<DOC>
[107 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:88571.wais]


                                                        S. Hrg. 107-971
 
                 REFORMING THE FBI IN THE 21ST CENTURY

=======================================================================

                                HEARINGS

                               before the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                   MARCH 21, APRIL 9, AND MAY 8, 2002

                               __________

                          Serial No. J-107-69

                               __________

         Printed for the use of the Committee on the Judiciary



88-571              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003
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                       COMMITTEE ON THE JUDICIARY

                  PATRICK J. LEAHY, Vermont, Chairman
EDWARD M. KENNEDY, Massachusetts     ORRIN G. HATCH, Utah
JOSEPH R. BIDEN, Jr., Delaware       STROM THURMOND, South Carolina
HERBERT KOHL, Wisconsin              CHARLES E. GRASSLEY, Iowa
DIANNE FEINSTEIN, California         ARLEN SPECTER, Pennsylvania
RUSSELL D. FEINGOLD, Wisconsin       JON KYL, Arizona
CHARLES E. SCHUMER, New York         MIKE DeWINE, Ohio
RICHARD J. DURBIN, Illinois          JEFF SESSIONS, Alabama
MARIA CANTWELL, Washington           SAM BROWNBACK, Kansas
JOHN EDWARDS, North Carolina         MITCH McCONNELL, Kentucky
       Bruce A. Cohen, Majority Chief Counsel and Staff Director
                  Sharon Prost, Minority Chief Counsel
                Makan Delrahim, Minority Staff Director


                            C O N T E N T S

                              ----------                              

                        THURSDAY, MARCH 21, 2002
                    STATEMENTS OF COMMITTEE MEMBERS

Grassley, Hon. Charles E., a U.S. Senator from the State of Iowa.    22
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah......     4
    prepared statement...........................................    52
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont.     1
    prepared statement...........................................    54
Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama....    18

                               WITNESSES

Chiaradio, Robert J., Executive Assistant Director for 
  Administration, Federal Bureau of Investigation, Department of 
  Justice, Washington, D.C.; accompanied by Bob Dies, Chief 
  Technology Officer, Federal Bureau of Investigation, and Bill 
  Hooten, Assistant Director for Records Management, Federal 
  Bureau of Investigation........................................     9
Fine, Glenn A., Inspector General, Department of Justice, 
  Washington, D.C................................................     6

                       SUBMISSIONS FOR THE RECORD

Chiaradio, Robert J., Executive Assistant Director for 
  Administration, Federal Bureau of Investigation, Department of 
  Justice, Washington, D.C., prepared statement..................    28
Fine, Glenn A., Inspector General, Department of Justice, 
  Washington, D.C., prepared statement...........................    36
Mueller, Robert S., III, Director, Federal Bureau of 
  Investigation, Department of Justice, Washington, D.C., 
  statement......................................................    57

                         TUESDAY, APRIL 9, 2002
                    STATEMENTS OF COMMITTEE MEMBERS

DeWine, Hon. Mike, a U.S. Senator from the State of Ohio.........    64
Durbin, Hon. Richard J., a U.S. Senator from the State of 
  Illinois.......................................................    75
Grassley, Hon. Charles E., a U.S. Senator from the State of Iowa.    64
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah......    66
    prepared statement...........................................   105
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont.    61
    prepared statement...........................................   107

                               WITNESSES

Senser, Kenneth H., Assistant Director, Security Division, 
  Federal Bureau of Investigation, Department of Justice, 
  Washington, D.C................................................    89
Szady, David, Assistant Director, Counterintelligence Division, 
  Federal Bureau of Investigation, Department of Justice, 
  Washington, D.C................................................    86
Watson, Dale, Executive Assistant Director for Counterterrorism/ 
  Counterintelligence, Federal Bureau of Investigation, 
  Department of Justice, Washington, D.C.........................    91
Webster, William H., Milbank, Tweed, Hadley and McCoy, LLP, 
  Washington, D.C................................................    65

                         QUESTIONS AND ANSWERS

Responses of Kenneth Senser to questions submitted by Senator 
  Grassley.......................................................   100

                       SUBMISSIONS FOR THE RECORD

Senser, Kenneth H., Assistant Director, Security Division, 
  Federal Bureau of Investigation, Department of Justice, 
  Washington, D.C., prepared statement...........................   113
Szady, David, Assistant Director, Counterintelligence Division, 
  Federal Bureau of Investigation, Department of Justice, 
  Washington, D.C., prepared statement...........................   125
Webster, William H., Milbank, Tweed, Hadley and McCoy, LLP, 
  Washington, D.C., prepared statement and attachment............   130

                         WEDNESDAY, MAY 8, 2002
                    STATEMENTS OF COMMITTEE MEMBERS

Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah, 
  prepared statement.............................................   241
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont.   135
    prepared statement...........................................   243
Thurmond, Hon. Strom, a U.S. Senator from the State of South 
  Carolina, prepared statement...................................   265

                               WITNESSES

Mueller, Hon. Robert S., III, Director, Federal Bureau of 
  Investigation, Department of Justice, Washington, D.C..........   139
Thompson, Hon. Larry D., Deputy Attorney General, Department of 
  Justice, Washington, D.C.......................................   137

                         QUESTIONS AND ANSWERS

Response of the Department of Justice to a question submitted by 
  Senator Leahy (December 23, 2002)..............................   172
Responses of the Department of Justice to questions submitted by 
  Senators Leahy and Feingold (April 11, 2003)...................   175
Responses of the Department of Justice to questions submitted by 
  Senators Leahy and Feingold (July 10, 2003)....................   206
Responses of the Department of Justice to questions submitted by 
  Senator Leahy (July 17, 2003)..................................   238

                       SUBMISSIONS FOR THE RECORD

Mueller, Hon. Robert S., III, Director, Federal Bureau of 
  Investigation, Department of Justice, Washington, D.C., 
  prepared statement.............................................   248
Thompson, Hon. Larry D., Deputy Attorney General, Department of 
  Justice, Washington, D.C., prepared statement..................   258


 REFORMING THE FBI IN THE 21ST CENTURY: LESSONS FROM THE OKLAHOMA CITY 
                              BOMBING CASE

                              ----------                              


                        THURSDAY, MARCH 21, 2002

                                       U.S. Senate,
                                Committee on the Judiciary,
                                                   Washington, D.C.
    The Committee met, Pursuant to notice, at 9:34 a.m., in 
room SD-106, Dirksen Senate Office Building, Hon. Patrick J. 
Leahy, Chairman of the Committee, presiding.
    Present: Senators Leahy, Hatch, Grassley, Specter, and 
Sessions.

OPENING STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM 
                      THE STATE OF VERMONT

