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CIA - Improper Handling of Classified Information by John M. Deutch
CIA - Improper Handling of Classified Information by John M. Deutch
REPORT OF INVESTIGATION
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TABLE OF CONTENTS
Page
INTRODUCTION ............................................................................1
SUMMARY .........................................................................................2
BACKGROUND................................................................................4
FINDINGS........................................................................................11
WHY WAS DEUTCH ISSUED GOVERNMENT COMPUTERS CONFIGURED
FOR UNCLASSIFIED USE AND WERE HIS COMPUTER SYSTEMS
APPROPRIATELY MARKED AS UNCLASSIFIED?...................................... 11
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CONCLUSIONS .............................................................................78
RECOMMENDATIONS...............................................................81
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REPORT OF INVESTIGATION
This unclassified report has been prepared from the July 13,
1999 version of the classified Report of Investigation at the request
of the Senate Select Committee on Intelligence. Information in this
version is current as of the date of the original report. All classified
information contained in the original Report of Investigation has
been deleted.
INTRODUCTION
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SUMMARY
1 OPS was established in 1994 and was subsumed as part of the new Center for CIA Security in
1998. The mission of OPS was to collect and analyze data on individuals employed by or affiliated
with the Agency, for the purpose of determining initial and continued reliability and suitability for
access to national security information. SIB conducts investigations primarily related to suitability
and internal security concerns of the Agency. SIB often works with the OIG, handling initial
investigations, and refers cases to the OIG and/or the proper law enforcement authority once
criminal conduct is detected.
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2 Congressional oversight is provided by the Senate Select Committee on Intelligence (SSCI) and the
House Permanent Select Committee on Intelligence (HPSCI). The two appropriations committees—
the Senate Appropriations Committee, Subcommittee on Defense (SAC) and the House
Appropriations Committee, National Security Subcommittee (HAC)—also bear oversight
responsibilities.
3 Hereafter, the residences will be referred to as Maryland and Belmont.
3
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BACKGROUND
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QUESTIONS PRESENTED
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1995
1996
December 5 Deutch requests that he be able to retain computers after he leaves office.
December 13 Deutch signs a no-fee consulting contract permitting him to retain government
computers.
December 23 Four PCMCIA cards retrieved from Deutch and given to O’Neil.
1997
January 6 OPS/SIB initiates investigation on Deutch. PDGC and the OPS Legal Advisor discuss
issue of a crimes report.
January 9 O’Neil releases to DDA Calder and C/SIB the hard drives from the residences and two
of six PCMCIA cards. O’Neil retains four PCMCIA cards from the Maryland residence.
January 9 Memo from ADCI to D/OPS directing Deutch to keep clearances through December
1997.
January 22 Technical exploitation team documents that two hard drives contain classified
information and had Internet exposure after classified material placed on drives.
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January 30 O’Neil speaks with FBI General Counsel and was reportedly told that FBI was not
inclined to investigate.
February 3 O’Neil releases four remaining PCMCIA cards that are subsequently exploited.
February 27 D/OPS tasked to review all material on hard drives and PCMCIA cards.
July 8 D/OPS’s report to ADCI prepared for distribution. Included on distribution are Slatkin,
O’Neil, and Richard Calder.
July 30 PDGC reaffirms with OGC attorney that original disks and hard drives need to be
destroyed to ensure protection of Deutch’s privacy.
August 11 PDGC appointed Acting General Counsel and O'Neil goes on extended annual leave.
August 12 Technical exploitation team confirms selected magnetic media were destroyed per
instruction of D/OPS.
November 24 DCI approves Deutch and other members of the Proliferation Commission for temporary
staff-like access to CIA information and facilities without polygraph.
1998
February 6 OIG is made aware of additional details of the SIB investigation and subsequently
opens a formal investigation.
1999
April 14 Attorney General Reno declines prosecution and suggests a review of Deutch’s security
clearances.
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FINDINGS
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19. The OIG has in its possession eight PCMCIA cards that
had been used by Deutch. Seven of the eight cards were labeled
unclassified; the eighth was not labeled. Four of the cards were
from the Maryland residence. Three of the cards were from CIA
Headquarters and one was from the OEOB. In addition, OIG
received four Macintosh computers and one Macintosh laptop that
were used by Deutch. The laptop and two of the computers were
marked with green unclassified labels; the other two computers
were marked with purple classified labels. One of the classified
computers was determined to have come from Deutch’s 7th floor
Headquarters office; the other from his OEOB office.
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Deutch told [him] “to look at a way in which he could keep his
government computers.”
