Early clues to navy spy Delisle's guilt overlooked

Canada's most active spy might have been caught almost a year sooner if the military and CSIS had followed their own mandatory security check rules, documents obtained by CBC News show.

And Sub-Lt. Jeffrey Paul Delisle might still be swapping secrets with the Russians for cash if not for a tip from the FBI in the United States, suggests information contained in three search warrants that were executed on Delisle's home, car and the ultra-secret navy intelligence facility in Halifax where Delisle worked, HMCS Trinity.

The first hint that Delisle was the central figure in a spy scandal that would rock the Canadian and allied military establishments came in the form of a letter sent to the RCMP from the FBI on Dec. 2, 2011.

"The RCMP gets a letter from Frank Figliuzzi, the FBI's Assistant Director, REDACTED implicating a Canadian military officer. His statement is corroborated by Anthony M. Buchmeier, the FBI's counter-intelligence expert witness," states one of the warrants. (Some portions of the warrants obtained by CBC have been redacted by Canadian security officials.)

The FBI makes it clear that there is one suspect: Sub-Lt. Jeffrey Delisle.

A ban on publication of the warrants was lifted in Nova Scotia provincial court on Thursday after an application was made by CBC News.

When the FBI tipped off the Mounties, Delisle was the threat assessment officer for the Canadian navy based on the East Coast. His job came with a Level 3 top secret security classification — the second highest possible — that gave him access to secret information gathered by the CIA, the FBI, CSIS, and British, Australian and New Zealand intelligence services.

But the warrants show that Delisle's top secret security clearance had lapsed before he was transferred to Trinity in August 2011. The transfer came after Delisle was promoted to an officer, giving him access to more classified material.

"Jeffrey Delisle's security clearance is Level 3 — TOP SECRET and is currently being updated. The last information request made to approve this clearance was completed on March 22, 2006," the warrants state.

The Defence Department has confirmed to CBC that Level 3 security classifications are supposed to be updated every five years. Delisle's should have undergone the rigorous security process in March 2011, five months before he moved to Trinity. But that check never happened, and the warrants don't explain why.

Might have uncovered problems

If Delisle had been subjected to the mandatory screening process, his loyalty to Canada would have been tested, his devotion to the Canadian military assessed and his financial and emotional health scrutinized.

The process might have uncovered unsettling facts about Delisle that should have triggered a security review long before the five-year mandatory check.

The warrants say that Delisle was in debt in 2009, owing thousands of dollars on a government American Express card. It was a debt he couldn't pay.

"He understands that he has to repay the amount of $3,242.72 and commits to do so," states the warrant. The information came from Delisle's commanding officer at Trinity.

The documents confirm Delisle claimed he incurred the debt because his marriage was falling apart. Debt coupled with a disintegrating marriage often triggers a security review for people involved in intelligence.

But Delisle remained undetected and untested: a man responsible for providing Canadian warships around the world with daily alerts about possible terror attacks and other risks.

'The systems didn't work'

Geoffrey O'Brian, CSIS's former chief of counter-intelligence, told CBC News the systems in place to detect spies did not work in his case.

"It would seem to me that the systems didn't work as one would hope the systems would work," he said.

'He would have been on a desk reading magazines until his security clearance came through.' —Ken Hansen, former navy commander

O'Brian said Delisle's financial situation and viewing and downloading documents should have been noticed.

"In this case, that appears not to have been the case."

He said it is not surprising Delisle's security clearance was updated before the proper procedures were followed, because "it's not an absolute drop deadline" and depends on resources.

"The interesting question for me would probably be how many clearances were behind? How much were they behind?" he said.

NDP justice critic Jack Harris tried to get some answers from Defence Minister Peter MacKay on Thursday in the House of Commons.

"What steps has the minister taken since January to fix this security problem other than providing these bland assurances?" Harris asked during question period.

MacKay responded the way the government has since the scandal broke.

"The member is a lawyer. He would know that the matter is still before the courts, so… we will not discuss this matter publicly," he said.

Ken Hansen, a former navy commander, agreed that security checks are often delayed, but said that is no excuse for the military. Hansen said he was surprised the military gave Delisle a position of trust.

"Properly speaking from my perspective, he would have been on a desk reading magazines until his security clearance came through," said Hansen.

23 payments to Delisle

The warrants also show that Delisle's 4½ years of betrayal only paid the 41-year-old sailor enough to keep his head above water.

"Between July 6, 2007, and Aug. 1, 2011, funds of $71,817 US, split in 23 payments, were transferred to Jeffrey Paul Delisle," state the warrants, which have not been tested in court.

The money was transferred via Western Union and cashed by Delisle at Money Marts. The documents say the money was sent by people in Russia and in Ireland.

The warrants name Sergey Shokolov, Fedor Vasilev, Andrey Orlov and Mary Larkin as the people who sent Delisle money orders. The warrants don't explain who they are or who they work for, but state that Larkin is using a fake name.

Despite his known money problems, Delisle gave notice to his commander that he was going to vacation in Cuba and Brazil in September 2011. Even these expensive sojourns didn't raise a red flag to the military. 

Delisle travelled to Brazil to meet with his Russian spymaster, who paid him $50,000. His Russian handler also offered him a new job as a go-between with other Russian agents in Canada.

Walked into Russian Embassy

When Delisle returned to Canada, a border services agent in Halifax thought the five-day trip and the amount of money Delisle carried on his return was odd. The border guard reported his suspicions to his superiors, but there is no information in the warrants to suggest the navy took action. 

It had been in 2007 that Delisle walked into the Russian Embassy in Ottawa on a summer afternoon. He agreed to supply Russia with secret information for money. On the 10th of every month he would upload untold megabytes of information he had downloaded onto a USB stick while at work in Trinity.

It was only after the FBI alerted the RCMP about Delisle that the navy began his overdue security clearance check. CSIS is responsible for conducting security checks on military personnel.

In a surprise move, Delisle pleaded guilty in October to passing secrets to the Russians. His guilty plea means that the whole story behind the leaks will never be heard in court.

Delisle, who still holds his rank and receives a salary from the navy, will be sentenced for his crime on Jan. 11, almost a year to the day he was arrested.

In Halifax on Thursday, Crown prosecutor Monica McQueen said some parts of the released documents had to be edited to protect "investigative techniques and things like that."

As well, "some of it was redacted for reasons under Section 38 of the Canada Evidence Act for national security reasons," she said.

David Coles, the lawyer who acted for the CBC, said there was no longer any reason to keep the material in the Delisle warrants secret.

"He's pleaded guilty; there's no reason to keep the critical information which led to the granting of these search warrants confidential anymore," he said.

Coles added: "It's the whole notion of the open-court principle to keep the courts under scrutiny and the police under scrutiny, and make sure the system is working as it should."