    Chairman Leahy. Good morning. Please, all the witnesses 
come up and take a seat. I want to thank the witnesses from the 
FBI for their cooperation in agreeing that everybody will sit 
at the table.
    We have this situation where the Republican Leader, 
exercising his rights under the rules, has objected to any 
committees being more than 2 hours into the session. But this 
is an extremely important issue, one that the American people 
and the FBI are quite concerned about, how we deal with the 
FBI's readiness to meet the law enforcement challenges of not 
only today but of tomorrow, too.
    We began oversight hearings last summer, and I think this 
is extremely important because the FBI is facing some 
unprecedented challenges. Also, under the new legislation we 
passed, they have unprecedented powers and we want to make sure 
in a democratic society that we balance those. We also want to 
make sure that the FBI is able to do all the things necessary 
to protect this great Nation.
    It is the committee's responsibility to ensure that the FBI 
is as great as it can be, and this series of oversight hearings 
is a fundamental part of that. We will consider the FBI's 
production, and it was actually belated production, as the 
important and thorough report by the Inspector General revealed 
this week, of the Oklahoma City documents. Also, we will look 
at the question of the destruction of some of them.
    What is troubling to me in that report, actually more 
troubling than the belated production or the destruction, is 
the conclusion that senior FBI personnel failed to notify 
either the prosecutors on the case or high-ranking Justice 
Department officials, including the current FBI Director, 
Robert Mueller, who was then serving as the Acting Deputy 
Attorney General, about the belated document production 
problems until 1 week before the scheduled execution date for 
Timothy McVeigh.
    I am concerned about that because the trial had been a 
textbook trial of how to do things right on both the 
prosecution side and the defense side. After the millions of 
dollars spent on that trial, to suddenly find a glitch like 
this that could have derailed the whole process is very 
troubling.
    The Inspector General's report revealed that the 
destruction of relevant FBI documents was not disclosed to the 
court or the prosecutors on the case or the defense until after 
Timothy McVeigh's execution. I agree with the conclusion in the 
Inspector General's report that the court and defense counsel 
should have been informed of the FBI's destruction of 
documents, in addition to being given the belated documents, 
while McVeigh's stay of execution was being litigated. It is 
unlikely that any of the destroyed documents, if produced, 
would have changed the outcome of the case, but that does not 
excuse the FBI's conduct.
    The observations of the presiding judge in the case are 
illuminating. He described the FBI as ``an undisciplined 
organization or organization that is not adequately controlled 
or that can't keep track of its information.'' In denying the 
request for a stay of execution, he noted ``It is the function 
others to hold the FBI accountable for its conduct here, as 
elsewhere.''
    The report raises three significant issues for this 
committee's review, as we are one of the ones that the court 
meant should look into this. First, there are structural and 
management problems at the FBI which need fixing. You can't 
blame a computer or filing system when senior FBI agents in 
charge of the Oklahoma City bombing case are aware of document 
production problems almost 5 months before the scheduled 
execution.
    FBI headquarters officials were aware nearly 3 months 
before the scheduled execution, but did not disclose these 
problems to the FBI director, to senior Justice Department 
officers, or to prosecutors on the case until a week before the 
scheduled execution. It is hard to blame those who are in 
charge when they don't get the information.
    I am afraid it is an example of a ``circle the wagons'' 
mentality. If you learn about a problem, you can't bury your 
head in the sand and hope it goes away. And you can't contain a 
problem under the cloak of secrecy; it just aggravates it.
    We will look to Director Mueller to consider appropriate 
administrative action against the FBI managers who did not 
promptly tell FBI headquarters or Justice Department officials. 
But the silver lining in the Inspector General's report is the 
conduct of two lower-level employees who, in contrast to the 
managers, did the right thing.
    The FBI financial analyst and the intelligence research 
specialist who first discovered the document production problem 
in January 2001 informed their superiors in the chain of 
command, but did not go around them. As the report notes, ``the 
FBI could do well to use this as an opportunity to help remedy 
a longstanding FBI problem--the belief among FBI employees that 
bringing problems to management's attention only results in 
problems for the employee.''
    Second, the information management and technology problems 
at the FBI substantially contributed to the belated document 
production. We are all relieved that the Inspector General 
found no intentional misconduct, but the report documents a 
number of fundamental flaws in the handling of information by 
the FBI that contributed to the failure to produce documents in 
the Oklahoma City bombing case: ``antiquated and inefficient 
computer systems;'' ``inattention to information management;'' 
``inadequate quality control systems;'' misfiling, mislaying or 
losing documents; failure by field offices to follow correct 
procedures. The litany of problems is startling and that is why 
I want to hear from the FBI what is going to happen on this. 
Mr. Dies, I am glad you are here on that.
    I appreciate, and I think most members on this committee 
appreciate the efforts of the director to correct the 
management and information management problems at the FBI. I 
hope he appreciates the fact that congressional involvement can 
help achieve that.
    In the Emergency Supplemental Appropriations Act passed in 
January, Congress, with my support, gave the FBI $745 million, 
with more than $417 of that dedicated to computer and 
information technology. We are poised to give another $245 
million. That would amount to $1 billion infusion of funds into 
the FBI, or a 25-percent budget increase since September 11.
    Now, we are giving more powers, we are giving more money, 
but the quid pro quo is that the problems will be fixed. This 
committee cannot authorize more money, will not authorize more 
money, nor will the Appropriations Committee appropriate it if 
the problems are not being fixed.
    Finally, we have to apply the lessons of Oklahoma City to 
the challenges facing the FBI in fighting terrorism because 
Oklahoma City, the problems there, the problems before 
September 11, can be problems today, on March 21. There is 
nobody in this room who would ever assume that we have seen our 
last domestic terrorism or international terrorism attack 
within the shores of the United States. We are sitting in a 
building that is just yards away from one of the buildings 
probably targeted in the September 11 attacks. So we have to 
look at this.
    There are parts of the Inspector General's report that are 
chilling. They raise the critical question of whether the same 
flaws hampered the FBI's sharing of counter-terrorism 
information before the September 11 terrorist attacks.
    I know there are some in the Congress who don't want us to 
look into the question of whether mistakes were made prior to 
September 11. I would say that those feelings are not shared by 
the heads of the FBI, Director Mueller and others. They have 
been very open with me that we will look at the problems of 
sharing information.
    Right now, it is fair to conclude that the FBI does not 
know what it knows. That is the problem. You have got all this 
information, but if you can't know what you know, it is not 
going to help us. If the information is sitting locked up 
somewhere, it is not going to help. If it is material that 
hasn't been translated, it is not going to help. If it is 
material that hasn't been distributed, it is not going to help.
    The Inspector General's report demonstrates the need for 
enactment of S. 1974, the Leahy-Grassley FBI Reform Act, to 
charter the authority of the FBI's Inspector General to review 
allegations of FBI misconduct and to strengthen FBI information 
management and technology and to protect FBI whistleblowers.
    I will put the rest of my statement in the record. We will 
continue these oversight hearings, and I do want to extend my 
appreciation for the cooperation I have received from the FBI 
in going forward on this. It is a lot different than a few 
years ago, what the cooperation would be.
    [The prepared statement of Senator Leahy appears as a 
submission for the record.]
    Chairman Leahy. Senator Hatch?

STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM THE STATE 
                            OF UTAH

    Senator Hatch. Well, thank you, Mr. Chairman. I apologize 
for being a little late. I had to introduce the Assistant 
Secretary of the Treasury.
    Chairman Leahy. Wearing that tie?
    Senator Hatch. Yes, wearing my modest tie here.
    Chairman Leahy. This is how you tell the liberals from the 
conservatives on this committee. You will notice my dark tie.
    Senator Hatch. The conservatives are so boring.
    Mr. Chairman, I would like to start off by stating 
unequivocally that I consider the FBI to be one of the finest, 
if not the finest, law enforcement agencies in the world. But 
those who justifiably we hold in great regard also bear a great 
responsibility.
    Last spring, we were all disappointed to learn that in the 
process of turning over millions of pages of documents to the 
defendants who were responsible for blowing up the Murrah 
Federal Building in Oklahoma City, the FBI had inadvertently 
failed to produce some documents. This is a mistake that never 
should have happened in litigation.
    Fortunately, with respect to Timothy McVeigh and Terry 
Nichols, there was no basis for arguing that any of the 
documents that were not produced would have altered in any way 
the outcome of their trials. Next time, we may not be so lucky. 
I am therefore committed to doing everything necessary to 
ensure that these types of mistakes do not ever happen again.
    The Department of Justice Inspector General has now 
completed a thorough and comprehensive review to determine how 
these documents fell through the cracks and how such mistakes 
can be eliminated in the future. And before I go on, I would 
like to acknowledge Glenn Fine, the DOJ Inspector General, for 
the fine work performed by you, Mr. Fine, and your staff. This 
report is clear. It is thorough and well-organized, and it 
should serve as a model for future investigative reports.
    There is much good news in the IG report. First, and most 
importantly, there is nothing in the report that does anything 
that calls into question the validity of the convictions or the 
sentences imposed on Timothy McVeigh or Terry Nichols. While I 
recognize that the guilt or innocence of these men was not the 
focus of the IG's report, I nevertheless take comfort from the 
fact that the IG uncovered no information that would even 
suggest that these men were not the perpetrators of the 
horrible crimes for which they were justly convicted. We must 
not forget that these men were captured, brought to trial and 
convicted for blowing up a Federal building and murdering more 
than 160 men, women and children through the hard work and 
through the dedication of FBI agents and personnel.
    Second, I am gratified to learn that the Inspector General 
determined that the FBI had not purposefully sought to withhold 
these documents from the defense. The Inspector General found 
that in the midst of producing more than a million pages of 
materials, some 1,033 documents were not turned over, and that 
the failure to produce these documents was simply the result of 
human error, not misconduct or misfeasance or malfeasance on 
the part of the FBI.
    Finally, I have been pleased to learn that under the 
vigorous direction and leadership of Director Robert Mueller, 
the FBI has already begun implementing many of the IG's 
suggested reforms. I applaud the IG for your thorough report, 
and I urge the FBI to continue its commitment to overhauling 
and upgrading its records management systems.
    Let me make a final point. When the FBI does its job well, 
we rarely hear about it. There is no way to tell how many 
terrorist plots against the United States have been averted 
simply because of the existence of the FBI's counter-terrorist 
capabilities.
    When the FBI does make the news, it is overwhelmingly for a 
job well done. It may be the perpetrator of a rape who has been 
identified and incarcerated because the FBI laboratory has 
matched his DNA to evidence found at the crime scene. Or 
perhaps a malicious computer virus has been detected by the FBI 
and traced back to a cyber criminal operating in a foreign 
country.
    It is this positive record of effectiveness and efficiency 
that makes it so newsworthy when the FBI fails to perform its 
duty with the degree of care and professionalism that we have 
come to expect. And as a result, many times we make a lot more 
fuss about these matters than the matters that very few people 
know very much about that are successes.
    As a United States Senator, I consider it to be one of my 
most solemn responsibilities to ensure that the awesome powers 
our law enforcement agencies have are exercised in a 
responsible fashion; that is, in a way that inspires confidence 
in our citizens and does not unlawfully infringe on our 
cherished liberties. I know that my colleagues on both sides of 
the aisle also feel the weight of this responsibility.
    Oversight hearings such as the one we are holding today are 
important and I look forward to the testimony of the witnesses 
today. But based on my review of the IG's report, the written 
testimony submitted by the witnesses, and my own knowledge of 
what Director Mueller has accomplished during his short tenure 
as director, I am persuaded that the FBI is taking the 
appropriate steps to address the shortcomings in records 
management that were revealed by the Oklahoma City bombing 
case, and thereby maintain its position as one of the world's 
most effective law enforcement agencies.
    So, Mr. Chairman, I appreciate your holding these hearings 
and I want to thank you for your efforts here today.
    Chairman Leahy. Thank you.
    Our first witness will be Glenn Fine, who is the Inspector 
General of the Department of Justice. He is a graduate of 
Harvard Law School, a Rhodes Scholar, and a former Federal 
prosecutor. He served as the director of the Special 
Investigations and Review Unit, and now has served under two 
Attorneys General. I know on this one, he has done extremely 
thorough and detailed work.
    I know that you put your own Director of Special 
Investigations, Suzanne Drouet, in charge of the Oklahoma 
documents matters, and I think that shows the importance you 
gave to it. We will put the whole report in the record, but I 
do want to hear from you, Mr. Fine, and then we will go to each 
of the other witnesses.

