In response, the AEC created an Office of Safeguards and Materials Management that reported to the commission and was responsible for safeguarding materials owned by the government and housed in government facilities. The AEC also established a Division of Nuclear Materials Safeguards reporting to the Director of Regulation. It was to administer the safeguards program for AEC licensees in the commercial sector and assist the Office of Safeguards and Materials Management in developing policies for both government and commercial facilities. The regulatory division developed guidelines for licensed facilities handling SNM, such as Apollo. The division also established a resident inspector program at three fuel fabrication facilities (Apollo, Hematite, and Cimarron) and the spent fuel reprocessing plant in West Valley, New York. The AEC soon thereafter cut back the resident inspector program to West Valley due to staff shortages.196 The safeguards programs required by these new offices and guidelines would, in the years to come, cost commercial and government facilities hundreds of millions of dollars per year.
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With NUMEC’s payment of the fine for the uranium lost on the Astronuclear project and with AEC’s implementation of the changes recommended by the Lumb Panel, it would have been reasonable to conclude that the NUMEC affair was over. However, people in high places feared otherwise, including the National Security Council, the Justice Department, the FBI, the State Department and the CIA. What they knew and what they would learn about connections among Shapiro, the missing uranium and Israel’s nuclear weapons program must have weighed heavily on their private thoughts. More than a decade would pass before their doubts about the missing uranium began to spill into the public domain.
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11 Yossi Melman covers intelligence and military affairs for the Israeli newspaper Haaretz; Dan Raviv is a CBS News correspondent. They have collaborated on articles and books on Israel’s defense capabilities.
12 No document has been found to confirm such a concern by the FBI. It is not clear why the FBI would care how the AEC Interview Team proceeded since FBI declined to do an investigation, as the Atomic Energy Act required, if criminal activity was suspected.
Chapter 5
Secret Investigation (1965)
In addition to its uneasiness with the discovery that NUMEC was missing nearly a hundred kilograms of U-235 in the form of HEU at Apollo, AEC was concerned with NUMEC’s foreign entanglements. Four years earlier, on February 13, 1962, Lawton Geiger in AEC’s Office of Naval Reactors was the first to express this concern when he wrote to Shapiro, “I consider the NUMEC relationship with the Societe d’Applications Industrielles de la Physique [a French undertaking] a matter of serious concern calling for increased security vigilance. The failure to comply with security regulations may be punishable as provided by law including the Atomic Energy Act of 1954 and by the espionage laws.” According to a record note, Admiral Rickover suggested that Geiger’s letter include reference to the governing laws.197 Rickover was famous for paying close attention to the proprietary technology of the naval reactors program.
Two weeks after Geiger’s rebuke, AEC’s Director of Security Admiral J. A. Waters wrote to AEC’s director of military applications complaining about lax security at NUMEC that was198
attributable to lack of effort on the part of NUMEC management to establish and maintain an adequate and effective security program. Coupled with this is the information that NUMEC has the following known foreign affiliations. 1. An agreement for cooperation with Israel under which NUMEC serves as technical consultant and training and procurement agency for Israel in the U.S. . . . We have informed you about the aliens working in the Plutonium plant. . . . One of these, an Israeli metallurgist is a guest worker under the agreement [for cooperation].
In 1963, an AEC security official visited Shapiro to address the commission’s concerns that foreign nationals working at NUMEC might violate security restrictions, for example, by gaining unescorted access to security areas or access to bomb quantities of plutonium or HEU. The security official noted that NUMEC had 502 employees, 176 with Q access authorizations [AEC’s highest clearance for access to weapons materials and information], 326 with L access authorizations [AEC’s second highest clearance], and a number of contracts and purchase orders involving documents, work and material classified through the level of Secret/Restricted Data. At the time of his visit, NUMEC had three uncleared foreign employees—one Dutch and two Argentineans.
