1992, and had his last operational meeting with the KGB in Bogota in November 1993.

The material collected by the FBI during the investigation and after Ames's arrest, much of it from Ames's personal computer, provided a wealth of detail and illustrated the nature of Ames's relationship with the KGB in these later years. In June 1992, according to documents recovered by the FBI from Ames's home computer, he wrote a note to his Soviet contacts which stated, in part:

My most immediate need, as I pointed out in March, is money. As I have mentioned several times, I do my best to invest a good part of the cash I received, but keep part of it out for ordinary expenses. Now I am faced with the need to cash in investments to meet current needs a very tight and unpleasant situation! I have had to sell a certificate of deposit in Zurich and some stock here to help make up the gap. Therefore, I will need as much cash delivered in Pipe [document drop site] as you think can be accommodated [sic] -- it seems to me that it could accommodate [sic] up to $100,000.

FBI records indicate Ames left his message at dead drop site "BRIDGE" and he left a signal at site "SMILE."

Ames wrote another letter to his contacts on August 18, 1992. He agreed to a personal meeting with the KGB in Caracas, Venezuela, and provided information on the level of CIA operations in Moscow, U.S. conclusions about Russian technical penetrations of the U.S. Embassy in Moscow, and CIA recruitment plans for Russian officials.

Ames placed this material at the drop site and signaled the Soviets that it was ready for retrieval on August 19, 1992. He placed a pencil mark at signal site HILL in the morning and left the documents and letter at dead drop GROUND at 4:00 p.m. When he returned to the signal site the next day, he saw the KGB had not erased the signal as arranged for if the collection had occurred. Accordingly, Ames retrieved his package. On September 1, 1992 Ames typed another letter to the KGB telling them he had retrieved his earlier package, and would place the material at dead drop GROUND on a specified date in September.

Apparently Ames had some problems with this form of impersonal communication. Among other things, the size of the dead drop site limited the amount of information he could pass. In Rome, he routinely delivered inches of data at each meeting. These procedures also limited the amount of cash he could receive in each transfer. Ames complained in a letter to the KGB dated in August or September 1992:

Besides getting cash in Carascus [sic] (I have mentuoned [sic] how little I like this method, though it is acceptable), I still hope that you will have decided on some safer, paper transfer of some sort of a large amount.

He also advised the KGB, "My lack of access frustrates me, since I would need to work harder to get what I can to you. It was easier to simply hand over cables!"

On March 9, 1993 Ames typed a letter on his computer which began by saying, "All is well with me -- I have no indications that anything is wrong or suspected." In the letter he also discussed the morale of the CIA SE Division, personnel changes, and information about the CIA budget. He included a variety of classified documents.

On May 26, 1993 Ames sent an "urgent" message, which he passed through a dead drop in the Washington, D.C. area, to the KGB asking for money immediately. Employing dead drop site BRIDGE, the KGB forwarded a package of cash to Ames four days later. The FBI obtained records later which show Ames deposited approximately $22,800 into various accounts between June 1-7, 1993.

In July 1993, the KGB provided more money through a dead drop. An accompanying KGB message discussed an upcoming personal meeting and informed Ames that they planned to test the security of a selected dead drop to ensure the site remained viable. The KGB also told Ames more money would soon be provided, unless the money was postponed due to the "diplomatic pouch schedule." Ames deposited approximately $16,500 into local back accounts between July 20 and August 4, 1993.

By September 1993, Ames and his wife's movements and conversations were being closely monitored by the FBI. On September 9, 1993, Ames and his wife attended a meeting at their son's school in Alexandria, Virginia, and then drove to the intersection of Garfield Street and Garfield Terrace in Northwest Washington to see if the KGB had placed a signal. At other times in September, Ames passed and received messages, in preparation for a personal meeting with the KGB in November in Bogota.

In October 1993, FBI agents observed that Ames left his residence around 6:22 a.m. and returned around 6:44 a.m. giving him time to place a mark on a signal site. Around 7:00 a.m., FBI agents observed that a horizontal chalk mark had appeared on a mailbox at the corner of 37th and R Street, N.W., Washington, D.C. They knew from other recovered documents that this mailbox served as signal site SMILE.

On November 1, 1993, Ames traveled to Bogota for another personal meeting with a KGB official. The official gave him a large amount of cash, and an updated impersonal communications plan for 1994. It included new signal and dead drop sites in the Washington, D.C. area and times for exchanges in February, March, May, August, and September. Personal meetings were scheduled for Caracas, Venezuela or Quito, Ecuador for November 1994. For 1995, they planned for meetings in Vienna or Paris. At the Bogota meeting the Soviets also told Ames they were holding $1.9 million for him. After Ames returned to the U.S., the FBI detected large financial deposits totaling approximately $43,200 between November 3-10, 1993.

While Ames was in Bogota, the FBI monitored several telephone calls between Ames and Rosario, who remained in Arlington, Virginia. On November 1, 1993, Ames told his wife that he had a "short meeting" that day and would have "more meetings" the following day.

Ames's Official Travel:

During 1992 and 1993, while working for the CNC, Ames made several official trips overseas, including visits to Moscow and Turkey. In a message delivered to the KGB through a dead drop around September 3, 1993, Ames referred to the Moscow trip and wrote, "You have probably heard a bit about me by this time from your (and now my) colleagues..."

On the trip to Turkey in September 1993, where he attended a conference on regional narcotics matters, Ames took an extraordinary risk which could have fully exposed his spying activities. Ames took with him a personal laptop computer which contained unauthorized classified information, personal files and several game programs. His superior, who had accompanied him to the conference, asked Ames's permission to use the computer to access the games, and Ames agreed. The FBI interviewed this officer in November 1993, several months before Ames's arrest, and he reported being "overwhelmed at the incredible amount of classified info that Ames brought to the conference.....large sub files containing classified cables and memos..." This officer also saw a file titled "VLAD" which he did not try to access. CIA regulations prohibit CIA officers from using personal computers for the storage of classified material, but Ames apparently was oblivious to the risk he was running by letting his boss use his laptop. The CIA officer who saw the classified information reported it to the CIA and FBI upon his return. Ames continued to be sloppy about security even when it risked exposing his own espionage activities.

