COl162251 _ w _i_ _ --_ - _1 III_ 1_ _- - - _ _ _ _ _ REPORT BYTI-lE ComptronE r General OF T iE UNITED STATES I I -· ·u - Un __ _ I----- _- Nuclear Diversiton In The U Sa 13 Years Of Co ntradiction And Confusior IINATIONIAL SECURIT IN FORMlj'Tf ON UNAUTHOFtlZED OfSCLOSUR E SIJBJE CT TO CRIM JNJ L SAI'JCrr4JNS t --'I Jl I - 1- J x · - - ' 'l J ' o ' ' ' J r l ' _ I I • -- -- ---- ­ - J J ' _ _ _------- ' WARNING NOTICE--Sensitive Intelligence Sources and Methods Involved c ECL SSIIF' lED l NDER AU1'HORITY OF TI-IE INTI RA G Er CY SECURITY lCLASSIFICi TIOl f APPEALS PANEl 1 0 13526 SECTION 5 3 b 3 D Sl' t 1 ISCfllP PPEAL NO 2013-078 document I1l0 1 r· · U 0j ii u _ E 18'201 1CCOl Jt' '-C _­ l67107 EM0-79-8 DECEMBER 18 1978 --- I 'l J J Classified by letter fI cm ffiI to Gr10 dated Octobe 25 1978 and a letter fran CIA to GN also' dcltai ctc l er 25 1978 1 • 4 Cl CO L1622 J f ' ·· · 8i ' '· 1 i ' · ' ' · CC '· -- - ·· C LER G JS L WI SHfN I OF Tf- £ 7 rON O C STr TES o w I' B-157767 The Honorable Johi1 D ingell Chairman Subcommittee on Enerav and Power Comrnitt E on Inte·rst atE and Fa rei g n Comma r CE House of Representat ives Dear Mr Chairman On -gust 12 1977 you requE sted th t we init ate an investi gation to det·errr ine the ext ent and cont ents of intel·­ ligence and related nuclear safeguards infor ation regarding a possi ble diversion of ·nuclear fficlterial from a U 'S facility and the extent to which this information as disseminated among those agencies haiing responsibilities in this area In response to your discusses two questions requ st this report primarily --what information has been developed abo the alleged diversion and --were the investigations done by the Federal Government adequate As agreed r¥it h your office we plan to distribute the report to certa·in other parties having an interest in it Specifically we plan to provide the report to the Chai'rman of the House CornrnittE e on Interior and Insular Affairs and the Chairman of the Subcomn ittee on Energy' N·u clear Prolife ­ ation and Federc ll Services' r Senate Committ ee on Governmental IGr D BY see inside front cover EXEMP F AL ECLASS IF ICATION SCHED JLE OF EXE 'ER 11652 EXEMP ION CAT'EGORY 2 This 1 age is UNCLASSIFIEI l CO 11622 1 B- 15 7 I 6 II 'ICLA SS I F I 'D Affairs Furthe l we will alsq be providin'g the report to the House and Senat e Select Intelligence C rnrnit tees and the Federal agencies included in our revi w The report has been classified as SECH ET rational Secu­ Info matiQn by the Federal Bureau of Investigation and the Central Inte11igenc 2 Agency 'le mad ' E very' attenpt to issue an unclassified repo t on thi s matter Hrowever neither the 'Federal BL1re iU of' Investiga·tion· n or the 'Cen tral Intelli­ gency Agency was able to provide us with a declassified version of the report rity 4 s yo rslJ l-t 01 4 1 Comptroller Genetal of the United States 2 CiNCLASS 1F1E1 II 17T C011622 51 REPORT OF THE NUCLE R DIVERSION' ·1· J T E OMPrr GL ' GENERAL OF THE' UNITEC STA ES 13 YEARS O UNITSP STATES CONTRl DI C rI O hl' D COt'JFUS I 0 ' DIG EST PREFi C E It is not G AO's function to conduct criminal i nv e S t i 9 a t ion san d t his rev i e w s h 0 U 1 d not be construed as one Thi s· report is simply a presentation of facts as we have examined them regarding thE alleged diversion and its accompanyin g 13 YE ars of contradiction and confusion GAO's efforts focused on the im­ plications such an alleged incidE n t lIould have f r imJ rov in9 'the effecti veness of the Nation s current nuclear safeguards program Inyestigations of the alleged inc j dent by the ·FBI and the Department of EnE rgyl s DOE Office of I'nspector Gene'ral are stilI under way WHY GAO'S REVIEW AS ADE Chairman 'John Din ell o f the Hou e Subcom­ mittee 'on Energy clnd Power requested GAO to exarnine an allE ged incident involving over 200 pounds of unaccounted for u 'aniufO­ 235 the mate rial used in the fabrication of nuclear 've 3pons ' from' a nucleclr plant in wester l'l Penns ylvania Also Chairman John Glenn of the Subcommittee on Energy Nuclear Prol if era t ion and Feder al Serv ices Sena te Committee on Governmental Affairs and Chair­ c man Morris K Uda11 of the Subcon rnitt ee on E ergy and nv ironmen t House COll1mi t tee on Interior and Insula'r Affairs eX f ressed in­ terest in the review Chairman Ding 211 spec'if icallY asked GAO to l examint the ext ent and content of int elli­ gence and saf 2guards informatfon regardin'g the all e 9 e din c i d E nt a'n d the ext e n t to wh ich t h'i s L nfo r mel t ion wa s p r ov ided t o DOE and thE Nuclear RE gulatory Commis sion NRC for their use ·in assuring that nuclear ma­ te ria 1 s we r E be in9 adequa te 1 y pr clte c t ed in this country Cha'irman Dingell requested that GJ O review rt all neces sary files EMD-79-8 C01162251 and reports incl dlna CIA and the FE CONSTRAINTS _ -it those of ERD NRC It ON GAOtS REVIEW -------- _------ ----------_ ­ GAO attempted to satIsfy the Chairman s re­ quest by intl ·r·viewinq rE sponsible Fede ll and private individu ls a d byexaminirig pertirient reports and db umentation While DOE 1 and NRC provided full access to all theii records a d docurnentat'ion GAO was con­ tin ually denied necessar y re orts· and docu­ men ta t io n on the a 11 eged i ric i den t by the Central Intelligenc·e Agency CIA and the Federal Bureau of nvestigation FBI CIA provided GAO a written chronology of contacts with other Federal ag ncies how ev r the CIA denied GAO ciccess tQ any source documents on the case According to agency officials this was a decision made by the' Direc·tor of the C I 4I --J - - - - -__J The CIA did subsequently allow selected staff of Chairman Dingell's Subcom ittee access to· CIA documents how­ ever access to the documents was not ex­ tended t O include GAO J­ - Withheld under 'statutory authority of the e traJ Int lligence i gency Act of 1949 50 I L S C sectIon 493g The Atomic Energy Commiss'ion AEC was for­ merly responsible for both regulating and promotirig all nuclear activities in the United States In January 19 1975 it was split into the 'Nucl at Regulatory Com­ mission nd the Energy Research and Devel­ opment Administration ERDA NRC becarn responsible for nuclear regulation and ERDA became responsible for nuclear devel­ opment and prorn tion Under Public Law 95-91 ERDA's functions w'ere placed in the DepartmeDt of Energy effective 6ctober 1 1977 NRC remained intact Throughout the report DOE i used to refer to the Department 6f Energy ERDA and AEC ii COi162251 The FBI's rationale for CiE r1yinCI acceBS was that it did not want to jeoo2rdize an on­ g 0 i ngin v est i gat i n ' 0 f t c 11 t d Ed d i v E r ­ sion incident GAQ 'was denied Iclccess t o dOCL mE nta­ tion it had to rely for the most part on oral evidence o'btained in interviews with knowledgeable indi idu ls and staff The lack of access to CIA and FBI documents made it impossible for GAO to corroborate or check all informati6n it obtained When­ ever possible GAO a'tternoted' to corroborate the inforrna t ion' with 0 the knowledgeable i n­ dividua1s One must keep in mind however that the alleged 'incident occurred more than 13 years ago These limitations impeded GAOls efforts to· fully collect and evaluate' ali facts of possible relevance t th al­ leged diversion incident Beca se a While GAO normally would not continue work wher it was continually denied access tb pertinent 'and im portant documentation it d·id continue in this case because of the significant· nuclear safequards j mplications and th congressional interest This re­ report is focused on· the' inlplications the alleged incident has for iITlproving th€ E f­ fectiveness of the Nationls current nu clear safeg'uard program BACKGROUND The alleged incident surfaced in 1965 at the Nucl ea r Ma ter ial s' and Egu ipmen t CorF o­ ration NUMEC Since that time many allegations concerning the incident have been made in newspa er and magazine arti­ cles nd at corigres ional hearings These allegations include --The material was illegally diverted to Israel by NUMEC's manag m nt for use in nuclear weapons --The material was diverted to Isra l by NUMEC's management with the assistance of the CIA C01162251 - The material'was diverted to Israel ith the acquiescence of the United States Government --There has been a cover-uo of the NUMEC' incident by the United S ates Government CIA officials prov'ided 'L lS with their views art the first all gation and stated th t' they had no inforlrnation to 'SlJICtstantiate anY of the o thers Sa'sed 'on t he totality of-GAO s inquiry we beli ve that the ll gations have not been fully or adequately answered ' Investigations of the incident were con­ ducted by DOE' and the FBI he CIA NE C and' the Joint Committee on Atomic Energy also have some knowledge of the facts sur­ ro ndino the inciden·t 4 ll investiqations 1 ' of the lleged incident'ended wit o definI tive an wer and GAO found no evidence that the 200 pounds 6f n cleai mat r'ial has been located However as a r'esult of the NUMEC incident the safeguards programs in the Un i ted S ta tes hav under ne 'suk s tan t ia1 'changes and have improved significantly This' report addresses' the t wo major ques-' tions still surrounding the incident and their implications for thi country's can­ t inu ing respons ib il i t'ies for safeguard ing strategic nuclear materials These are -What information has been developed the alle ed NUMEC diversion about --Were the investigations conducted by the Federal Government into the alleged inci­ dent adequate l CIA officials informed GAO that they have - no authoriti' to conduct 'investigat ions of unaccounted for nuclear materials in the United States As used in this report the term Uinvest gatioryl s is used in the conte xt o'f t he entire FE de ral E ffort'tlD re­ solve 'the incident iv SECRElr COl162251 WHAT INFORMATION HAS·BEEN DEVELOPED -AB UT TH E- ALLf 'GE D NUMECDI VERS tON ---·-----··--·­ - - - - _ --- _­ - Based crt its review of available documents held by DOE and discussioris with those in­ volved in and knowledgeable about the NUMEC incident GAO cannot say whether or not there was a d'iversion ot nlc lter icll fronl thf NUMEC facility DOEh s taken the position that it is aware of no conclusive evidence that a diversion of nuclear material ever occurred at the NUMEC facility although it recogni es that' 'the pos's'ibility cannot be el imina te d Agents' f rom the FB I invol vee in the' current investigation told GAO ihat· while there exists circumstanial information which could lead an individual to conclude thgt a d ver sion occurred th re s no' su6stantlve proof bf a diverSIon Current ly the FBI is continuing its in·­ vestigation into the alleged NUMEC inci­ dent I 25Xl E O 13526 I In an August'1977 meeting a former high ranking CIA official 'informed GAO ' in the presence of sev ral current CIA officials that information was developed by ·the CIA that made· it' appear that the NUMEC facilit was the most likely source of the material _J GAO's understandlng of the informatlon that was presented at this meeting was subsequently provided to CIA in a memorandum of con er- sation A knowledgeabl CIA official who r viewed the memorandum xpressed rio oppo­ sition to GAO's use 'of the 'tl2rn1 most likely Later in 'No mb r 1977 meeting with CIA o'£f ic ial S GAO w a's info rmed 1 ha t ther e '-las no data to specifically sup ort such a con­ clusi6n Further GAO was informed by CIA officials that chara terizinq NUMEC as the Itmost likelyU source of thE lranilJm-235 held by Israel was not the 'official position f the Agency but of erhaps on or two former Agency of ficials The CIA offici ls GAO contacted informed us that the position ex­ pressed in the August 1977 briefing should v C01162251 h3ve been changed to rE fl ect a less conclusive position Ul EC The CIA officials suggested that be recognized as only one of many pas-­ sible sources of enriched uranium going to Isr el SUbsegu ntly however two former senior CIA officials res nsible for' collect­ ing and analyzing such data told GAO that information does exist within the CIA I'ink­ ing the unaccounted for NUMEC material to Israel One of these former officials was one'of the five highest ranking employees of the ' CIA and reported directly to t he' Director of the CIA on this matter Current CIA ofticials told GAO that these two former offic'ials were drawing on memory as they recalled' past eventsc The CIA o f­ ficials having current access to the files ad ised GAO that a search f the ijyailable data reveals a semant'ic roblem conGerning the use of the term uevidE nce 1f In short CIA states there is no hard evidence on a diversion from NUMEC to Israel At the same time current CIA'officials recognize that the available dat when coupled ith past recollections'of event could lead former officials t'o speak in te rnls of ' linking the' unaccounted mat rial from NUMEC to nuclear develop ents in Israel GAO was unable to determine whether the CIA changed its opin ions about any NUMEC Is rael link or whethe r U the CIA inadver tently failed to comment on the inaccuracy of the most likely positi on conveyed to'GAO in the Aug st 197 briefing The FBI agent' urrently in charge of the in­ vestiaation told GAO that the FBI also re­ ceive conflicting stories from the CIA Initially the CIA told the FBI investiga­ tors they had information supporting the possibility'that the material missing from the NUMEC facility' went to Israel ThE CIA later reversed itself and told the FBI it did not have this type of information In 1975 t e entire regulatory 'function of DOE was taken over by the newly created NRC which was made responsible for the regula­ tory oversight of ommercial nuclear facili­ ties like NUMEt and c onsequently has become involved in the incident - In a FebI uary 1978 report related to th NUMEC incident C01162251 NRC coricluded that their previous official position of no evidencE t o support a di­ ve sion may need to be reconsidered in light of the ma Y uncertainties surrounding the ' Incid'ent WERE THE INVESTIGATIONS C'ON DLlC'I'ED BY THE 'FEDERAL GOVERNMENT INTO THE ALLEGED INCIDENT ADEQUATE If a diversion or' theft of nuclear material