Shapiro told his AEC visitor about NUMEC’s proposals to Euratom for two and possibly three more foreign nationals to work at the plutonium facility. He said NUMEC profited by its training of foreign workers because it “receives the benefit of their services without cost to the facility.” Shapiro also reported NUMEC’s agreement to assist construction of irradiation facilities in Israel for irradiating foodstuffs and producing drugs and medicines. In addition, he described NUMEC’s agreement to serve as technical consultant and training procurement agency for Israel in the U.S. and its joint venture with the French in the electrical instrumentation and control business.199 There is no mention in these records that Shapiro or the AEC personnel discussed the fact that the French were well along in constructing Dimona.
In December 1963, Clement A. Palazzolo, chief of the research branch in AEC’s division of security, informed FBI that AEC authorized NUMEC to fabricate four plutonium-beryllium neutron sources of five curies each to be used by the Department of Nuclear Science, Israeli Institute of Technology, located at Nahal Soreq. The shipment was made on an El Al Airlines flight to Israel on June 30, 1963. It weighed more than 270 kilograms.200 Such a shipment would have provided opportunity for addition or substitution of materials because of the lax security that was then in place for exports of SNM. Coincidentally, AEC’s 1965 investigation of the uranium plant at Apollo showed that more HEU went missing from the plant in 1963 than any other year.
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Although Shapiro’s overseas affiliations made some people in the AEC nervous from the start, the commission did not alert the FBI to its concerns for several more years. In early 1965, NUMEC representatives told AEC inspectors at Apollo that Shapiro was negotiating with the Israeli AEC to establish a joint company in Israel. They said the company was “to be known as Israeli NUMEC Isotopes and Radiation Enterprises (ISORAD), Ltd.” ISORAD’s initial operation was to be the irradiation of citrus fruits using gamma rays emitted by cobalt 60 sources imported from America. The New York office of FBI also learned “NUMEC is a sales agent for the government of Israel through its Minister of Defense . . . [and] has a contract with the Israeli AEC for the general development of plutonium oxide as fuel elements in nuclear reactors. . . . NUMEC has a contract with Chemical and Phosphates Limited [in Israel] for calcium zirconium production.”201 The records from these early days of AEC and FBI interaction concerning ISORAD contain no mention of the fact that Ernst David Bergmann, head of the Israeli AEC, was a leader in the Israeli nuclear weapons program.
News of this foreign ownership arrangement raised additional concerns at AEC because Shapiro and his employees held security clearances, were processing strategic quantities of SNM, and possessed classified information. The AEC’s rules prohibited foreign ownership or control of companies having such responsibilities.202 In addition, people who held AEC security clearances (most of the employees of NUMEC) were required to tell the commission of any changes in their foreign contacts and affiliations.
The AEC informed the FBI of NUMEC’s interests in Israel and asked the Bureau to investigate Shapiro’s activities, “to see if he has incurred obligations under the [Foreign Agents] Registration Act.” On June 1, 1965, Hoover informed the Special Agent in Charge (SAC) of the Bureau’s Pittsburgh Field Office of this information and tasked the Washington Field Office to, “check records of AEC, State, CIA for any pertinent information concerning subject and also check the Registration Section of the Department [of Justice] to determine if subject is a registered agent.”203
According to th
e current website of the Department of Justice, the Foreign Agents Registration Act (FARA) was enacted in 1938.204
[The statute] requires persons acting as agents of foreign principals in a political or quasi-political capacity to make periodic public disclosure of their relationship with the foreign principal, as well as activities, receipts and disbursements in support of those activities. Disclosure of the required information facilitates evaluation by the government and the American people of the statements and activities of such persons in light of their function as foreign agents. The FARA Registration Unit . . . in the National Security Division (NSD) is responsible for the administration and enforcement of the Act.
The FBI first resurrected records of its previous background investigation of Shapiro in connection with his application for an AEC security clearance. Then the Bureau updated its knowledge of his activities and affiliations as of 1965. Excerpts from FBI files, interviews granted by Shapiro to third parties, and NUMEC filings with AEC lead to the following synopsis of Shapiro’s background and affiliations.
