AP records seizure just latest step in sweeping U.S. leak probe

By Mark Hosenball and Tabassum Zakaria

WASHINGTON (Reuters) - The Justice Department's controversial decision to seize phone records of Associated Press journalists was just one element in a sweeping U.S. government investigation into media leaks about a Yemen-based plot to bomb a U.S. airliner, government officials said on Wednesday.

The search for who leaked the information is being led by the U.S. Attorney's Office in Washington and has involved extensive FBI interviews of personnel at the Justice Department, U.S. intelligence agencies, the White House's National Security staff and the FBI itself.

The interviews have been lengthy and thorough, said people who have been questioned in the investigation, but requested anonymity. Two of those interviewed said leak inquiries were always aggressive and that being questioned is a wearing and unpleasant experience.

The investigation, which a law enforcement official has said was prompted by a May 7, 2012, AP story about the operation to foil the Yemen plot, appears to be ongoing. Some potential witnesses have been advised they are likely to be interviewed in the next two or three weeks.

Officials in the office of Ronald Machen, the U.S. attorney for the District of Columbia, could not immediately be reached for comment.

Attorney General Eric Holder, who recused himself from involvement in the case, largely sidestepped questions from angry lawmakers on Wednesday about his department's secret seizure of AP records, which the news agency revealed on Monday.

The seizure, denounced by critics as a gross intrusion into freedom of the press, has created an uproar in Washington and led to questions about how the Obama administration is balancing the need for national security with privacy rights.

There are signs the administration's efforts to find the alleged leaker were unproductive - at least before the Justice Department seized two months of records of phone calls by the AP and its journalists.

"Seeking toll records associated with media organizations is undertaken only after all other reasonable alternative investigative steps have been taken," Holder's deputy, James Cole, said in a letter on Tuesday to AP President Gary Pruitt, who has protested the government's action.

In that letter, Cole revealed the Justice Department had conducted more than 550 interviews and reviewed tens of thousands of documents before subpoenaing phone company records of AP calls.

Reuters was one of nearly 50 news organizations that signed a letter to Holder on Tuesday complaining about the AP phone record seizures.

'BREATHTAKING SCOPE'

Floyd Abrams, a prominent First Amendment and media attorney, said, "The breathtaking scope of these subpoenas served on the telephone companies might suggest that after all this time, they have no idea who they're looking for."

Another possibility is "they are touching all bases" because they suspect someone but are not sure, said Abrams, a partner at Cahill Gordon and Reindel LLP in New York. He said it was difficult for an outsider to know.

"I don't think that there is any doubt that this is a serious investigation that they have spent a lot of time on and that they feel deeply about," Abrams said. Justice's targeting of a large number of phone lines and the AP journalists who use them "taken together, certainly makes it look like the largest, most intrusive action by the government vis-a-vis the press that I can remember."

Holder has called the leak "very, very serious" and said it "put the American people at risk." He did not provide details.

The AP has reported that it delayed reporting the story of how the United States had foiled a plot by a suicide bomber affiliated with Yemen-based Al Qaeda in the Arabian Peninsula, or AQAP, at the request of government officials, who said it would jeopardize national security. Once U.S. officials said those concerns were allayed, the AP said, it disclosed the plot.

A law enforcement official said on Wednesday that because officials were so concerned and shocked by the leak, they opened an investigation into how the AP found out about the spy operation even before the news agency ran its initial story. The AP had contacted the government and asked for comment several days before the story was published.

The AP's first story reported the CIA had "thwarted an ambitious plot" by AQAP to attack an airline with a newly designed underwear bomb and said the FBI had acquired the bomb. The AP reported it did not know what had happened to the alleged bomber.

A few hours after the story was published, John Brennan, then chief White House counterterrorism adviser and now director of the CIA, held a conference call with former counterterrorism officials who frequently appear as TV commentators. Brennan said the plot was never a threat to the U.S. public or air safety because Washington had "inside control" over it.