Ames's Personal Wealth:

Evidence developed by the FBI indicated that between April 1985 and November 1993 Ames spent at least $1,397,300. On August 1, 1989 Ames paid $540,000 in cash for a house in northern Virginia. The Ames's advised their title insurance agent that they bought the house with funds obtained from an inheritance from Rosario Ames's family. Ames also apparently told close friends that Rosario's uncle in Colombia was so pleased at the birth of the Ames's son that he decided to buy the house for them as a gift. Ames embellished this story by telling this friend that the cash purchase of the house allowed Ames to spend an extra $1,000 to $1,500 per month on personal expenses, because he was saving on regular mortgage payments. Ames obfuscated the electronic money trail of these funds by moving funds from Credit Suisse, through Citibank and an account with Pierpont Funds, and eventually into his account at the Dominion Bank of Virginia.

Ames spent large sums of money on home improvements, furniture, Jaguar and Honda automobiles, telephone bills, credit card payments totaling $455,000, tuition for his wife's schooling at Georgetown University, and stock and securities purchases. Ames also used his Soviet payments to purchase property in Colombia, and to support Rosario's family in South America. Ames bought condominiums in Bogota and Cartagena, and a farm in Colombia referred to as the "Guajira." Between April 1985 and November 1993, Ames's total CIA "take home" salary totaled $336,164.

In January 1992, Ames traded his three-year old Jaguar for a new model. The fact that Ames purchased not one, but two Jaguars within a three-year period went unnoticed by investigators until they were well into completing their financial analysis. Ames stated that he "considered the purchase of a second Jaguar within three years to be the only time he flaunted his money and considered this his greatest financial indiscretion."

From 1990 until the time of his arrest, Ames routinely made large cash deposits into various bank accounts. On June 22, 1990, Ames deposited $34,825 into one Swiss account, and $29,850 into another. On January 24, 1991, he deposited $10,000 into his wife's Dominion Bank Account and in March, May, and June he deposited large sums into his own Dominion account after meeting his KGB handler in Caracas in October 1992, Ames made eight cash deposits into two Dominion Bank of Virginia checking accounts and four deposits into his Riggs National Bank of Virginia account, totaling $86,700. Each deposit was under $10,000, reflecting Ames's attempt to avoid the deposits being reported to the Treasury Department. Ultimately, however, it was Ames's sudden affluence that made him the focus of investigators.

The Initial Tip on Ames:

In November 1989, shortly after he returned from Rome, CIA received the first information which pointed directly to Ames. A CIA employee, who knew Ames well, reported to the Counterintelligence Center (CIC) that Ames seemed to be living beyond his means. The employee reported Ames appeared to have little money when he left for Rome, but now seemed unusually well off financially. The employee explained Ames and his wife had purchased an expensive home in Arlington, Virginia.

According to the CIA IG report, the employee who reported this information was aware of the 1985 1986 compromises, and knew that Ames would have known about them. Moreover, the employee knew the Ameses sufficiently well to know that Rosario's family was not wealthy. Afterwards, the employee periodically advised the CIC investigators of additional details relating to the Ames's wealth, such as their personal travel, extensive landscaping expenditures, and extensive kitchen renovations.

Based upon this report, an Office of Security investigator assigned to CIC, who usually handled investigations of CIA employees in connection with suspected penetrations, opened a routine financial inquiry on Ames. (This investigator had done the investigation of an SE Division employee who, in the 1988-89 time period, was suspected of compromising some of the Soviet sources. This was also the same investigator who looked into the related investigation involving a possible penetration of a particular office at the CIA described previously in this report.) He queried the U.S. Customs Service for any information on currency transactions involving Ames. The CIA IG report indicates that the investigator also examined public records and discovered that Ames had purchased his Arlington home for $540,000, but the investigator could find no record of a mortgage.

In January 1990, the Treasury Department responded to the currency transaction request and identified three "hits" involving Ames: a $13,000 cash deposit into a local bank account in 1985; a $15,000 cash deposit into the account in 1986; and, upon his return from Rome, a conversion of Italian lira into $22,107.

Despite the significance of this new information, the investigation into Ames's finances stalled. In January 1990, the investigator assigned to the case began a two-month training course, and no one was assigned to perform his duties during his absence. When he returned, he was given other leads to follow, as explained below.

CIA Counterintelligence Review:

In the meantime, the CIA investigation group which had been looking into the 1985 86 compromises since 1986 was making little progress. According to those involved, there was still no consensus, even in the fall of 1989, as to whether the earlier compromises resulted from a technical or human penetration. While certain avenues of the investigation appeared to be coming to a close, there was, as yet, no explanation for the losses.

As described earlier in this report, the investigation group had initiated an investigation into another SE Division employee in 1988, but by the fall of 1989 had failed to connect this employee directly to the compromises. The possible involvement of the employee could not be entirely dismissed, but there appeared to be no further leads to follow. Investigators were also continuing to analyze the information provided a year earlier by a KGB officer, who had provided information indicating that the 1985 86 losses were a result of poor CIA tradecraft.

CIA followed several leads since 1986, but had reached no conclusions. The investigation group appeared no closer to identifying the source of the 1985- 86 compromises.

The Ames Inquiry Falters:

The CIA investigator responsible for examining Ames's unexplained wealth returned from his two month training course in March 1990, but was immediately diverted to pursue other leads which the investigation group considered more pressing. The CIA had learned that a key source who would likely have information concerning the possible penetration of a particular CIA office, under investigation since the mid-1980's, was willing to talk to the CIA. Since the investigator had investigated this case since its inception, he was sent overseas to interview the source. More debriefings of the source occurred in April and May 1990.

In June, the investigator was sent on a European assignment to assess the information emerging in Berlin from newly-opened East German intelligence files. The CIA wanted to learn what the East German service knew about CIA operations, and in particular, whether the East Germans had recruited a CIA officer who had access, or could have developed access directly or indirectly, to the 1985 Soviet cases that were compromised.

The CIA IG report indicates that the investigation group was hesitant to solicit financial expertise from other components within CIA, such as the Office of Financial Management or the IG Audit Staff, and that they were even more wary of seeking help from any outside sources such as the FBI. They felt that people outside of the Directorate of Operations would not have the proper sensitivities to the DO culture or to the fact that CIA employees were under scrutiny. CIA officials believed that there was not a sufficient basis at the time for the FBI to open an investigation of Ames.

