Appropriately enough, today’s gossip page in the New York Daily News has the latest on the “spy scandal” surrounding Britain’s late Princess Diana. Both the CIA and the Secret Service deny any involvement in the effort; one CIA spokesman emphatically told the paper: “It’s not us, it’s not us. What intelligence value could she possibly have had?”

But there was a slightly different response from the National Security Agency (NSA), which says Diana’s name was mentioned in calls by “other people” that it was monitoring. The NSA insists that Diana was never targeted in their surveillance efforts, claiming that it had much more important things to do.

Officials also offered another plausible explanation, suggesting that the agency may have “accidentally” picked up her phone calls while monitoring other conversations from the Ritz Hotel, where she was staying before the Paris car crash that claimed her life in August, 1997.

And, if you don’t like that theory, sources close to New York financier Teddy Forstmann suggest that Diana’s calls may have been monitored while she flew on his private jet. Forstmann was Diana’s boyfriend for a period in the mid-1990s, after she left Prince Charles. Diana asked Forstmann to help her find a summer vacation place in the Hamptons, but that plan was later rejected by British authorities, due to security concerns. Forstmann reportedly believes that phone calls from his jet were bugged by the feds, to listen in on his rich and powerful friends.

While all of these theories have some degree of credibility, we’re sticking by our original hypothesis. If there was a deliberate effort to monitor Diana’s activities, it originated in the U.K. As we noted yesterday, the only parties with any real interest in Di’s post-divorce activities seem to be Britain’s royal family and government. To carry out surveillance operations (without running afoul of British laws), the job would be farmed out to the American, Australian, or Canadian intelligence agencies, giving U.K. authorities plausible denial, if the effort was ever uncovered.

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Tongue (partly?) in cheek, Mickey Kaus claims to have “found the dots” in the Diana case, and lets the reader connect them. He notes that the Clintonites could have their reasons for snooping on Princess Di. Her one-time beau, Teddy Forstmann, once talked vaguely of challenging Hillary Clinton for the Senate in 2000, and Diana herself dreamed of marrying a New York billionaire (read: Mr. Forstmann), who would make her the next Jackie Kennedy. That later claim was made in a book by Diana’s former butler, Paul Burrell, published after her death. While it makes for rather juicy reading, but I’m not quite prepared to join Mr. Kaus on that motive-for-eavesdropping limb (at least not yet). In the years since her death, we’ve learned that Diana was given to fantasies involving her paramours, and beyond Mr. Burrell, it’s unclear if anyone else was aware of her White House dreams in 1997.

On a more serious note, is the Lady Di case prima facie evidence of warrantless, domestic surveillance program by the Clinton Administration? Byron York at National Review notes that, if the government was listening in on Diana and Mr. Forstmann (a U.S. citizen), then such surveillance would have required a warrant from a federal judge. As we noted yesterday, there is no evidence of a legal paper trail–so far. But the Forstmann connection is intriguging, particularly if interest in his activities prompted the snooping, and if the job was carried out by the NSA, not domestic law enforcement. Absent more compelling evidence, I’ll still wager that the trail on the Diana spy scandal will ultimately lead to London, and not Washington.

By MYLIFE