That night, Richard Clarke, a former counterterrorism adviser to Presidents Bill Clinton and George W. Bush, suggested on ABC News there was a Western spy or double agent in on the plot. "The U.S. government is saying it never came close because they had insider information, insider control, which implies that they had somebody on the inside who wasn't going to let it happen," Clarke said.

The next day's headlines were filled with news of a U.S. spy planted inside AQAP who had acquired the latest, non-metallic model of the underwear bomb and handed it over to U.S. authorities.

Reuters subsequently reported that the spy inside AQAP had been recruited by British intelligence, principally the counterterrorism agency known as MI-5, that the informant had to be whisked to safety, and that UK authorities were deeply distressed that news of the operation had leaked.

During Senate consideration of his nomination to become CIA director, Brennan confirmed he had been interviewed by people investigating both the foiled bomb plot leak and another series of leaks related to alleged U.S. cyber warfare against Iran's nuclear program.

Brennan strongly denied he had leaked any sensitive or secret information to the media. Sources familiar with Brennan's conference call with the TV pundits said at least two of the former officials who were on the call with Brennan had not been contacted by leak investigators.

(Editing by Warren Strobel and Peter Cooney)

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Positive signs lost to latest boat

IT WAS a rare moment for Julia Gillard. At the end of her five-day visit to China, praise was being heaped upon her from all sides.

Her talks went so well that Chinese President Xi Jinping predicted a "new level" in economic and strategic ties.

An agreement was signed providing for annual meetings between Australian and Chinese leaders.

There will also be formal dialogues every year between economic and foreign ministers from the two countries.

It was dubbed a "historic pact" and a new "strategic partnership".

The Australian newspaper, often highly critical of the Prime Minister, called Gillard's achievement "a foreign policy coup" and "one of the most significant breakthroughs in the Australia-China relationship since Gough Whitlam recognised the communist state more than 40 years ago".

The Fairfax press described it as "a triumph" that will give Australia "greater access than the superpower has granted virtually any other western nation".

For a while, the PM and her advisers, far more used to brickbats than bouquets, were feeling pretty chuffed.

Then a rickety fishing boat carrying 66 Sri Lankans chugged into Geraldton harbour, and everything was back to normal.

China was largely forgotten as the asylum-seeker issue revved up again and talkback jocks were back in familiar territory.

"Border protection trumps foreign policy," said a Liberal strategist, happily.

And the Gillard government handled the situation with its usual lack of finesse.

In political terms, the boat's arrival was clearly a major embarrassment for the Gillard government.

Instead of heading for Christmas Island, or being intercepted in waters to our north, this one made its way undetected to the Australian mainland just 430km from Perth. When federal Home Affairs Minister Jason Clare, responsible for border security, blundered in with a statement that he would review "whether there need to be changes in the way we patrol seas in the northwest", an exasperated West Australian Premier, Colin Barnett, had to put him right.

Barnett pointed out that Geraldton is in the southern half of WA, not the northwest. It is 2000km from Christmas Island. He suggested the feds buy an atlas.

But it was Gillard's immigration minister, Brendan O'Connor, who had annoyed Barnett initially by accusing him of using language "bordering on hysteria" in his comments about the latest boat's arrival.

Barnett had said: "This is a serious, unprecedented and unacceptable breach of Australia's border security. That a boat, laden with people, can sail into a busy regional port in broad daylight is shocking."

I'd bet most Western Australians agreed with their premier, even taking the view that he was merely stating the bleeding obvious. (Except, perhaps, for the use of the word "unprecedented". Asylum seeker boats have reached the mainland before, though not for a very long time.)

Certainly O'Connor's bagging of Barnett did not go down well in the West, where it is common knowledge that state authorities, not federal agencies, had to deal with the situation after the boat was spotted 500m from shore.

WA police took charge. About 20 of them were assigned to it -- a lot of bodies to divert from other duties for 24 hours or more in a town like Geraldton. State health officials and child protection people were quickly involved. I understand that, until reinforcements could be flown or driven in from Perth, the only feds on the spot were a customs officer and a quarantine official. According to a well-placed source: "The WA police were getting instructions from Customs in Fremantle. It was clear the feds were absolutely floundering.

