The Maclean’s Excerpt

WATCHING THE WATCHERS

Did a rogue agent sell CSIS secrets to buy heroin?

October 28 2002
The Maclean’s Excerpt

WATCHING THE WATCHERS

Did a rogue agent sell CSIS secrets to buy heroin?

October 28 2002

WATCHING THE WATCHERS

The Maclean’s Excerpt

Covert Entry

Did a rogue agent sell CSIS secrets to buy heroin?

ANDREW MITROVICA is a veteran investigative reporter, with past stints at the fifth estate and the Globe and Mail. Among the many issues and institutions he has put under scrutiny is the Canadian Security Intelligence Service. In the early 1990s, according to Mitrovica’s Covert Entry: Spies, Lies and Crimes Inside Canadas Secret Service, sometimes comical, often grave, lapses of security were infecting Canada’s spy service like a runaway virus. In an exclusive excerpt, Mitrovica describes one colossal breach of security involving CSIS’s Physical Surveillance Unit-the “watchers’-sensitive documents, and organized crime figures. The episode, successfully hushed up by senior officials until now, raises disturbing questions about how CSIS can protect Canadians

when it has so much difficulty safeguarding its own secrets.

JAMES PATRICK CASEY is a tall, curlyhaired and lean veteran of the watcher service in Toronto. The “watchers” are government-trained and paid voyeurs who carefully track the movements, habits and contacts of CSIS’s targets: suspected terrorists, spies and their associates. Watchers are indispensable cogs in the machinery of an intelligence service, expected to keep their eyes open and their mouths shut. “He’s a hell of a nice guy,” says one intelligence officer who has worked with Casey. The watcher was at the centre of an incident that nearly snuffed out his career and raised the troubling spectre that a rogue employee was

trading top-secret documents for drugs supplied by the Mob.

In late 1991, Casey was working on an undercover operation. As was his custom, he carefully tucked a stack of surveillance files into his unsecured briefcase before he hopped into one of CSIS’s company cars and headed home to Loretto, a tiny community north of Toronto. The files included the names, addresses and habits of high-profile CSIS targets that he and other watchers were assigned to keep an intense eye on. He left the briefcase in his car, parked in the driveway. When he woke the following morning, the briefcase and its contents were gone, including Casey’s CSIS identification badge, his airport security clearance, and as many as 30 active surveillance files. Vanished.

Barry Jesse Barnes is a tall, slim man of 43. While he has the look of a maître d’ at an upscale restaurant, Barnes has amassed over 150 criminal convictions. He has befriended some of this country’s most feared and powerful Mafia bosses, peddled drugs, committed scores of robberies, escaped prison, stabbed a man in jail with a pair of barber’s scissors and conspired to incinerate another inmate alive in his cell on the orders of a mobster. In 1983, Barnes turned informant as well, agreeing to help police with their Mob investigations after he was caught on a stolen-property rap. But at the same time, Barnes—the man who eventually got his hands on Casey’s files—continued an active criminal life.

One afternoon in late 1991, he was looking forward to enjoying an espresso and small talk with his friend Salvatore “Sam” Gallo at his small ceramic tile store in Toronto. Tiles and Styles, tucked away in a grimy industrial mall, was a regular haunt for Barnes, who did the occasional odd job for Gallo when he wasn’t in prison. A chubby, nerdy-looking man with stringy, grey hair, Sam was also a junkie. “He looked like Garth, the guy in the movie Wayne’s World,” Barnes says. When he walked into the shop that winter afternoon, Sam was leaning on a small counter near the espresso machine. Beside him was someone Barnes didn’t know, a lean man in his early 40s, with graying brown hair. Gallo pulled Barnes aside and whispered to him that the man was with CSIS.

“CSIS?”

“The Canadian Security Intelligence Service. Spies, all that bullshit,” Sam replied.

“What the f— does he want?” Barnes said.

“He’s a junkie. He wants some junk.”

“Stop playing with me, Sam.”

“No, no,” Sam insisted. “He’s a junkie.”

Together, the three sipped espressos and chatted. Sam eventually handed the man a gram of heroin, with a street value of $400. The man appeared to know Sam as well as a regular customer would. He then asked Barnes if he was interested in making a quick buck. The trio retreated into a small anteroom and opened James Casey’s briefcase. The man explained that it contained sensitive surveillance files about CSIS targets. One of them lived in western Toronto. Handwritten notes on the file made reference to the target’s canoe trips down the city’s Humber River. Sam’s customer suggested that copies be made. The targets could then be contacted and offered their files in exchange for a tidy sum of cash. The man promised more such files in the future.

Handling stolen secret documents was virgin territory for Barnes. He’d spent a lifetime trying to sell hot suits, appliances and drugs. But he was willing to try anything if there was a dollar to be made. At the time, Barnes was living in Port Sydney, a small lakeside community south of Huntsville, Ont. He headed north from Toronto, stopping in his hometown of Barrie to make photocopies of all the surveillance files. The originals he eventually hid behind some fresh drywall in an acquaintance’s home outside Huntsville.