is suspected or ' actualljl occurs in this country the rederal Government must be able to quickly and· def ini tiv ely determine how and why it happened so that the public can be protected against the poten ial hazaids from such an occurrence To do thi agen­ 'cies of the Governm nt with capabilities fo inves tigating and reSI ondinq o such incidents must work together to assure that all relevant information is obtained and is timely This did not happen with the al­ l eged NUMEC inc id'en t Feder al inves t iga t ions of he alleged NUMEC incident were uncoordi­ nated limited in scope and timeliness and in GAO's opinion less than adequate There was not a unified and coordinated investiga­ tion of the incident by those agencies having the capabilities to fully resdlve the matter --DOE the FBI and the CIA During 1965 and 1966 DOE investigated NUMEC's accountability and safeguards system focus­ ing on the div rsion possibility Prior to the alleged 1965 incident DOE conducted six accountability inspections at NUMEC in'order to assure that nuclear materials were being adequately protected The inspections were directed solely 'at the ma t- riall accounting requirements of the time which were much less vigorous th n those in existence at nuclear facilities today Each inspection revealed significant defi lencies but DOE allowed the facility to continue nuclear operations even though a key field investi­ gator at one pOInt recommE nded that DOE stop providing nuclear material to thE facility The FBI 'which had the respo sibility and authority to investigate the lleged inci­ den t did n'o t f c U son t h E que s t i 0 n 0 f a 'l' C01162251 ObI e nuc 1· ear vers lon U1 OS S·l I 25Xl E O 13526· --nearly 11 years later FBI declined DOE t S May 19-76 un t l Initially the eguest tC c nduct an investigation of the divte rsic n ·possi bility even though they are required to conduct such investigations u der the Atomic Energy Act TWO' sour es familiar with the matter gave GAO differing views o why the FBI de­ clined to ndertake' the investi9at ion Be­ tween 1965 'and 1976 the FBI's efforts'w re directed at investigating the actioris and associations' of NUMEC's president FBI and Department of Justice staff told GAO that after a request by President Ford in April 1976 the FBI did begin to address th diver­ sion aspect GAO was not furnished any docu ents regard'ing President Ford's re­ quest and ·thus could not s pecifical1y determine its nature and scope his Inv stigatio·n which is currentl ' ongoing is bviously hampered by the II-year gap since the alleged in6ident occurred Also although it may not affect the investigative outcome GAO fo nd that certain key indivi­ duals had not been' contacted by the FBI almost 2 years into ihe FBI's current investigation According to the CIA it did not conduct a the' inc id ent be­ domes tic nvest igat ion· of cause it had no autho'rit _ O d j L-- _ Several current and fonner' FBI and DOE officials indicated that thE CIA ithheld this information from them at a time when it could ha ve aff ec ted the scope and d irec­ tion of the i r inves tiga tions HO lJever cu r­ rent CIA officials we contact ed stated that the full range of informat was not available during the FBI investiga­ tion in 1968 Current CIA officials told s that during the· FBIls investigation be­ ginning in 1976 the FBI was·briefed by CIA in full and the FBI agerit-in-charge told viii ---'--ill E O 13526 ''mRU --­ 25Xl ------­ I COl162251 ' I the CI that he did nbt see any new informa­ tion in the preserit tion which was germane to the FBI investioation CIA officials also told us that ' abou the same time ' ' ' ' 'I DOE officials also briefed by CIA said ' that the information was consistent with what had been krl'own 'previ usly GAO does not know the exterit to which the CIA re­ vealed to the FBr or DOE the information it possessed Wh ile' the CIA rna' ' have alerted hese agencies it does n6t appear to us that 'it provided the m 'with all ·the in­ formation it had on this subjt ct in in ade­ quate or timely m nner It appears to GAO that the CIA ma have been reluctant to aid thei domestic investigation of t'he arlleged diversion becau e of its concern about pro­ tecti ng its own sources and nlethods of obtaining information II The failure of DOE ' the FB r a nd the CIA to coordinate their efforts 11 the suspected divers ion when i·t occurre and as new infor ­ mation developed and the limitation in the scope and timeliness 'of the FBI efforts lead GAO to c'onclude that the FeCleral efforts to resolve th mat'ter wer less t an adequate Currently there exists no Calor-dina ted inter­ upon plan' whi c foc'uses on 1 an adequate detection and investigative sys­ t em and 2 c reporting systeln to the appro­ priate congressional committees and to the President As a result if a similar inci­ dent were to occur today this country may not be assured of any better investi9ation The United States needs to improve its ef­ forts for effectively responding to artd in­ vestigating incidents of missing or unac­ counted for weapons-grade nuclear materials In view of increasing terrorist activities t'hroughout the world the labili t y to respon d and investigate such incidents should be of concern to national 'security and the public' health and safety ·agency agreed I COl162251 • I RECOI-l E ' Dl TICINS TO THE HEADS OF AGE CIES GAO reconmends that the heads of DOE NRC the Department 0'£ Justice and the CIA 'as part of thei responsibilities for the na­ tional security of the 'country establish a plan for coordinated interagency action which focuses on a nuclear safeguards systelll that aej'equately detectl5 investigates and reports to the con ress and the President on thefts or diverSions of nuclear materials The plaD' which should be submitted to the Congress within 90 days or less of the issu­ ance of this repo t should include' --a fOrMal means £o r- a ti m1el J determination olf vhether a loss has occurred --a clear 'and direct 'chan n l c f tions between ' he gencies corn mun ica­ --a tamal means for rapid ly focus ing the abilities of these agencies on the resolu­ tion of a diversiori i0cident and --a means for allowing any incident involving the theft or diversion of nuclear material to be definitely re ol ed' bo tte satisfac­ tion of the Congr ss and the resident GAO also recomrnen'ds that the ttc rney General working with the FBI take the lead in establishing the interagency plan since the FBI under the 'Atomic Energy'Act of 1954 is responsible for inves·tigating incidents involving the' 'diversion' or theft nuclear rna terials of RECOMMENDATION TO THE CON ES The committees of Congress having juri sdic­ tion for domestic nuclear' safE gua1 ds should --review the nuclear safeguards plan to be submitted by the Executive Branch to assure that an' adequate s rstem is developed which deters and investigates-thefts or diver­ sions of uclear materia15 C01162251 ' ' 'T' 'u • uI'---' the FaI and D E IS C ffice c f Inspector G2n al co plete their investi­ ja t ions 'of the U 'lEC inc id E n t as soon as ossible and submit their reports to the --l Aequest· that· c01 1mittee These reports should be reviewed to deteDnine the adequacy of the investigations and their implications for developing a more effective· future system l 'Even' with com plete' info·r3Tlation c n alI Govern­ ment investigations given the pas age of time it·'may be difficult to conclusively determine what specifically happened at NUMEC GAO believes the important thing is to use the lessons learned from the r UMEC experience ake certa n that the Nation develops an fc llo vv ··up srstern tOI deter future nuclear thefts or diversions to ade 'uatedetectlon and AGENCY COf lMEN'I'S DOE's comments on the report' are contained in a letter dated July 25 1978 See ap­ pendix II DOE agreed with the thrust of the r-eport Howeve r it disagreE with oU'r recommendation concerning the need to enter into a' formal interag ncy agreement with NRC the FBI and the CIA for more timely and ef­ fective action in investigating incidents of suspected or real diversions of nuclear ma­ terial DOE stated in its letter that a comprehensive plan and a memorandum of under­ standing with the FBI alrE ady existed for joint responses to nucle r threat situations Further DOE stated that it had open channels of communication to other a'gencies including the CIA for the exchange· of information pertinent to nuclear threat situations Thes factors w re known to GAO nd mendable The tu rent m morandum are com­ of under­ standing b tween DOE and the FBI is the b ­ ginning of an effective response plan to incidents of nuclear d'ivers Lon but is in­ adequate since it does not include CIA par­ ticipation and 'cooperation W'ithc ut a for­ mal in te ragency ag reement plac ing pes it i ve reporting and investigative responsibilities on DOE NRC the FBI and the CIA along the lines recommended by GAO we believe the 'COl162251 1' ' - E 2 eXIsts to a repetItIon of the i'oJ U ' EC i l S t i s- at i c n • 0S2lDl lty Y The conments received frc P'1' th e CIA are con-· t ined in a l tte'r- dated Sept ember 1 1978 ·See appendi III The l tter takes no issue with he facts or recommendations ·in­ cluded in the report It does however point out some concerns about certain in­ formation in the'report GAO believes that the concerns expressed by the CIA have been adequately addressed in the text· 0 £ the reoort 'H wev'er 'w e did not spec i f icallv add ress' the 'CIA I 5 c ncerns re' garding its - degree of cobI E rat ion i th DOE and the FBI ori th alleged NUMEC incident In its letter the CIA disa9reed vlith the s tal em n t in the report' inC i eel ting • that they fa led to cooperate with DOE and the FBI The CIA bases·the d isagr eerr ent IOn the fact that its officials briefed a largenum­ 0 ber of officials in the executive and legis­ lative branches' of Government on the NUMEC matter in 1976 and 1977 was a are that such briefings were pro­ vided However GAO believes that since the briefing were prqvided 4 tb 6 years after some of the key information was developed t heir utility in helping t re solve the NUMEC ma·tter was greatly diminished Fur­ ther according to two former CIA officials familiar with the case documents were prepar ed within the CIA· lin cing the unac­ counted for NUMEC material to Israel This information was not passed on to DOE or the FBI according to the officials we contacted in those agencies 'However we believe it must be pointed out that·the current'CrA officials GAO interviewed said that such documents were not known to exist within the CIA GAO The Department of Ju·stice and the FBI lid not fU rnish 'fornlal written' COffilnents AO provided them more than 3 months to do so a ti e period longer than that provided DOE the CIA and NRC While GAO did not have the benefit df official written com­ ments from the DepartInerit f Justice arld ' C01162251 1 0L J the FBI in pr-eparing the inal report GAO d i l cons i eL the V'iE · i r CO - l lents of th FBI staff familiar Yli·th the a lleged t U lEC incident during the course of-the rev ew NRC had no comment on the ontent of the report However NRC did state that the recommendations to the Heads of Agencies appears reasonable See appendix IV C01162251 Con t e n t s - - ­ - - - --- _---- DIGEST i CHAPTER 1 1 INTRODUCTION' Agencies involved in investigating NUMEC Access to records difficulties 2 WHAT INFORMATION HAS BEEN DEVELOPED ABOUT THE ALLEGED NUMEC DIVERSION Depar tmen t of Enerqy s invol vemen with NUMEC incident 3 3 5 I 5 Federal Bureau of'Investigati6n's O involvement with NUMEC incident 3 Central Int lligence Agency involvement with NUMEC incident 15 WERE THE INVESTIGATIONS BY THE FEDERAL GOVERNMENT I TO THE AI LEG ED INCI OENT AD EQ UAT E ' 19 Department of Energy Federal Bureau of Investigation Central Intelli ence Agency 4 19 22 23 OBSERVATIONS CONCLUSIONS AND RECOMMENDATIONS Whethei a diversion occurred at NUMEC remains to be answered 25 25 Federal me·chanisrns to coord inate in­ vestigations of missing nuclear material ate lacking Recommendations to he heads of agencies Recom ehdation to the Congress Agency com ents 5 26 27 28 28 SCOPE OF REVIEW 31 Summary list of individuals contacted in preparing report 32 APPENDIX I II Letter dated July 25 1978 comm nts III co taining DOE on'this report Letter dated September 1 1978 containing CIA comments on this report 34 36 C01162251 _ Paqe APPENDIX -J IV v Letter dated July i3 1978 containfng JRC co ments on this repqrt 40 Letter dated February 8 1978 from Attorney Gen ral to GAO denying access to Department of Justice ·records 41 ABBRE I 'IO AEC Atomic Energy Co rnisSion CIA Central DOE Department of Enetgy ERDA Energy Research and Development Administration FBI Federal Bureau of Investigiation GAO General Accounting Office Int lligence Agency I JCAE ' ' Joint Committee on Atomic Energy NRC Nuclear Reguia··to·ty' Corn rnission NUMEC Nuclear Materials 'and Equipment Commission 'C01162251 cHAp rER 1 INTRODUCTIO · In 1965 the Department of Energy' DOE 1 found during an inspection that about 206 pounds of uranium--235 could not be acc6unted for a t the Nuclear Materi ls and Equipmen Cor­ poration NUMEC a nuclear facility located·in Apollo Penn­ sylvania DOE estimated that1this much uranium could make at least four or fiv·'e nuclea'r weapons Although i nvestigations were conducted the uranium was never ac ounted for The Federal Government has generally remained silent the inci ent Infotmation that has become known over the years has been vague and inconsistent With the 6urr·ent high interest in a s5uring adequate safE guards ov r nuclear' materials speculation about the incident has surfaced gain Many allegations concerning' ·the unaccounted for rnater ial· and the NUME facility have been made in' newspaper and magazine articles and at congressional hearings ' hese allegations include ' abou --The material was illegally dtverted to Israel by management for use in nuclear weapons UMEC --The material was iverted to Israel by NUMEC management with the assistance of the Central Intelligenc Agency CI • --The material was diverted to Israel with the'acquies­ cence of the United states Government --There