BRIT HUME, HOST: Last time we reported on the approximately 60 Israelis who had been detained in connection

with the Sept. 11 terrorism investigation. Carl Cameron reported that U.S. investigators suspect that some of these

Israelis were spying on Arabs in this country, and may have turned up information on the planned terrorist attacks

back in September that was not passed on.

Tonight, in the second of four reports on spying by Israelis in the U.S., we learn about an Israeli-based private

communications company, for whom a half-dozen of those 60 detained suspects worked. American investigators fear

information generated by this firm may have fallen into the wrong hands and had the effect of impeded the Sept. 11

terror inquiry. Here's Carl Cameron's second report.

(BEGIN VIDEOTAPE)

CARL CAMERON, FOX NEWS CORRESPONDENT (voice-over): Fox News has learned that some American

terrorist investigators fear certain suspects in the Sept. 11 attacks may have managed to stay ahead of them, by

knowing who and when investigators are calling on the telephone. How?

By obtaining and analyzing data that's generated every time someone in the U.S. makes a call.

UNIDENTIFIED FEMALE: What city and state, please?

CAMERON: Here's how the system works. Most directory assistance calls, and virtually all call records and billing in

the U.S. are done for the phone companies by Amdocs Ltd., an Israeli-based private elecommunications company.

Amdocs has contracts with the 25 biggest phone companies in America, and more worldwide. The White House and

other secure government phone lines are protected, but it is virtually impossible to make a call on normal phones

without generating an Amdocs record of it.

In recent years, the FBI and other government agencies have investigated Amdocs more than once. The firm has

repeatedly and adamantly denied any security breaches or wrongdoing. But sources tell Fox News that in 1999, the

super secret national security agency, headquartered in northern Maryland, issued what's called a Top Secret sensitive

compartmentalized information report, TS/SCI, warning that records of calls in the United States were getting into

foreign hands - in Israel, in particular.

Investigators don't believe calls are being listened to, but the data about who is calling whom and when is plenty

valuable in itself. An internal Amdocs memo to senior company executives suggests just how Amdocs generated call

records could be used. "Widespread data mining techniques and algorithms.... combining both the properties of the

customer (e.g., credit rating) and properties of the specific 'behavior.'" Specific behavior, such as who the customers

are calling.

The Amdocs memo says the system should be used to prevent phone fraud. But U.S. counterintelligence analysts say

it could also be used to spy through the phone system. Fox News has learned that the N.S.A has held numerous

classified conferences to warn the F.B.I. and C.I.A. how Amdocs records could be used. At one NSA briefing, a

diagram by the Argon national lab was used to show that if the phone records are not secure, major security breaches

are possible.

Another briefing document said, "It has become increasingly apparent that systems and networks are vulnerable.Such

crimes always involve unauthorized persons, or persons who exceed their authorization...citing on exploitable

vulnerabilities."

Those vulnerabilities are growing, because according to another briefing, the U.S. relies too much on foreign

companies like Amdocs for high-tech equipment and software. "Many factors have led to increased dependence on

code developed overseas.... We buy rather than train or develop solutions."

U.S. intelligence does not believe the Israeli government is involved in a misuse of information, and Amdocs insists

that its data is secure. What U.S. government officials are worried about, however, is the possibility that Amdocs data

could get into the wrong hands, particularly organized crime. And that would not be the first thing that such a thing

has happened. Fox News has documents of a 1997 drug trafficking case in Los Angeles, in which telephone

information, the type that Amdocs collects, was used to "completely compromise the communications of the FBI, the

Secret Service, the DEO and the LAPD."

We'll have that and a lot more in the days ahead - Brit.

HUME: Carl, I want to take you back to your report last night on those 60 Israelis who were detained in the

anti-terror investigation, and the suspicion that some investigators have that they may have picked up information on

the 9/11 attacks ahead of time and not passed it on.

There was a report, you'll recall, that the Mossad, the Israeli intelligence agency, did indeed send representatives to

the U.S. to warn, just before 9/11, that a major terrorist attack was imminent. How does that leave room for the lack

of a warning?