In August 1990, the investigation group inquiry was again diverted when CIA received detailed information from a defector that the KGB had recruited an unidentified CIA officer in the SE Division during the mid-1970s. The defector explained that this unidentified officer had served in Moscow and was known for his carousing and expensive tastes. This information seemed to match up with the specific investigative leads pursued by the FBI and the CIA both in the 1970s and again in the mid 1980s, after the 1985 86 compromises came to light. The defector information prompted CIA investigators to reinvigorate their review, and to match the defector information to a current or former employee. This effort lasted for more than a year. While counterintelligence officials eventually assessed the lead to be unreliable, it consumed considerable effort on the part of the FBI and the CIA.

In any event, the investigator working with the investigation group, who had begun to look into Ames's finances in late 1989, temporarily returned to it in September 1990 when he requested a routine credit check of Ames and his wife. Nothing surfaced which appeared out of the ordinary, but the inquiry did provide a listing of local banks where Ames had accounts.

According to the CIA IG report, in the fall of 1990, the investigators concluded that because of his yet unexplained wealth, a background reinvestigation and a polygraph should be done on Ames, but they were concerned that he might be alerted to their suspicions. Ames had last been polygraphed in 1986, and according to CIA's routine five year cycle of polygraphs, his next one would be scheduled in 1991. Therefore, they elected to wait until then, so that the polygraph would appear to be routine.

Reinvestigation of Ames:

The investigator working on Ames finances outlined his concerns in a December 5, 1990, memorandum to the Office of Security, and requested background investigation and polygraph. The memorandum described the three large financial transactions identified almost a year earlier on the Treasury data base, and provided the Office of Security with the details reported by Ames's colleague in the November 1989 "tip." The memo also mentioned that Ames had purchased a $540,000 home with no record of a mortgage or lien filed with Arlington County, and had purchased a white Jaguar valued at approximately $49,000. (A copy of the memo, redacted for security reasons, is printed in the appendix to this report.) The memo expressed urgency in expediting the background investigation and polygraph out of concern that Ames's superiors could not continue to limit Ames's access to sensitive information without raising his suspicions that he was under investigation.

The memorandum noted that there could be logical explanations for the large dollar transactions, raising the possibility that the money represented the proceeds of his mother's insurance policy, or could have come from his wife's family who was thought to be well connected in Colombia. The memo also suggested that the large cash deposits could be explained by loans from the credit union.

The Office of Security opened a reinvestigation of Ames in December 1990. Investigators checked Ames's account at the Northwest Federal Credit Union and found nothing unusual. Indeed, it showed that Ames had borrowed $25,000 of the purchase price for the Jaguar, making this circumstance appear less suspicious. The Office of Security did not make additional requests in December 1990 to obtain information from financial institutions other than the Northwest Federal Credit Union for the purpose of pursuing Ames's finances. CIA Office of Security officials later stated that they did not know that the legal authority existed to seek information from other institutions.

In January 1991, the Office of Security sent Ames various forms to complete for the purpose of updating his background investigation. Ames did not return the forms until March 4, at which time the Office of Security initiated a background investigation.

The Office of Security completed this investigation by April 12, 1991. The investigation was particularly comprehensive and included interviews with many of Ames's past and present co workers, whose comments included the following:

- Ames was assigned to CIC "under a cloud."..One individual recalled that SE Division did not trust Ames or his Soviet agents. There were questions about Ames's handling of a particular agent and also concerns about his judgment.

- In Rome, Ames seemed to have considerable contact with his Soviet and Eastern Bloc assets. A colleague noted Ames received many calls from assets at work. This person also noted that Ames routinely left his safe open when he was leaving for the day, and had admitted he wrote an agent contact report at home on his personal computer.

- In Rome, Ames could not be expected into the office before 9 or 10 am. At least once per week there was evidence that Ames had been drinking during his lunch hour.

- Another of Ames's co-workers said he didn't think Ames was a spy, but wouldn't be surprised if that someday came to light. When asked to explain his remark, the person retracted it stating that the profile of Ames was wrong for him to be a spy, but he didn't trust Ames as a colleague. He reportedly had seen Ames take some actions that he was specifically instructed against, such as giving his agent a laptop computer after his superiors told him not to.

- Another person interviewed commented that Ames lived at a higher standard of living than most other government employees and this person believed that there was money on the spouse's side of the family. The person stressed that Ames's government salary did not explain his level of spending.

- Another co-worker reported that he understood Ames paid cash for his house, a purchase well into the $500,000 range.

- Another colleague stressed that Ames made no attempt to conceal his wealth and observed that Ames had new cars and relied on household help.

According to the CIA IG interview of the investigator who reviewed the Ames background investigation report, "[The investigator) did not consider that the background investigation revealed anything he did not already know. Thus, he did not believe it would be necessary to conduct follow-up interviews with any of the sources, nor did he discuss that possibility with (his supervisors)." According to the investigator, follow-up interviews were unusual and could have been alerting to Ames.

Moreover, the CIA security officer who assessed the results of the reinvestigation determined that it "had no CI (counterintelligence) implications." No action was taken with respect to Ames's security clearance on the basis of the investigation.

1991 Polygraph:

The derogatory information developed during Ames's background investigation also was not provided to the polygraph examiner before Ames's polygraph. The background investigation results were forwarded to the Office of Security on April 12, 1991, the same day that Ames was given his polygraph examination. According to polygraph officials, there was no requirement that background investigation information be made available to polygraphers prior to an examination.

The polygraph supervisor and the examiner were aware that there was some question about Ames's unexplained wealth, but neither recalls actually seeing the December 5, 1990 memorandum from the CIC or having the information in the memo specifically discussed with them. The polygraphers stated that they conducted a routine polygraph examination of Ames, and did not focus on financial questions other than those routinely asked of all employees during an update polygraph.

As is normal procedure, the polygrapher interviewed Ames prior to beginning the polygraph, and at that time Ames volunteered some information on his finances. He said he had money that came principally from his mother-in-law, that he owned property in Colombia, and that he had made several small, but lucrative, investments. Once the polygraph test began he was asked whether he was concealing any financial difficulties from the Agency. To this question Ames answered no, showing no signs of deception. According to CIA officials, the examiner did not ask questions during the polygraph test about the specific examples of Ames's unexplained affluence because they considered this a routine polygraph and were not advised to do any specialized questioning. CIC officials stated that they wanted Ames's polygraph to appear in every way to be routine so as not to tip Ames off to any specific concern in this area.