 STATEMENT OF GLENN A. FINE, INSPECTOR GENERAL, DEPARTMENT OF 
                   JUSTICE, WASHINGTON, D.C.

    Mr. Fine. Thank you. Mr. Chairman, Senator Hatch, members 
of the Committee on the Judiciary, I appreciate the opportunity 
to appear before the committee this morning to discuss the 
Office of the Inspector General's report on the belated 
production of documents in the Oklahoma City bombing case.
    The disclosure of these documents just 1 week before the 
scheduled execution of Timothy McVeigh raised serious questions 
as to whether the FBI had intentionally failed to disclose 
documents to the defense before trial, and why the failure to 
produce documents had occurred. Because of the importance of 
these issues, the OIG expended significant resources to 
investigate the circumstances surrounding the belated 
disclosures.
    The OIG team of attorneys, special agents and auditors was 
led by an OIG attorney whom Chairman Leahy just described, who 
is a former Federal prosecutor. The team conducted 
approximately 200 interviews of FBI and Department employees. 
On Tuesday of this week, we issued a 192-page report detailing 
our findings.
    In sum, our investigation found that widespread failures by 
the FBI led to the belated disclosure of more than 1,000 
documents in the OKBOMB case. We traced the failures to a 
variety of causes, including individual mistakes by FBI 
employees, the FBI's cumbersome and complex document handling 
procedures, agents' failure to follow FBI policies and 
procedures, inconsistent interpretation of policies and 
directives, agents' lack of understanding of the unusual 
discovery agreement in the case, and the tremendous volume of 
material being processed within a short period of time.
    The failures were not confined to either the FBI field 
offices or the OKBOMB task force. Both share responsibility. 
However, we did not find that any FBI employees intentionally 
withheld from the defense documents they knew to be 
discoverable.
    Our report criticizes most severely several senior FBI 
managers for how they responded when they became aware of the 
belated documents problem. The issue was first discovered in 
January 2001 as part of a routine archiving process by two 
conscientious analysts in the FBI's Oklahoma City field office.
    These two analysts found copies of documents that had not 
been turned over to defense attorneys and materials sent by the 
offices to Oklahoma City. Yet, the senior managers to whom they 
reported the problem failed to adequately manage the document 
review process and failed to set any deadlines for completing 
the project.
    Most troubling, the managers failed to notify FBI 
headquarters or the prosecutors in the case until the beginning 
of May, 1 week before McVeigh's scheduled execution. We believe 
their failure to take timely action to resolve or report the 
problem was a significant neglect of their duties and we 
recommend that the FBI consider discipline for these failures.
    Let me now turn to the question of why the documents were 
not produced before trial. We were able to determine a number 
of factors that contributed to the belated disclosures.
    First, the FBI's system for handling documents is 
inordinately complex. Documents are stored in many different 
locations. Various data bases are used to track the documents, 
and information is placed on different types of forms that are 
handled in different ways.
    Second, despite instructions to send everything to the task 
force, some agents failed to send documents because they deemed 
the information as insignificant to the OKBOMB investigation.
    Third, some employees incorrectly assumed that other 
employees had sent the documents in.
    Fourth, it appeared that many field offices did not follow 
instructions from the OKBOMB task force to search their files 
and ensure that all investigative activity had been properly 
documented and sent to the task force.
    We found that the task force also shares responsibility for 
documents not being disclosed. For example, we found that 
documents sent to the task force were lost or placed in the 
wrong file drawer.
    We carefully examined the allegation that the Government 
intentionally withheld documents it knew to be discoverable 
from the defense. We questioned FBI employees and former 
employees, analyzed circumstantial evidence, and investigated 
documents the defense alleged showed that the Government 
intentionally withheld exculpatory evidence. We concluded that 
the evidence did not support a finding that Government 
personnel withheld evidence it knew to be discoverable.
    We also examined the actions of the FBI after the belated 
documents were publicly disclosed in May 2001. FBI officials at 
headquarters incorrectly placed blame on the FBI's computer 
system and FBI field offices, when the fault lay both with the 
field offices and the task force. In addition, we saw many 
untimely and inaccurate responses from the field offices to the 
directives in 2001.
    The issues encountered in this case shine light on several 
of the FBI's longstanding problems: antiquated and inefficient 
computer systems, inattention to information management, and 
inadequate quality control systems. The FBI has both a paper 
and an electronic information system in place, neither of which 
is reliable. Although the belated documents issue was presented 
as a discovery problem, the FBI's troubled systems are likely 
to continue to impede its ability to perform its mission.
    In our report, we detail many recommendations to help 
address the problems we found. Following are highlights of some 
of the recommendations.
    First, the FBI needs to foster an attitude throughout the 
entire agency that information management is a critical part of 
the FBI's mission. It is not the glamorous part of the mission, 
but it is an essential part. Unless the FBI as an institution 
ensures that sufficient emphasis is placed on managing the mass 
of information it collects, problems will persist.
    Second, FBI automation systems must be reliable and user-
friendly and they must integrate data bases that are used for 
many different functions throughout the FBI.
    Third, the FBI must simplify its document handling process. 
The FBI's current system requires paper documents to move 
through multiple steps and locations, creating many 
opportunities for them to go astray. The FBI also should reduce 
the mind-boggling variety of forms it uses.
    Fourth, the FBI must provide increased training on its 
automation systems in document handling. They should be 
required core skills for FBI employees, including agents and 
supervisors, and refresher training also should be required.
    In conclusion, the significance of this case is much 
broader than the impact of the problem in the OKBOMB 
investigation. The FBI has known about these problems for some 
time either because the OIG has discussed them in other reports 
or because the FBI has found them through its own reviews. But 
until recently, the FBI has made insufficient efforts to 
correct these deficiencies.
    FBI employees need and deserve better computer systems and 
support. As the tragic attacks of September 11 revealed, the 
FBI will continue to be faced with cases of the scale and 
dimension of OKBOMB, and the lessons learned from it will 
continue to be important.
    To adequately fulfill its responsibilities in major cases, 
as well as in smaller ones, the FBI must significantly improve 
its document handling and information technology. This requires 
a sustained commitment of resources and effort, but the FBI 
must make this commitment if it is to avoid the serious 
problems that occurred in the OKBOMB case.
    That concludes my statement and I would be pleased to 
answer any questions.
    [The prepared statement of Mr. Fine appears as a submission 
for the record.]
    Chairman Leahy. Thank you, Mr. Fine. One of the reasons why 
I and many others have been urging the administration to do 
what they can to speed up this ability to pull up information 
is because, as I said earlier, I worry when the FBI doesn't 
know what it knows. They have information that might stop a 
terrorist bombing or might stop something from happening, but 
if they don't know it is there, it doesn't help.
    The rest of the panel will be Mr. Bob Chiaradio, who is the 
new Executive Assistant Director for Administration.
    I believe you used to head the Tampa office. Is that 
correct?
    Mr. Chiaradio. Yes, sir.
    Chairman Leahy. Bob Dies is the Chief Technology Officer, a 
former IBM executive who was very helpful to the committee last 
summer. Bill Hooten is the new Assistant Director for Records 
Management. He recently came to the FBI from a private sector 
position at SAIC.
    A vote has started, and we will recess for about five or 6 
minutes so that we can go over and vote because I don't want to 
interrupt the testimony of any of the three of you. I will come 
right back and we will begin the testimony of the remaining 
three and then go to questions.
    I should note that Mr. Chiaradio will be the one who will 
testify, and Mr. Hooten and Mr. Dies will be there to answer 
questions, as they have for the committee before.
    Thank you.
    [The committee stood in recess from 10:01 a.m. to 10:19 
a.m.]
    Chairman Leahy. Thank you for your patience.
    Mr. Chiaradio, would you please go ahead?