The only legal way to loan the computers to the DCI would be if
a contract was signed setting forth that John Deutch was a
consultant to the CIA, and that the computers were being loaned
to Mr. Deutch to be used solely for U.S. Government business.
4 This division has since been renamed the Administrative Law and Ethics Division.
5 According to his July 14, 1998 OIG interview, C/ALD prepared the MFR and it was co-signed by
the PDGC and [him]. [He] stated that he took the only copy of it, sealed it in an envelope, and
retained it. He sensed that it was likely there would eventually be an Inspector General
investigation of the computer loan. [He] stated that this was the only time in his career that he has
resorted to preparing such an MFR. He stated that he did not tell O’Neil about the MFR nor provide
a copy to O’Neil since he judged that to be “unwise.” He did not provide a copy of it to the OGC
Registry. He said that he has kept it in his “hold box” since he wrote it.
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29. According to the C/ALD and PDGC MFR, they met with
O’Neil on December 13, 1996 to discuss the loan of the computers to
Deutch. [They] expressed concern that the loan of the computers
would be improper if Deutch intended to use the computers for
personal purposes. O’Neil stated that he had discussed the matter
with Deutch, and Deutch knew he could not use the computers for
personal purposes. O’Neil also stated, according to the MFR, that
Deutch had his own personal computers and that Deutch would
transfer any personal data from the CIA computers to his own.
O’Neil said that the contract, which only called for the loan of two
computers, had to be re-drafted so that it would cover the loan of a
third computer. O’Neil advised that Deutch would not agree to an
arrangement in which he would simply use his own computers for
official work in place of a loaned CIA computer.6
6 The OIG investigation has not located any contract that includes a third computer.
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copies of the documents for his review.” [He] contacted the Infosec
Officer and instructed him to copy the six classified/sensitive files
to a separate disk and return to Headquarters. The Infosec Officer
copied five of the six files.7
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45. By January 13, 1997, all hardware and files that had been
used by Deutch, except four PCMCIA cards retrieved from Deutch’s
Maryland residence on December 23, 1996, were in SIB’s
possession. On February 3, 1997, O’Neil released the four PCMCIA
cards to Calder, who transferred them to the group on February 4,
1997. Then-Director of Personnel Security (D/OPS) headed the
group. Calder was the senior focal point for the group. In addition,
a technical exploitation team was formed to exploit the magnetic
media.
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10 OIG was unable to determine how the Belmont computer was marked because the chassis was
disposed of prior to the OIG investigation.
11 In response to an authorization for disclosure signed by Deutch, [the ISP] provided business
records to OIG. These records reflect that Deutch, using the screen name [that was a variation of his
name,] maintained an account with [the ISP] since January 1, 1995.
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Microtech PCMCIA “Deutch’s Disk,” PCMCIA Card Reader Three complete classified documents and text
Card/Deutch’s Maryland “Unclassified,” Networked to U.S. Robotics fragments including TS/Codeword.14
Residence GS001414 Fax Modem
[Bank] online usage.
Microtech PCMCIA “Deutch’s Backup PCMCIA Card Reader 31 complete classified documents and text
Card/Deutch’s Maryland Disk,” “Unclassified,” Networked to U.S. Robotics fragments, five observed during security
Residence GS001490 Fax Modem inspection.
Quantum ProDrive Hard “JMD” on Drive Shell U.S. Robotics Fax Modem Six complete classified documents and text
Drive/Deutch’s Belmont fragments including TS/Codeword.
Residence Two PCMCIA Card Readers
Internet usage.
MacIntosh Power PC with “Unclassified,” U.S. Robotics Fax Modem One complete classified document and text
Hard Drive/Deutch’s 7th “Property of O/DCI….” fragments including TS/Codeword.
Floor Office, Original “DCI’s Internet Station Two PCMCIA Card Readers
Headquarters Building Unclassified” Word macro concept virus.
MacIntosh Power PC with “Unclassified,” U.S. Robotics Fax Modem Text fragments including TS/Codeword.
Hard Drive/Deutch’s “Property of DCI…”
OEOB Office Two PCMCIA Card Readers DoD electronic mail usage.
MacIntosh Powerbook “Dr. Deutch Primary,” Global Village Internal Modem Two complete classified documents and text
Laptop “Unclassified,” fragments including TS/Codeword.
13 Certain material viewed by the exploitation team was described as leaving the user's computer
particularly vulnerable to exploitation. The exploitation team did not recover this material and it
was never viewed by OIG.
14 Journals containing classified material classified up to TS/SCI encompassing Deutch's DoD and
CIA activities were recovered from multiple PCMCIA cards. Deutch stated that he believed his
journals to be unclassified.
