Citing one blunder after another, the report calls the investigation "flawed from the outset."
"Key officials in our government were beset with communications failures and poor judgment," said Fred Thompson, R-Tenn., who is on the Senate Governmental Affairs Committee. "And we do not know the extent of the damage that may come from that."
The committee's top Democrat, Joe Lieberman of Connecticut, was equally critical.
"There was... a shocking lack of thoroughness, competency and urgency in the government's investigation in this very important and critical case," he said.
Among the findings:
- For four years investigators overlooked the fact that suspect Wen Ho Lee had signed a waiver which would have allowed his computer to be searched.
- For the first time in a case like this, the Department of Justice refused an FBI request for a special surveillance warrant against Lee.
- Investigators had multiple suspects, but only two - Lee and his wife - were actually investigated.
"I have not done anything wrong, but they try to accuse me," said Lee.
Secretary of Energy Bill Richardson admits the U.S. government botched the investigation. But he still believes officials finally zeroed in on the right suspect.
"We think the investigation with this subject is in the right place," said Richardson. "We are looking at all types of potential leads, but the most... logical connection is with this subject."
The Senate report does not find any deliberate cover-up but calls it remarkable that the attorney general was left so completely out of the loop.
Now the FBI, Justice Department and the Department of Energy are trying to decide whether to use classified income to bring a case against Lee.