* Obama adviser touted "inside control" of bomb plot
* Leaks forced shutdown of operation
By Mark Hosenball
WASHINGTON, May 18 (Reuters) - White House efforts to soft-pedal the danger from a new "underwear bomb" plot emanating from Yemen may have inadvertently broken the news they needed most to contain.
At about 5:45 p.m. EDT on Monday, May 7, just before the evening newscasts, John Brennan, President Barack Obama's top White House adviser on counter-terrorism, held a small, private teleconference to brief former counter-terrorism advisers who have become frequent commentators on TV news shows.
According to five people familiar with the call, Brennan stressed that the plot was never a threat to the U.S. public or air safety because Washington had "inside control" over it.
Brennan's comment appears unintentionally to have helped lead to disclosure of the secret at the heart of a joint U.S.-British-Saudi undercover counter-terrorism operation.
A few minutes after Brennan's teleconference, on ABC's World News Tonight, Richard Clarke, former chief of counter-terrorism in the Clinton White House and a participant on the Brennan call, said the underwear bomb plot "never came close because they had insider information, insider control."
A few hours later, Clarke, who is a regular consultant to the network, concluded on ABC's Nightline that there was a Western spy or double-agent in on the plot: "The U.S. government is saying it never came close because they had insider information, insider control, which implies that they had somebody on the inside who wasn't going to let it happen."
The next day's headlines were filled with news of a U.S. spy planted inside Yemen-based Al Qaeda in the Arabian Peninsula (AQAP), who had acquired the latest, non-metallic model of the underwear bomb and handed it over to U.S. authorities.
At stake was an operation that could not have been more sensitive - the successful penetration by Western spies of AQAP, al Qaeda's most creative and lethal affiliate. As a result of leaks, the undercover operation had to be shut down.
The initial story of the foiling of an underwear-bomb plot was broken by the Associated Press.
According to National Security Council spokesman Tommy Vietor, due to its sensitivity, the AP initially agreed to a White House request to delay publication of the story for several days.
But according to three government officials, a final deal on timing of publication fell apart over the AP's insistence that no U.S. official would respond to the story for one clear hour after its release.
When the administration rejected that demand as "untenable," two officials said, the AP said it was going public with the story. At that point, Brennan was immediately called out of a meeting to take charge of damage control.
Relevant agencies were instructed to prepare public statements and urged to notify Congressional oversight panels. Brennan then started the teleconference with potential TV commentators.
White House officials and others on the call insist that Brennan disclosed no classified information during that conference call and chose his words carefully to avoid doing so.
The AP denies any quid pro quo was requested by them or rejected by the White House. "At no point did AP offer or propose a deal with regard to this story," said AP spokesman Paul Colford.
As for his appearance on ABC, Richard Clarke acknowledges he made a logical "leap" when he said that "inside control" meant "there was human inside control rather than anything else I could imagine." But he adds that over the course of a week, ABC "took extraordinary measures ... to make sure" that nothing it was planning to broadcast would damage ongoing counter-terrorism operations.
As a result of the news leaks, however, U.S. and allied officials told Reuters that they were forced to end an operation which they hoped could have continued for weeks or longer.
Several days after the first leaks, counter-terrorism sources confirmed to Reuters that a central role in the operation had been played by MI-5 and MI-6, Britain's ultra-secretive domestic and foreign intelligence services, whose relationship with their American counterparts has been periodically strained by concern about leaks.
These sources acknowledged that British authorities were deeply distressed that anything at all had leaked out about the operation.
The White House places the blame squarely on AP, calling the claim that Brennan contributed to a leak "ridiculous."
"It is well known that we use a range of intelligence capabilities to penetrate and monitor terrorist groups," according to an official statement from the White House national security staff.
"None of these sources or methods was disclosed by this statement. The egregious leak here was to the Associated Press. The White House fought to prevent this information from being reported and ultimately worked to delay its publication for operational security reasons. No one is more upset than us about this disclosure, and we support efforts to prevent leaks like this which harm our national security," the statement said.
The original AP story, however, made no mention of an undercover informant or allied "control" over the operation, indicating only that the fate of the would-be suicide bomber was unknown.
The White House may ultimately have to explain its handling of the case both to Congressional oversight committees and to leak investigations the administration itself has launched.
The Republican chairman of the House intelligence committee, Representative Mike Rogers, announced a "preliminary review" of leaks about the operation.
Two leak investigations have been opened by the executive branch as well, one by the Director of National Intelligence and one by the FBI.
On Wednesday, FBI director Robert Mueller, appearing before the Senate Judiciary committee, promised the bureau would "investigate thoroughly." (Reporting By Mark Hosenball; Editing by Warren Strobel and Jim Loney)