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57. [The] former Chief of Staff to the DCI and Slatkin both
identified the memorandum as one Deutch composed on the
computer at his Maryland residence in their presence on October 5,
1996.
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johnd@odci[Office of DCI].gov[Government]
15 A “cookie” is a method by which commercial web sites develop a profile of potential consumers
by inserting data on the user’s hard drive.
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16 After reading the draft ROI, Deutch's refreshed recollection is that it was in December 1996, not
December 1997, that he first became aware that his computer priorities resulted in vulnerability to
electronic attack.
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112. The National Security Act of 1947, CIA Act of 1949, and
Executive Order (E.O.) 12333 establish the legal duty and
responsibility of the DCI, as head of the United States intelligence
community and primary advisor to the President and the National
Security Council on national foreign intelligence, to protect
intelligence sources and methods from unauthorized disclosure.
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practice for her to review such requests with the DCI. She does not
recall denying any request to involve others in this case.
130. Calder stated that the OPS Legal Advisor was strident
in his concern that Deutch be treated the same as any other Agency
employee and senior officials should scrupulously avoid showing
special treatment to Deutch. Calder agreed that the investigation
should resemble those conducted for similar violations by other
Agency personnel. He stated he was concerned that he insulate the
OPS/SIB personnel and the C/DCI Administration to ensure that
they did not “get ground up.”
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134. Calder recalled that O’Neil told him that Deutch wanted
the PCMCIA cards destroyed. Calder advocated the position that
the cards should not be tampered with and must be maintained in
the event of a future leak investigation. According to Calder,
O’Neil and Deutch came to realize the PCMCIA cards could not be
summarily destroyed. Calder stated that he went to O’Neil on
three or four occasions in an attempt to obtain the four PCMCIA
cards, and it took two to three weeks to reach a satisfactory
arrangement for O’Neil to surrender them.
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140. Calder stated that, in his view, Slatkin and O’Neil did
not want Deutch’s name “to be besmirched” and O’Neil assumed
the role of an “interlocutor.” He also said that Slatkin and O’Neil
were particularly sensitive that a possible vendetta would be
orchestrated by security personnel as a response to interference by
O’Neil and Slatkin in a previous, unrelated, joint investigation
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18 Based on a series of intelligence leaks in the Washington Times, CIA’s Special Investigations
Branch determined the leaks were related to the distribution of intelligence reports at the Pentagon.
In a routine procedure, CIA sent a letter to DoD and the Defense Intelligence Agency (DIA) to
coordinate an investigation. According to Calder, the DIA nominee for Director of that organization
contacted Slatkin and demanded an explanation of the CIA’s actions. Subsequently, O’Neil
requested that DDA Calder rescind the CIA letter. Calder states that O’Neil commented the actions
of CIA security officials appeared to be “vindictive and malicious.”
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19 C/SIB noted that he did not review Deutch’s official security file. OIG reviewed the file.
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150. After D/OPS sent his report to Calder, the OPS Legal
Advisor received an e-mail from the C/ALD stating that the PDGC
had spoken to Calder about the SIB investigation of Deutch. Calder
reportedly said Deutch would be given a code of conduct briefing
in conjunction with Deutch’s security briefing as a member of the
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151. C/SIB had also relayed his concerns about the possible
exposure of DoD classified material of ongoing military operations.
In his chronology, C/SIB wrote that on March 14, 1997, Calder
decided appropriate senior level DoD officials should be briefed on
a potential compromise. Calder planned to brief Slatkin of this
decision. C/SIB indicated he again reminded Calder of the need
for DoD notification on March 24, 1997. The OIG investigation did
not locate any information that such notification occurred until OIG
notified DoD on June 17, 1998.
20 There is no record of Deutch receiving a code of conduct briefing. The Center for CIA Security
provided an SCI briefing to the Commission members on two occasions. Deutch was present for the
second one-hour presentation on November 17, 1998.
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155. Pursuant to Part 1.7(a) of E.O. 12333, the DCI and the
Attorney General agreed on crimes reporting procedures for CIA
on March 2, 1982. These procedures, which are included as Annex
D to HR 7-1, were in effect from that time until August 2, 1995,
when they were superseded by new procedures.21 The new
procedures are contained in a document, “Memorandum of
Understanding: Reporting of Information Concerning Federal
Crimes,” signed by DCI Deutch.
21 Although HR 7-1 Annex D was superseded by the MOU on August 2, 1995, the current version of
HR 7-1 Annex D is dated December 23, 1987 and does not reflect the changes caused by the
subsequent MOU.
