The Telegraph
Since 1st March, 1999
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FBI stumbles on Israeli spy at Pentagon

Washington, Aug. 28: The FBI is investigating a mid-level Pentagon official who specialises in Iranian affairs for allegedly passing classified information to Israel, and arrests in the case could come as early as next week, officials at the Pentagon and other government agencies said last night.

The name of the person under investigation was not officially released, but two sources identified him as Larry Franklin. He was described as a desk officer in the Pentagon’s Near East and South Asia Bureau, one of six regional policy sections.

Franklin worked at the defence intelligence agency before moving to the Pentagon’s policy branch three years ago and is nearing retirement, the officials said. Franklin could not be located for comment last night.

One government official familiar with the investigation said it is not yet clear whether the case will rise to the level of espionage or end up involving lesser charges such as improper disclosure or mishandling of classified information.

The investigation has been underway for some months. Defence secretary Donald H. Rumsfeld and top Pentagon lawyers were informed of it some time ago, officials said. But many other senior Pentagon officials expressed surprise at the news when it was first reported last night on CBS.

Several Pentagon officials sought to play down Franklin’s role in policymaking, saying that he was not in a position to have significant influence over US policy.

“The defence department has been cooperating with the department of justice for an extended period of time,” the Pentagon said in a statement last night. “It is the department of defence’s (DOD) understanding that the investigation within DOD is very limited in its scope.” Even so, the case is likely to attract intense attention because the official being investigated works under William J. Luti, deputy undersecretary of defence for Near East and South Asian Affairs. Luti oversaw the Pentagon’s “Office of Special Plans,” which conducted some early policy work for the 2003 invasion of Iraq.

That office is one of two Pentagon offices that Bush administration critics have claimed were set up by defence department hawks to bypass the CIA and other intelligence agencies, providing information that President Bush and others used to exaggerate the Iraqi threat.

The other office was run by a Luti superior, Douglas J. Feith, undersecretary of defence for policy, and was known as the Policy Counterterrorism Evaluation Group. Feith reports to deputy defence secretary Paul D. Wolfowitz, who in turn reports to Rumsfeld.

Neither the House nor Senate intelligence committees, however, found support for allegations that the analysts in the offices collected their own intelligence, or that their information significantly shaped the case the administration made for going to war. A law enforcement official said that the information allegedly passed by Franklin went to Israel through the American Israel Public Affairs Committee (AIPAC), a pro-Israel lobbying organisation. The information was said to have been the draft of a presidential directive related to US policies toward Iran.

In addition to Franklin, the FBI investigation is focusing on at least two employees at AIPAC, the law enforcement official said. Franklin's name surfaced in news reports last year that disclosed he and another Pentagon specialist on the Persian Gulf region had met secretly with Manucher Ghorbanifar, a discredited expatriate Iranian arms merchant who figured prominently in the Iran-contra scandal of the mid-1980s.

That meeting took place in late 2001. It had been formally sanctioned by the US government in response to an Iranian government offer to provide information relevant to the war on terrorism. Franklin and the other Pentagon official, Harold Rhode, met the Iranians over three days in Italy. Ghorbanifar attended these meetings. Rumsfeld has said that the information received at the meetings led nowhere.

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