STATEMENT OF ROBERT CHIARADIO, EXECUTIVE ASSISTANT DIRECTOR FOR 
ADMINISTRATION, FEDERAL BUREAU OF INVESTIGATION, DEPARTMENT OF 
   JUSTICE, WASHINGTON, D.C.; ACCOMPANIED BY BOB DIES, CHIEF 
 TECHNOLOGY OFFICER, FEDERAL BUREAU OF INVESTIGATION, AND BILL 
  HOOTEN, ASSISTANT DIRECTOR FOR RECORDS MANAGEMENT, FEDERAL 
                    BUREAU OF INVESTIGATION

    Mr. Chiaradio. Thank you. Good morning, Chairman Leahy, 
members of the committee. We appreciate the opportunity to be 
here to discuss the myriad of things we are doing in response 
to the issues properly identified by Inspector General Fine. We 
also appreciate this committee's longstanding interest in our 
ongoing efforts to rebuild our antiquated information 
infrastructure.
    We commend Inspector General Fine and his staff for a 
thorough, objective, and independent examination of these 
issues. His report is instructive and his recommendations 
constructive. Because his findings go to the very heart of how 
we conduct one of our core functions, Director Mueller has had 
the report made available to all employees and has made it 
recommended reading for all FBI management and supervisory 
personnel. Its lessons will be part of our training and its 
relevance and importance will live far beyond today.
    Last May, then-Director Freeh outlined for Congress the 
massive nature of the OKBOMB investigation and the virtual 
flood of documents and information created during this course. 
He also expressed regret that our shortcomings pertaining to 
the records had overshadowed the enormity of the sacrifices and 
accomplishments of those agents who successfully investigated 
this case.
    He candidly admitted that, ``We simply have too little 
management attention focused on what has become over time a 
monumental task. The seemingly mundane tasks of proper records 
creation, maintenance, dissemination and retrieval have not 
received the appropriate level of senior management attention. 
This episode demonstrated the mundane must be done as well as 
the spectacular.'' He then outlined a number of steps that the 
Bureau had embarked upon to fix some of these shortcomings.
    On Tuesday, Director Mueller stated that ``Sound records 
management and document accountability are at the heart of the 
FBI's ability to support investigations and prosecutions with 
information integrity. There can be no doubt about the 
accuracy, completeness, and proper disclosure of the records we 
compile during our investigations and used by prosecutors in 
the support of prosecutions. The ability to maintain, access, 
and retrieve documents is critical to our mission and equally 
critical to protect the rights of those charged with crimes. It 
is also fundamental to robust information-sharing capacities, 
both functions which we are readily enhancing. In short, 
records management and integrity are core functions that demand 
the same level of attention and accountability as any function 
we undertake. It must be a part of the Bureau's culture.''
    As Inspector General Fine outlined for you, there are host 
of contributing factors. The methods we use to record and 
retrieve information are too complex. Our automated case system 
was not very effective in identifying information or supporting 
the investigation. Our technology was inadequate. We lacked a 
true information management system, and what we do have is not 
user-friendly. Many of our employees lack the training 
necessary to be fully engaged in an automated environment, and 
a host of other issues as well.
    But what we thought when this issue first surfaced and what 
we believe now has been confirmed by Mr. Fine. This is not a 
computer glitch. Although a more robust system would have 
helped, it is a management and cultural issue which must be 
forthrightly confronted.
    We can add technology, simplify our procedures, and 
dramatically reduce the opportunities for human error. Doing 
those things are relatively simple. What we must do and what we 
are doing is recognizing information management as the core 
function that it is. At all levels, we must lead the Bureau 
back to where the function is accepted as second nature. We 
must put in place the structures and automation that fully 
support this core function, and we must inculcate in every 
employee, ourselves included, that this new way of doing 
business is the only way acceptable. We must improve our 
records management practices, not simply automate what we have 
been doing for decades.
    We are taking specific actions to address each concern 
raised by the Inspector General and a number of significant 
steps are well underway to overhaul our Bureau-wide records 
management capabilities to increase accountability for 
compliance with established record procedures and to put in 
place the training and skill sets necessary to bring about full 
acceptance of a near-paperless environment.
    Borrowing a little from what my boss has said, with the 
help of the Congress we have restructured to recognize that the 
creation, maintenance, use and dissemination is a core function 
that must be fully supported by management as a priority.
    We have created a Records Management Division to ensure 
executive direction and full-time oversight over all records 
policies and functions, consolidating all records operations to 
ensure consistency, thoroughness and accountability. A 
professional records management expert, Mr. William Hooten, 
here with us today, has been hired from the private sector to 
run that division. He has been charged with modernizing our 
enterprise-wide records systems, developing comprehensive, 
enforceable policies and procedures, and to ensure records 
integrity. He is also charged with putting in place those 
quality control mechanisms that will detect anomalies and 
problems early on.
    It is critical that we manage information, not just the 
systems that support our records. Congress has funded, and we 
are implementing, extensive agency-wide training aimed squarely 
at reforming our culture to one that exploits and incorporates 
technology in our everyday way of doing business.
    Director Mueller is personally providing the leadership for 
this. We have retrained our employees on proper document 
production, management and retrieval, and the importance of 
records management as a core function. There will be continuous 
training over the course of an employee's career.
    Of course, basic to any modern system of records is a 
modern information technology system, and modernization of our 
information technology, as this committee knows, is one of our 
top priorities. We are making sustained progress in this area. 
Congress has approved funding for the FBI to upgrade technology 
and infrastructure for organizing, accessing, analyzing and 
sharing information throughout the FBI and beyond.
    We are replacing the now antiquated automated case system 
in favor of a multimedia, near-paperless virtual case file, 
with significant improvements and capabilities that greatly 
reduce the possibility that future documents will be misfiled, 
lost, or otherwise fail to be produced. The new system will 
dramatically decrease the potential for human error, both 
automatically doing many functions now done by manual 
intervention and by substantially reducing the number of 
opportunities for problems to occur that are inherent in our 
current systems.
    This new case file document management system, designed 
with substantial input from street agents, will be of benefit 
in greatly simplifying the records creation and maintenance 
processes, being user-friendly, and allowing us to manage leads 
much more effectively.
    The FBI's computer network is being completely revitalized 
to provide a data warehousing, collaborative environment, 
instead of application stovepipes. The creation of data 
warehouses and ample supporting networks provide easier and 
more robust access and sharing of information, and results in 
integrated data bases. The need for ad hoc crisis software 
applications will be eliminated. Private sector support which 
will allow commercial software and professional scanning, 
indexing and storage of documents is being used to move us 
rapidly out of the paper environment that was so vexing in the 
OKBOMB investigation.
    All of these systemic changes and many others, including 
everything Mr. Fine recommended, are critical components to 
what must be a sustained agency-wide effort. These things are 
as important to protecting rights as how we execute warrants 
and testify in court. The challenge is great, especially the 
challenge of changing the culture. We believe we are on the 
way.
    Finally, although his exhaustive investigation found no 
evidence of any intentional effort to withhold information from 
defense counsel, the Inspector General's report also criticizes 
actions of certain FBI personnel. We are reviewing these 
criticisms and will move quickly to take any appropriate 
disciplinary action. In the end, there must be accountability.
    At this time, I am prepared to present a brief 
demonstration on the prototype of the virtual case file that is 
currently in development or answer any questions, as the 
Chairman would like.
    Chairman Leahy. I assume throughout all that you are doing 
the appropriate firewalls, depending upon classification and 
that sort of thing.
    Mr. Chiaradio. Absolutely. Within the branch created by 
Director Mueller in my area of responsibility is a new Security 
Division. Integral to this new system will be overlays and 
internal security, external security and the like.
    Chairman Leahy. Go ahead with your demonstration.
    Mr. Chiaradio. Mr. Chairman and members, I have circulated 
