How a crippling intelligence loss led the CIA on a mole hunt

Judy Woodruff:

A former CIA officer was arrested this week on charges of mishandling classified information.

The FBI said that Jerry Chun Shing Lee had in his possession notebooks that contained names and contact information of CIA informants and agents in China.

John Yang now has more on Lee's arrest, amid a massive mole hunt inside the agency.

John Yang:

Judy, that hunt has been going on for years, looking for who may have helped the Chinese government roll up a significant piece of the U.S. spying network in China.

Still, after Lee's arrest, questions linger over the entire case.

Here to lend some clarity is Adam Goldman, the New York Times reporter who first broke the story last year of the loss of American assets in China, and he has also been leading the paper's coverage of Lee's arrest.

Adam, thanks so much for joining us.

First of all, just tell us, who is Lee and what drew investigators' attention to him?

Adam Goldman:

Jerry Lee is a Chinese American who worked for the CIA, joined the CIA in 1994, was stationed in Tokyo. He was stationed in Beijing. He was involved in Chinese operations, and left the agency in 2007.

And we're told he left disgruntled and that his career had plateaued.

John Yang:

And give us the context of this investigation. Talk about the loss of the American assets in China, the scope of that.

Adam Goldman:

So we're told that approximately about the end of 2010, the agency realizes it has a problem. They have begun to lose informants in China. And eventually the FBI is brought in to help investigate this counterintelligence issue.

And they continued to lose people into 2011 and '12. I think, by '13, the loses had been stemmed. But it was devastating. We're told 18 to 20 people were either killed or imprisoned. And the magnitude of the loss really, really crippled the agency's operations there.

John Yang:

And Lee has been charged with not returning information, classified information, when he left the CIA in 2007, but he has not been charged with espionage, is that right?

Adam Goldman:

No. So, right.

Lee has been sort of — basically, Lee had his notebooks he had kept that had highly classified information. The information was found in cables. It was the same information that was found in cables that Lee had written while in the CIA.

So there would be no reason for Lee to have these books outside of the CIA. But he's been charged with unlawful retention of classified information. Carries up to 10 years.

John Yang:

And as you have been writing, there is a debate within the CIA and the FBI about whether Lee's responsible for giving this information to the Chinese or even if there is a mole at all.

Adam Goldman:

Well, I think for some of the people who investigated this, they could clearly — they could demonstrate that Lee had information to who knew about some of the people who were killed, some, but not all of them.

So how do you explain how the Chinese racked up everybody? I mean, we had heard it had been a combination of several things. You know, Lee might, might have been involved. I want to stress that, might have been involved.

Their code com, the way they communicate with their secret agents in China, might have been compromised, or sloppy tradecraft by agency people in China. That means essentially, when they went to go meet their informants or their agents in China, that Chinese intelligence managed to pick that up.

John Yang:

Now, you also wrote in today's paper that Lee was first questioned — or I should say that they first found this information, this material in Lee's belongings in 2012. He was questioned and then he was released. He was let go, even though there was this cloud of suspicion around him.

What was going on?

Adam Goldman:

They — Lee came back. It was a ruse. The CIA had offered him a sensitive contract. And they wanted to get him back to the States, because he had been living in Hong Kong. And by that time, they were fearful he was divulging secrets to China.

So they wanted to get him back. And they offered him this secret contract. So they managed to lure him back and his family. And they interviewed him five times, but they never disclosed to Mr. Lee that in fact they, A, he had these books filled with information or they suspected he was a Chinese spy.

And they made a calculated — it was a calculated gamble. They let him go, obviously hoping to get more information about what he knew or his interactions with other people. And they also were concerned that if they had confronted Lee and not been able to charge him — if they had confronted him and had charged him, the Chinese would have been tipped off that the FBI knew that they were losing their assets.

So, this was a really life-and-death time for the FBI and CIA in what to do with Lee.

John Yang:

And whether or not or not Lee is responsible or even if there was a mole, what has been the impact of the loss of those U.S. assets, of those sources of information inside China on the United States' intelligence gathering in China?

Adam Goldman:

Before we started losing those informants, we had extraordinary visibility into Chinese operations, government operations, whether intel, military.

And after they rolled up these informants, it was almost a complete blackout, we're told. It is one of the most devastating intelligence failures in modern CIA history.

John Yang:

A real-life spy story.

Adam Goldman of The New York Times, thanks for — thanks for being with us.

Adam Goldman:

Thank you.