has been a cover-up of the NUMEC incident by the United States Government --------liThe Atomic Energy Commission AEC was fo merly· responsible - for both regulating and'promoting all nuclear activities in the United States On January 19 1975 it was split into the Nuclear Regulatory Commission NRC and the Energy Re­ search and Development Administration ERDA NRC became responsible for nuclear regulation and ERDA became respon-' sible for'nuclear'development and promotion Under Public Law 95-91 ERDA's functions were pl ced in the Department of Energy effective October Ii 1977 NRC remai ed intact Throughout the report DOE is used to refer to the Depart­ ment of Energy ERDA and AEC - - _ ' I C01162251 ' _' CIA officials lrOVlcea us' itr l tht ir TJ'iews on he' first allegation and stated that they had no information to sub­ stantiate any of the other 8ased on the totality of our inquiry we believe that the allegations have not be n fully or adequately answered Overall the nuclear s feguards systems in this country have been greatly improved as a result of the alleged 'NUMEC incident Since the alleged incident occurr d AEC and its succeeding agencies have placed much greater levels of con- trol requirements on private nuclear facilit'ies like NUMEC There are many riew reauirements which include such measures as bimon hly inventori accounting armed guards to protect unauthorized aCgess to nuclear material and alarm systems de­ signed to detect nauthorized'movernent of nuclear material Nevertheless two repo rt s GAO recent l y issued 1 cited major clef ic ie'ncies in otir domestic nuclear' sa Eeguards sys ems These reports point' out tha't there alre thousands of pounds 'of weapons-gr1 de material unaccounted for in this country today This being the case it is critical 'that £ne Government be prepar ed to quickly and' effe'ctiv E ly res ond to allegations of loss of nuclear material to determine whether when where an how it'occurred The unresolve'd NUMEC incident raises questions on the U S capability to deal with unaccoun ted for nuc-lE ar mate­ rials This report discu 5es wi'thin the constraints of the data available to us the scope and effectiveness of U S efforts to locate t'he' una'cco'unted for 'uranium anc the impli­ cations the incident has for our current nuclear safeguards programs This repor't addresse two basic questions arising from the NUMEC incident ­ --What information NUMEC diversion h s been developed about the alleged --Were the investigations by' th€ Federal Government into the a 11 e 9 e din q ide n t ad e q u t e l Wit h the am 0 u n' t 0 f n u c 1 ear mat e ria 1 sin t his c 0 un try i n­ creasing rapidly the o portunities for diversion without 1 EMD-76- uShor tcornings in the Syst ms Used to Protect and - Control Highly Dangerous'Nuclear Materials 'dated July 22 197'6 and EMb-77-40 Com'mercial Nucleclr Fuel Facilities Need Better Security dated May 2 1977 2 SteRu COl162251 - also t c - aaequa e saLeguaras can ' to' • ' ' lnc se Conseguent y -answers to i'nsure that cur­ rent Federal capabilities exist to respond to real or suspected incidents of nuclear ciaterial diversion to these C Jestions c - ir ort Clnt i n· Ol c r AGENCl S INVdLVED I 1 NUMEC INVESTIGA ING Orlglnally there were three agencies involVed in gath­ ering information on the incident These were DOE the Fed­ eral Bureau of Investi ation FBI and the CIA However pOE and t'he FBI' have begun new' investi gations of the incident • In' February 1978 DOE began an- invE sti 9'ation t o determine what officials in the- agency knew about the alleged diversion inci­ dent In April of 1976 at the oral request of Prtesident' Ford the FBI opened an' investigation of the NUM C incident aimed·at determining whether a diversion of nu lear material ever oc­ curred at the facility Both of th se later investigations are still going and we have' not rev ewed these' rE ports There are ai so other Federal' bod ies that 'have developed a substantial amount of inforrn'atic 'n on 'the incident ' These are the 'former Joint Committee dh Atomic Energy JCAE NRC and GAO A staff mem'ber of the former JCAE c mpilE d a lengthy record of the events and' incidents surrounding the alleged diversion and wrote a repOlr't whictl was inconclusive about whether a diversion ever ccutred at the NUMEC facility The· report was written in about 1967 or 1968 NRC issued a report on certain asp ct5 of the NUMEC incident in March 1978 The NRC r epo t however did' not fqcus on th diversion question It was aimed at what s ecific NRC officials knew· about the al­ leged divers ion incident ' GA9 issued cl' report to the former JCAE in une 1967 which focused primarily on NUMEC's account­ ability cant' t'ols over nuclear material In that report GAO said it found no evidence of divers ion an aft er considering informa tion ava i1 able had no r eason tel qUE stion AEC' s con­ clusion that while it could not be sta ted w ith certcainty that diversion didn1t take place the survey team found no evidence to support the possibility GAO's current report focuses on the allegations and infor­ mation developed since th'a t time in attempting to answer the l CIA officials infor ed GAO that they have no uthority to conduct investigations of unacC'ountl d for nucleclr mate­ rials' in the United States ·As used in this report the term investigation s i s used in thE context of the en­ tire Federal effort·to resolve the incident 'COl162251 gue5tlo s of what information has been dev loped about alle ed alverslo 3nd ere the investigations done by the the Federal Government adeouate ACCESS TO RECORDS DIFFICtiLTIES ----------_ _---_ _---------- _-- - - -_ I During our review we w re denied documents pertinent to the NUMEC incIdent by the FBI and the CIA We repeatedly tried to obtain documents from these groups but with no Success A written' chronology of contacts' with other Federal ag ncies was provided by the CIA however the CIA denied GAO access to any source documents on the case According to ' Agency offIcials this was a decision made by 'the Director of the CIAI _ The CIA d ld sUbsequently a'l'low seltected staff of Chairman D ingell's Subcommittee to revie some CIA documents at CIA Headquarters Access to these or any 6the CIA 'documents was not extended to include 6AO Further th CIA'did not cooperate with GAO in arranging some interviews w ith kno ledgeable current and former CIA officials This was significant since former CIA officials although not required can be expected to inform CIA before discussing their former activities with others The FBI's rationale for denying GAO access to their documents was that the Bureau did not want to jeopardize its ongoing investiga­ tion of the alleged diversion incident These constraints made it irnoossible to obtain corrobor­ ating evidence for some of the re ort's contents Nonetheless we made every attempt to do so a nd where it was not possible' ·' we have so noted it in the report C01162251 tJHAT' IN·FO' TICIl' ' HA S BlSEN DEVELOPED ---------------- ----_ - ABOUT THE ALtEGED NUMEC DIVERSION n il the summer of '1977 the only publi ized Government view on the NUMEC incident was that there was no evidence to indicate 'that a diversion of nuclear material had occurred However ' incongr ssional'he ringsbefore the Ho se Subcorn rnittee on Energy and Enviionment and the HoGse Subcommittee on Energy and Power in July and August 1977 respectively it was revealed that the CIA might possess information which did not support this concl sion and in fact that a totally opposite posi i9n ould be taken We attempted' to obtain all the information developed by the Government on this matter We r viewed documents report and stud es made ava ilable to us We also in terv ie wed those individua s most involved with the incidant and the subsequent investigations of it Based on our work we cannot say whether or not there was a diver sian o·f Ina ter ial from th4 NUMEC fac il i ty Fol­ lowing is the informatioti and view which we obtained from the three principal agencies involved in the alleged incident --DOE FBI and CIA DEPARTMENT OF ENERGY'S INVOLVEMENT WITH NUMEC INCIDENT DOE records show that in D ecenlt er 1957 the NUMEC facil­ ity located in Apollo Pennsylvania was licensed to possess enr iched uranium for' manufactur ing nuclear fuel' recover ing scrap and conducting nuclear research and development NUMEC obtained various 'forms of enriched uranium and other nucl ar material from the United States Government and commercial sources During the period 1957 thr u9h 1967 'NUMEC received over 22 tons of 'uraniurn-235--the material used in the fabri­ cation of nuclear weapons Until 1975'DO wa responsible for insuring that licensed commercial nuclear facilities iu h 'as NUMEC provided adequate safeguards and materi l control DOE'S records show that un­ til June 1967 the polic for safeguarding nuclear materials relied pr irnar fly on the mo'n etary value of the mater ial DOE believed that the financial penalties imposed pon licensees for the loss of or dam ge to nuclear material and the crimi­ nal penalties provided b y the 'Atomic Energy Act of 1954 would be sufficiE nt ·to motivate licensee s to adequately protect the· material from loss' t'heft or d'iversi on Material 5 COl162251 ccountability requitements ' while written int licerisee contracts and the' Code of 'F deral Reaulations wer more di­ rected to health'and safeiy concerns than in protecting nu clear ·material rom theft or diversion Our review of DOE records s owed that at the time 1 there were no limits placed on the amo'unt of unaccountE d for nucl ear mater ials 2 facilities were required to inventory their nuclear mate rials only onc a year and 3 estimati g inventories was a widespread practice at all nuclear 'facilities at that time The elaborate mater ial control and ph ysical secur i ty measures in place at commercial nuclear facilities toda were developed since 1967 Such m asures were not present bef re then ' DOE officials told us that in the mid-1960s material ac­ countability dapabilities'and methods were just being d vel­ oped As a result uncertainty existed on the part'of both the agency and the industry abotit nucle r material control standards and criteria DOE officials and NUMEC's president told us that the situation at NUMEC was further complicate by the faJct tha t NUMEC was involved in m ny uniclue fir'st-of­ a-kind nuclear projects DOE pursuant to it r gulatory responsibilities con­ ducted six accountability inspect ons at NUMEC -prior to the alleged 1965 incident·--to' assur e thc lt' nuclear· rna terials were being adequately pr6tected Each' inspection revealed major deficiencies ' In April 1961 DOE conducted its first material control inspection and found significant def ic'ienc ies in the mate- rial accoun t ing sys·t ems ' 'Dur in9 i t s sE corid inspection in May 1962 DOE found that although NUMEC had corrected some U accounting deficiencies it still did not follow practices necessary for the rnaintehance of adequate material control 'During this inspection the'agency discovered that NUMEC was mixing nuclear material among various contracts--a practice that was expressly prohibited According to DOE inspectors s ch commirigli ng made it difficult if not impos ible to trace discrete batches of material through the plant and to etermine how the material was being us d DOE's next inspection in July and August of 1963 did not show much improv'ernen t and reveal d add it ioncll problems with the material accounting systems In early 1964 another inspection was undertaken and more inadequacies were identi­ fied DOEls re ords show that at his point the agency be­ came so concerned with theinadelquat E ' cont rols at the facil­ i ty tha t i t began co nsider ing whie thE to preve nt NUMEC from receiving any additional nticl ar materials L ter in Se ­ tember of 196 4 DOE attempted 'to ·take a physical inventory of the material held by NUMEC but cOuld not do so since in 6 T I I COl162251 the opinion of DOE in 'Estigators NUt-lEe's records were so poor that they · 'erE LJn uditablj2• lJ s a result the inventory check was canceled In April of 1 965 DOE begc in another' inspe'ction and for the sixth consecutive time found f ndamental problems with NUr lEC's ability to control rriatE rial Th- inspection report concluded that safeguards' control of nuclear rnaterial at NUMEC is inadequate 'It was durin g this inspection that a large amount of highl enriched uranium was unaccounted for The loss initiall y ident'ified as 53 kilograms 117 pounds was later adjusted to 61 kilograms 134 pounds This was about 2 to 3 times higher than was exp e'ri enced t y other simi­ lar facilities operating at that time Although DOE h cid 'made f inane ial arrangements wi thNUMEC t6 insure payment for the loss the highly significant safe­ guards il1 pl ications of the loss spc rked a lengthy investiga­ tion T investigation which began in early November 1965 was aimed at 1 determining the exact total cumulative lo s of highly enriched uranium at NUMEC since its startup 'in 1957 and 2 explaining the 134 pound loss'under its most recent contract inv lving 93 percent enriched--weapons-grade--uranium The in estigation lasted ntil mid-Novernber 1965 and revealed a cumulative loss of 178 kilograms 392 pounds of material bOE was able to trace 186 pounds to waste and gas filters leading from the plant but the remaining 206 pounds could not be accounted for The November 196 investigation did not provide DOE with' a conclusive ns er as to what happened to the unaccounted for mater ial However 'according to agency o ffic ials enough information existed to develop a nth_ ory'U on the probable cause of the rni'ssin9 material The IIth eory deve loped by the DOE staff and accepted by top DOE officials was that through April 1965 NUMEC consistently undeLestimated its material losses ftom contract to contract As each job was completed and NUMEC lyad' to pay DOE for thE actual losses sustained the differences between the estimated and actual losses were passed on fr'om comple'ted jobs to ne w1 jobs The theory con­ cluded that these actions continued over the 8 years of the companyts operations until April 1965 