before my testimony this morning four charts which I will refer 
to in the presentation as slides.
    The first slide is basically a virtual case file. What we 
would have is a sign-in screen. The IG found that ACS was so 
difficult to use that many agents and supervisors had abandoned 
their effort to use it. In fact, they would rather rely on 
secretaries and administrative personnel.
    Our current system is 1970's and 1980's technology, green 
screen emulators with F key functionality. For example, it 
takes more than a dozen screen entries just to enter one 
document and upload it into the system. The virtual case file 
is designed to operate in a browser-based technology, point and 
click, user-friendly, things that we are using today in our 
everyday lives. The presentation will be more intuitive.
    Security will be essential, as the chairman asked, as an 
integral component. Access will be password-controlled, roll-
based authorities, possessed of robust features for document 
management control, auditing unauthorized access, the things we 
found with the Hanssen investigation.
    We will have system-wide activity approval logs which will 
track documents where they have been throughout the process 
from creation into the final system, through what approval 
processes they travel.
    Chairman Leahy. You will also be able to follow, then, who 
was picking these documents up, too?
    Mr. Chiaradio. Absolutely. The system will be able to show 
us who may have printed a document, who looked at a document, 
where the document is. When it is needed for discovery, it will 
be in one place. It can't be misfiled. It can only be printed 
or burned onto a CD and transmitted to the defense or to the 
prosecutors.
    We have a case document access review, where the agents 
will be responsible to go in on their own on a certain that 
will be designed that they go in and they see who footprinted 
into their case, who was supposed to be in there and who not, 
with the responsibility to elevate those concerns when found.
    I will take you to the second slide. Once we would sign 
into a case, a case agent would now see----
    Chairman Leahy. Incidentally, this kind of thing you are 
talking about--I am sure Judge Webster's review people are 
probably looking at, too, I would hope.
    Mr. Chiaradio. Ken Sensor, the Assistant Director in the 
Security Division, has had a series of meetings with Judge 
Webster and his committee.
    Chairman Leahy. Thank you.
    Mr. Chiaradio. On the second page, on the slide, we were 
getting to a case file management system. Typically, this would 
be the prototype of what an agent would see when they logged in 
in the morning. Although the paper obviously doesn't reflect 
it, there is a red arrow circling up in the top case. That is 
going to be indicative to a case agent or an investigative 
employee that something new has happened in their case. A lead 
has come in from another office, a serial has been sent to 
them, a supervisor has sent instructions. There is not a 
chance, again, for human error. We are trying to minimize at 
every opportunity where human intervention is necessary, to 
have automation and technology assist us.
    What we would see here is the ability to track leads, to 
control documents, to know when there is a document and 
activity has taken place in the case. The virtual case file 
will be interactive, intuitive processes, the ability to see 
one's case and lead assignments on a screen, rather than in 
paper folders or in drawers or in file cabinets, intuitively, 
again, to point and click to a file in your area of interest.
    We would, for example, in this case click onto the first 
case and bring you to slide three, and this would be what was 
going on in this particular case. Again, that arrow or that 
spinning red notification would show you that what had happened 
in that case was a photo spread had come in, which is something 
that we don't have in ACS. We don't have the ability to put in 
any scanning or multimedia. It is only documents that we may 
create in our own environment, nothing external from another 
agency, for example, no ability to put a picture in.
    During the 9/11 attacks, shortly thereafter, I was the 
agent-in-charge in Tampa and headquarters wanted to send us 
pictures of the 19 hijackers. They couldn't use our 
infrastructure to do that. It had to be put on a CD-ROM and 
mailed to me.
    Chairman Leahy. Also, I would think that you could do that 
in a hurry. Another part that is helpful is so many times it is 
frustrating. You hear on the news, whether it is the FBI or the 
chief of police in a major city or somebody like that will say 
there has been this terrible crime. We have the description and 
artist's sketch of such-and-such a person, and whoever is 
reporting the news is talking about it and I think the average 
American sits there saying, well, put the sketch up so we can 
see it.
    Also, in those cases where you have got something and the 
Bureau determines that it makes some sense to let the press 
know this, you can immediately disseminate it to hundreds of 
outlets, thousands of outlets, if need be.
    Mr. Chiaradio. Absolutely. The virtual case file is one 
part of Trilogy, and Trilogy is the big project that the 
Congress has funded for us. By this summer, we hope to have 
deployed to the field the robust network, the desktops, the 
hardware, and the presentation software. This notion of Trilogy 
is in a development stage now called joint application design 
with the contractors and the users.
    An important point to add about the virtual case file with 
respect to multimedia capabilities is the chairman's comment is 
we don't know what we know. We don't know what we know because 
a lot of the information we obtain and we collect in our files 
remain in a paper format. They are externally generated. They 
sit in file cabinets.
    The multimedia capabilities of the virtual case file will 
give us the ability to bring that information into a digital 
format into data warehouses, to be able to access it, to be 
able to work against it with robust search engines and the 
like.
    The FBI's current document management system requires paper 
through multiple procedures and steps. The IG had found that 
and it was replete through his report. The quote was that it 
was ``mind-boggling,'' the variety of forms. What we are doing 
in the virtual case file development is eliminating to a great 
extent the forms in our investigative cases. We are getting 
down to one form.
    We are going to obviate the need to have multiple reporting 
and stovepiping of applications by designing on the front end 
what we may need as an organization and not have to create 
automation to compensate for forms that were designed in the 
1930's, the 1940's and the 1950's. We need to not just 
automate, but we need to revitalize the way we do our business.
    We would have this project, virtual case file, delivered, 
certified and accredited for some months. In the interim, under 
the direction of Mr. Dies, and also our Information Resources 
Division, we are going to do some things to ACS.
    We are going to collapse those 15 screens to upload a form 
down to 2 or 3. We are going to get our work force trained and 
start to get them ingrained in a culture of using this new 
technology for our organization anyway--the point-and-click, 
the Web-basing. So by the time we turn on our virtual case 
file, we will be prepared.
    We have a robust training program put in place not only on 
the hardware deployment but on the software deployment. We have 
about $20 million set aside to do enterprise-wide training to 
get our organization prepared.
    The last thing I will show on slide four is just an example 
of the photo spread, things that we can't do today, have 
multimedia, simply just transfer a photo spread of Mohammed 
Atta, as I just gave you a graphic anecdotal example of what 
happened when I was running the Tampa field office.
    ACS will allow full-text retrieval. It would be very time-
consuming before we had this to even get anything out of ACS. 
You might not even know what you are looking for. The search 
engines that are available today to search my name--you would 
have to have all of the letters in almost exactly the right 
order to even know if I was in your system.
    We are working with the intelligence community, with the 
Mormon Church on some of the search engines they use for 
genealogy review and research to put a more robust search 
engine in there so we can pick out information that may be in 
our data bases; foreign names, for example, as a good start.
    The most important thing is to get our data bases together. 
With this virtual case file and the data warehousing that we 
are going to create, we are starting with the five most 
critical investigative applications. We have about 42 that have 
been created as work-arounds to a bad system.
    Some of those investigative warehouses--the need for them 
will be obviated by what we are doing with these five new data 
base consolidations into one warehouse. The others are going to 
be addressed after Trilogy in future appropriations requests 
and in future efforts by our Information Resources Division.
    I can answer any questions or I could go further. There are 
many features that we have in this prototype, but I wanted to 
just give you a few examples of how accurate Inspector General 
Fine's report was on our shortcomings and how we will use every 
possible thing we can as far as technology to minimize the 
opportunity for human error. But that is not the final answer. 
We need to do more. We need to do more culturally. We need to 
do things in our organization to put an emphasis on this, on 
