Should Ultrak guard U.S. nuclear labs? Former associates of Niklaus Zenger, a Swiss resident with ties to the Russian government, are worried that his U.S. company, Ultrak, has access to U.S. nuclear facilities

0 Comments | Insight on the News, Nov 12, 2002 | by John Berlau

A month ago INSIGHT revealed serious concerns about the new computerized access-control system for the White House built in the final months of the Clinton administration and put in place right after George W. Bush took office [see "Security Cracks at the White House," Sept. 30]. INSIGHT quoted sources familiar with the system who said that it frequently breaks down and gives erroneous data about White House employees and guests.

The story also noted that controlling interest in the Secret Service's lead contractor, Ultrak Inc. of Lewisville, Texas, recently had been acquired by Niklaus Zenger, a Swiss resident with ties to the Russian government who had led a delegation allowed to visit that country's ultrasecret nuclear-weapons command center. In a June shareholders meeting, Zenger was made sole chief executive officer (CEO) of Ultrak, and new board members were seated. All but one member of that board now are foreign nationals, company spokesman David Paul told INSIGHT.

With little information about Zenger readily available, INSIGHT reported that, while "Zenger may be a fine chap," security experts say "a foreign-controlled company whose CEO has ties close enough to the Russian government to be toured through its nuclear command center should not be anywhere near the chain of authority of a highly sensitive data system at the White House." Especially not a system controlling access to the president of the United States and his national-security team.

Since the article appeared, INSIGHT has been contacted by former Zenger business associates and others with intimate knowledge of his dealings. They say that, in fact, he is not a "fine chap" and that they are disturbed that he now is running a company in charge of the crucial computer system used to clear those who go in and out of the White House. These sources, some who would speak for attribution and some who would not, say that Zenger's close ties to the Russian government go back to the days of the Soviet Union and claim that he has a history of running away with proprietary U.S. technology after coming up short on promised cash and other commitments. This history, they say, should make him untrustworthy to handle security issues for any government agency, let alone the White House.

"He's the last person I'd ever want to be involved with, let alone leading a group that's doing security for the White House," says Wayne Jacoby, a former business associate of Zenger who won an $8,100 judgment against Zenger in a Pennsylvania court. He says Zenger still hasn't paid. "I can't believe the White House wouldn't have checked this guy out," says another American businessman familiar with Zenger's dealings.

At press time, Ultrak had not made Zenger available for interviews about these matters. In fact, the company would not provide INSIGHT with a photo or even a basic biography with the date and place of his birth. Ultrak general counsel Karen Austin tells this magazine that the company performed a background check on Zenger before he joined the board of directors, but admitted the inquiry was cursory. "In Europe, the privacy laws are pretty strict, and really all you can find out is whether they've had any criminal convictions," she says. "He did not."

Austin says Zenger frequently visits corporate headquarters in Lewisville, Texas, and always gives off positive vibes. "He's really excited about the company, and he really wants to make it successful," Austin says. "He has a lot of energy, and a lot of real innovative ideas. Our CFO [chief financial officer] compared him to a Bill Gates. He just has a lot of ideas lying around, and some of them will stick and some of them won't, but if some of them stick, that will be great."

Meanwhile, new business that Ultrak has obtained with U.S. government agencies has heightened concern. Time and again as INSIGHT researched its initial story security experts said that the only government buildings where security is more important than the White House are U.S. nuclear-weapons laboratories. A week after INSIGHT's story ran, Ultrak issued a press release revealing that it just had been selected to install a new system at the Los Alamos and Sandia nuclear laboratories in New Mexico. These are the very labs where alleged Chinese espionage is reported to have resulted in Communist China getting U.S. nuclear-weapons designs.

Austin adds Zenger probably will have little involvement with the Ultrak division handling Los Alamos and Sandia systems, but conceded that he likely would have access to the system designs if he wanted to review them. "He has a reporting chain," she says. "He's only been CEO for a few months."

The labs had contracted with Ultrak vendors to build a new computerized fire-protection system that experts say would give the contractor sensitive data about process details and the location of important data and materials. Notra Trulock, the former director of intelligence for the Department of Energy who blew the whistle on lax security at the labs during the Clinton administration, tells INSIGHT there naturally should be concern about a foreign-owned company doing this type of work. "They have to know physically where everything is," Trulock tells INSIGHT. "Presumably they'll have a combination of blueprints and walk-arounds and so forth. At Los Alamos there's one area where they store plutonium, for instance. That could present some interesting fire-protection problems. If there's fissile material--highly enriched uranium or plutonium--or something like that where you would be worried about terrorist threats, then there would be issues."