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Talked to [the PDGC]. She already knew about the Deutch leak.
Discussed the 793(f) issue. She concluded years ago that the
DCI who has authority to declassify cannot realistically be
punished under the statute. I expressed my disbelief in that
analysis. Hypo - does that put the DCI beyond espionage
statutes? No she says that would be a natl. security call . . . .
Returned briefly to information in play. Discussed how there
may have been [non-CIA controlled compartmented program
material] on the computer. Doesn’t this push 793(f) back into
play?
161. In his OIG interview, the OPS Legal Advisor said that
DoD material and Top Secret/[the non-CIA controlled
compartmented program] material would not qualify for
information a DCI had the authority to declassify. He realized that
a referral to the FBI would “technically not” be the same as making
a crimes report to DoJ. He stated there was a tendency to discuss
some cases with the FBI in order to get their procedural advice.
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with the FBI Agent regarding the case. The note indicated that the
FBI Agent at CIC suggested that it was better to have O’Neil call
the then-FBI General Counsel to discuss the case.
167. The FBI Agent at CIC recalled that he was told Deutch
had classified information on a computer disk at his home in
Maryland shortly after the matter was discovered. The FBI Agent
was asked if the matter was an “811” violation.27 The FBI Agent
concluded there was no reason to believe that the information had
been compromised to a foreign power and, therefore, the FBI did
26 A check of O’Neil’s “sensitive personal file” was conducted by his secretary’s successor in OGC.
There was no evidence of any document regarding contact between O’Neil and the FBI General
Counsel concerning a possible crimes report on Deutch.
27 “811” is Section 811 of the Counterintelligence and Security Enhancement Act of 1994.
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not need to get involved. The FBI Agent recalled telling someone
at CIA, whose identity he does not remember, that since Deutch
was involved, O’Neil may want to contact the FBI General Counsel,
O’Neil’s counterpart at FBI. The FBI Agent said that he established
early on in his tenure at CIA that merely telling him something did
not constitute official notification of the FBI much less DoJ. He was
aware that OGC had crimes reporting responsibilities, and he
expected them to fulfill those responsibilities.
169. The FBI General Counsel stated that he did not consider
O’Neil’s call as a submission of a crimes report because, from what
he remembers being told, there was no evidence of a crime. He
said that he and O’Neil spoke on the telephone several times a
week, but O’Neil never made a crimes report to him. [He] said that
if he thought O’Neil was giving him a crimes report, he would
have told him to do it through the proper channel.
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172. The PDGC was not aware that Deutch was deleting files
from the Maryland computer in the days immediately following
the discovery of the classified information. She remembered
speaking with Calder about the necessity of protecting the magnetic
media. Her reason for wanting to retain the magnetic media was
not for evidence of a crime but to have a record should there be a
need to conduct a leak investigation in the future.
28 The PDGC has served in the CIA since 1982. [She] was appointed PDGC, the second highest
position in the Office of General Counsel, in the summer of 1995 and served in that capacity until
March 1, 1999. While serving as PDGC, [she] also served as Acting General Counsel from the
August 11, 1997 until November 10, 1997.
29 The then-Executive Assistant to the GC states he was aware of the inquiry regarding the
classified information found on Deutch’s computer and that it was being worked by others in OGC.
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of Title 18 and with the OPS Legal Advisor. She did not agree with
the OPS Legal Advisor's assertion that, because the classified
information “was [only] in his [Deutch’s] head,” Deutch did not
remove classified information from the Agency. The PDGC was
aware that, on occasion, Deutch carried the PCMCIA cards “back
and forth” with him. She did not know if the cards contained
classified information. The PDGC saw no distinction between
classified information on a document as opposed to being on
magnetic media. She explained that she was more concerned at
this time with protecting and recovering the magnetic media than
considering a crimes report.
The Executive Assistant does not remember assisting the PDGC in this matter, but concludes that, if
the PDGC states that he assisted her, he has no reason to doubt her recollection.
30 The statute contains the pertinent phrase “and with the intent to retain such documents or
materials at an unauthorized location.”
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176. The PDGC did not remember when she made the legal
decision that a crimes report was not required. She remembered
speaking with C/SIB in March 1997 about his concern that a crimes
report should be filed.
177. The PDGC said that D/OPS's report was not made
available to her. Although someone in OGC would usually read
OPS reports, the PDGC speculated that the D/OPS would not have
shown the report to her without receiving authorization. She never
thought to request a copy of the D/OPS's report to determine if his
findings were consistent with her decision not to file a crimes
report. Later, after she became Acting General Counsel, the issue of
her reviewing the report never arose, and she would have expected
OPS to raise the report with her only if the facts had changed
significantly from what she learned initially.