the importance of data management.
    [The prepared statement of Mr. Chiaradio appears as a 
submission for the record.]
    Chairman Leahy. You have so many superb men and women in 
the Bureau who are well-trained. They go through intensive 
training, as you know, and I want them to feel that when they 
are there what they are doing is actually being paid attention 
to, and if they are involved in cases, they are going to be 
heard.
    Technology is not the only answer, of course, but if you 
have technology that really brings the Bureau together rather 
than balkanizing it, that is extremely important. But then you 
have to do what Mr. Fine's report points out. You have also got 
to go to the basic culture of the Bureau to make sure that as 
you break down the walls, you really want everybody in.
    If I could, I would like to go back to the Inspector 
General. I want to make sure I understand the sequence of 
events correctly, and I was reading through the material last 
night.
    In January, the potential discovery problem is first 
brought to the attention of the senior FBI official who was 
running an entire FBI field division. From that time until May 
7, the FBI conducts a search in most every field office in the 
U.S. for documents which were not turned over. Memos were being 
sent. Documents were being shipped to Oklahoma City and 
analyzed there. Supervisors are flying in from Dallas to review 
the materials; they have meetings. So there is a wide-scale 
operation going on in the Bureau. As it is proceeding, 
documents are being discovered that people in the FBI suspect 
may not have been turned over to the defense, even though they 
should have been.
    Now, I am assuming this is an ongoing process. All of these 
documents didn't simultaneously appear the morning of May 6. So 
am I right that it essentially happened over a 5-month period 
and no one in the FBI even mentioned this potential problem to 
either the prosecutors who were working with them on the 
McVeigh case or to officials in the Department of Justice?
    Mr. Fine. That is correct. No prosecutor, no one in the 
Department of Justice knew about this issue until May 7.
    Chairman Leahy. What does that say about the atmosphere in 
the FBI and how you would deal with these kinds of problems?
    Mr. Fine. I think that is not a good atmosphere. When we 
talked to the inspector in charge, Mr. Defenbaugh, and asked 
him why he didn't expose the potential problem, he had a number 
of reasons, including he wanted to research the problem, he 
wanted to ensure that he was thorough. But when we asked him 
why didn't you tell somebody in the Justice Department, a 
prosecutor, that you had a potential problem so that they could 
deal with it, one of the answers he gave was I didn't want it 
to leak out, I didn't want to cry wolf.
    That, to me, discloses not a good relationship that you 
could not tell a prosecutor and let the prosecutor provide 
guidance on the appropriate way to deal with this potential 
issue, even if you think you may find documents later on. We 
believe that the Department of Justice and the prosecutor 
should have been notified, and should have been notified early.
    Chairman Leahy. Well, I would think so because I know then-
Director Freeh, like Director Mueller today, both of them are 
people who want the rules followed. Whether they agreed or 
disagreed--I am not saying they did disagree, but whether they 
agreed or disagreed with the court's ruling on discovery, I 
don't think there is any question that former Director Freeh 
and current Director Mueller would want those rules carried 
out.
    There is no question in my mind that Attorney General 
Ashcroft, just as his predecessor, Attorney General Reno--if 
there was an order for discovery, they would want it carried 
out. What worries me is that somebody down the chain puts the 
Attorney General and the FBI director and the court and 
ultimately the public in a difficult position.
    Did any of the people you dealt with in the FBI accept 
responsibility for their actions or inactions, as the case may 
be?
    Mr. Fine. We found actually a notable and distressing lack 
of accountability, particularly on this issue. When we were 
talking to the people involved, they would say that it was 
somebody else's job to notify the prosecutors; it was somebody 
else's job to ensure that the review of the documents was done 
in an expeditious way.
    One person kept saying, well, I was just a consultant to 
the problem, or I was in the problem and I was out of the 
problem. We believe that many of them should have taken 
responsibility and ensured that the process was reviewed 
quickly; if there was a problem, in fact, and that the 
prosecutors in the Department of Justice and FBI headquarters 
be notified. And none of them took the appropriate actions, in 
our view.
    Chairman Leahy. The reason I ask these questions is not to 
beat up on the FBI by any means. In this case, the Timothy 
McVeigh case, all the accounts I have read of it--and I have 
talked with the prosecutors involved with it. Obviously, when I 
was prosecuting cases, I never had anything that horrendous. No 
prosecutor has ever had anything that horrendous prior to that 
time and we hope that they don't again.
    I looked at that case as a textbook of the way a case 
should be run. You had a judge who knew what he was doing who 
was in control of the case. You had highly qualified defense 
attorneys, highly qualified prosecutors, and a case of enormous 
importance to the United States. It was handled well, and I am 
convinced of the defendant's guilt. There is no question in my 
mind from everything that I have read about it that he was 
guilty; no question that the law was followed appropriately on 
the sentencing phase and death penalty phase. All of that was 
done very, very properly.
    What I worry about is something like this, where there is a 
mistake and somebody saying I don't want to tell anybody, and 
it may end up jeopardizing that whole thing. You know as a 
former prosecutor in a case like that it would be the most 
difficult thing in the world to re-try that case. You could do 
it, but it would be twice as hard to re-try a case, usually, 
that it is to try it in the first place.
    I worry about whether these kinds of mistakes in the 
handling of documents and information might be the same kinds 
of flaws that hampered the FBI's sharing of counter-terrorism 
information internally and with other agencies prior to 
September 11.
    You state in your report on page 176, ``The tragic attacks 
occurring on September 11, 2001, demonstrate that the FBI 
continues to be faced with cases of the scale and dimension of 
Oklahoma City, and the lessons learned from the Oklahoma City 
case continue to be relevant. Though Oklahoma City occurred 
over 6 years ago, the FBI's document management process remains 
generally unchanged, as does the technology on which it 
relies.''
    You further point out that the failure to manage 
information properly has important implications for the FBI's 
ability to share information, both with prosecutors and other 
law enforcement agencies, which you state is even more 
important in the wake of September 11. I happen to agree with 
you. I am very, very worried that these other agencies don't 
have it.
    Do you think that these problems that you found hampered 
the ability of the FBI, our premier investigative arm in this 
country, from being able to adequately share counter-terrorism 
information prior to September 11?
    Mr. Fine. I think the FBI is in the business of gathering, 
storing, tracking, analyzing and sharing information. If they 
don't have adequate technology and information systems to be 
able to do that, I think it does hamper them.
    I can't say what happened in the September 11 cases, but 
the vulnerabilities that we found in the OKBOMB case, I 
believe, have significant impact and effect on its abilities 
throughout major cases, as well as in smaller cases. So I do 
believe that these issues affect everything the FBI does.
    Chairman Leahy. Thank you. Everybody agrees that given the 
current state of the FBI's information and computer technology, 
in one sense the FBI does not know all that it knows. Does 
anybody disagree with that?
    [No response.]
    Chairman Leahy. Now, I talked to the Attorney General last 
November and I told him he was right to focus the Department of 
Justice and the FBI on protecting America from further 
terrorist attacks. I am glad to see that that focus was 
emphasized after September 11, but if you are going to plan 
effectively for the future, you have to know what worked or 
didn't work in the past.
    I have asked the Attorney General to consider an internal 
review of the FBI's counter-terrorism performance prior to and 
bearing on the attacks of September 11 to see if there are any 
lessons that we might learn there. I asked the FBI director 
last October to preserve all the FBI's records and information 
so that such a review could be conducted, even if we found 
areas where mistakes were made. It won't surprise you to know 
that Director Mueller said, of course.
    Would that kind of review be useful?
    Mr. Fine. I think reviews are useful to determine the 
lessons learned, the problems that occurred, and how to prevent 
it from happening in the future. I hope that this review is 
helpful in the information technology field. I believe other 
kinds of reviews can have important effects and help in the 
future. So I do believe that what we do, what the inspector 
generals do, performs a useful function.
    Chairman Leahy. Does anybody want to add to that?
    [No response.]
    Chairman Leahy. I will turn to Senator Sessions.

