The Jerusalem Post - Aug. 28, 2004

JERUSALEM: NO INTELLIGENCE
ASSETS ON AMERICAN SOIL

By Janine Zacharia and Arieh O'Sullivan

The FBI is broadening its investigation into whether a mid-level Pentagon official in the Office of the Secretary of Defense passed classified material regarding internal policy deliberations on Iran to two staffers at the American Israel Public Affairs Committee (AIPAC), who in turn provided the information to Israel.

According to the Washington Post, officials in the Pentagon say that is not yet clear whether the case will develop into a charge of espionage, or whether investigations will result in lesser charges such as improper release of classified information or mishandling of government documents.

Israel vehemently denies having any intelligence agents working in the US. "We are not aware of any Israeli spies in the United States. Israel is not employing any intelligence assets on American soil," an official in the Prime Minister's office was quoted as saying on Channel 2 TV.

Larry Franklin, the alleged informant, worked as a mid-level Pentagon official in the Office of the Secretary of Defense. Reportedly Franklin had traveled to Israel a number of times, and spent a period of time during his service in the US Air Force Reserve in Israel working as a specialist in foreign political-military affairs.

Security sources in Israel confirmed Sunday morning that Larry Franklin, the suspected "mole" in the Pentagon, did in fact have work ties with Jerusalem, but declared that the relationship most certainly did not deviate from standard diplomatic contact, Israel Radio reported.

CBS Evening News led its broadcast Friday night saying the FBI has a "full-fledged espionage investigation underway" and that the FBI believes it has "solid evidence" that a "suspected mole" in the Pentagon "supplied Israel with classified materials that include secret White House policy deliberations on Iran."

Israel immediately denied the espionage allegation. "We deny these allegations. The United States is Israel's most cherished friend and ally. We have a strong, ongoing, working relationship at all levels and in no way would Israel do anything to impair this relationship," said David Siegel, spokesman for the Israeli embassy in Washington.

Earlier, the embassy described the allegations as "false and outrageous."

AIPAC, the leading pro-Israel lobby, also denied any wrongdoing. "Any allegation of criminal conduct by AIPAC or our employees is false and baseless. Neither AIPAC nor any of its employees has violated any laws or rules, nor has AIPAC or its employees ever received information they believed was secret or classified," the group said in a statement.

"AIPAC is cooperating fully with the governmental authorities. It has provided documents and information to the government and has made staff available for interviews."

Israel's defense establishment said it conducted a thorough examination over the weekend with all security and intelligence bodies to verify the veracity of reports that a Pentagon employee passed on secrets to Israel.

"The examination revealed what we expected," said a senior defense official. "There are no sanctioned espionage operations going on against the United States. There is no truth to these reports."

The official, who spoke to The Jerusalem Post on condition of anonymity, said that the entire story was dubious from the outset. He noted that Israel and the United States are very close strategic allies and there is enormous sharing of intelligence between the two countries.

"We have very good, excellent working relations with the Americans, and we are very discreet about it. There is no need to operate (spies) in the Pentagon or anywhere else in the United States." The senior official said. "Also, it wouldn't be in our interest to take actions that would jeopardize these relations that we've built up over the years," he added.

The official added that they were speaking in the name of the Defense establishment, and that any official statement from the government needed to come from the prime minister's office or the foreign ministry.

The investigation has been ongoing for a year, according to several news reports. And the Pentagon, in a statement issued late Friday, said it has been cooperating with the Department of Justice on this matter "for an extended period of time."

"It is the D.O.D (Department of Defense's) understanding that the investigation within the D.O.D is limited in its scope," it said.