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Jeffrey Delisle leaves court in Halifax on Oct. 10, 2012. He pleaded guilty and was sentenced to 20 years in prison last February for violating the Security of Information Act.Andrew Vaughan/The Canadian Press

Canada's spy agency clandestinely watched a navy officer pass top secret information to Russia for months without briefing the RCMP – a previously unknown operation that raises questions about whether Jeffrey Delisle could have been arrested sooner.

The Canadian Press has learned that the U.S. Federal Bureau of Investigation alerted the Canadian Security Intelligence Service to Delisle's illicit dealings with Moscow well before the Mounties took on the file in December, 2011, and later brought him into custody.

CSIS ultimately decided not to transfer its thick Delisle dossier to the RCMP. The spy agency, acting on legal advice, opted to keep its investigation sealed for fear of exposing a trove of Canadian and U.S. secrets of the intelligence trade in open court proceedings.

In a bizarre twist, it fell to the FBI – not CSIS – to send a letter to the RCMP spelling out how a Canadian was pilfering extremely sensitive information, including highly classified U.S. material.

The RCMP had to start its own investigation of Delisle almost from scratch. The delay alarmed and frustrated Washington as the geyser of secrets continued to spew.

At one point the Americans, eager to see Delisle in handcuffs, sketched out a Plan B: luring the Canadian officer to the U.S. and arresting him themselves, perhaps during a stop-over en route to a Caribbean vacation.

The RCMP and CSIS are supposed to be able to "seamlessly hand off cases back and forth between them," said intelligence historian Wesley Wark, a visiting professor at the University of Ottawa's graduate school of public and international affairs.

He said "it is deeply troubling" if the system indeed broke down in the Delisle case over CSIS's refusal to share its files or to bring the RCMP in at an early stage.

"I think that's scandalous, in fact," said Wark, who served as an expert witness at Delisle's sentencing. "And it would be a matter, I think, for a judicial inquiry or certainly a serious parliamentary investigation."

According to Delisle's lawyer, it also flags important legal concerns about the government's obligation to disclose all of the evidence against someone charged with breaching national security.

An investigation by The Canadian Press, drawing on multiple sources familiar with the Delisle case, reveals that CSIS was deeply involved in the file before the Mounties entered the picture. Several sources spoke on condition of anonymity because they were not authorized to discuss the case publicly.

The RCMP arrested Delisle, now 42, on Jan. 13, 2012, for violating the Security of Information Act. He pleaded guilty and was sentenced to 20 years in prison last February. Delisle had given secret material to Russia in exchange for upward of $110,000 over a period of more than four years.

Until now the official story – as revealed through the court record – has suggested the FBI first tipped Canadian authorities to Delisle's relationship with the Russians on Dec. 2, 2011, via the letter to the RCMP.

But the story actually begins months earlier.

Senior CSIS officials were called to Washington where U.S. security personnel told them a navy officer in Halifax was receiving cash transfers from Russian agents. One of the paymasters was Mary Larkin, a known pseudonym used by Russian intelligence in running a U.S. spy ring – busted by the FBI in 2010 – that included the glamorous Anna Chapman and several others.

CSIS soon obtained court approval to begin electronic surveillance of Delisle.

Despondent over his failed marriage and nursing financial woes, Delisle decided in 2007 to commit "professional suicide," as he would later put it, by walking into the Russian embassy in Ottawa and volunteering to offer up some of western intelligence's most valuable secrets.

He spied for the Russians while working in sensitive posts at National Defence headquarters, including the military's nerve centre, the Strategic Joint Staff, and at the office of the Chief of Defence Intelligence.

As a sub-lieutenant at the Trinity intelligence centre in Halifax, Delisle had access to a data bank of classified secrets shared by the Five Eyes community – Canada, the United States, Britain, Australia and New Zealand.

It soon became clear to CSIS that Delisle was handing over a great deal of highly sensitive material originating from the United States.

"The information he gave up caused grave damage – grave damage – to the U.S.," said one source.

"We're getting into the category of sources, techniques and methods of the most sensitive nature."

Pressure on the Canadians began to build as American patience eroded. The FBI director and senior U.S. justice officials called counterparts in Canada.

"There was a very small subset of information provided by Delisle that impacted a couple of other of the Five Eyes, but it paled in comparison to the volume and gravity of the U.S. information he gave up," said the source.

In mid-September, 2011, Delisle was summoned to Rio de Janeiro, Brazil, to meet one of his Russian handlers.