According to the CIA IG interviews of Ames, "Ames states that if the Agency had interviewed him about his spending in the context of a reinvestigation, he would not have been terribly alarmed. In fact, he prepared himself for the possibility that he would be asked about his finances. Ames attempted to account for the cash purchase of his Arlington home by having a gift letter prepared and notarized making it appear to have been a gift from his mother in law. He states that at some point someone would learn that he had purchased the house for cash and it was reasonable to expect that someone would ask him about the source of his wealth. But no one ever did."

Ames also showed no reaction when he was asked whether he was working for a foreign intelligence service. Deception was indicated, however, when he was asked whether he was concealing contacts with foreign nationals. After several hours of testing, Ames continued to show deception in response to the question. The examiner, as was standard CIA practice, ended the test, called it incomplete, and asked Ames to return again in a few days to try to successfully complete the test.

Four days later Ames returned to finish the polygraph examination. On that day, with a different polygrapher, Ames answered all questions without any deceptive response, including the question regarding unreported contacts with a foreign national. The reaction that had occurred on the previous test was not present, according to the examiner. In fact, the examiner noted that Ames's overall level of responsiveness was down considerably from the prior test. No additional polygraph questions were asked about Ames's finances. The polygrapher concluded the test, dismissed Ames and wrote the polygraph report indicating Ames had passed the test. However, in file notes, the first examiner commented, "I don't think he is a spy, but I am not 100% convinced because of the money situation." CIA officials have recently stated that, in retrospect, the security background check on Ames should have preceded the polygraph and the polygraph examination should have been conducted after taking the results of the investigation into account.

Ames told the CIA IG investigators that he accepted his reinvestigation in 1991 as routine since he was aware that the five-year reinvestigation program "had taken hold." However, he had expected that the 1991 reinvestigation would be more direct and pointed than his 1986 test. Ames maintained that his passing the 1986 polygraph was very important to him because it gave him confidence and reduced his anxiety. Ames was still apprehensive, however, because he viewed the polygraph as "rolling the dice and so I felt that it was perfectly possible that even if I were telling the truth instead of lying I might have problems." Ames said he never received training from the KGB on how to beat the polygraph. He acknowledges, however, that the KGB advised him to "just relax, don't worry, you have nothing to fear."

In its review of the Ames polygraphs, the CIA IG report quotes several current and former polygraph examiners who stated that the Ames case should not be considered to be a polygraph "chart interpretation" problem. Rather, they say, the fundamental problem is that the 1986 and 1991 polygraph charts were invalid because the examiner in each case failed to establish a proper psychological atmosphere in the examination sessions. A former polygrapher noted that without proper preparation, a subject has no fear of detection and, without fear of detection, the subject will not necessarily demonstrate the proper physiological response. Consequently, they surmise, the Ames polygraph tests were invalid because the process was flawed by examiners who had not establish the proper psychological mind set in Ames because they were overly friendly. As a result, Ames's physiological reactions were unreliable.

The fact that Ames passed his 1991 polygraph caused the CIC investigative team to be less suspicious of him. Nevertheless, a question remained in their minds about the source of his money. As of April 1991, CIA had still not checked whether Rosario's family was, in fact, wealthy. In July 1991, a CIA officer was sent to Bogota to develop additional information on Ames's in-laws. Relying on very limited information, the officer reported on July 31 that the family was well-known, politically connected and financially stable. The report noted that a company owned by the family dealt in real estate, import- export, and other business ventures. The report further stated that several years earlier, Rosario's family had donated land worth several million dollars for a soccer field and sports arena. Overall, the report seemed to corroborate Ames's claims that his wealth came from Rosario's family. The next request from CIA headquarters to Bogota for information regarding Ames was not made until over a year later, in August 1992.

On the basis of the July 31 report on Ames's in laws, the results of the earlier background investigation (which also tended to corroborate Ames's story). and his successful polygraph examination, CIA investigators put the Ames inquiry on hold in the fall of 1991.

leads. For example, no effort was made to determine whether Ames's money came from the proceeds of an insurance policy on his mother, a possibility raised in the December 5, 1990 memo. A high school teacher, Ames's mother had died in 1986, and investigators did not view this as a plausible explanation for the affluence that appeared three years later. In addition, investigators did not delve into Ames's financial situation in Rome or attempt to identify when Ames's financial situation actually changed so that they could correlate this change with other events.

The team also did not take another possible step, and formally inform the FBI about the information it had developed on Ames. According to the CIA IG report, the CIC did not formally advise FBI headquarters about the case details until the FBI took over the case in 1993. Nor did the two FBI officers, who had been detailed to the CIC investigation since 1991, formally advise FBI headquarters of the suspicions regarding Ames.

The CIA and the FBI Take a New Tack:

In April 1991, two CIA representatives, who had been involved in the investigation of the 1985-1986 compromises from the beginning, went to the FBI and told them they were going to revitalize their investigation. The FBI suggested that the two agencies join forces to solve the mystery of the compromises, a proposal that their CIA counterparts accepted immediately. None of the participants in this meeting recalled a specific motivating factor for this decision. One CIA official advised the Committee that the breakup of the Soviet Union provided more opportunities to solve the case, and both agencies realized this had to be done in an organized way. Another said it was simply a "natural evolution...it (the 1985 compromises) was always there and it was always an open wound that we wanted to solve." (The reader should note that in 1991, the KGB was reorganized and officially redesignated as the "SVR." For ease of understanding, however, the term "KGB" continues to be used in the remainder of the report.)

As a result of the meeting, the FBI sent two agents to the Counterintelligence Center at the CIA to begin working full-time with two CIA representatives to address the problem in a systematic way. In the summer of 1991, the joint CIA/FBI unit began to review the failed cases, look for commonalities, determine who had access, and identify suspects for subsequent investigation. This analytical effort differed from previous "mole hunt" efforts because, for the first time, the CIA and the FBI had joined forces, and the investigation focused on identifying individual suspects.