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179. George Tenet, who was Acting DCI at the time of the
OPS/SIB investigation, said no one ever raised the issue of
reporting this incident to DoJ, and it did not occur to him to do so.
Tenet said no one ever came forward with a legal judgment that
what had occurred was a crime. In Tenet’s opinion, based upon
what he knew at that time, there was no intent on Deutch’s part to
compromise classified information. Therefore, Tenet did not
believe a crime was committed. Tenet was aware of the incident
involving [another] senior Agency official but was not aware a
crimes report had been filed on it.
31 A crimes report was made by letter to DoJ on December 13, 1996. It is signed by the AGC in the
Litigation Division, who was the OGC focal point for crimes reports at that time.
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34 The Intelligence Oversight Board is a standing committee of the President’s Foreign Intelligence
Advisory Board.
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unclassified CIA computer, the OPS Legal Advisor stated that the
Congressional oversight committees may eventually inquire about
this matter. He recalled that Calder wanted the investigation
performed “by the book” in case there would be a need to account
for SIB actions.
197. The PDGC stated she did not remember any discussion
concerning notifying the Congressional oversight committees or the
IOB. O’Neil said that “the question of informing the IOB or the
Congressional oversight committees did not come up.”
35 The Group of Four refers to the Senate Select Committee on Intelligence, the House Permanent
Select Committee on Intelligence, and the two appropriations committees—the Senate
Appropriations Committee, Subcommittee on Defense and the House Appropriations Committee,
National Security Subcommittee.
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202. The former ADDA stated that she was “worn down” by
Slatkin and O’Neil, and perceived that the D/OPS and Calder were
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203. The PDGC said that there was not a “crisp end” to the
case; “it ran out of steam” when many of the principals left the
Agency. The PDGC thought a decision was made that the Director
of the Center for CIA Security or the D/OPS would brief either
Deutch or the whole Proliferation Commission regarding
safeguarding classified information, but she does not know if this
action was taken. O'Neil stated that after the process for producing
the review was approved by the ADCI, who had been kept
informed all long, he had little to do with the investigation. O’Neil
also stated, he did not interfere with the OPS investigation, he left
the Agency in July 1997,36 and he does not know how the
investigation was concluded. Slatkin said that she gave the
information to Tenet and assumed that the investigation would
have proceeded after she departed the Agency. The D/OPS said
that, as far as he knows, no decision was ever made on what to do
concerning Deutch’s actions.
204. Tenet did not recall how the matter was resolved. He
believes Calder, the D/OPS, Slatkin, and O’Neil had detailed
36 Although O'Neil states he left the Agency in July 1997, he was present for duty until August 11,
1997 when he was replaced by the PDGC as Acting General Counsel.
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37 Hitz served as CIA IG from October 12, 1990 until April 30, 1998, when he retired.
38 The former C/DCI Administration provided a copy of his MFR to Hitz, Calder, and C/SIB.
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213. Hitz observed that the investigation had started with the
former C/DCI Administration's “security people” finding the data,
and the investigation stayed in a security channel. Hitz believed
that it was appropriate for that to continue as long as OPS would be
allowed to do their job.
39 A review of Hitz’s files, which he left when he retired, failed to locate [the] MFR of the former
C/DCI Administration or any notes or correspondence connected with this investigation.
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Fred [Hitz] said he would speak to the DCI about this matter,
and sensitize him to the problems associated with [Deutch’s]
needing a clearance at another U.S.G. agency. Fred asked to be
kept informed.40
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41C/SIB later explains his use of the word “particulars” meant that he did not disclose what
evidence had been discovered in his investigation. He states that it does not necessarily mean that
Deutch’s name and/or title was not discussed.
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Investigations does not recall knowing at the time that the OPS/SIB
investigation involved classified information.
42 On February 5, 1997, Hitz sent a memorandum to the Director of Personnel Security, Subject:
"Crimes Reporting and Other Referrals by Office of Personnel Security to the Office of Inspector
General." The memorandum eliminated the requirement for OPS to routinely notify OIG of certain
specific investigative matters in which it is engaged. Included as one of the nine categories of
investigative issues identified in the memorandum was the following: "Mishandling of classified
information that is or could be a possible violation of 18 U.S.C. 1924, 'Unauthorized removal and
retention of classified documents or material.'"
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CONCLUSIONS
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Daniel S. Seikaly
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RECOMMENDATIONS
CONCUR:
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