when str ictly by chance only one contract was being processed at the facility and it was possible for DOE to i olate the total cumulative material unaccounted for ' lt DOE documents showed that because of fhe poor condition of NUMEC's material acco nting records it was not possible to establish when the losses occurred or even whether the mater ial was used to offset 'lossE s on previously completed ' T - e ' __ '_ _ - -- _ COl162251 contracts NUMEC·s president c0nt nded that the nUcleai mat e ria 1 -j' a not s tole nor d i v ted but u n c 10 ida 1 v los t in the processing syste itself through adherence to he equip­ ment and piping and amounts d·iscarded as waste Consequently the DOE investigators concluded that DOE could not say une­ quivocally that the material was not stolen or diverted from the f a c i 1 1 t Y• We learried from a discussion with a former DOE offic ial that in February 1966 DOE asked the FBI to determine· whether' a theft or diversion of the material had occurred The DOE files contain' a memorandum of discussion with the FBI The memorandum stated that Ie the Bureau had decided not to under ta e an investigation a t this t i me even though they were required to investigate such incidents under the Atomic Energy Act o 1954 Consequently DOE continued its own After examin'ing' t'he facility records cleaning out proc­ essing equ ipment se ar'ching some of the cornpany s nuclear waste buri l ground and interyiewin9 man key UMEC employees DOE was still unable to' conc1usi eljl determine what happened to the rna ter ial ' If In 1966 NUMEC' paid DOE $1 1 million for the missing 206 pounds 'of enriched uranium as required by NUMEe's contract and the DOE inyestigation o the iricident was for all prac­ tical purposes closed unresolVed The $1 1 million was ' aid partly from a $2 5·00 000 'revolving c rE dit note'·ac count that NUMEC ar ranged with th e Mellon 'Ba'nk The bal ance was pa id through the r etur'n to DOg of some' nu lear rna ter ial for which NUMEC was credited Atlantic Richfield Corporation later purchased th facility in April 1967 clnd it is now owned·· by the Babcoc k and wilcox Carpor a tion who bough t the' f ac il i ty in 197'2 Other inf6rmation relevant to the NUMEC incident We identified sev ral 'occur ences from our review of DOE files and inter·views with' DOE officials which impact on the NUMEC incident We learned that --After the November 1965 inv stigation NUMEC management hired one'of DOE's on-site in estigators who was an ex­ pert in rnateri l control' and accountability The in­ vestigator had responsibility for condu6ting a major part of the material control review at the facility --During a'period of rising concern wit unaccounted for material at NUMEC some material accounting records were reported to bOE as being inad ertently destroyed T · oCOl162251 during' a labor disputeoat· the facility in JanLr r '­ ebruary i964 AoccoOrdir g °to a foorr71 r head of DO ' s nuclear omaterial management group and inv stigatois fro the FBI the recbrds miaht have affected DOE's abilitY to trace theomateriai held by t e facility --NUMEC mixed material among various contracts--a prac­ tice that was explicitly prohibited by DOE Acc6rding to DOE investigators ihis practice made it very dif­ ficult if not impossible to tiack the material through the facility Further DOE was cooncernoeodoo with the foreign interests nd contact maintained bYoNUM t·So president DOE's records °show hat while president this indoividual had various high­ level contacts with officials of the G6vernment of Israel bqth in that country and in the United States The records also show 'that for a ti me he a cted as aH aoles agent in the United States ·for theoDefense Ministry of Israel o Also while president of NUMEC he had a 50-percent interest in a nuclear facility in Israel established for the purpose of r diation exper imen ta tion ·on vaorious' per ishable commod i ties 0 or Several current and 'of mer off lcials we interviewed at DOE and theOFBI and a form r etA official told us that in view of the poor nuclear material control at NUMtC and the general sloppiness of the operation NUMEC management could have divert d material from the facility if they wanted to A principal field investigatoi for DOE at the time told us that the sloppiness of NUMECoperations made it very condu ive to a diversion This invesotigator noted that on a visit to the facility in 1963 or 1964 he saw nucl ar maoterial deposited in the crevices of the stairwells oand on tIle floor However of all DOE officials we interviewed including a former Chair­ man and two ormer membe·rs of thE Atolnic Energy Commission only one a former DOE security expert actually believed that a diversion of material occurred Acc9rdlng to this individ­ ual who was nbt familiar with the material accounting prac­ t i'ce 5 es tabl ished by DOE his concl us ion was based on inspec­ tions he conducted a to NUMEC He told us he v is i ted NUMEC soev­ eral times between 1962 and 1967 to conduct physical security inspections for DOE He said that in an inspection report dated February 10 and II 1966 °he noted that a large ship­ ment of highly enriched uranium was made to France roughly eauivalent toO he mateIi l identified °a missing in DOE's 0 O 0 o N vember 1965 inspection -lOO kilograms According tQ him the circumstances at th e- facility werE such that it would have been relatively easy to shiF' hi 9hly enri ched O weapons­ grade uranium to another country instead of loow enriched ura o o ni um sin'ce the enricheod uranium storageo system at NUMEC did - T Sff COl162251 ' • ' ' ' ' ' I ' not 'clearly 9istinguish bet 'een weapons-grade and nqn1 vea on s­ grade material ' -¥t • ' '' -- Current DOE offic-ials 'nforme d us h·owever· that while the United States did not m ak'e indepenoenl v·erificat'ion of the shipments being dispatch'E d to a 'fbreign country ' at the time of the ·NUMEC incident it did conduct safE guards inspections as provided in bilateral agreements for cooperation with vari­ ous countries Accord·ing to DOE inspections in this partic ular foreign country were conducted to account for enriched uranium shi ped from the United 'St'ates I OE o'fficials told us that two of these inspections were conducted which identi­ fied rnateri al in the form enrichment leve l and appr'oximate quantity shown in th'E D S NUMEC transfe r documents The former DOE security inspector also said that the NUME C was very baa andtha't to a large extent ontribu ed to his con6ern tha the· missing material a' NUMEC had been diverte Two other former secu­ rity officials at DOE concurred in this 1 1ter point These three individuals agreed'that based on their knowledge and experience with the NUMEC f cility 'it was very possible that en tire security prograrl at the rna ter ial unaccoun ted £0' from l UMEC could have been d i­ verted One' of these seturity officials told us that NUMEC's security program was wri dely ndi'srespec·ted among the DOE investigative staff However none of these individuals were able to provide us with any direct evidence that would upport the view that' a divetsion of ater ial had occurred Further DOE records show that of the 37 NdMEC emp1oyee ihteryiewed by 'DOE in 1966 none believed that a diversion of nuclear mate­ rial h d occurred In 197 NRC was made responsil le for the regulatory over­ sight of conlmercial nuclear facilities lik NUMEC and conse­ quently has become involved in the i ncident In a February '1978 report related to the NUMEC incident NRC concluded that their previous offici al position of Uno evidence ll to support a diversion may need t'o be reconsiclered in light of the many uncertaintie s surroun ding the incident -Included in that report is a letter fr orn the Chairman NRC 1 0 the Chairman of the Cornrnitte'e o'n Interior and Insu1ar Affairs conclUding that for r'egul a tor y purposes we ·mus 1 assurne the c ircum­ stances surroundihg NUMEC were such that a diversion could have ccurred and we must construct our safeguaras require­ ments accordingly It ' FEDERAL BUREAU OF INVESTIGATION'S INVOEVEMENTWITHN JME oi INCIDENT The FBI is responsible for gathering domestic intelli­ gence on activities affecting the national security of the T 'RET fL COlI 62 5 1 'I' • I United States It i s also respons'ible for investigat'ing all alleged or suspected cri llinal violations of the tomic Energy Act of 1954 including the theft or diversion of nuclear ma­ terial In this role the Bureau has initiated three investi­ gations involving NUMEC with one still ongoing Our efforts to obtain and evaluate the information col­ lected by t he 'FBI on the NUlw1EC matter wer e repeatedly denied by thE Depclr trnen·t of JLJS t iCE · ThE ' Depar tlnen t of Jus t ice told us that since th ir la t 'est i nvestiga io n 'flas still underway they could not' give us -any documentation re·lated to the NUMEC incidE nt The denial inclucled inforrnatiOtl developed as part of Justice's pr ior t' NO investicj attons This position was for­ mally cornmun ica ted t t he Cc mptroller Gen ral of the Uni ted States front the Attolrn ey General i n a letter dated February 8 1978 See Appendix V for a copy of this letter The FBI did however brief us twice and responded to We alIso conl a cted 1 2 former and current officials of the Dep1artrnent of JUBtice 'and the Bureau including the current l ttorney General ·and two former Attorneys Geflera l Appendix I contains a summary f the individuals we several fo low-up inquir ies contacted during OUI review C ur first briefin9 by the FBI was provided by the agent­ in-charge and two other FBI represent tives on October 6 1977 The br iefing covered all FBI 'investigatioI1S rel ted to NUMEC We rec'eived a follow ·Ul br iefing on Decemt er 14 1977 in order to clarify some of the information we had obtained earliei This briefing was p vided by a new· FBI agent-in-charge since the former one was transferred off the case shQrtly after our October 1977 briefing We we're informec 1 a t these br ief ings that in' June of 1965 the FBI was asked by DC E to investigate the possibility tha t NUMEC's president mi rh1 need to register bis activities in the United states unc ler t he Foreign Agent Registration Act DOE's specific con ern stemmed from the 'irldividual's associa­ tions·with Israeli officials • Accotding·t o information we received at the October 1977 'briefing NU EC's president's capacity as sales agc nt for the Ministry clf Defense of Israel was 'of particUlar conCE rn to DOE At the October 1'977 br iefing we were told that the FBI the investigation in August of 1965 In October· of 1966 'after 14 months of e fc rt it reported 'thalt NUMEC's president­ did not havle to r'egi tE r as a forei9n ager t since NUMEC's ac­ tivities with Israel were conducted under appli ab1e u s laws and regulations ' Fur thIer accord ing to the Department of Jus­ tice the business ·ac ti Jities established between Israel a no beg n NUMEC were all found to be legiti ate ET ' - - l C01162251 ilil E O 1352 In a let ter to th Dir ctor of the FBI aa ted Febr'uary 17 1966 DOE asked the Burecu to invest'i'iat 'the suspected di­ versiDn of nuclea r aterial from the iJU · E olan FBI re­ sponded on February 25 1966' stating that it decided not to undertake this Investigation at this time I ' According to the for rn e r FBI age n t inc h a rg e 0 f t h e cur r en t i n v est i gat i 0 the r€ ason for the dec Lsion was tffa t in DlJE's' discussions wi·th the Bureau · DOE pre ented a c onvi tlcing ca 5e that there' was no diversion a t the facilLty Howeve r weWI re informed by a for­ mer E ecutive Di rector' of the Joint Comrni tee on Atomic Energy that the re ason the Burea'u d· id not want to get involved was twofold I the Bureclu did 'not t hink that a d iversion oc­ curred based on the 'presentation t rovided by DOE and 2 it simpl ' did not like conducting inv'estigations invo lving unac­ counted for nuclear matetials We were infbrmed at· the October 1977 briefing that the FBI's next involvement in the NUMEC matt er occurred' as a re­ sult of a i pr il' 196B letter from the DirE ctor of CIA to the c en Attorney General The FBI was asked to j nitiate' a discreet intell igence ·i nvesti9ation 'of' the· relationship' of NUMEC's t wi th the G vernment of Is ael 11 - r- ----I The former FBI ag'ent in charge of thE· inves'tigation told us that in September 1969 the FBI Director advised the CIA Director that surveillance of NUMEC'spresident had been ter­ minated because the I BI did· not believe further investigation would develop a-'ny ne' IV inform4ation The Associate Deputy Di­ rector for Operations at the CIA told us the CIA was not sat­ isfied with the FBlrs termination of·the c se and equested th Bureau to reinstitute its surveillance in a letter to the Director of the E BI a· ted ·October 13 1969 However accord­ ing to this CIA offi i l no f ormal request was ever made to the Attorney 'General and no investigation was initiated as far as he could determin · The former FBI agent in charge of the investigation said hll I as unable to corroborat e this informa­ tion CIA officials advised us th at they have file cop ies of correspondence to th'l FBI which sUJpport its position that re­ quests were made to the FBI·to contihue a·counterintell igence investigat'lon of NUMI C s p'resident · We however did not see this c rresl ondence' ' The CIl provide u s with' a chronology of their contacts with the fBI It indlic4ated that in September 1970 the CIA again asked the FBI to re'institute th inves igation based on inform ltion that NUME C' s pre sident was planning to I r-- But again th l CIA official said no furth'--e-r-w-o-r-k- -w-a-s--l ken by the F B · ' '12 T 25Xl E O 13526 i co 1162 51 - l' ' At the two FB I r 1 e Lc ' ' 1 19 S ' ' ' ' eo- 1 tJ1 prov l inforf ldtion the FBI I ad d vt 1opeu 0 -1 the' bc cJ r o - associa­ · 'E roe tions and business C1ctJ viti- s 0' l UtlEC's r'2sident ith Israe­ li govE rnment officials agent and citizens hccording to the FBI a ents giving the briefings the infornati'on deve'loped while circumstantial in- nature raised serious auestions con-' cernin9 the national' securit z' ri k 'posed Jy NUl 1EC S president 1 In