By August 1991, the joint unit had identified 198 CIA employees who had access to the 1985-86 compromised cases. Of these, the joint unit identified 29 employees, including Ames, for priority attention. All members of the joint unit conceded this winnowing process involved more art than science. For the CIA representatives, who often personally knew many officers on the list, the winnowing focused on problem officers, or cases where there were "just some kind of vibes about them." For the FBI representatives, who for the most part were not acquainted with the CIA employees involved, it was largely a matter of determining which employees had access to the compromised cases. Ames made everyone's list; indeed, he was high on several lists because he had access to the information, and there were unresolved questions about his sudden affluence. But other members of the joint unit (and other CIA and FBI officials) regarded other CIA employees with more suspicion.

The joint unit members decided to interview individuals on the list of 198 in an effort to further narrow the list, and to determine who did and did not have access to the compromised cases. Further, the joint unit members agreed to have the Office of Security polygraph everyone on the list of 198 if the individuals were still employees and had not been polygraphed since 1985. The joint unit planned to review the personnel and security files of each of the 29 employees identified for priority attention. It tasked the CIA Office of Security to review the files of the remaining employees and asked a CIA psychologist to review medical files for some of the employees.

According to the IG report, a CIA member of the joint unit concentrated on Ames and began to compile an extensive chronology of his activities. The investigator built up this chronology as the team developed new information on Ames from the review. The joint unit did not develop a similar chronology on any other suspects.

A Temporary Diversion:

In October 1991, soon after the joint unit began its Work, it received a report that a CIA officer abroad had information alleged to have come from a KGB officer. According to the report, the KGB had long ago succeeded in penetrating the CIA with an unidentified USSR born employee who had provided detailed information on CIA operations in Moscow and who was, in fact, still active.

The information had some similarities to the investigation which CIA had been pursuing without resolution since the mid 1980's involving the suspected KGB penetration of a particular CIA office. This new lead prompted the joint unit to reprioritize its investigation temporarily.

But soon thereafter, officers at CIA headquarters questioned the veracity of the reported information. They recalled the CIA officer who had reported the information for questioning. The ensuing investigation indicated it was likely the CIA officer had fabricated the entire story for career enhancing or financial reasons. Confronted with this information, the CIA officer resigned and CIA referred his case to the Justice Department for possible criminal action.

The Joint Investigation Resumes Course:

Temporarily diverted by the fabricated story in October, the joint unit resumed the game plan it had earlier conceived. The joint unit continued its interviews with CIA employees on the list of 198 and its evaluation of the shorter list of 29 employees.

On November 12, 1991, the joint CIA/FBI investigative unit interviewed Ames. According to one of the participants, the interview of Ames, like all of the interviews, essentially concerned "housekeeping" details: how paper flowed, who did what, who went to which meetings, etc. It was obvious to each person interviewed that there was an effort underway to go back and find out what went wrong in 1985 1986, but the interviewers did not suggest to those people interviewed that they were under suspicion. Nor did the interviewers discuss their methodology or progress.

Records from the Ames interview indicate that he twice volunteered that he had received a security violation while in SE Division for not closing and locking his safe. He stated the safe contained case chronologies and combinations to other safes. In retrospect, it appears that Ames offered this information as an explanation for the 1985-86 compromises and to detract from any suspicions that he was the mole. It appears to have had the opposite effect.

In late 1991, the joint unit conducted a comprehensive computer search of DO records regarding Ames. No similar searches were conducted for any of the other "mole" suspects. The search produced the reports Ames had written about his contacts in the 1985 86 timeframe with the Soviet official Chuvakhin. CIA records also contain a July 1986 cable which relayed an FBI query about contacts with Chuvakhin that Ames had not reported. CIA headquarters responded to this query by stating that Ames had had three brief contacts during which no operational progress was made. CIA headquarters further promised that Ames would send additional details from Rome, however, he never did and the matter was not pursued by CIA officials.

One of the FBI members of the joint unit reviewed FBI headquarters records on these meetings soon after, but found nothing. It was not until well into 1992 that FBI officials reviewed FBI Washington Field Office records, as opposed to Washington headquarters records, on Chuvakhin. The field office records revealed that Chuvakhin and Ames had numerous contacts during 1985-86 that Ames had never officially reported.

In December 1991, the joint unit held an off site conference attended by senior FBI and CIA supervisors to discuss progress and future plans. In January 1992, following this meeting, the FBI Washington Field Office established its own task force to investigate Soviet penetrations of the CIA and FBI. Its focused on resolving old leads, rather than duplicating the approach of the joint unit. Each joint unit was aware of the activities of the other.

By the Spring of 1992, approximately six months after its creation, the joint unit decided to focus more precisely on Ames's finances because of the still unresolved issues about his wealth. The Deputy Chief of CIC instructed the investigator to complete the financial inquiry of Ames that had been initiated in 1989. (Interestingly, Ames was the only employee on the list of 29 singled out by the joint unit for a financial inquiry, apparently because he was the only person on the list for whom evidence of unexplained affluence had previously surfaced.)

At this point, CIA suggested, and the FBI agreed, that CIA, utilizing statutory authorities provided by the Right to Financial Privacy Act, should seek copies of Ames's financial records from banks and credit card companies where Ames was known to have accounts.

In June 1992, responses from credit card companies indicated that the Ameses charged as much as $20,000 to $30,000 per month. The Ames's credit card records also indicated additional overseas travel. The team learned Ames had not reported some of this travel, as required by CIA regulations.

In August 1992, a financial institution responded to CIA's inquiries, indicating that since 1985 hundreds of thousands of dollars had been deposited into Ames's accounts. The response also showed large amounts were received via wire transfers from an undetermined origin. CIA queried the bank for more information on the source of the wire transfers.

Further investigation of the wire transfers into Ames's various bank accounts from 1985 forward disclosed that approximately $1 million, as well as cash deposits of over $500,000, had been moved into Ames's account, none of which was attributable to his salary. The investigators managed to directly correlate many of these deposits with Ames's operational meetings with Chuvakhin.

The CIA IG report points out that until this point, Ames's apparent affluence could have been explained by legitimate family wealth or even illegal activities in Colombia such as narcotics or emerald smuggling. When the team found a strong correlation between the meetings and deposits, however, they began to focus more urgently on Ames.

The CIA IG report also found, "Despite the significance of these findings.....the [task force] did not officially notify FBI Headquarters." According to a note from the senior unit member to the Chief of CIC, "We have not briefed the FBI in any formal manner and do not plan to do so at this time."

