The government doesn't like to catch spies. Nabbing one tends to be embarrassing, seen as proof that the people in charge have been sloppy and lax on security. And it raises painful questions: How much damage has the spy done? Why wasn't he rooted out earlier? Who's making sure such pillaging of the country's vital secrets doesn't happen again? It's an unwinnable debate that no Administration wants to join.

But it is this kind of scandal that hit the White House last week--and the fact that it involved China made the mess even harder to clean up. Bill Clinton has already been bruised by accusations that illegal Chinese contributions found their way into his 1996 campaign and that he was overeager to allow U.S. firms to sell high-end computers and satellite technology to Beijing. Now the "soft on China" shouts are louder than ever, boosted by claims from critics in both parties that top Administration officials delayed and soft-pedaled the investigation into alleged Chinese spying at Los Alamos National Laboratory in New Mexico, birthplace of the atom bomb.

The FBI's prime suspect is Taiwanese-born American scientist Wen Ho Lee, 59, who first began working in Los Alamos in the 1970s. A well-placed government source tells Time that Lee traveled to a 1988 seminar in Hong Kong and, with Chinese officials present, allegedly divulged sensitive information on the miniaturization involved in the design of America's most modern warhead, the W-88. In 1995 the CIA obtained a secret Chinese-government document that discussed details of the W-88. The document was dated 1988--the year the warhead went into production and a year in which Lee also visited Beijing. When intelligence analysts studied the data from nine Chinese nuclear tests from 1990 to 1995, they were chagrined to discover that the blasts involved a miniaturized warhead that was a near replica of the W-88. They also concluded, sources tell TIME, that China had acquired details of no fewer than five other U.S. warheads.

Still, according to a U.S. official, it was not until mid-1996 that investigators singled Lee out as a suspect, examined his travel and financial records, asked discreet questions about him and started monitoring his movements. Lee apparently had a habit of not locking up classified data. "He's pretty sloppy," says a U.S. official. And he was reportedly defiant when investigators confronted him about the propriety of his Hong Kong seminar. But Lee was not fired, because the FBI and the Department of Energy, which runs Los Alamos, were still trying to build their case.

In August 1998 Bill Richardson took over Energy from Federico Peña. Soon after, Richardson demanded that the FBI polygraph Lee. He passed, but Richardson suspended his security clearance and moved Lee out of sensitive areas. The Secretary then approved a security crackdown urged by Ed Curran, a former FBI counterespionage specialist hired the previous February to shape up Energy's counterintelligence program. About a month and a half ago, Richardson ordered Energy to polygraph Lee again--and the scientist failed. On Saturday, March 6, the New York Times broke an extensive story on the scandal, and the FBI swept in. They started questioning Lee gently on Saturday then turned up the heat. By 10 p.m. on Sunday, a U.S. official informs TIME, Lee announced, "I'm not going to tell you anything, and I'm ready to go to jail." On Monday, Lee finally lost his job for allegedly breaking security rules: failing to report contacts with people from "sensitive" countries, failing to "safeguard" classified material and giving deceptive answers. So far, no criminal charges have been brought against him for his suspected offense.

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R E L A T E D L I N K S : Wanna Dance? Warming up for his Washington trip, Zhu Rongji tangoed--and tangled--with Madeleine Albright on tough issues. Can China and the U.S. get in step? --TIME Asia, March 15, 1999

Reef Wars China's moves into the disputed Spratly Islands raise fears that Beijing will seize military control of the South China Sea --TIME Asia, March 8, 1999