STATEMENT OF HON. JEFF SESSIONS, A U.S. SENATOR FROM THE STATE 
                           OF ALABAMA

    Senator Sessions. Thank you, Mr. Chairman. I really have 
the greatest respect for the FBI. I have worked with them for 
quite a number of years and seen the integrity and dedication 
of the agents, their intelligence and ability and training.
    The judge said they are not disciplined. I think for the 
most part FBI agents are disciplined, but it is not a perfect 
situation. Mr. Fine, I think you are touching on the good and 
the bad there.
    Director Mueller, I believe strongly, has the kind of 
experience to understand just this problem. He has been a big-
time prosecutor of criminal cases all his life. He is a career 
prosecutor. He admires the FBI agents that he has worked with, 
and I have asked him about it. But I also believe he would 
understand how to avoid this kind of thing happening in the 
future. For that, I am very grateful that we have him at this 
time because it is time to confront some of the problems in the 
FBI and try to get past those.
    Your report, Mr. Fine, seems to touch on that. Your answer 
to Senator Leahy's questions were, I think, candid and 
noteworthy and important.
    Mr. Chairman, I love the FBI and I believe it is the 
premier law enforcement agency. You are correct. They are 
accountable to this Congress and to the American people, and 
this is the best way that the American people will have 
confidence in it, to have public hearings and talk about the 
problems. We should do that, and I salute you for going forward 
with this review.
    There are good things, I think, here that maybe a lot of 
people didn't notice. It didn't surprise me at all. I think I 
understood precisely how this problem with the McVeigh case 
happened. It was not intentional, as you found. As a matter of 
fact, there would be no real motive in terms of hurting the 
defendant for an FBI office in Miami to fail to send in an 
insignificant document to the prosecutors in Oklahoma City, 
would there, Mr. Fine?
    I mean, it was inadvertence and lack of attention to detail 
rather than some attempt to compromise the prosecution or hurt 
Mr. McVeigh's chances.
    Mr. Fine. As I stated, we didn't find any intent on 
anybody's part to withhold discoverable documents that they 
knew to be discoverable from the defense. It was a wide range 
of documents. Many of them were utterly useless and 
insignificant. There were documents in virtually every field 
office. It was a widespread failure that we found. We did not 
find it to be an intentional failure.
    Senator Sessions. What happened was in that court, that 
judge looked at that prosecutor and issued an order about what 
would be disclosed. It was a broad disclosure order that 
required documents and any interviews relating to the case, I 
assume, to be disclosed.
    Mr. Fine. Actually, Senator Sessions, it was an agreement 
by the Government and the defense for this broad discovery.
    Senator Sessions. But essentially it was backed up by the 
order of the court. Is that correct?
    Mr. Fine. I believe the court did recognize it and order 
it, but it was entered into by the Government. The reason they 
did that was to ensure that the defense got the evidence, to 
show that there would be fair access to the evidence, and also 
to try and avoid discovery disputes.
    Senator Sessions. Well, you make a good point because I am 
not sure under the strict rules of evidence all these documents 
would have been admissible, Mr. Chairman. Mr. Fine makes a good 
point. In fact, they probably were not. What happened was the 
prosecutor voluntarily agreed to what we refer to as an open 
case file. We will give you all documents, all interviews 
related to the case.
    What was the language they actually used?
    Mr. Fine. The language was never written down. This was an 
agreement entered into by the prosecution and the defense and 
it was never memorialized in writing. But there was as clear 
understanding that all FBI 302s--that is, records of 
interviews, inserts, 1-A documents, evidence and other things--
had to be turned over to the defense or made available to the 
defense.
    Senator Sessions. So then a directive went out from the 
Oklahoma City investigative team to every FBI office in 
America, because this was such a big case and it impacted the 
Nation and leads were being run in every office in America, to 
send in all your information. Some of them did and some of them 
did not, and that is what caused the problem fundamentally?
    Mr. Fine. Fundamentally, that is what happened. There were 
many directives sent to the field offices saying send in 
everything you have on the OKBOMB case, and we found that in 
many cases those offices didn't. And in many cases, they did 
send it in and it was lost at the task force.
    Senator Sessions. Now, on the negative thing here to the 
FBI, I have sensed on occasion--and I will ask if you found it 
here--do you think some of the people who got those inquiries 
and those telexes to send in information said this is not 
discoverable stuff, we don't really have to turn this over, I 
am not sending it in? Do you think that possibly was in the 
back of some people's minds, even though the prosecutors and 
the judge and the defense counsel were expecting all documents 
to come in?
    Mr. Fine. Yes, we found that. We found that some agents 
used what they thought was their discretion to say this is 
irrelevant, non-pertinent, and it doesn't need to be sent in. 
But we found that they should not have done that, that they 
were specifically directed to send in everything and let the 
task force decide what had to be turned over. So, yes, that did 
happen.
    Senator Sessions. Sometimes, people get to thinking instead 
of following the direction of their bosses, and that can be 
dangerous if you don't know all the facts in the case, as 
obviously here. So that really compromised the case, I would 
suspect, that kind of mentality, inadvertence or whatever.
    All the documents--and how many were produced? Was it a 
million?
    Mr. Fine. There were millions of documents made available 
to the defense. There were 27,000, I believe, memoranda of 
interviews. I think there were 13,000 pieces of evidence. There 
were millions of hotel receipts, motel receipts, rental car 
receipts that were being tracked and made available.
    Senator Sessions. And many of them, as it turned out, had 
absolutely nothing to do with the case.
    Mr. Fine. That is what the judge found.
    Senator Sessions. I remember when I first began as a 
prosecutor we had a great prosecutor in the South District of 
Alabama. The FBI knew him and he was renowned. His name was 
Ruddy Favre. They have named one of the rooms in the Federal 
U.S. Attorney's office now for Ruddy. He died a number of years 
ago.
    He would tell all young agents this: don't' you worry. If 
there is an error in this case, do not cover it up. Come and 
tell me as soon as possible and I will take care of you. He 
said that because he believed that there was almost a zero 
tolerance for any error in the FBI. The young agents were 
afraid that if they had made a mistake, if they told it, their 
careers could be ruined. They could be adversely disciplined 
for some decision in a complex matter that they hadn't had 
experience with and it would compound the error.
    Do you think there is a culture afoot in the FBI that still 
makes agents reluctant or fearful about coming forward at the 
earliest possible date if they may have made an error, even an 
unintentional error?
    Mr. Fine. Yes, I think it exists to come extent. I don't 
believe it is all over the FBI, but I think that attitude is 
present.
    I remember testifying at a hearing before this committee 
last year at which Senator Danforth made that very point. He 
said the big problem is not the mistake, it is the failure to 
disclose the mistake. That is what he thought the FBI should 
focus on, ensuring that people who make mistakes feel free and 
come forward and disclose those problems. I agree with that.
    Senator Sessions. To me, that is a problem we need to get 
beyond. You don't want to accept lack of highest possible 
standards. You don't want to accept mistakes on a regular 
basis, but you also want people to let you know. The official 
spokesman for the FBI in the official arena, the courts, is the 
United States Attorney.
    Do you think that the agents could have been more 
forthcoming and could have been more cooperative with the 
prosecutors in the case on these subjects?
    Mr. Fine. Well, I think in the case itself I don't have a 
comment on that. I believe that the FBI--and I want to point 
this out: This should not diminish the enormous efforts of the 
FBI in investigating OKBOMB and bringing to to a successful 
prosecution, including the person that we criticize, Mr. 
Defenbaugh.
    He was the inspector in charge of that investigation and he 
deserves wide credit for the way he handled that investigation. 
We criticize strongly how he handled the problem when the 
belated disclosures came forward. He did not disclose that 
potential problem and we think he should have at an early 
stage. I don't think he intended to cover it up completely. I 
think eventually he was going to tell about it if all of the 
research confirmed there was a problem. We think, though, he 
should have disclosed that problem very early on.
    Senator Sessions. Well, I think you are correct. I know 
Danny Defenbaugh and I know he is a good man. He gave his life 
to the FBI and his country, and I believe he was working with 
just incredible tirelessness to make this case successful. I am 
sure it is a great embarrassment and painful for him to have 
this event--after all the things that they did successfully in 
the case, have this event come back and cause a problem.
    He did delay some reporting it. What was it, a month or 2 
months?
    Mr. Fine. No. From the end of January, when the problem was 
initially disclosed, it went to about March, when it was very, 
very clear that they had not been able to find the documents 
and that there was a significant number of problem documents. 
And he did not disclose it until May 7.
    Senator Sessions. May 7, and that was shortly before the 
execution date?
    Mr. Fine. The execution date was May 16.
    Senator Sessions. So they decided to do their own internal 
review to make absolutely certain that this had to be 
disclosed. When they realized that it had to be, they did so, 
but late?
    Mr. Fine. Well, the conscientious employees that I 
described, the two analysts, when they get the documents, they 
disclosed it to their supervisors, including Mr. Defenbaugh, 
and they went forward with their review. But even by March, it 
was clear that there was a problem with the documents and they 
continued their review until every single document had been 
analyzed and reviewed in this very time-consuming and laborious 
process.
    That happened at the end of April, and so they were finally 
mailed to Mr. Defenbaugh on May 7 and he disclosed it then. But 
in our view, his failure to disclose the potential problem 
earlier was a significant neglect of his duties.
    Senator Sessions. I would agree. I think there was a delay 
there, an unfortunate delay. It was not held too late in the 
sense of the case. He did do it before the execution date, but 
there was very little time. It should have been done sooner.
    Thank you, Mr. Chairman. I have gone over my time.
    Chairman Leahy. I gave you extra time. It is an important 
point. We all recall that because they had been so late in 
reporting this, the Attorney General had to delay what had been 
the scheduled execution date in that case to have it reviewed. 
I said at the time I thought the Attorney General did the right 
thing. I also know in my private conversations with him he was 
not happy to have been put in that position. He had no problem 
in doing what was the right thing to do, but he was not very 
happy that when they started knowing about this early in the 
year that nobody had come forward.
    Senator Grassley has been at several other meetings, and 
this is an area where he has not only enormous expertise but 
has been heavily involved. I appreciate him stepping out of his 
other hearing and I would yield to him.