In October 1992, another piece of the puzzle fell into place when the joint unit learned that most of the wire transfers had involved transfers from a bank account of Ames at Credit Suisse in Zurich, Switzerland.

Formal Investigation:

At that point, in October 1992, the joint unit was relatively certain that Ames was the spy they were looking for, although others remained under suspicion. In January 1993, the joint unit began briefing the FBI and other appropriate officials on its work, and began to contemplate turning the investigation over to the FBI.

In March 1993, the joint unit issued its final report, known as the PLAYACTOR/SKYLIGHT report. The report did not describe the specific information developed about Ames or any other CIA employee on the list of possible suspects, but it did provide a compelling analysis of the 1985 1986 compromises and of the subsequent efforts by the KGB to divert attention away from the presence of a "mole" within the CIA. It stated that as many as 30 CIA and FBI Soviet operations had been compromised or discontinued under unusual or suspicious circumstances between 1985 and 1986. The report reached several conclusions which were to prove very close to the mark:

We are virtually certain there was a KGB penetration of CIA who followed closely on the heels of CIA defector Edward Lee Howard. This subject probably began to disclose CIA/FBI operations to the KGB by July 1985, if not earlier. The KGB then proceeded to roll up our agents throughout 1985-86.

The subject was assigned to CIAHQ in 1985 and was in a position to compromise Soviet operations virtually 'across the board.' The subject was employed in SE Division or one of a few slots in CI staff.

(The PLAYACTOR/SKYLIGHT report included, as an appendix, a list of approximately 40 people with access. Ames was on the list.)

The FBI Opens an Intensive Counterintelligence Investigation of Ames:

On the basis of the work done by the joint task force, the FBI put an investigative team together in March 1993, and tasked the team members to acquaint themselves with the facts.

This effort led the FBI to begin an intensive investigation of Ames. Under applicable Attorney General guidelines, this meant that the FBI was able to seek authority under pertinent laws and Justice Department guidelines to employ a full array of investigative techniques against Ames. For instance, the Foreign Intelligence Surveillance Court issued orders authorizing electronic surveillance of Ames's office and residence. Other surveillance techniques used against Ames included mail cover (i.e., deriving information from envelopes addressed to and from Ames), and a clandestine monitor installed in his car to track his movements.

On June 25, 1993, the FBI conducted a search of Ames's office at the CIA. Approximately 144 classified documents were located in his work area, most of which did not relate to his official duties.

According to the CIA IG report, by mid 1993, significant information had been obtained from the relevant financial institutions, which further implicated Ames. The completed financial analysis showed that Ames had a total income of $1,326,310 that could not be accounted for through salary and other known sources.

On September 15,1993, a search of Ames's trash disclosed a torn note in Ames's handwriting which appeared to relate to a clandestine meeting planned for Bogota, Colombia on October 1, 1993.

On September 29, 1993, in a telephone conversation with his wife, Ames said that "my visit was canceled." His wife responded, "Does that mean you retrieve something?" Ames replied, "Yeah," presumably referring to new KGB instructions setting up a an alternate meeting. The following day Ames canceled his airline reservation to Bogota.

On October 6, 1993, a search of Ames's trash turned up a typewriter or printer ribbon which contained two documents which Ames appeared to have prepared in 1992. Among other things, these documents discussed CIA personnel, access to classified information, and classified operational matters.

On October 9, 1993, FBI agents conducted a search of Ames's residence in Arlington. Among other things, this search yielded (1) a typewriter ribbon which contained a note Ames had written to his KGB contact regarding a meeting in Caracas, Venezuela in October 1992; (2) a computer document which identified a mailbox at 37th and R Streets in Washington, D.C. as a signal site, and (3) a series of computer documents regarding Ames's relationship with the KGB. These computer documents included information on clandestine communications, classified CIA operations, classified CIA human assets, and information regarding the payments previously made to Ames.

On October 12, 1993, Ames spoke to his wife about leaving for work early the next morning to "put a signal down...confirming that I am coming." FBI agents followed Ames to the mailbox, and, while not observing him making a mark, they found a horizontal mark on the side of the mailbox at 7:00 a.m. the same day. Later in the afternoon, the chalk mark had been erased.

Later in October, Ames and his wife had several discussions picked up by the wiretap on his telephone related to his trip to Bogota. In particular, his wife was concerned that border officials would detect the large sums of money he traveled with.

On November 1, 1993, Ames traveled to Bogota, Colombia to meet his KGB contact. Transcripts of telephone conversations between Ames and his wife established that Ames and his handler had, in fact, managed to meet twice while he was there; on the evening of November 1 and the afternoon of November 2.

From November 1993 until the time of his arrest, Ames was kept under virtually constant physical surveillance by FBI officers anticipating yet another passage of classified information. The investigation to date, while producing clear evidence of Ames's espionage activities, had not succeeded in producing tangible evidence of meetings between Ames and his KGB handlers. But when the FBI, working with the CIA, learned in early 1994 that Ames, as part of his CIA duties, was scheduled to attend a conference in Moscow in late February, the FBI believed they could not postpone his travel yet again without alerting him, and, thus could wait no longer to make the arrest.

On the morning of February 21, 1994, FBI agents arrested Ames in his car outside his residence. His wife, Rosario, was arrested minutes later in their residence.

Excerpts from

Committee's Conclusions and Recommendations

Over the months since his arrest, it has become clear that Aldrich Hazen Ames caused more damage to the national security of the United States than any spy in the history of the CIA.

Obviously, something went terribly wrong. For a CIA officer to carry on espionage activities without detection for almost nine years indicates, on its face, a failure of the system. As the Committee began to look into this failure, we found a bureaucracy which was excessively tolerant of serious personal and professional misconduct among its employees, where security was lax and ineffective. And we found a system and a culture unwilling and unable -- particularly in the early years of Ames' betrayal -- to face, assess, and investigate the catastrophic blow Ames had dealt to the core of its operations. The system which permitted Ames' prolonged betrayal must be changed. The country cannot afford such calamities in the future.