"The state people needed information, but at the federal level they were buck-passing all over the place."

The Gillard government thinks about asylum seekers primarily in the context of endangered Labor electorates in western Sydney where the policy failure resonates loudly.

But it should not forget that voters a lot further west, on the other side of the continent, will also have a say in the September 14 election and they don't need any more reasons to feel aggrieved about Canberra.

The other major political issue of the week -- the unveiling of Malcolm Turnbull's broadband policy -- was also bad news for Gillard, in that it seriously blunted one of the few advantages Labor had over the Coalition.

It would result in an inferior National Broadband Network, relying heavily on Telstra's old copper wire connections to homes rather than "fibre to the premises" as provided for in the government's plan.

Because the Turnbull NBN would be cheaper, but with download speeds a lot slower than those Labor is rolling out, there was much derision on social network sites and not just from tech-heads.

Russell Crowe, for example, tweeted: "Coalition NBN plan, half the cost to be as efficient? Obviously somebody needs to explain to them the point of the NBN."

But the Coalition used to be against an NBN. Turnbull has dragged Tony Abbott and co. to a point where they accept the need for such a network, even if only the economy-class version.

In the words of that Liberal strategist I quoted earlier: "Now Gillard can't go to the election saying, 'If you want

an NBN you have to vote Labor'. She was able to do that last time."

Gillard can hardly be blamed for basking in that brief period of foreign policy glory in Beijing. There is very little prospect of anything similar on the home front.

Laurie Oakes is political editor for the Nine Network. His column appears every Saturday in The Daily Telegraph.

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Maryland set to become latest state to enact stiff gun-control measure

WASHINGTON (Reuters) - Maryland was set to become the latest U.S. state to enact stiff gun control measures, with the approval on Wednesday by the state's House of Delegates of legislation that includes a ban on dozens of assault weapons and limits on magazine size.

The legislation, which had been proposed by Governor Martin O'Malley, was passed by the state Senate last month.

Colorado and New York have already passed new laws on gun control, and the Connecticut legislature was set to vote on Wednesday on what supporters describe as one of the toughest gun measures in the country.

Maryland's Democratic-controlled House voted 78 to 61 to pass the measure, sending it to O'Malley to be signed.

"We're so close to enacting common sense reforms," O'Malley posted on Twitter, moments after the bill's passage.

Maryland lawmakers joined others in seeking to tighten controls on firearms following the December massacre of 20 schoolchildren and six adults in Newtown, Connecticut.

The legislation limits magazine capacity to 10 bullets, requires that gun buyers be fingerprinted and licensed, and places new limits on weapons purchases by the mentally ill.

The legislation also bans more than 40 types of existing assault rifles, including all models of the AR-15. That weapon was used in the Newtown attack, by accused Aurora, Colorado, shooter James Holmes, and by Washington's "Beltway sniper" in 2002.

A House committee pulled from the bill part of O'Malley's proposal that set out physical characteristics used to weigh whether weapons made in the future should be banned as well.

Critics have contended that the removal of that proposal from the bill creates a loophole that could allow future types of weapons to be legal that otherwise would be banned.

The package also allows the purchase of assault weapons after October 1, when the law takes effect, as long as they can prove that the sale was initiated before it took effect.

(Reporting by Ian Simpson, additional reporting by Lacey Johnson; Editing by Scott Malone and Leslie Adler)

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Scenes from the latest Midwest snowstorm

RIO DE JANEIRO, March 5 (Reuters) - Brazil coach Luiz Felipe Scolari stood up for specialist dribbler Neymar on Tuesday, saying the flamboyant forward's reputation for falling down easily was undeserved and exaggerated. "He gets fouled 10 times a match, and possibly one or two of those free kicks shouldn't be awarded, but then that is normal in football," Scolari told a news conference on Tuesday. "The coaches who criticise Neymar, who claim he falls over or simulates fouls, do that because it's an easy way out for them. ...

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