review'ing DOE fil'es' we found that during the FBI's surveillance activities the FBI be arne so concerned about the security' risks po sea by lU tEC's' president that they asked DOE whE ther it planned to· terminat€ his security clearance or s top the f lClw of nucl1ear m'a ter ials to NUl-lEe Accord ing to the FBI ·s liaison wit ln GAO the FBI recommE nded that NUMEC's operating license be taken away DelE files also s ho'w' that in early 1969 the F'Bl briefed· Pres ident Nixon on th laues tionablE act i vi ties of NUMEC' s pres idE nt The f il es f r the'r show t ha t tor leve 1 'Government concern abol t the secur i ty ri sk's posed by the pres id ent of NUMEC continued until 1'971 We were told by a former Deputy' Director of Security at DOE that in 1971 a former Comrnission r of AEC aided the NUME official in obtaining employment with Westinghouse Electric Corpora tion where hE would have no need for access to national security information The former Depu­ 'ty Director of Securi ty sa id he helped the former Commissioner i'n obta in ing sueh e mplo yment for NU'MEC IS 'pres ident The for­ mer Commissioner ·declined to comment to us on this matter We believe this is parti ularly important since we were informed by the president of N- JMEC that· he m ay attenlpt to obtain employ­ ment in an area wh'ich will involve a top SE cret clearance If this should occur th ' juestion of his obtaining a security clearance may surface again In the FBI briefing on December 14 1977 we were told by the current FBI ag nt in charge of the investigation that no additional surveillance act ivities or ir vestigations of any kind werle underta o en by the FBI concerning NUMEC from September 1969' until pril of 1976 when ordered to do so by President Ford A Der artment of Justice st aff attorney as­ signed to the case la 't e 1 - conf i rmed this He told us thci t the FBI's c rrent investigation was th direct result of a request to the then ttorney C eneral by President Ford in April 1976 According to the Justice staff attorney it was at th t time President Ford asked he FBI to investigate the 'possibility that weapons--gr'ade materials might have ·been diverted from the NUMEC facility to Israel GAO was not furnished ny documents reqard i og Px es ident Ford'· s request 'and thus could not· specifically determine its nature and'seop e ' T _ 25Xl COIl 62 5 1 O 13526 t t h t n e· f 0 r rn era n a- cur r e n t F B 1 a a e n t s involved i he invE st lgation that durinq all the r3I's in­ ve s t i 9 a t i 0 1 ton Lr 1 EC f i t did not 0 b t c 1 nan i 1 £ 0 r r a t i 0 r con c 1 us 1 vel jt s h 0 'N i n SJ t hat a d i v e r s i a no f n u c 14a arm ate ria 1 occurred at U EC I ' l r 1 _ 0 COd l i s part of its recent investigation the' former agent-in­ charge told us the FBJ questioned the CIA regarding information it mi9ht have devel'oped on the alleged ai'version According to this agE nt the CIA initially told the FBI they possessed inforrnat'ion 1 inking th E Jnacc'ountE d for N'uMEC mater ial to Israel The CIA later how€ ver informed the FBI that they did not have such inf orma tion The CIA r presentatives told the FB I thCl t th y kn1ew no rnor··e· than the FBI did abou t the matter The 'CIA offici als having current aCCE SS to the files have advised us that a search of the availabl E data reveals a semantic problem concerning the use of the term evidence In short CIA states t here is no '''hard eV laence n of a diver­ · 1 rom to··r I s Ion '•• L ' t 0 I s ral e ll I C J Without access to the records showing the exact nature of thle informatic n excharlged betw een these two agencies we were unable to determine what information ex­ changE did occur H w1ever two fOlrmer offici211s of the CIA a former Deputy Director of Science and Technology--who was one of the five highest ranking officials in the C IA and who re­ ported directly to the Di rector of the CIJ on this matter --and another source who asked not to be identified told us that t he CIA had pre pared several internal ana lyses discussing this par ticular Lncili ellhS I _ _ b r r en t FBI agent in charge of the inv'es ti never br iefed by tbe CIA to'ld us that he was unaware of this information A newspaper article on January 28 1978 appeared to fur­ ther support the existe 1ce of such information The article identified the existence of a special intelligence report pre­ pared by the CIA in 1974 The n'ewspaper article noted' that the CIA had mistakenly eleased th e top--secret report One of the conclusions of t he repor t w a's that Isr ael had developed nuclear weapons and that th'e sourc1e of the nuclear material for the weapons was o'btained pa·rtially through clandestine means IF The IA neVE lr denied the'validity of the newspaper article Subseauentlv we o jtained· a copy of the report -- J 1 L2 0 L __ ' -- StnRQ I 25Xl E O 13526 -1 - COl162251 r ' - -- J 13526 The CIA officials W c ntactE d told us that they did Inform the FBI of this information in 3 May 19-77 InE eting on -the subject The previous FB r investigator in charge of the investigation attended the May 1977 meeting The current one did not The CIA officials we interviewed b li ved that the May 1977 brief­ ing constitute d formal advice to the FBI on what was known by the CIA -'about the situation concerning Israeli s acquisition of a nuclear weapons cal ab il i ty ' The F I is currE nt ly preparinq a rep rt on' its most re­ cent investigation FBI agents involved in the current inves­ tigation told us that w'r1ile there E xists circ ms tantial infor­ mation which could lead an 'individual to conclude that a diversion had occurred the e is no substantive proof of a diversion The report w s submitted to the Attorney General on February 16 1978 HowevE r a staff lawyer in -the Internal Security Section at the Department of Justice informed us on May 25 1978 that there were 'still several items the FBI had' to cover in its r1epo rt t eforf the rLtstice Department would accept it Currentl th1e FBI' is still in-vestigating the alleged NUMEC incident CENTRAL INTELLIGENCE AGE NCY 'S INVOLV MENT WITH NUME cl NEIDENT On August 29 1977 we'met' with the CIA for a briefing on their knowledge of and inV'olveme nt in the alleged NUMEC inc id en t Subsequen t ly we had sevrer al f a llow-up discuss ions with CIA representati'ves on the matt er w contacted 11 former and current CIA employees Howev r as we go further into our review the CIA blocked our efforts to continue While the CIA did provide s lE'cted staff· members of Ch irman Dingell's House Subcommittee on Energy and Power wit the opportunity to rev iew a t CIA Headquar te r s some documenta t lon on their knowledge of the NUMEC inc iden_t CIA off ic ial s refusHd to prov id e us with acc'ess to' any sour1ce documents on -their intelligence ac­ tiviti€ s surrounding thle Israeli NUMEC matter Furthermore the CIA did not cooperate with us in arranging interviews with I e knowledgeable cu'rrent for mer officials I _ _ _ Withheld under statutory authority of the Central Intelligence Agency Act of 1949 50 U S section 403g T C01162251 r' ••• L i '25Xl EJ 135261 L i ------- A t the Au 9 u s t 1 j 7 b r i e f i n 9 1--------· 1briefing r Additionally e later pro­ vided the CIA with a melTIorandum 'on the information presented to us at th e ·briefinq to aSSIJre that our interpretation of the information was alCCJrate The CIA official who reviewed the 'memo r and urn s ugge ted cer ta in chc3nges' r u t did not cornmen t on the accuracy of G 1 0· s stated position regarding the alleged divers'ion incident which identified' the Nt MEC facility as the most likely spurce of Israel's nuclear 'eapons material A formE r high ranking CIA offi cial at the briefing provided us with the following additibnal information on the incident He cited the e items as further SuPI Ort for his belief about the Isra'el NtJMEC conn€ ction --The ase with which riucle r materials could have been taken from the NCMEC facility · T I 25Xl E O 13526 'I r T - 'COl162251 · c o -- E 13 ' - '-- -'rhe CIA also told us much of tne sarrie Informatlo·n tr the FBI had provided us In an interviet t r with a CI i- offici l' on Sept mber 12 1977 we ere infor ed that the intellice ce information' develop d on the matter was so strong that every­ one in the intell ig lncl comn1un i tv concur red with t he CIA IS op in ions lexcep t one-- OE HOl aJeve r 1 ike th e FBI ' the CIh emphasized that they had no 'conclusive evidence tracin'g the unaccounted for nuc1e a r mat er ial from NUMEC to Israel ' den t ne f rmer of f rc ial 's tla ted tha t the CIA 1Nas 50 conf i­ in thf ' NUMEC 'infol -ma t ion th'a t a forme r D ir ecto r' br iefed Preside t '0 ' F ' ' Lyndon'Johnsdn on the incidertt in 1968 or 1969 The former CIA Director such a br it f ing_ latlf r told us he could not rec all I We were told b I' a CIA off ici al on SeptemlJer 12 1977 that at least one intelligence estimate was p cepared by CIA staff on tl1is incidE nt HO'IJever in commenting on this re­ port CIA o ficials advised us that the ·currentl'y available files do not contain an esti'ma te on the NUMEC incident and it is their belief that this official was referring to an overall in 1 ell igence estimate on nuclearproli fer a t ion We were also told by tbe i orme r CIA De puty Direc' or of Science and Technology on' Oc tober l r ' 1977 and anoth r ource' for­ merly employed by the CIA January 28 1978 that a series of papers t- ere wr i tten -­ _ ___ _ __-0_---' I 1 r­ WE asked the former CIA Director ab ut these papers and he told us that he COt ld not recall an l such docurnE nts owe'7er he qual if ied th is sta tenlen t by il lld iea t inf J tha t he did not intend to say that the documents do not exist On January 16 1978 involve in the matter In a nleeting wi th seve al CI repres nta1 ives on November 17 1977 · t he CIA ippea rE d to ch ange its views about the legeci diver s i _ r --l we asked' the CIA to explain its ai ppalrent changE in v ie Ns concerning NUMEC Specifically we as'k ed them to state in ' it ng th e CIA's official position onl' the alleged diversio 1 heir last sub­ mission to us was thlei ' forrnal connnlents 0 1 th l5 report which still did not adequaltely addres's 1 his point ' _ 0 In sev'eral meet ings with' C rA officials who have current access to he files it was explained to 1JS that a search of T SXl E O 13526 J C01162251 ' I 25X-'1- E O 13 26 nr' -l i _'J1 I I the ava ilable da ta re leals alt se - -Lantic orcblem concern inc the use of the term 11 vidence In short CIA stated' ther is no hard evidenc€ _ of a cii ver'5i on £ro l NlJ iECto Israel L __ _ _ We were unabl etc dIe t erm ine whether the CIA changed' its opinion about any NUM·E C lIsrael link l r whether the CIA inad­ 'verten tly failed to C mm'4 nt on the inaccuracy of the most likely position c'onv4 yed tOo us in the A gus t 1977 briefing Further we aske for any reports the CIA might have prepared on the 'rna t ter We 'ha le 1ever rece ived any A January 28 1978 newspaper artic e however alleged the existence of a t leas -tone such repc rt 1r- MoreovelC in Nov'E mt 4 r 1977 the CIA refus'ed to assist us in contactinq form er r J resent 'CIA employees having knowledge of the incident At one point we attempted to discu s a par­ ticular CIA briefing 4ith a former Chairman of NRC who 'had participated in the brie Eing Howe erf sin'ce the discussion would have involved CIA infor rnation the former NRC Chairman wanted pr ior approval fr m th CIA ie attelnpted to obtain the necessa r y approval' from 1 he CIA but were informed that this request could not be honc red due to the Dir1actor's decision to work solely with Chairman ' ingell l s Subc omrnittee on this investigation ' 2SX1 E O 13526 I 18 -sfSRiL j i -· · 5T co 11622 51 ­ ' CHAPTE WERE THE 3 INVEs rrIGATIONS BY THE FE1 E AL GOVERNlv ENT ----­ - INTO rH E ALLEGED INCIDENT l DEOUATE If a diversion or theft of nuclear material is suspected or actually occur s in this coun try the 'Feder al GO vernrnen t I must be able to quiclkly a·nd definitivel determine how and why it happe'ned so that the 'public can c e protected against the potential hazards of such an occurrE nce ' To do this agencies of the Federal Government w th capabilities for in­ vestigating and responding to suspected diversion incidents must work togethe r Th'is did not happerl w ith NUMEC Whether a diversion s ever o ctir ed at NUMEC st ill remains unanswered Wha t c an be said howeve r is t ha t the Feder al i nves t ig a t i ns of the matter were uncoordinated limited in scope nd time- ' liness and in'o r opinion less than ade uate DEPARTMEtf r OF' ENER Y We believe certain DOE a tions prior to and after the alleged NOMEC diversion 5 rais' e questions on the adequacy of DOE I S implementation of i ts r' qulatory responsibili ties and its investigation of NUMEC DOE did not take corrective action against the UMEC facility prior to the alleged inci­ dent even'thoughDOE inspections revealed'repeated NUMEC rna ter ial accoun tab il i y and phys leal secur i ty def ic ienc ies DOE' 5 inVE stigation o E NUM J C orni'tted one potentially signif­ icant avenue of investigation i that the unaccounted foi' material could have' been erroneously shipped to another coun-' try Also recognizing DOE' 5 dual role for promotional and regulatory responsibilities' over nuclear activities its in­ vestigatic n of NU MEC cannot be considered truly independent Prior to Janua r y19 7 5 DOE was rE spons ible for regulating nuclear rnclterials a s I'lell c s· promoting the use and develop­ ment af nuclear energy in' the United States Consequently a discovery that la large an ount f' weapons-grade material could have been diverted from a u s facility would have been embarrassing to DOE and detrimental'to its 'promotional respon­ sibilities Congrels's recO Jnize d these cl nflicting DOE roles and split DOE's reg'ulclt ory aspec t s' fr om its promo tional role e f fee t i ve Jan II a r y 1 9 19 7 5 II ' From the time NUtJlE was licensed in 1957 until the missi ng material was i dentified in April 1965 every accounta­ bility inspection conducted at NlJMEC by OE found significant' weaknesses in NDMEC IS accountabili ty ave - nuclear mater ial In