CBS Reports FBI Suspects Israel has Spy in Pentagon

DEBKAfile Intelligence

Updated Saturday, August 28:

Official sources in Jerusalem flatly denied a CBS News report the day before of an Israeli spy in Pentagon. The US TV network said the FBI has an investigation underway against a suspected Israeli mole within the office of defense secretary Donald Rumsfeld. The Federal bureau is said to believe it has “solid” evidence that the suspect supplied Israel with classified materials including secret White House policy deliberations on Iran, including the draft of a presidential directive related to US policies towards Iran.

FBI officials confirmed an investigation was underway against a suspect to find out if classified materials were passed to Israel through two employees of AIPAC - the American Israel Public Affairs Committee. The bureau reportedly documented its findings with the help of wiretaps, undercover surveillance and photography. No arrests have been made as yet.

Israeli officials stressed Saturday that no Israeli intelligence-gathering resources had been activated in Washington for many years. The Israeli embassy immediately denied the allegations categorically as “completely false and outrageous.” AIPAC also described information as “baseless and false.”

No name of the suspected mole was officially released, but the Washington Post identified him as Larry Franklin, a desk officer in the Pentagon’s Near East and South Asia Bureau, one of six regional policy sections. Franklin is reported to have worked at the Defense Intelligence Agency as an Iranian expert before moving to the bureau three years ago and is nearing retirement. He could not be reached for comment.

Pentagon officials responded that the suspected official was not in any position to influence US policy. They said in a statement the DOD has been cooperating with the Department of Justice for an extended period of time, but understands the investigation in the department is very limited in scope.

It is not clear yet if the case, conducted by an FBI headed by Dave Szady, will end up as espionage or a lesser charge such as improper disclosure or mishandling of classified information.

The Washington Post reports the unit to which Franklin was assigned was tasked with helping develop the Pentagon’s Iraq policy. He works under William J. Luti, deputy undersecretary of defense for Near East and South Asian Affairs, who oversaw the Pentagon’s “Office of Special Plans,” which conducted some early policy work for the 2003 invasion of Iraq. The unit is one of the two Pentagon offices that Bush administration critics accused Pentagon hawks of setting up to bypass the CIA. The other office was run by Douglas J. Feith, undersecretary of defense for policy, who reports to deputy defense secretary Paul D. Wolfowitz.

The classified information is said by CBS to have passed from the alleged mole to two employees of AIPAC – and then on to the Israelis. AIPAC has been asked for information about the two employees and their contacts with a person at the Pentagon. In a statement, the organization said it was cooperating with the inquiry and had hired outside counsel, but denied any wrongdoing by the organization or any of its employees, adding: “We would not condone or tolerate for a second any violation of US law or interests.”