A Steamy Spy Scandal at the State Department

The whole thing sounds like a Woody Allen plot or a Bill Murray movie,
State Department
Asia hand gives info to his lover, a Taiwanese spy, but the real
problem is the Asia hand's wife is the on-loan CIA officer setting up
an open-source office in the new DNI. She takes documents home, he
takes documents home, whoever is charging him doesn't want to charge
her but his lawyer says he has fulfilled his end of the plea bargain.
(To be continued)

Saturday, Jul. 15, 2006
A Steamy Spy Scandal at the State Department
A tale of the diplomat, his spy paramour, and his wife - also a spy
- keeps getting weirder
By TIMOTHY J. BURGER AND ADAM ZAGORIN

Few occasions are more sensitive than a visit to the U.S. of a foreign
head of state, and few such events during the Bush years have been as
closely watched as Chinese leader Jiang Zemin's visit to the
President's Texas ranch in 2002. But a Taiwanese spy named Isabelle
Cheng had the inside track on Jiang's trip, according to a recent court
filing. Federal prosecutors say vaunted State Department Asia hand
Donald Keyser sent Cheng long e-mails detailing his 'conversations with
Chinese President Jiang' in Texas. At some point, prosecutors say, the
spy became his lover, and Keyser was caught lying to hide the affair
- and hoarding classified documents in his suburban Washington home.
Facing jail and with his marriage threatened, Keyser cut a deal,
promising to tell all he knew about Taiwan?s intelligence operations.
But then the tale of the diplomat, his spook paramour and his wife -
also a spy - got even weirder.

In return for Keyser's cooperation, prosecutors had accepted his denial
of spying for Taiwan and let him plead guilty to three lesser felonies,
preserving his pension. But in their filing earlier this month to throw
out his plea, they allege Keyser repeatedly lied about his contacts
with Taiwanese intelligence. Prosecutors want to enter new evidence to
support 'espionage-related' charges.

The new filing could also raise awkward questions for Director of
National Intelligence (DNI) John Negroponte because Keyser's wife
Margaret Lyons is a senior cia official on loan in a sensitive post
helping set up a new open-source unit of dni. The prosecutors' filing
says Lyons had known for about a year that Keyser had improperly kept
classified documents at home. Worse, current and former U.S. government
officials tell TIME, an FBI search of the couple's home found cia
documents that Lyons had there without authorization. In a Feb. 22
letter to the judge in Keyser's case, Lyons - who hasn't been charged
- admitted she and Keyser had failed 'to properly secure' her
husband's secret material. Through a spokesman, Negroponte declined to
discuss Lyons' dni role or whether cia material was compromised. A CIA
spokeswoman said the agency 'stands by the decision' not to revoke
Lyons' security clearance.

Keyser's attorney Robert Litt says the prosecutors' filing 'contains
numerous inaccuracies' Litt insists Keyser never spied for Taiwan,
didn't improperly disclose classified information and fulfilled his end
of the plea bargain. The government seems to disagree - and appears
content to let this spy saga unfold in court.

http://www.time.com/time/world/article/0,8599,1214911,00.html

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