view of the problems DOE was experiencing with NUMEC and investigations which were conducted the FBI'S l aison 19 C01162 51 with GAO and a former Executive Director of the JCA·E told us tha t the FB I and the J'CAE recomlnE ncled to DOE tha t 'NUl'lEe' s 1 i-· Cense be taken away and that it be' prohibited from receiving additional nuclear materials However they could not recall wben or how these recommendations were communicated to the agency ve wer e unclble to find any 'recor9 of these communi cations Furthet i n a letter to DOE on JUly 26 1965 a DOE official who flla led a key role in the investigation of the NUMEC facility w ote u if it 'were withtn m province to do so I would top all furthE ·r deliveries 0'£ enriched urani·um to r UMEC until such time as they hl3d straightened out the i r prQcedu re s and had sa tis fact r il y accoun ted for all enriched 1l lrani lm entrusted to ' hem to date 1I We found no indications that DOE took corrective action against NUMEC based on the ·se recommendations DOE s reluctance to take action aga'inst the facility in light of continuin9 rnateri al control pr blems is questionable In Some informal notes we obtained from DOE's files a former DOE official in charge of DOEls overall investigation of NUMEC admitted the agency jid not know' whethe the material had be'en stolen or divertE dj' Yet the facility was not ordered to cease operations and it continued to obtain nuclearrnaterial con­ tr ac ts Ac co r ding to th is 0 ff ic ial who was a former DOE Assistant General 1anager there was nne good answer lf as to wh these conditions were allowed to persist over the years of NUMEC's operation DOE' S handlin r of physical securit l inspection reports on the NU1VlEC faci lity by t p DOE securit y officials also raises SOIne concern Two former DOE sec urity inspectors told us on March 31 and April 3 1978 t hat during most of the 1960s including the p riod of the a lleged NUMEC inci­ dent t DOE's Division of Security 'would ot issue an unsat­ isfactoryl' se'cur it t rl port on a nuclear facility According to these ins pee to r s· thesec ur i tyreports had to be wr i t ten in a certi3in manner i n ord'f r to be approved by the top secu­ rity official at DOE the Director of Security For example one security insp ecti on re port on the 'NeMEC facility con ducted on February 10 and 11 1966 noted two principal and s eve r a 1 If min 0 r 5 E cur i t Y de fie i e nc i e s a t the f a c iIi t Y • The deficiencies were significant enough to prompt the Di­ rector of Security to visit the NUMEC'plant to discuss the problems ll ith faci1it r management The two form'er security inspectors told us Io h wever that the conclusion in the in­ spect ion report did not re r esent the actual findings The report concl uded I ur ing the course of the inspection seve r a 1 de f ic ienc iE S e r e d iscov red though not suf icien t 20 T T COl162251 ' •• · · ·t ·· · ' L ·I· to ser iously detr act frorn the othE 'w ise s atisfactory aspects of the secu rity pro'granl ' Howev·er 'three former DO'2 security in vestigators inc1 i 1 ding t he forlner Deputy and A ssist ant D ire c tor S 0 f Sec lJ r i ty told u s t hat the en t ire NUME C 5 e c u­ rity program was inadequate We were unable to discuss t hi s matteJ with the former Director of Security due to his current ill pealth • ' ·' i 'j I • ' I We wer told by the f I'mer DC E secur L ty inspector for the NUMEC'facility that during t he' Fer ruary 1966 physical security 'inspection at NUMEC he identified some untlsual circumstances regarding the control of'nuclear material held by NUME Al­ though th is ind·i v idual was not farntillar with the rna ter ial ac­ counting practices the circum tances led him to believe that an amount of highly lenr iched ur'an'i um about equal to the amount unaccounted for f rom the NU E'C fac iII ty mIgh t have been e r ro­ neously shipped to Fra11ce · This former inspec'tor became so concerned bolJt the' natter t hat he atteinpt 'd to report it to the former Director f S ecur 1 ty up10n returning f'rom the in­ spection However i lcco'rding to t his indiv-idtial and his-former supervisor the Directc r o'f Secur ity told h rn to get o'ut of his office and not pursue the matter any further According to bot h these individuiils ' the entire matter was suppressed and was never consid rE d by top DOE securi ty officials Ac­ cording to DOE officials as it later dev'E loped an authorized shipment of highly enr iched uranium was se nt to France and was identified by DOE inSpE ct ors as being in that country Since NUMEC was 'both a DOE cont'ractoI' and a licensee the facility's nuclej tr activities were split be tween DOE's confl icting regula't'oll ' y and promot ional re lpons ibil it ies These confl icting r'e spc ns ibil i ties may ha' i e affected DOE's conclusion about the alleged diversion incident DOE devel­ oped a II the1ory aboQt ha t happened to the rna ter ial even though DOE had no concl sive information E howing that a di­ version did or did not occur at the NUMEC plant Moreover at a top level staff meeting on February 14 1966 a former Assistant G1eneral Mana Jler of AEC advised t he members of th former AEC that 11 it would bE theoretically possible' to ship mate­ rial abroad in excess of the ambunts indicated in the compan y I s records II And tha t the AEC rna ter ial accountability' sy tern might not reveal a deliberate and systematic attempt to divert material t Further 3 days aftell P E C was advised of t he possibility of diversion they bri fed the FBI and according to the former agen t i n ch arge 0 f the inves tiga t ion t- pres en ted a conv inc ing I 'T u 1Ni COl162 251 case that there was no div rsion or theft of the NUMEC facility rnateri l from ' FEDERAL BUREAU OF IN 7ESTIC ATION -----_ _­ Our evalui3tion e f thE FBI's investig atio of JMEC was blocked by the FBI's denial to I ·ovide 'us with supporting documentation Hp'weve'r based c n our interview s with FBI and Department lof JusticE fficials we believe that 1 the FBI's investigatiotlS of trlle inci dent were untimelYi and 2 the scope a f the inve st iga tion ras 1 imi ted S eptemt er 1969 f the FBI developed informat ion on the actions and asso­ NUM G's president Accordinq to th FBI investiga­ From Augus t 1965 to 'j a substantial amount of ciates of tors this informa1ticn was developed in response to reque'sts from DOE and the CIA How'ever it was not until Apr il o'f 1976 that the- FB' be9an to investigate hether there was a diversion of material at t he NUM EC plant--about 11 years after DO s investiglation of the in'ciden't On February' 17 1966 DOE staff met with the FBI to dis­ cuss the inciden't and requested them to investigate the matter The FBI is required by the- Atomic Energ ' Act of 19'54 to inves­ tigate all alleged or suspected criminal violations of the act A diversion of nuclear material is a criminal violation of the act howev r on February 25 1966 the FBI informed DOE that it would not undertake an inv e'stigation of the incident The question of diversion was not addressed by the Bureau again' until 1976 The fdrmer agent-in charge cif the investigation stated th4at since such a 10 n9 p r iod of time h d elapsed since the alleged incid nt occurred -it' was very doubtful wheth r the FBI would be able to develop any vidence' that would resolve the incid- nt During our review·we fouhd that the scope of the FBI's current investigation appeared' limited si ce the had not n­ terviewed at least ei ght key offi1c ials about their knowledge of the NOMEC incident These included a' Chairman of the for­ mer AEC during iheNUMEC incident a former Deputy Director of the CIA responsibl for gathering and analyzing data on nuclear activities in Israel during the tirn of the alleged' incieJent · the loan oj ficer at t he Mellon Bank who approved the loan to NUMEC a key D OE sta·f f member responsible for mate­ rial control' inv'esti J ations at NUMECi' and the chief DOE field investiga1 or for NL1MEIC 'These officials told us th at the FBI never int rviewed t hE m about the 0JUME·C incident Two individ­ uals the forme Deputy Director of the CIA and DOE'$ chief field investigator told us that the could not understand why the FBI had never dis ussed the nattet with them in light of their exterisive and ditect involvem nt I co 1162 51 In t h FBI briefing e recE i ve'd on Octoo'er 6 197i le rned 0 5nother l mitation in the scope 0 the FBI le cur­ rent inve stiga'tion The former agent iJ1 charg'e of the FEIls inVE stiga tion told us t'hat the FBI did not investigate t h e ' source of funds for NUMEC's payment for the missing nuclear matE 'r ial Al though he saV 7 this as n ilnportant aspect of the inVE sti'9a tion'- -since NUMEC's financial l osition did not ap­ pear to support such a loan--it was not pursued because the 'FBI anticipated leqa l difficult'i es in g tting the appropriate ban records HOWE ver I' WE obtai ned much of the data simply by requesting it from the responsible bank official over the telephone 'Although the information we obtained did not re-' veal any peculiarities i n NUMECts financial dealings it did serve to furtqer dE monstrate the limited 'scope of the FBlts investigation of the incident I S The FBI's efforts to effect ively nvestigate the incide'nt have also been impE aed by its la ck of technical exper tise n dealing ith nuclear 'facilities such as NUMEC This is par­ ticularly significant since the Atomic I ergy Act requires that the FBI inve sti9at e such occurrenCE S According to the former agent in charge of the investigation at' the FBI' the FBI is not competent to do the type of investigation ne eded to determine the c auses of unaccounteq for nuclear'material without expert assistance Consequentl ' he did not think the FBI could ever conduct effective di 'ersion-type investi­ gations without relying he'avily on DOE o'r NRC for technical assistance and guidance CENTRAL INTELLIGENCE AGENCY From intervie1 lswi th a former CIA official and with for­ mer and current officia ls and staff of OE and the FBI we con­ cluded that the CI4 did not fU11y cooperate with DOE or the FBI in attempti ng to resolve th e NUMEC lltatter Altho ugh CIA' officials told us that 'th'e·y bel ieve the1' did f ully cooperate with DOE and the 'FBI it appears to us t hat the CIA was reluc­ tant to provide infor llation which coula nave been helpful to the domestic inves igat ion beca use of it s concern about pro­ tecting its sourcf s a'nd methods of information r- ----------- X _ E O 13 23 r T _' t 25 Xl E O 13526J C01162 251 According to the'CIA a briefing similar to that provided to the FBI in May 1977 - 'as I rovided to ce rtain key DOE offi­ cials on July 29 1977 Those present at the meeting are no longer wi th DOE and have not been interv iewed by GAO However we interviewed sever-al formler offiGi ls ' including a_ Chairman of AEC and two other Commissioners at AEC during the time pe­ riod 1965-1972 who told us that they were not aware that such i formation existed ev n though several individuals agreed that it would have ee n irnpprtant information to have at that L - C • Further we were told by two former CIA officials a former Deputy Direct or of S ience and Technology and an in­ dividual who'did not w· lsh t be identified· of the existence of internal reports discussing the alleged NUMEC diversion The Deputy Director w·a s one of thE five highest ranking o'ffi­ cials in the CIA at the time of the NUMEC incident and re­ ported directly to the Director of the CIA on' the atter I Off' 1 currently handlihg the NUMEC matter at the CIA told us that I they have been unable t o idE nti fy or find any such documents Yet the two individuals who told us about the documents said they assist ed in preparing them DOE and FBI representatives we questioned said the r werE not aware of the existence of the documents The appearance 'of the January 28 1978 news­ paper article discussed on pages 14 17 I nd 18 of this repo·rt leads us to believe that the CIA was less than forthright in dea1ing with us and the FBI41 The CIA dis • lgrees with this opinion I 25Xl KO 13526J C0116225 1 I I i I 25X1 E O 13526 CHAP'I'ER 4 2 § ER TIO on tusION S AND I ECOMMENDATIONS ETHER A DIVERSION OCCURRED AT NUMEC RE AINS-'TO BE ANSWE RED' -­ Al though larqe· amoun'ts of' circumstantial informati on have been developed by 'D E tOle FBI and 'the C IA on this incident these agericies did not'provide any inf6rmation nor did we in­ dep1endent ly iaenti f ' any that 'would conclusively show 'that a diversion of material occurred at the NUMEC faGility Conse guently whether or not such an incident occurred is still dena tablE DO'E has taken the position tha t it has 'no conclusive evidence that a d vel sion of nuclear material ever occurred at the N lMEC fac'iJ it ' although it cann1ot deny such 'a possi­ bility • DOE supports thE theory that the n'Llclear mater ial' unac­ coun ed for from t rUMEC wa ·c ausE d by inadequate inventory management All Gurrent and former DOE officials we inter­ viewed e' xcept one clgreed with this·theory On the other hand many of thes e E ame off iciatls also agreed that the facil­ ity was sUfficiently unable to control its nuclear materials so that a diversion could have been carried out FB I agen t s 'in'Jo 1 ved i n the Inves't i J a t ion bel ieve tha t there is a substantial amount of informati9n which tends to support the diversion t heory HoweVE r it is circumstan­ tial in nature The FBI is still investigating' the matter The official data wh ic was m a de' i ava ilable t o us by a former CIA Ileft us with the under stand ing that NUMEC was the 'mclst '1 ikely source of some of the nucl'ear no'at er icil that was diverted to Israel How­ ever dur ing tbe course 0'£ our work I CIA appeared to change its opinions on the matter and tofd GAO that it ha no data to specifically support such a conclusion c I I-----Th e-----I newspaper article of January 28 1978 seemed to confirm this Current CIA officials told us that the former offie ials were drawing on memory as hey recallE d p'ast events The CIA offi­ cials who have current access to the files have advised us that a secirch of the available 'dc3 t a reve als a semant'ic