CAMERON: I remember the report, Brit. We did it first internationally right here on your show on the 14th. What

investigators are saying is that that warning from the Mossad was nonspecific and general, and they believe that it

may have had something to do with the desire to protect what are called sources and methods in the intelligence

community. The suspicion being, perhaps those sources and methods were taking place right here in the United

States.

The question came up in select intelligence committee on Capitol Hill today. They intend to look into what we

reported last night, and specifically that possibility - Brit.

HUME: So in other words, the problem wasn't lack of a warning, the problem was lack of useful details?

CAMERON: Quantity of information.

HUME: All right, Carl, thank you very much.

Part 3

BRIT HUME, HOST: Last time we reported on an Israeli-based company called Amdocs Ltd. that generates the

computerized records and billing data for nearly every phone call made in America. As Carl Cameron reported, U.S.

investigators digging into the 9/11 terrorist attacks fear that suspects may have been tipped off to what they were

doing by information leaking out of Amdocs.

In tonight's report, we learn that the concern about phone security extends to another company, founded in Israel,

that provides the technology that the U.S. government uses for electronic eavesdropping. Here is Carl Cameron's

third report.

(BEGIN VIDEOTAPE)

CARL CAMERON, FOX NEWS CORRESPONDENT (voice-over): The company is Comverse Infosys, a subsidiary

of an Israeli-run private telecommunications firm, with offices throughout the U.S. It provides wiretapping equipment

for law enforcement. Here's how wiretapping works in the U.S.

Every time you make a call, it passes through the nation's elaborate network of switchers and routers run by the

phone companies. Custom computers and software, made by companies like Comverse, are tied into that network to

intercept, record and store the wiretapped calls, and at the same time transmit them to investigators.

The manufacturers have continuing access to the computers so they can service them and keep them free of glitches.

This process was authorized by the 1994 Communications Assistance for Law Enforcement Act, or CALEA. Senior

government officials have now told Fox News that while CALEA made wiretapping easier, it has led to a system that

is seriously vulnerable to compromise, and may have undermined the whole wiretapping system.

Indeed, Fox News has learned that Attorney General John Ashcroft and FBI Director Robert Mueller were both

warned Oct. 18 in a hand-delivered letter from 15 local, state and federal law enforcement officials, who complained

that "law enforcement's current electronic surveillance capabilities are less effective today than they were at the time

CALEA was enacted."

Congress insists the equipment it installs is secure. But the complaint about this system is that the wiretap computer

programs made by Comverse have, in effect, a back door through which wiretaps themselves can be intercepted by

unauthorized parties.

Adding to the suspicions is the fact that in Israel, Comverse works closely with the Israeli government, and under

special programs, gets reimbursed for up to 50 percent of its research and development costs by the Israeli Ministry

of Industry and Trade. But investigators within the DEA, INS and FBI have all told Fox News that to pursue or even

suggest Israeli spying through Comverse is considered career suicide.

And sources say that while various F.B.I. inquiries into Comverse have been conducted over the years, they've been

halted before the actual equipment has ever been thoroughly tested for leaks. A 1999 F.C.C. document indicates

several government agencies expressed deep concerns that too many unauthorized non-law enforcement personnel

can access the wiretap system. And the FBI's own nondescript office in Chantilly, Virginia that actually oversees the

CALEA wiretapping program, is among the most agitated about the threat.

But there is a bitter turf war internally at F.B.I. It is the FBI's office in Quantico, Virginia, that has jurisdiction over

awarding contracts and buying intercept equipment. And for years, they've thrown much of the business to Comverse.

A handful of former U.S. law enforcement officials involved in awarding Comverse government contracts over the

years now work for the company.

Numerous sources say some of those individuals were asked to leave government service under what knowledgeable

sources call "troublesome circumstances" that remain under administrative review within the Justice Department.

(END VIDEOTAPE)

And what troubles investigators most, particularly in New York, in the counter terrorism investigation of the World

Trade Center attack, is that on a number of cases, suspects that they had sought to wiretap and survey immediately

changed their telecommunications processes. They started acting much differently as soon as those supposedly secret

wiretaps went into place – Brit.

HUME: Carl, is there any reason to suspect in this instance that the Israeli government is involved?