In the discussion which follows, the Committee sets forth where we believe the system failed and what we believe should be done to correct it. In the end, regardless of what the committee may recommend or what Congress may enact, fundamental change will come only if the Director of Central Intelligence, supervisors at all levels, and the employees of the CIA bring it about. The leadership must come from within. It is clear, given the immense national security interests at stake, that there was "gross negligence" -- both individually and institutionally -- in creating and perpetuating the environment in which Ames was able to carry out his espionage activities for nine years without detection.

As this report documents, the failures evident in the Ames case were numerous and egregious. While it might be argued that the majority of individuals cited by the Inspector General were guilty of acts of omission rather than commission, the seriousness of these omissions cannot be overstated. The failures of the individuals cited by the Inspector General led to the loss of virtually all of CIA's intelligence assets targeted against the Soviet Union at the height of the Cold War. Ten of these agents were executed.

If there is not a higher standard of accountability established by DCIs, then a repeat of the Ames tragedy becomes all the more likely. Management accountability within the Intelligence Community should be no less than the highest levels found elsewhere in the Executive branch.

Having noted in strong terms the magnitude of CIA's failures, the Committee would be remiss not to point out what went right. A traitor, responsible for heinous acts of espionage, was identified and convicted. He has been imprisoned for life. In the end, this was accomplished by the work of a small group of CIA and FBI personnel who took part in what became a long and arduous inquiry -- for some, lasting almost nine years. At least one member of this group appears to have pushed from the very beginning to get to the bottom of the 1985 compromises. It was his impetus that eventually put the investigation back on track in 1991.

The Failure to Deal with Suitability Problems:

From the outset of his career at the CIA, Ames demonstrated serious suitability problems which, over the years, should have led his supervisors to reassess his continued employment. These problems included drunkenness, disregard for security regulations, and sloppiness towards administrative requirements. In the years immediately before he began to commit espionage and during the rest of his career, his supervisors were aware of his personal and professional deficiencies, but did not make his problems part of his official record, nor act effectively to correct them. Despite his recognized unsuitability, there is little evidence that his assignments, activities, or access to sensitive information were in any way limited as a result.

In April 1993, when CIA headquarters asked Ames' supervisors in Mexico City whether Ames qualified for a staff position in another Latin American country, they recommended against it, citing his alcohol problem, his failure to financial accountings, and his generally poor performance. Nevertheless, six months later, when a former supervisor of Ames requested him to fill a position in the SE Division at headquarters -- the most sensitive element of the Directorate of Operations -- there is no indication that Ames' alcohol problem or poor performance were ever noted. Indeed, Ames was placed in a position which provided him access to the identities of virtually all of the Soviet intelligence officers by the CIA without his new supervisors being aware of the problems he had had in Mexico City.

The alcohol abuse counseling that Ames ultimately did receive upon his return to headquarters amounted to one conversation with a counselor, who, according to Ames, told him that his case was not a serious one when compared to many others in the Directorate of Operations.

In 1983, during the assignment in Mexico City, Ames also began an extra- marital relationship with a Colombian national. Rosario Casas Depuy (hereinafter "Rosario"), herself a recruited asset of the CIA. Over time, the seriousness of their relationship became apparent to several of Ames' colleagues, but this never led to any action by Ames' supervisors, despite the fact that CIA regulations prohibit sexual relationships with recruited assets and require that reports of "close and continuing" relationships with foreign nationals be submitted by employees. Despite the security implications of this relationship, the violation of Agency regulations was ignored.

In fact, Ames did not file an official report concerning his relationship with Rosario until April 1984, four months after she came to the United States to live with him. Indeed, it appears that until their marriage in August 1985, Ames (still married to his first wife) and Rosario continued to live together, with any perceptible concern being registered by the CIA. While the counterintelligence staff recommended in February 1985, that in view of the anticipated marriage, Ames be moved to a less sensitive position, nothing changed. Ames continued in the same position.

Over his career, Ames repeatedly demonstrated carelessness and disdain for security requirements. In 1975, while on his way to meet a CIA source in New York, Ames left a briefcase of classified materials identifying the source on a subway train. Although the briefcase was ultimately recovered, it might well have compromised the source's relationship with the CIA. In Rome, he was known to prepare classified reports at home. During his assignments at CIA headquarters between 1989 and 1994, he was occasionally found in other CIA offices where he had no reason to be, and with materials he had no reason to have.

He was equally negligent throughout his career in complying with the administrative requirements imposed on officers of the Directorate of Operations, such as submitting financial accountings for the cases he was handling.

Despite these and other incidents, Ames never received a single official reprimand during his 31-year career at the CIA. Indeed, most of the incidents and shortcomings which have come to light since Ames was arrested were never made a matter of official record. Once on board, his fitness to serve in the Directorate of Operations was never reevaluated.

It is the Committee's perception, which the Ames case confirms, that the Directorate of Operations has been far too willing to dismiss or ignore flagrant examples of personal misconduct among its officers. Security concerns are too often dismissed as the bureaucratic whining of small-minded administrators. All too often an officer who has been through training, gone through the polygraph examination, and had an overseas assignment, is accepted as a "member of the club," whose fitness for assignments, promotions, and continued service becomes immune from challenge.

Director Woolsey, in a recent speech, said that the "culture" of the directorate must be changed. The Committee shares that view. Such change will not come solely by changing regulations or personnel. It will come only when supervisors at every level of the directorate take seriously their responsibilities as managers. Personal misconduct should be documented. Officers who do not meet acceptable standards of personal behavior should not be assigned to sensitive positions nor qualify for supervisory positions. Personal shortcomings should be factored into consideration of promotions and bonus awards. While officers with personal problems should be given an opportunity, as well as appropriate assistance, to rehabilitate themselves, failing that, their employment with the directorate, if not with the Agency, itself, should be terminated.

Failure to Restrict the Assignments and Access of Suspects in Counterintelligence Cases:

The Ames case reveals glaring weaknesses in the CIA's procedures for dealing with the career assignments of employees who are under suspicion for compromising intelligence operations. The CIA failed to restrict Ames' assignments and access even after information surfaced in 1989 which indicated Ames was a possible counterintelligence problem.

In September 1989, after a poor tour in Rome, which was known to the managers in the SE Division, his SE superiors allowed Ames to return to the SE Division and assigned him to the office supporting to all Soviet and East European operations in Europe, a position affording him broad access to sensitive information. He remained assigned to the SE Division until August 1990. During this period, investigators learned about Ames' unexplained affluence and developed information regarding several large bank deposits and a particularly large currency exchange. Yet none of this appears to have had any bearing on Ames' continued assignment or access during this period.