A former agent—at the time a keen young intelligence officer—remembers the mixture of fear and determination that gripped CSIS’s Toronto office when word hit of the theft of Casey’s briefcase. Along with every other CSIS officer in Toronto, the young agent was enlisted to assess the damage Casey’s monstrous security blunder might have caused. Resources normally devoted to counterintelligence and counter-terrorism were diverted to determining the extent of the damage. The security breach was particularly egregious since the material included the names, addresses and private habits of some of CSIS’s prime targets. The likeli-

hood of a catastrophic domino effect that could compromise other operations loomed depressingly large.

After a day or two with the documents, though, Barnes was beginning to have second thoughts. When he stole a television or sold drugs, he was on familiar terrain. Terrorists and espionage were an alien world and an undue risk. While CSIS was undertaking its harried damage assessment, Barnes was weighing the pros and cons of his find. Instead of selling the files, he decided to make an investment of sorts. Barnes picked up the phone and called an old friend, Sgt. Sam LoStracco—a short, tough-talking Toronto police intelligence officer—who was his main handler when he had something to tell the police.

“Sam, suppose somebody has something that they didn’t want anymore?” LoStracco insisted that Barnes be a touch more specific, and Barnes told him that he had access to a CSIS briefcase. “You f—ing a------. You’re not bullshit-

When Barnes asked what the CSIS agent wanted, Gallo whispered back:‘He’s a junkie.

He wants some junk’

ting me, are you?”

“No, I’m not,” Barnes replied.

LoStracco said he would make a few phone calls and told Barnes to call back in an hour. LoStracco confirmed that CSIS had lost an important briefcase. When Barnes called back, the Toronto cop got almost the entire story from him. (Barnes never revealed he had made copies of the documents.) What then followed was a slapstick combination of scenes from a bad espionage flick, including a hurried meeting in a hospital washroom (after the stalls had been checked for spies), and practical mishaps—at one point Barnes was pulled over by a policeman, with the briefcase in his car, for driving with stolen plates. Eventually, however, the files were safely handed to LoStracco in exchange for $2,500 in CSIS money.

LoStracco was skeptical of Barnes’s story, but he couldn’t interview Gallo because that would mean burning Barnes. Nor was he eager to tell CSIS that one of its own may have been peddling secret documents for dope. So LoStracco concocted a more palatable cover story. He would tell CSIS that Barnes happened upon the briefcase in a car he was jockeying to Barrie for a used-car dealer who had bought the vehicle at auction in Toronto. LoStracco then issued a warning: if Barnes breathed a word of the find, he would be charged under the Official Secrets Act. “Don’t f— around, Barry. You don’t know what you have stepped into here.”

Barnes shrugged. He was eager to step right out of the world of spies and secret files and right back into the warm, welcoming world of petty crime and hoods.

Meanwhile, James Casey was fighting for his job. His colleagues among the tightknit watchers came to his defence. Other CSIS intelligence officers had been hounded out of the service for relatively minor transgressions, but Casey survived. He still works for CSIS, and when I visited his new split-level, red-brick home in Loretto, he was reluctant to discuss the incident. “I don’t want to talk to you. No. Goodbye,” he said before slamming his door.

Sam LoStracco, now back working a regular shift out of 32 Division in north Toronto, was at first reluctant to talk to a reporter. But his eyes lit up when I mentioned Barnes and CSIS. He confirmed that Barnes was in possession of a CSIS

briefcase containing sensitive surveillance files which he was paid money to return. “The majority of events [as you describe them] are correct,” LoStracco said. “It was a very touchy situation in relation to the safety of the Canadian people.”

In April, 1995, Barnes was back home— that is, in jail. There he had an idea. He thought that he might be able to persuade CSIS to make a deal. He would hand over his copies of the surveillance documents if the service would help knock down the his newest criminal charges. Barnes had his common-law wife

call CSIS in Toronto. Angela Jones, a young intelligence officer with CSIS’s internal security branch, called Barnes at the jail at 11:55 a.m. on April 24, 1995, the first time since the loss of the documents more than three years earlier that anyone at CSIS had contacted him.

Barnes was prepared to tell Jones the whole story. But when the CSIS officer saw him in jail, she seemed in no mood to deal. She promised to get back to him, but never did. On May 29, 1995, Barnes wrote the solicitor general of Canada, offering the same deal: he would tell all

about the CSIS documents in exchange for special consideration. On Aug. 4, 1995, Barnes received a curt letter from Tom Bradley, CSIS director general. Bradley confirmed that a CSIS representative had been dispatched to meet him and had listened to his demands. “The Service’s position was made clear to you at that time,” Bradley wrote. “CSIS’s position has not changed in the interim and I consider the matter closed.” fil

Reprinted by permission of Random House Canada. Copyright © 2002 Andrew Mitrovica.