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DATE=8/13/1999 TYPE=CORRESPONDENT REPORT TITLE=CHINA / SPYING / DISCIPLINE (L-ONLY) NUMBER=2-252769 BYLINE=DAVID SWAN DATELINE=CAPITOL HILL CONTENT= VOICED AT: INTRO: The U-S Energy Secretary is urging punishment for three officials who allowed a suspected Chinese spy to remain in place at a nuclear weapons lab. V-O-A's David Swan reports on the latest developments in the case. TEXT: Secretary Bill Richardson has acknowledged what he calls a total breakdown in security, with plenty of blame to go around. However, he has singled out just three people for possible discipline -- the former director of the Los Alamos lab, its former chief of counterintelligence and a second counterintelligence official. An internal inquiry found the three did not act quickly or decisively enough against Wen Ho Lee, the scientist who allegedly passed nuclear warhead data to Beijing. The lab director reportedly failed to curb his access to secret information, even after he fell under suspicion. Another official neglected to tell F-B-I agents Mr. Lee had signed a document [waiver] allowing them to search his computer. As a result, it took until May of this year to learn he moved a huge volume of classified code from a secure computer network to his own, relatively insecure machine. None of the three men had any immediate comment on the allegations. Mr. Lee denies spying and, though he was fired in March, he has not been charged. Officials have said they may never be able to build an espionage case against him, but may prosecute him on lesser charges, such as mishandling secrets. Mr. Richardson's recommendation for discipline marks another attempt to put the matter to rest. The administration is still at odds with some Republicans in Congress, who want a major reorganization of the Energy Department and the labs. (Signed) NEB/DS/WTW 13-Aug-1999 11:57 AM EDT (13-Aug-1999 1557 UTC) NNNN Source: Voice of America .