prob­ lem concerning the USE lof the term lI ev id lence In s hort 'CIA statE s thE re is no hcird e' ridenCE n of a jiversion from N'OMEC to Israel At' the' sanle tiIinei·current CIA officials admit ' StL 125X1 E O 135 6 I T - co 1162 2 51 8vai13hl ct a -lh'en coupled tith past reco11ecti n's of events 1 orr i r officials to speak 'in term s of linking' ' unaC20U tec 7'lct r Lal fre in NV EC to nuclear developments in could th-s Israel NRC in a February 1978 report related to the NUMEC inci­ dent concluded that their previous official 'position of no evi ence to support a diversio may ne d to be reconsi ered in light of the many uncertainties surrounding the incident DOE stated that it had nb evidence to indicate that a divE rsion of nuclElar mat erial had occurred We bel-ieve that he age'ncy could havE been' much rnore te ntativeih its conclu­ sions an the matter instE ad of informir1g' th e public and Gov­ ernr lent official'S th lt possible diversi on o t there was no need for concern about a mat rial from the NUMEC WeaE On 9rade facility 1or ver we bel ieve hat the FBI Qd CIA may have a1­ ready collected in Eormation which if added to'data he ld by DOE ·could provide a more definitiye an 5wer to the question of v rhether a diversion did' occu ' Unt'il all information held by t hese 'organization's can be cClnsolidated and eviewed in its entirety a complete evaluation providing authoritative answers to the questions surrounding the NUMEC diversion cannbt be ob­ tained FEDERAL MECHANISMS TO 'COORDINATE INVES TIGATI ONS-OFMI 3SI NG-·oNUCLEAR MATE'RIALAR E--LACKI NG ------- - - - -­ _-- ------------­ I t 15 essE ntial th at the nuclear sG feguards systems em­ ployed by the lJnitj d States be continually monitored and' im­ pr'oved as weakness s in it re identifie'd Overall the safeguards syst e ms in t h'ts country have been greatly improved as a result of· the lleged NUMEC incident 'Since the alleged incident occutred AEC and its succeeding agencies have placed much greater levle1's of control re·g uirements on private nuclear lNUl1E Thl re arE many n w requirements which inclUde such measures as bimonthly inventory accounting armed guards ta prevent unauthorized access to nuclear material and facilities li ke alarm systems designed to detect·unauthorized'movement of nu­ NE ve l thel I sS t 1NO recent GAO re'ports pointed short c ominqs in the ability of Government and commercial nuelear facilities to adequately monitor and control nucl ear rnateri al 3 with current account bility systems These reports poin'ted out t hat du'e to limita tions in the state-of­ the-art of measurement iristrumentation diversions of n clear material from a' tJ S facility can'still 'occur and would prob­ ably not be d i sc vE re'd in a timely manner - clear matt r ial out significant 26 ' ­I ' - C0116225 1 f t ' he U 1EC i ci ent and its a sociat ed 13' 'year in vestigation hi h1 i ht this c'Juntry' current in bili ty to 'effectively deal wi n ossi le l 'r il ns of nuclear mat ial The combined capabilities of DerE FBI clnd Clf were n ver directed at all the factors in 701vec in the alleqed diversion The institu­ tional barriers exi tin'g arnong these agencies may haye pre­ vented it Each agE ncy did its own thirlg t'o the detriment' of a unified comprehensive investigation A formal 'coordi­ nated interagency plan agreed upon plan is needed to focus the combined ca abilit ies of these agenci es in a more timely The agreed upon plan should focus on I an adequate det c 1 ion and investigative system and 2 a repor t ing sys t'errt to th e appropr ia te congr ess ional carom it tees' and to the President As a result if'a similar incident were to occur today 'thi 5 couritr y may n'ot be assured of any better investigation The United states need·s to improve its efforts for effectively responding t6 and invest igating incidents of missing or unaccounted for weapons-grade nuclear materials In view of incr'eas ing' terror i'st ·activities4 throughout· the war ld the ab i 1 i t to r espond arid inves t ig a te such inc iden ts should be o conCE rn to ' nat Lonal sE curity and the pUblic health and safety We believe a timely concerted effort on the part of these threE lage11cies I uld' have greatly aided and possibly solved the NUMEC diversi6n questions if they desired to do so and effective manner While incidents 'of unaccQuntE d for mc iterial have been e perienced in the past thE re has not be4 n another incident involving public a 114 ga tions such as thos at NUMEC We be­ lieve this can possilJl i' be cllttributed to the increased empha­ sis the Government has pla cE d on protective measures against diversions or thE ft s but it may als'o be dtle to a little good luck in that people may h ve not tried to db it RECOMMENDATIONS ----- TO THE HEADS OF AGENCIES - GAO recommends that the hea'ds of DOE· NRC the Dep'art­ ment of Justice and the CIA as part of their' respon sibil­ ities for the nation ll se'curity of the cOl ntry establish a plan for coordinated interagency action which focuses on a nuclear saf eguard s S tst em that adequately detects investi­ gates ana reports to the Congress and the President on thefts or diversions of nuclea r niatleiials The plan which should be subrni t ted to th e Con9 r € ISS wi th in 90 days or l'es 5 of th e issu­ ance of this report should includle -'-a formal means for a timely determination of wheth r a loss has occurred ---a' clear and'di reet channel the ag'e nc i e s 27­ f communications between l r T COl162251 ' --a formal nleelns for rapidl focusing ·the abi t ies 0 these agencies on the res lu'tion of a diversion inc dent and --a rneans for allo inSr a ny incident involving the theft or diversion of nuclear mate'rial to be definitely re­ solved to the satisfaction of the Congress and the Pres ident We also recornm nd that the P ttorney General working wi th the FBI take the lE ad in e stablishing tIle interagency pl -n sin c e the FBI' un de r t h E A t 0 micE n erg y Act 0 f 1 9 5 4 i s res po n ­ s'ible· for investigating incidents involvJ ng the' diversion or theft of nucl at materials RECOMMENDATION TO THE CONGRESS The comm i t tees of Congr ess hav ing j ur isd ic tion for safE guards should ' dorries tic nLlcleal --review the' nuclt ar safeguards plan to be submitted by th Executive Branch to assure that an adequate system is developled which d'eters 'and investigates thefts or diversions of nlJclea'r materials --request that the FBI and DOE's Office of Inspector General cornplet their invte tigations of the NUMEC in­ cident as soon as possible and s ubmit their reports to' the carom i t 1 ee s • These reports sh'ould bE reviewed to determine the adequacy of the inv stigations and their implications for developing a more E ffective future systern The committees should not that with the passage of time it is difficult te C'oncll sively dE terrnine what specificall'y happened at NUMEC However the important point to remember is th a t we should us e t h is' lesson and mak4 cer ta in that the Na t ion develops an adeqruC te de teet ion and follow-up sys em to deter future· nuclear thefts or diveision AGENCY COMMENTS DOE's comment s on the report are con1 ained in a letter dated July 25 1978 See appendix II DOE agreed with the thr·ust of the rel ort 1l However it disagrE ed with our recom­ mendat ion concerning the nee d to enter into a formal intera­ gency agreement with NRC the FBl and thE CIA for more timely and effective action·in i nvestigating incidents of suspected or real diversions ot nuclear materials DOE states in its letter that a comprehe'nsive plan and a menlorandum of '- f • 0 _ COl16225 1 understanding with thle FBI already existE d for joint responses to nuclear threat situations Further DOE' stated' t'hat ·it ha open channels of cO 1m1Jnicati6n to otnerc aencies incl u i inc the CIA for the exchange of information ertinent to nucl ar threat situations These factors were known to us and are c6mmendable The cur ren t memor andu m o'f under stand in9 betwe en DOE and the FBI is the beginning of an effectiv'e r esponse pl an to incidents o f n u c 1 ear d i v e r s ion b u t i t i sin la de qua t e sin c e i t doe s not include CIA part ic'ipation and' cooperation Without a formal interagency agreement placing positive reporting and investi­ gative responsibilities on DOE NRC FBI and the tIA along the lines recommended by GAO we t lieve the possibility exists for a re etitio of' the I3-year NUMEC investigation The comments received from thE CIA are contained in' a letter dated September 1 1978 See appendix III The letter tak s no isslle iith the facts· or ecommendations in-' eluded in he repc rt It does however pbint out some CIA concerns about certain information in the report We bel ieve trLa t ttte addressed· in the 'e p'Q'rt CIt IS concern·s hl 1ve been adequa tely However' - we did not specifically address the CIA's conce rns regardi ng its degree of coopera­ tion with DOE and the FBI on the alleged l UM C incident In its letter the crA disagreed with the statement in the report indicat in9 t hat t hey failed to cooperate w ith DOE and the FBI The CI b'ased the dlsagreemE nt on the fact that its officials briefed a large numbter of oj ficials in the exec­ utive and legislative branctles o·f Government on the NUMEC mat­ ter in 1976 and 1977 We were aware that such briefings were· provided How­ ever we believe tha sinc the' briefings'were provided 4 to 6 years after some of the key infdrmation was developed their utility in h Q - t e SQIY e the NUME C mG tter was greatlY dirnini C E O 13 _6_ _ ThiS information was not passed on to DOE or the FBI accord­ ing to the officials we' contacted in those gencies However we believe it must be pDinted out t at the current officials we interviewed said that such documents were not known to exist within the CIA The Department'of Justice and the FBI did nO t furnish formal written comments We provided them more than 3 months to do So a time period longer than that provided DOE CIA and NRC Wh i 1 e w'e did no t hi3 ve thlE benef i t 0 f off ic ial 29 _--_ _---- r r u C01162251 ' written comments fronl the Departlnent of Justice and t'h'e FBI in preparing thE fincil' re I Ort r 7 did c Jns·ide r the view's 'ana com nent s of th e FBI st·aff· famil i c lr' with the alleged NU LEC incident NR'C had no co' me·nt on the content of the report How­ ever the Commissi6n did 'state that the recommendations to the Heads of A e·nc ies appear s r E asqnablE See append ix IV -L • r TJ L_ t COl162251 CHAPTER 5 SCOPE OF REVIEt I _ _ _ We obtained the information c6ntained in this re o rt by reviewing documents reports correspondence and other re ords of the former AEC and ERDA and DOE and RC We also interviewed officials at --DOE head quarters ·Washington D C and Germantown Maryland ---CIA headquarters Langley Vir gin iai --FBI headquar ter s Wash ington D C I --NRC headquar 'ter s Bethesdal Maryl nd and --many othe r 1 cl3 t C n try ions across t he Because we werE tinable' to obtain' SOllrce documents from some of the organizations involved in the matter' we conducted extens i ve in terv iews ¥ i th former 2nd cur tent Gover nmen t agen cy employees about their knowledge of the incident We' also in­ terv iewed peopl e outs·i'de 0 f t'he Governmen t hav ing an· invel ve­ ment with the NUM EC eI ·erati·lon Specifically we contacted 42 former and currertt employees of DOE and NRC We contacted 12 former and current official s of the Department of' Justice a nd the FBI 11 from thE ' CIA and 20 ther individuals including 7 people that formerly worked at NUMEC Our interviews were with those most kno't 'ledgeable of the incident at all levels of these org'anizations including the for'mer Chairrn'an of A·Ee two former AttornE Ys GE ne'ral of ttJ1E ·United States the presi­ dent of NUMEC formE r lnd current J reside tial aides and FBI CIA DOE i nves ti Ja t r s See clppend ix for a summary listing of indiviciuclls· contacted during our review We believe we conducted the most thorough and complete investigation Possible under the Severe limitations imposed on us by several Federal agencies 31 COl162251 I J ' 1 1 I $Q APPENDIX I A PE D X ' ' ' SUMMj RY - - 1''''' LIST OF INDIVIDUALS O '1T A CTED IN PREPARING· REPORT AEC _ERDAL 2Q former Crlairman Age 2 former Commissioners ' AEC 1 14 former staff IYlembe'rs AEC ERDA 13 current staff rne b rs DOE ij CIA Current Director General Counsel 1 former Director '2 former Deputy Directors 6 cur nt staff members NRC 1 former Chairman 5 former staff member 6 current staff members DOJ Current· Atto rn y l eneral 2 former Attorneys General 3 staff attorneys FBI 3 former agents 3 current agE nt s NUMEC Former President c f cornpany Fa rmer Vice Pre s iden t of com pany Former Treasure r c f cornpany Former Secretary' of cornpany' 3 former emp1oy'lees JCAE 2 former executivE' staff dire ctors I ' 'C01162251 APPENDIX I Senate Select Intelliqen'ce --_ _--------_ _ _---_ APP£ JGIX I Committee 1 current staff lnember Others PresidE ntial aides Penns rlvanici Depart nent· 6 former and current 2 staff Illembers aneJ Taxa t ion 'of Revenue 1 staff member U' s S cur it ies and xchange Cornmiss ian 1 official f Mellon Bank Pittsburqh Penns'ylvania II - 33 SteR tl C 0 11 2 2 5 1 ET L - i P J APPENDIX I1 ' i -- - _ ' - tI l ' ' • Ji t Department of Ener IY ' 'J ashington D IC 2 D5 45 1 July 25 1978 Mr Monte Canfield Jr D1r ctor Energy and 1iner l1s Division U s General Acc ount in g Office Washington D C 20548 Dear Mr Canfield Thank you for the opportunity to revi ew and cOtJunent on the GAO draft rE pOI-t enti t led Nu lear Dive'rsion it1L the U s - 13 Years of· Con­ tradiction and Confusic ' 1 u In our July 21 1978 met ting ' ith Mr' ' J Howard' and ot er members of your staff we disc ussed Jur conmel1ts and conc erns 'ith the draft report as written As the result of our meeting we under tand that certain changes are to bE made which will point out that DOE ha s made significant improve­ merits in strength ning past safeguard policies and pt actices since 1965 We also understand that the report will be clarified in other 'respects onsis t en t wi th our e Imnents furnished under separate cover However