But it wasn't Delisle's obvious lack of a vacation tan that prompted Canada Border Services Agency officials to submit him to a secondary search upon his return. CSIS had tipped the border agency to Delisle's pending arrival at the Halifax airport in a bid to gather more evidence for the case against him.

During its search, the border agency discovered a Rio hotel receipt, more than $6,500 in cash – most of it new $100 American bills – and pre-paid credit cards.

After reviewing the case, CSIS lawyers said handing the spy service's file to the RCMP would pose the risk that both U.S. and Canadian secrets – investigative sources and methods – might be disclosed in criminal court as part of the requirement to ensure a fair trial.

During a meeting in Ottawa, CSIS, the FBI and RCMP discussed the possibility of arresting Delisle in the United States during an airport stopover, or by arranging a U.S. military secondment or training course for him. However, it was decided jointly that the FBI would send a letter to the RCMP about the case.

It almost "shocks the conscience" that an American agency had to formally notify the Mounties, said a source who spoke out of concern about what they see as systemic flaws in Canada's intelligence apparatus that allowed Delisle to peddle secrets longer than necessary.

"CSIS had already made the case. But RCMP had to do it again."

As the Mounties investigated, the junior intelligence officer continued to pass information to the Russians that was "as damaging or more damaging" than earlier packages uncovered during the CSIS probe, one source said.

Another source with knowledge of the investigation said ideally the Canadian Forces would have detected Delisle's actions and told CSIS.

"CSIS should have helped them [the Forces] to investigate a little bit more," said the source. "Eventually when they collected enough evidence, we say, 'We've got a criminal case here,' then we go to the RCMP and we let the RCMP prepare the criminal case from the investigation."

Delisle's lawyer, Mike Taylor, said he knew nothing of a prequel investigation by CSIS and found the revelation "disturbing," adding that it raises serious questions about whether his client's charter rights were violated, and how the Canadian government pursues national security investigations.

"I've always had concerns about what was going on behind the scenes," Taylor said in an interview.

The existence of the spy service investigation and the resulting document trail should have been part of the court record, Taylor said, and had he known about them it would have affected the advice given to his client.

In the end, Delisle might still have pleaded guilty, Taylor said, but nevertheless he should have been given the "opportunity to chase back and determine whether information was obtained unlawfully."

For example, the search conducted by border agents upon Delisle's return from Brazil could have been deemed "tainted," unreasonable and "subject to exclusion" in light of the CSIS investigation, he said.

"It certainly could have changed the timing [of Delisle's response] because he might not have been so quick to go ahead and say, 'OK, look, I'm done.'" There is no possibility of an appeal and Taylor said he understands there's little public sympathy for someone who has admitted to selling out his country, but he argues the government has a legal obligation to disclose everything it knows to an accused.

"They cannot be allowed to operate under that kind of a covert veil," Taylor said. "The potential for civil rights violations is huge."

CSIS was created in 1984 from the ashes of the old RCMP Security Service, which was disbanded following a series of headline-grabbing scandals. The new spy service would gather information and advise the federal government of security threats, but have no arrest powers.

It has meant that CSIS must hand over a case to the RCMP or work in parallel with the Mounties, then pass along the file when it comes time to take suspected spies or terrorists into custody.

But it hasn't always gone smoothly.

The infamous case of the 1985 Air India airliner bombing is often cited as the most obvious failure to forge a well-oiled working relationship between the agencies.

Steps have been taken in recent years to encourage closer co-operation between CSIS and the RCMP.

In response to recommendations of a 2010 federal inquiry report on the Air India attack, the Conservative government began reviewing the process of disclosure in court proceedings involving national security.

The RCMP and CSIS are "developing best practices to ensure that the disclosure of intelligence in the context of criminal investigations occurs in the most expeditious and efficient manner," said a federal update on the process last July.

At a Senate committee hearing in February, then-CSIS director Dick Fadden expressed confidence in the procedures.

"With the RCMP, we have developed a policy and practice called 'one vision,'" Fadden said. "We put all this in a document with illustrations from case law that the courts have developed. My sense is that it is working pretty well."

Both CSIS and the RCMP had no comment on the spy service's involvement in the Delisle file. The FBI did not respond to a request to discuss the case, and it would not release any information in response to a Freedom of Information Act application, citing Delisle's privacy rights.

The Canadian Press asked Fadden after the February committee hearing about the timing of CSIS's awareness of the Delisle case, but he declined to answer. Fadden recently became deputy minister of defence.

Michel Coulombe, CSIS's deputy director of operations, refused to speak with the news agency. He has since become the spy agency's interim director.