CAMERON: No, there's not. But there are growing instincts in an awful lot of law enforcement officials in a variety

of agencies who suspect that it had begun compiling evidence, and a highly classified investigation into that possibility

– Brit.

HUME: All right, Carl. Thanks very much.

Part 4

This week, senior correspondent Carl Cameron has reported on a longstanding government espionage investigation.

Federal officials this year have arrested or detained nearly 200 Israeli citizens suspected of belonging to an "organized

intelligence-gathering operation." The Bush administration has deported most of those arrested after Sept. 11,

although some are in custody under the new anti-terrorism law.

Cameron also investigates the possibility that an Israeli firm generated billing data that could be used for intelligence

purpose, and describes concerns that the federal government's own wiretapping system may be vulnerable. Tonight, in

part four of the series, we'll learn about the probable roots of the probe: a drug case that went bad four years ago in

L.A.

(BEGIN VIDEOTAPE)

CARL CAMERON, FOX NEWS CORRESPONDENT (voice-over): Los Angeles, 1997, a major local, state and

federal drug investigating sours. The suspects: Israeli organized crime with operations in New York, Miami, Las

Vegas, Canada, Israel and Egypt. The allegations: cocaine and ecstasy trafficking, and sophisticated white-collar

credit card and computer fraud.

The problem: according to classified law enforcement documents obtained by Fox News, the bad guys had the cops’

beepers, cell phones, even home phones under surveillance. Some who did get caught admitted to having hundreds of

numbers and using them to avoid arrest.

"This compromised law enforcement communications between LAPD detectives and other assigned law enforcement

officers working various aspects of the case. The organization discovered communications between organized crime

intelligence division detectives, the FBI and the Secret Service."

Shock spread from the DEA to the FBI in Washington, and then the CIA. An investigation of the problem, according

to law enforcement documents, concluded, "The organization has apparent extensive access to database systems to

identify pertinent personal and biographical information."

When investigators tried to find out where the information might have come from, they looked at Amdocs, a publicly

traded firm based in Israel. Amdocs generates billing data for virtually every call in America, and they do credit

checks. The company denies any leaks, but investigators still fear that the firm's data is getting into the wrong hands.

When investigators checked their own wiretapping system for leaks, they grew concerned about potential

vulnerabilities in the computers that intercept, record and store the wiretapped calls. A main contractor is Comverse

Infosys, which works closely with the Israeli government, and under a special grant program, is reimbursed for up to

50 percent of its research and development costs by Israel's Ministry of Industry and Trade.

Asked this week about another sprawling investigation and the detention of 60 Israeli since Sept. 11, the Bush

administration treated the questions like hot potatoes.

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: I would just refer you to the Department of Justice with

that. I'm not familiar with the report.

COLIN POWELL, SECRETARY OF STATE: I'm aware that some Israeli citizens have been detained. With respect

to why they're being detained and the other aspects of your question – whether it's because they're in intelligence

services, or what they were doing – I will defer to the Department of Justice and the FBI to answer that.

(END VIDEOTAPE)

CAMERON: Beyond the 60 apprehended or detained, and many deported since Sept. 11, another group of 140

Israeli individuals have been arrested and detained in this year in what government documents describe as "an

organized intelligence gathering operation," designed to "penetrate government facilities." Most of those individuals

said they had served in the Israeli military, which is compulsory there.

But they also had, most of them, intelligence expertise, and either worked for Amdocs or other companies in Israel

that specialize in wiretapping. Earlier this week, the Israeli embassy in Washington denied any spying against or in the

United States – Tony.

SNOW: Carl, we've heard the comments from Ari Fleischer and Colin Powell. What are officials saying behind the

scenes?

CAMERON: Well, there's real pandemonium described at the FBI, the DEA and the INS. A lot of these problems

have been well known to some investigators, many of who have contributed to the reporting on this story. And what

they say is happening is supervisors and management are now going back and collecting much of the information,

because there's tremendous pressure from the top levels of all of those agencies to find out exactly what's going on.

At the DEA and the FBI already a variety of administration reviews are under way, in addition to the investigation of

the phenomenon. They want to find out how it is all this has come out, as well as be very careful because of the

explosive nature and very political ramifications of the story itself – Tony.

SNOW: All right, Carl, thanks.