we are concerned that t he reade'rs of 'the report an its recoimnendation might obtain an incorrect impression 01 ' DOEf s ability to respond to threats or incide ts of suspected or real theft or diversion of nuclear material SNM DOl responds in a very timely and e££E ctive'manner to terrorism threats and incidents of s uspected or real diversions O'C thefts of nuclear materials in he' U S'I 1Ne have a comprehensive plan and a'memorandum of understanding with the FBI for joint responses 1 0 nucl'ear threat situations We also have cleat' and IJpen channels to other agencies such as the CIA and NRG for the exchange of infonnation pe rtinent to potential nuclear thef t alleged black market incidents 'involvi ng SNM etc Further t we have an arrangement with the ' FBI to pr vide fonnal irt-sE rvice tra1n ing for' agents' in the technical and sci ntifi sophistications relevant to nuclear in' vestigaticJns NRC ha s fully p' articipated in thi s program Also we have briefed Congress in somE detail on various aspec ts of our emergency pr 'p'aredness and r sp orlse p ogram4' Information on our emergency preparedness and response program ineluding our fonnal policies and procedures con­ tinues to be ava il ablt for revtew by your representatives 34 ·mKt CO 116L 251 t APpr nnr I Mr Honte Canfield Jr - APPENDIX I I July 25 1978 The thrust of the reccmunendations concerning investigation of threats was clarified during our discussion to Lpply to after-the-fact resolution of' reasons for or eauses of threat 'ind tc ations It is p p osed that these recommendations' be re lt'ated to'mak'e c lear that they are directed to agencies other th n DOE cind not 't o DOE or it s ability to investigate' and respond to threats or diversic ns of SNM in a t i 1nely and effective manner Since'rely t Y f J4i 1 Fred L 'Uiser Director Division of GAO Liaison Office oj the Controller 35 C01162251 · · 7·i· t JO t ' PPEll ' I ' I 1 U1ii ' APPENDIX III ''' on t w 111tt i I l'f'll'A 'l'11 I t 10 ' ' y Wd ' O C 20505 1 S ptember 1978 The Honorable Elmer Staats Comptroller General of the United States Washington D C ' Dear Elmer In the period August 1977 to Augu t 1978 CIA was iTI sustained con­ tact with the General Ac counting Office GAO concernin£ its current investigation of nuclear' mat er'ials unaccounted for from the facilities of the Nuclear Materials and Equipment Corporc3 tion NUMEC Of Apollo Pennsylvania We believe that this dialogue has contributed to GAO's understanding of some of t le kE y issues that· eire touched on in the GAO report titled IINuclear Di Vl lrS· lon· in the UnitE d 'States Thirteen' Years' of Contl 'adiction and Confusion One needs tC note however that the issues that have been of pr'imaY'y intere st to CiAO its present investi- gation find their origins in a complex situation that first cam to the attention of the United States Government in 1965 As a r sult while it is a reed that the nu clecir material that hals been unaccounted for s nee 1965 is uran i um- 235 j t s 1ess cl ear d1espi'te 1en thy nves ti ga­ tions and inspections conducted at different t imes over the past thirteen years 'by GAO the FBI and DOE as to what actually happened to this uranium In view of these circumstances CIA officers have spent a subs tanti a1 numbE r of' hours duri ng several di ffel 'ent meetings in recent weeks in review n9 with GAO personnel a number of ·factual errors and m sun'derstand ings in the earlier versions of ' he draft report which were eventucll1y eliminated We find howevE r that the tone of the GAO repo rt sug gE S ts a 1ess than ·fo'rthr1 ght approach to the NUMEC i'ssue by CIA Insc far as this agencY srole in thi's matter is concerned which is all tha 'we can address ·this report creates' an unfortunate and inaccurate mpr ssion 1 hich in our' view c annot be sub- stantiated by the facts alS ie hlive been 'ab1e tlJ reconstruct them This jUdgment leads us ther' e'fol e to corrrnent 'in the following para­ graphs on our react ons t o the GAO report befol'-e it is JD l de fina 1 in The circumstances surrounding the identification of·nuclear materials unaccounted for when combined with media speculations on what may have h appened to th'i s materia'il have £Jenerated a number of a11 egat ons It is mpo rtant tel note therefor'e t that 'e IA' 5 knowledge of those events which could in any way impact on these E WA N'NG NQT1CE II OCltliTi srrrvr INTnUGfNCE' OUJt CU ------_ A P 5 i gne r ft l ' f 01 4 lotlirl« t I1 I • • f O 11' _em ICt 4flHOf $ lNVOl Vf • Ailtetn_ t ie-lly M 36 S 1 d OGI '''''' UI f Ie It • -- I· --·f'l' ·' 4' • a '- _ _ _ I • • • C011 52251 1 • 1- j • · ' ' J O 13526 1'- I L lj APPE -'JDIX I I I APPENDIX III allegations stems from this clgency·'s pursui t of fo·reign intelligence and counterintelligence objectives 'which deal with the issues of worldwide nuclear· proliferation In short CIAls interest in intelli­ gence and counterintell igencie matters enab les 1ft to comment on events in overseas areas to include the making of estimates about the growing capabil ties of foreign countries in the nuclealr arena This situation has been explained to the GAO investigators on severa1 different occasi ons • The GAO repo rt imp 1 i es however th'at there w as a CIA estimate on the alleged NlJMEC diversion which was never admitted ·to I ' 'J - •' • I' by this agency o n • The GAO citE s a newspaper article to buttress this This braf passage was ontained iin an overall 'estimate on nuc'lear pro­ liferation worldw e Despite the availability of this background information the GAO report CIPts to leave this issue factually unclear In a policy sense the ke ' alle'g ations that 'continue to circulate' relative to the material unacl ourltedfor are a The material ·was illegally diverted to Israel by NUMEC's management for use in nuclear we pons b The material was d1 erted to Israel by NUMEC's with the a ssistance of the CIA management c ' The material was diverted to Israel with the acquiescence of the Uni d St tes Government d There has been a cover-up of the NUMEC incident by the United States Government involving a President of the United States CIA has no IIhard i'nteltligencl '1t 'concerning the allegat'ions outlined in subparagraph a above It as CIA however w'hich reque ited an FBI investigation as early as 196f r • r C I _ rDeSpite this historical record ft1s implied in the GIAO r eport that CIA failed to cooperate with United'States officials ho ere concerned 'with the NUMEC case We believe the facts of the ma tteY argue otherwise Of par'ticular note in this regard is the reality thalt since the NUMEC case was reopened in 1976 by Presidential direction a large number of officials in the executive and legislative branche's have been brilefed on NUfJ EC-related developments by CIA The DOE 'ind FBI officia--ls ho received these· CIA briefings as of 1976 stated thcit 'It'hile more· infonnation was now· 17 g '1 I 25Xl KO 13526 CO 1162 2 51 r t r APPENDI ' P E ' DI I I Israf ll i DucJear developh' ents than had bee th cas n new nforma t On d'l d not change the thrust of thel r earl' er avai lable on 1968 the conclusions concerning the'previous allega ions of a diversion GAO has also beenladv sed repE atedly that CIA has no informa· ticn that would substantiate the allegations outlined in subpara­ graphs b c and d Also of concern to us is the GAO llegation that CIA c anged its pas it on on the a11 e g ed di vers i on of nuc1ear mater a1s Thi s 's tuati on 1 resulted from GAO participation in Bln August 1977 meeting at which they were given an oral briefing on Israeli nuclear developments and how these might impact an GAO·s NUMEC investigation The participants at he briefing were retired and active duty CIA 6fficers The retired employee spoke f'r'om memory on past events WitJ10ut the benefit of access to file data Thf ' current employees talked primarily from data that had bee retrieved frl m the' fil s s'ince the princ pal briefer had not been a firsthand participant in monitlJring Israeli uclear developments in the 1 65 to 19 5 pf riod The GAO report tends to cooming1e the re'su1ts of what was Stlid at that rrieet'ing by both the retired employee and by the current e loyees'into one official CI position ·Thi in our view is n t cl proper nvestigat'tve technique for it creates con­ fusion where therE should be none In short · he retired Official ta 1ked fram memory and i'n so do ng surfaced da a that 't Ias not recorded ei ther in our C'ury·ent fi 1 or in our institut'ional memory ' This new material was not c hal 'enged at the time' it was presented but subse­ quent checks reveallled that siome of it could not be confirmed by docu­ mentary data Thi s does n'ot mean thE infonnat ion as stated was not true It simply r'leflE cts 'a 'situation in which file data on this topic has proven to be less than' adequate 'In' addition the reti red' employee mentioned one or t'fi items that subslequent chec ks revealed were garbled Although this entire tter 'has been explained to GAO investi9ato s and we have made the pO 'nt that·the lkey issue in this dialogue hinges on the semanti c pr b lem concerning the use of t he tenn evidence the reader of the CiAO l'-epart is 1eft wi th the imprE ssion that GAO does not ful'ly accept this explanation This in turn raises a question of con­ tradictions when in fact there' is'none es II We are of the opini'on tha't part of the confusion and contradicti on u refle ts the results of investigators talking to emp 1oyees 'of ot rle r agenci es whof Cl A di d not brief on ts knowl edge of Israeli nuclear devell pments If thE employee contacted by GAO did 'not have access to hisor lan'ization's fil e s or did not recall a past event involving CIA acti n the GAO report makes it appear that CIA was either remiss in not brie4f'in9 the employeeol 'r is 'not r1ecounting past events accurately This is d distorti n that rieeds to be corrected for hen recorded in the GAO'report 38 I C01162251 I ' t _ GI 1• • • • • • APPENDIX III • • APPE DI 25Xl E O 13526 --CiA briefed an individual FBI Or' 'DOE emp'l yee we _ ere pass ing infor­ mation to the institution that w'as involvHd and not the individual If in sUbsequent per'i ad the i nstitutiofl s current emp 1oyees cannot retrieve this d ata or th y do not have acc ess to it within their organi2ation this fa tor sho uld in our view not bE ' stated or impl ied as a shortfa 11 in CIA pr l edures or openrless in dea 1 i ng wi-th other C t ag encies ' The GAO report ac cur-cltely states thclt its officers were denied access to documents c---- -' ' ''''' I _ _ I It shoul d be stated in the repoT't ith equal vigor that congressional staffers directly engaged in the NUMEC case did subsequently review relevant CIA files and others includirlg GAO were ver'bally briefed on CIA's knowl­ edge of pert nent e'ven ts ' The GAO report ma es a nu mber of rec onmendatiol1s ' We cannot fore­ see how these will be acted on by those 'who have the 'responsibility to consider these key points CIA remains fully'awa re however of the need to cooperate with th ose in the United States who have 'the legal mandate to investigate nuclear material unaccounted for We will ful­ fill this respons ibility l fJhi' e simultaneously meeting our obligations to protect sources and methods 'As a final point let me say that my staff is looking at the qU'estion of what porti n of the GAO report can be dE'classified We will be in touch wit ou - associates on ' hismatter' in' a rom t manner L I ___-----' ' % Yours STANSFIELD TURNER 25Xl E O 13526 39 SEGaq I ZI · COl 1 6 2 5 1 APPENDIX IV APPE DIX l ' IUCu '0 I - UNITED STATES NUCLEAR REGULATORY CC MMrsslqN 0 If'' WASHIN l·ON O C 20 i55 r JUL I 3 1978 ' Mr Monte tanfield Jr t Director Energy and Minerals Division U S General Accounting Office Washington DC 20548 J Dea Mr Canfield SUBdECT GAD DRAFT REPORT NUCLEAR DIVERSION IN THE US 13 YEARS OF CONTRADICTION AND CONFUSION SECRET NSI The Nuclear Re£Julatory Comniss cln has no I onments on the content of the report Th e recormlendations to Hel ids of 'Agencies appe rs reasonable Si ncerel f t _ ­ V' C '- iee V Gnssick ExecutivE Director for 30513 of I 7 ' 40 ''Sltmq OpE rat ons t 1 I I 1rr c 11 6 2 2 5 1 • p • • II ' F a· ·· APP'£NDI v · ·t P ' 't - - - ' 1 r i -1 if T n t t i_ l ' r' l' r 1' ' • • • • • 4 'II i 1 •• _ - ' ' _ APPErJDIX V J # •• · -· ··· 1 FE Drua r ' 8 19if _ t y i c _r-­ t Honorable Elmer 13 Sta'at s Comptroller GeneJ al of t he Uni ted States Washington D c 20548 ' · lt -rt· Dear Mr Staats This'is in I es l onse to yo Llr letter to me dated December 16 1977 J aequesting l cess to • records reports and files in the pc ssession of this Department which relate to the Niclear Ma te ials and E liprnent Q lrporat'ion ' NUMEC of Apollo Penns lvcLnia Your inquiry into this matter was at the re uest of Crlairman Di E ll of the House Subco ittee on Energy and PO 'ler You also request1ed to be infonned of th scope of our in restigation clnd the estimated date of its completion I •• 1 As· 'y ou may kliO ' in resporlse to a similar request from Chainnan Dingell tb e Deputy Att o ney c eneral· informed him by letter Idated S4 pt ember 8 ' 1977 ' tha' 'Depar'bnent policy' has been to provicle oral briefings by' i he FBI to Congressional comrnittees which lla V'e' inquired a bout tl'lis matter Such a briefing was of'feJred t o Chai a n DingeJ l • I· The recent mE e t ing of FBI represerltatives with Mr Canfield DirectoJ c Jf' the GAO Energy' aILd Minerals Division and members of hi s l taff to which you refer in your letter was in fact a brile f in9 by the FBI as a resul t of the Acting omptroller Generi ll 'l s lette'r to me of A ugust 30 1977 • I • 41 ·' I ' ' n r n r _ - C 116L251 APPENDIX V • APPENDIX V In rie ·w· of th ' c t C i l've - i'S ' tic i - s a ct a l 'to accede o o req'uest 'lat this t _rnt · Co siceration · il1 at rs·E D 'gi ven to your req uE st upon the conc·1U5 ion of o' inves tiga­ matter is continuin I tion I am unable tC estimate when the nvestigation will be concluded You rna r oe' assured howeveJ that it is being carried out as eXF E I itiously as possibJ e 1 ' ' YClurs sincerely ­ ' t - - 42 ' -_ _-- -------­ Gr ffin B Bell Attorney General i in