Zalman Mordechai Shapiro was born in Canton, Ohio on May 12, 1920. He married and fathered three children. His parents’ families came to America from Lithuania. His father and paternal grandfather were rabbis. He attended Johns Hopkins University where he received a B.A. in 1942, M.A. in 1945 and Ph.D. in 1948.
Before beginning his doctoral studies, Shapiro worked as a research associate for the National Defense Research Council where he studied chemical factors contributing to the erosion of high caliber guns. He was a chemistry instructor during his doctoral program. Westinghouse Electric Company hired him in 1948 as a Senior Engineer in its Research Laboratory in Pittsburgh. In 1949, the company transferred him to its Bettis Atomic Power Laboratory to support AEC’s Office of Naval Reactors. At Bettis, he devised the first practical method for large-scale production of ultra-pure zirconium, the key ingredient in the cladding of fuel elements in most water-cooled nuclear reactors. Westinghouse awarded Shapiro its Order of Merit for Distinguished Service for his creativity with zirconium production.
Shapiro established facilities at Bettis for corrosion studies of metals in high-pressure water systems and directed research on the corrosion of Zircaloy, an alloy of zirconium. He participated in the design of the reactor for the first nuclear-powered submarine, Nautilus. In 1952, Bettis appointed Shapiro to be its manager of physical chemistry. From 1953 to 1955, he managed chemical metallurgy and developed fuel for the first U.S. power reactor, located at Shippingport, Pennsylvania. From 1955 to 1957, he served Bettis as manager of reactor design.
Shapiro authored Chapter V of the book Metallurgy of Zirconium (McGraw-Hill, 1955) and a large number of classified publications. By 1959, he had four patents concerning the production of pure metals and 17 other patent disclosures. His professional memberships included the American Chemical Society and the American Nuclear Society plus the academic honoraries Phi Beta Kappa and Sigma Xi. When he left Bettis in 1957 to form NUMEC, Shapiro was one of the leading metallurgists in the U.S. nuclear industry, if not the world.205
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Soon after the FBI began its 1965 investigation of Shapiro, the CIA and the Justice Department informed Hoover that they had no “identifiable pertinent information concerning the subject.” In addition, the Justice Department said it had no records concerning NUMEC and two of its senior officers, Oscar Gray and Jack Newman.206 Gray was a former State Department attorney and one of NUMEC’s founders. Newman was a former staff lawyer for the Joint Committee. Shapiro recruited Newman to take over Gray’s position as General Counsel of NUMEC. Newman left NUMEC after a few years to establish a law firm in Washington, DC that served AEC and then NRC licensees.
The FBI redacted much of the background information that it gathered on Shapiro in 1965 before it released the documents in the mid 1980s. It appears FBI made the redactions to protect Shapiro’s privacy. Since it is reasonable to expect that the Bureau learned of Shapiro’s extensive activities connected with Israel while doing its background checks, it follows that those activities are probably hidden by the redactions.
Shapiro, however, was open about those activities. Years later he listed them for an oral history compiled by the National Council of Jewish Women in the Pittsburgh area.207 Shapiro said he was an officer of the Technion Society, an American organization promoting education in science and technology in Israel through support of the Technion-Israel Institute of Technology. The Technion website lists him as an Honorary Life Member.208 He was a director for Hillel, a Foundation for Jewish Campus Life at more than 500 colleges and universities. He performed volunteer work for the Jewish Federation and the Anti-Defamation League. He was a life member of the Jewish National Fund and served as national vice president of the Zionist Organization of America (ZOA), the oldest and, at one time, one of the largest pro-Israel organizations in the United States. Jewish Americans founded ZOA in 1897 to support the establishment of a Jewish State in Palestine. ZOA helped to mobilize support for the creation of Israel in 1948. Shapiro has been active in ZOA for many years. On November 24, 2008, more than 500 people attended its National Dinner at the Grand Hyatt Hotel in New York City where they feted a number of people for contributions to the cause and honored board members Henry Schwartz and Zalman Shapiro for their contributions to the development of Israeli anti-missile technology.209
In 2011, the Internal Revenue Service revoked ZOA’s tax-exempt status for failing to file three consecutive years of key financial documents.210 One of ZOA’s filings in the IRS case, which restored the organization’s tax-exempt status, was a 2012 listing of the members of its national board of directors, which included Zalman Shapiro.
