Part 3 of 4

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.