In October 1990, SE Division managers reassigned Ames to the Counterintelligence Center (CIC) because he had performed poorly and they wanted him out of the Division. Apparently, supervisors in the CIC knew Ames was a poor performer and were aware that questions had been raised about his unexplained affluence. Yet they believed they could manage the problem. After his arrest, these officials recognized that Ames' position had given him access to data which identified virtually every double agent operation controlled by the United States. It is unclear how or why his CIC supervisors did not ascertain or evaluate the extent of his access at the time.

In April 1991, while Ames was assigned to the CIC, the Office of Security carried out an updated background investigation of Ames. The results of this investigation were evaluated and shared with the investigator assigned to the special task force. Reflecting interviews with his co-workers in Rome and his Arlington, Virginia neighbors, the investigation produced information that Ames had frequent contacts in Rome with Soviet and East European officials not fully explained by his work requirements, frequently violated security regulations by leaving his safe open and doing classified work at home, and lived far beyond his CIA salary in both Rome and Arlington. (One of those interviewed went so far as to say that he would not be surprised if Ames were a spy.)

Inexplicably, the CIA security officer who reviewed the investigative report evaluated it as "raising no CI concerns," and the task force investigator assigned to the case did not regard the report as providing any new information. Ames retained his security clearance and his job in the Counterintelligence Center, and no further action was taken to follow-up on the information developed in his report. Indeed, the special task force members viewed the investigative report, together with the favorable results of the April 1991, polygraph, as giving Ames "a clean bill of health."

In September 1991, despite having been "booted out" of the SE Division a year earlier, and despite the special task force inquiry then underway. Ames was allowed to return to the SE Division to conduct a special study of the KGB. While the study itself did not call for particularly sensitive access. Ames once again was given access to the personnel and records of the SE Division.

Recommendation: The Director of Central Intelligence should establish procedures to inform current and prospective supervisors about employees under suspicion in counterintelligence cases. While the need to protect the secrecy of the investigation is essential, as well as the need to protect the employees themselves from unfair personnel actions, the assignment of employees under suspicion without frank consultations at the supervisory level increases the likelihood of serious compromises and leads to conflict between CIA elements.

Recommendation: The Director of Central Intelligence should issue procedures to require, in any case in which an employee is under suspicion for espionage or related activities, that a systematic evaluation be made of the employee's access to classified information, and that appropriate and timely actions be taken to limit such access. While care must obviously be taken to ensure that such actions do not tip off the employee that he or she is under suspicion, the failure to evaluate the access of an employee in these circumstances may eventually result in damage that might have been prevented.

Control of Classified Documents and Materials:

The Ames case also demonstrated gaps in the control of sensitive classified information. Ames was able--without detection--to walk out of CIA headquarters and the U.S. Embassy in Rome with bags and envelopes stuffed with classified documents and materials. Many of the classified documents he passed to his KGB handlers were copies of documents that were not under any system of accountability. Ames did not even have to make copies of them. In his last job in the Counternarcotics Center at the CIA, Ames was able to "download" a variety of classified documents onto computer discs and then simply remove them to his home. When he attended a conference in Turkey in 1993, he brought a lap-top computer to do work in his hotel room. This apparently raised no security concern among those familiar with the incident. He was also able to visit offices he had no reason to be in, and gain access to information he had no business seeing.

In the late 1970s, the CIA instituted a policy calling for random and unannounced spot-checks of personnel leaving Agency compounds. But the policy was discontinued soon thereafter due to the inconvenience caused to those subject to such searches.

Ames recounted later that his KGB handlers were amazed at his ability to gain access to sensitive operations and take large bundles of classified information out of CIA offices without arousing suspicion, a sad commentary on the laxness of security at the CIA.

Recommendation: The Director of Central Intelligence should reinstate the policy making persons leaving CIA facilities subject to random searches of their person and possessions, and require that such searches be conducted unannounced and periodically at selected locations. Such searches should be conducted frequently enough to serve as a deterrent without unduly hampering the operation of the facilities involved.

Recommendation: The Director of Central Intelligence should institute computer security measures to prevent employees from being able to "download" classified information onto computer diskettes and removing them from CIA facilities. In addition, existing policies for the introduction, accountability, dissemination, removal, and destruction of all forms of electronic media should be reevaluated. The ability of the CIA's security managers to "audit" specific computer-related functions in order to detect and monitor the actions of suspected offenders should be upgraded.

Recommendation: The Director of Central Intelligence should institute a policy requiring employees to report to their supervisor any instance in which a CIA employee attempts to obtain classified information which the CIA employee has no apparent reason to know. In turn, supervisors should be required to report to the CIA Counterintelligence Center any such case where a plausible explanation for such a request cannot be ascertained by the supervisor.

Recommendation: The Director of Central Intelligence should institute new policies to improve the control of classified documents and materials within the CIA. In particular, the Directorate of Operations should undertake an immediate and comprehensive review of its practices and procedures for compartmenting information relating to clandestine operations to ensure that only those officers who absolutely need access can obtain such information. Further, the Director should establish and maintain a detailed, automated record of the access granted to each of its employees.

Coordination of Security and Counterintelligence:

The Ames case demonstrated a serious division between security and counterintelligence activities in the CIA. Even though an investigator from the Office of Security (OS) participated in the investigation of the 1985-86 compromises under the auspices of the Counterintelligence Center (CIC), he failed to coordinate properly with OS with respect to Ames' 1991 polygraph examination. OS had initiated a background investigation of Ames in March 1991, but went ahead with the polygraph in April without the benefit of the background investigation. As it turned out, the background investigation provided significant information about Ames that was largely ignored by the investigator assigned to the CIC in light of Ames' passing the polygraph examination.

Citing senior security officials, the Inspector General's report noted there had always been a "fault line" in communications between the CIC and its predecessors, and the OS. The CIC had not always shared information regarding its counterintelligence investigations and had failed to make use of OS's investigative expertise. Indeed, the search to find the cause of the 1985 compromises might have moved more quickly from analysis to investigation if there had been better coordination between security and counterintelligence.

The Inspector General's report also found "a gradual