In 2014, Israeli journalist Yossi Melman, writing in the Jerusalem Post, reported that Shapiro was on the board of governors of the Israeli Intelligence Heritage Center.211 The Center honors spies for Israel who secretly took action to advance the state. The names of seven of the nine recipients of its “Hero of Silence” award are secret. The latest award was given in 2009.212
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In October 1965, FBI agents in New York informed Hoover that a file in AEC’s New York office provided more details about NUMEC’s Israeli connections. The file contained a May 7, 1965 memorandum from the Research Branch of AEC’s division of security.213 It read in part,
NUMEC is a sales agent for the Government of Israel through its Minister of Defense, Division of Supplies, [and] has a proposal pending with the Israeli government for the design, construction and operation of facilities for irradiation of foodstuffs in various parts of the world. . . . NUMEC has a contract with the Israel AEC for the development of plutonium oxide as fuel elements in nuclear reactors. NUMEC has a contract with Chemical and Phosphates Limited, Post Office Box 1428, Haifa, Israel, for calcium-zirconium production. [In addition] located in the Administration Building of NUMEC is the [office of] NUMEC Instruments and Controls Corporation (NUMINCO), a firm established to manufacture and market nuclear instruments and process control equipment. NUMINCO, according to this report, is owned by the Societe d’Applications Industrielles de la Physique, Paris, France, by NUMEC, and by a group of private investors, each having about a one-third interest.
On October 25, agents in FBI’s Pittsburgh office reported additional background information on Shapiro and confirmed the information provided by the New York office.214 On January 7, 1966, Hoover asked the Justice Department whether these various foreign connections would require Shapiro’s registration as an Israeli agent under the provisions of the Foreign Agents Registration Act of 1938. Hoover wanted the Department’s opinion before authorizing agents to interview Shapiro.215
On February 14, 1966, the same day AEC staff briefed the commissioners on the status of their investigation of NUMEC’s missing HEU, Chairman Seaborg wrote to Joint Committee Chairman Chet Holifield to answer questions raised earlier by the Committee. One of the questions asked whether an investigation of NUMEC by AEC’s division of inspection or by FB
I was warranted. Seaborg responded, “In the absence of evidence or suspicion of violation of law, we have determined that an inquiry by the FBI is not now warranted. Our Division of Inspection is presently reviewing the survey report and a determination has not been made as to the need for further inquiry by that Division.”216
Three days later, Howard Brown, AEC’s assistant general manager, briefed FBI officials on AEC’s findings regarding “sloppy management of nuclear materials by NUMEC.” Brown told the FBI that the situation had been reported to the Joint Committee on February 14. Brown also said that the Committee asked searching questions regarding controls exercised by the AEC over nuclear materials, prompting it to “make more penetrating checks into NUMEC’s operations, including interviews with some present and former employees.” The FBI agents recorded Brown’s other important points, as follows:217
•An AEC inventory in November 1965 indicated a loss of 61 kilograms from the Astronuclear project with a value of $764,000;
•The cumulative loss on all AEC subcontracts at NUMEC since 1957 was 178 kilograms;
•“While it cannot say unequivocally that theft or diversion of the 61 kilograms has taken place, AEC believes that NUMEC consistently underestimated its processing losses;” and
•“It could not be determined when the various losses occurred or whether material provided for the latest subcontract was used, knowingly or inadvertently, to offset losses on other contracts.”
Stealing the Atom Bomb: How Denial and Deception Armed Israel Page 12