STATEMENT OF HON. CHARLES E. GRASSLEY, A U.S. SENATOR FROM THE 
                         STATE OF IOWA

    Senator Grassley. Well, I thank you, Mr. Chairman, for 
doing that, and I want to thank you on this issue and a lot of 
other issues for your cooperation with me, and particularly 
your leadership on the bill that we recently announced.
    First of all, I want to take the time to commend General 
Fine. I don't know you very well, but I want to get well 
acquainted with you. I think this report and the work that you 
have done on the FBI investigation, the McVeigh documents, et 
cetera, have been worked the way that inspector generals ought 
to work.
    I say that not only from my observation, but I have a 
former employee who has been observing inspector generals' work 
for a long period of time. He is no longer in my office, but he 
made a very positive comment to me about your work, and I kind 
of use that as a standard of judging some of the work. So I 
think I not only want to commend you for this report, but I 
think for doing what inspector generals should do.
    The most important, key point there is independence, and if 
sometimes you don't feel you have the independence that I think 
inspector generals ought to have and I think that the law 
allows you, I hope you will let me know.
    I think you have proven through this work to be genuine 
watchdogs. I think you have hit home the need for the FBI 
reform bill that was introduced by the chairman and me, and 
this would codify, as you know, the Inspector General's 
authority to investigate the FBI.
    I would turn to Mr. Chiaradio and the rest of you, and bear 
with me if I am asking something that you have answered before, 
because I would like to hear it from you again. So maybe we 
need to followup with some dialog.
    First, it was unclear to me, in the comments of the FBI and 
the Department of Justice officials this week, whether the FBI 
has really taken responsibility for the main cause of McVeigh 
document problems, and that is obviously and quite simply human 
error. The problem was more than just a terrible filing system 
and old computers.
    I don't want to rehash the whole report, but it pointed out 
problems and mistakes at the top level at headquarters all the 
way down to field agents. So I want to make sure that, first, 
you agree with the IG that human errors up and down the FBI 
chain were the main cause of this problem.
    Mr. Chiaradio. Senator, absolutely. Through my remarks and 
through some of the conversations we have had here today, it is 
clear that we have a cultural change as much as we have 
anything. Technology and technology upgrades will absolutely 
assist us in minimizing the opportunity for human error, but as 
an organization we need to change. We need to get to the sense 
of urgency and the attention to detail, as Director Freeh said, 
in the mundane as much as the spectacular.
    I can tell you from the 6-months that I have served 
directly under the leadership of Director Mueller that he not 
only believes that, but I believe he believes it. He has had 
two separate meetings now with all of our special agents-in-
change where I have heard his comments to that audience, where 
he expects accountability, he expects people to admit their 
mistakes, come forward quickly with them and move on and 
correct them.
    He is inculcating that into the organization to every 
person in the organization, and I believe that he is making 
that difference. It is a leadership issue, Senator. It starts 
with the director and it comes through all of us, and I believe 
we are on our way to that.
    Senator Grassley. My second question deals with the 
National Infrastructure Protection Center. I am going to refer 
to it, as I think everybody does, as NIPC. I ask you 
particularly because of your being an expert on technology, so 
I would like to ask you about the director's plan for the FBI 
to swallow up NIPC by putting it in the Criminal Division.
    I hope that you know that NIPC is supposed to share 
information with the private sector and issue warnings about 
threats. The private sector has some concern about NIPC, and 
particularly concern about that move. So why does the FBI want 
to turn an information analysis and warning center into a 
support office for criminal investigation?
    Mr. Chiaradio. Senator, I talked to the director about this 
issue this morning at our seven o'clock staff meeting in 
anticipation of your question. The director has made no 
decision with respect to the NIPC. He has authorized me at this 
point and at other times to let you know that he values your 
opinion. Clearly, he will not make any final decision without 
coming to see you.
    Senator Grassley. Thank you. I think I have made clear that 
I think it is a mistake. I will be glad to listen to that, but 
I hope you come around to the point of view that I have.
    I understand that you are training new and current agents 
in computer and recordkeeping with what is referred to as back 
to basics and other things, but I would like to know how these 
new policies will be enforced. What I really would like to have 
you answer is, first, specifically what kinds of accountability 
measures there are for the FBI as a whole and individuals in 
the FBI. And, second, how are you going to make sure that the 
FBI doesn't have the same human error mistakes that led to the 
problems with the McVeigh documents?
    Mr. Chiaradio. To answer the first question about what 
mechanisms are in place, we have cumbersome manuals of 
operation, administrative and investigative. I believe that was 
part of the Inspector General's findings that we have too 
complex a recordkeeping system.
    What we are planning on doing and what the director has 
recognized and has organized, too, is a separate records 
management division, consolidating our functions, our policies 
and practices, where they have been sprinkled through the 
organization, bringing in an expert from the outside, and Mr. 
Hooten is here with us today, charging him with putting 
together a consolidated and more enforceable procedure on how 
we maintain, process, and otherwise retrieve and handle our 
information management; also, with the technology that we are 
hoping to develop and we are developing through Trilogy, 
minimize at every possible turn the point of human error or the 
intervention of human beings into a process and get technology 
to where that can be done.
    We cannot completely eliminate the possibility for human 
error. We can't run as an organization of just computers. We 
are an organization of 28,000 strong, but to every extent we 
can possibly minimize the opportunity for error through 
technology, we will.
    As far as our training, part of that development will be 
on-time and just-in-time training with our new systems. We have 
set aside upwards of $20 million between our hardware 
implementation and rollout and our software implementation and 
rollout just for the training of the work force to make sure 
that they know what they are supposed to do and how they are 
supposed to get it done.
    The remedies for failing to do that are administrative, and 
they are also performance-related; someone doesn't get a good 
report card on their performance. What we are trying to do, as 
we are reviewing now the findings of the Inspector General, is 
looking at the more serious allegations when it has to do with 
the issues that were raised in that report objectively by our 
Office of Professional Responsibility and take appropriate 
action. The director is prepared to look objectively at what 
the Inspector General has found, look at the details behind his 
work and take appropriate action on personnel where necessary.
    Senator Grassley. My last point would be more of a 
statement than a question. I hope that I can ask you to convey 
to Director Mueller when you see him that I would expect to see 
him take some action against the worst individuals who made the 
worst mistakes in this McVeigh paper case which the Inspector 
General has investigated so thoroughly.
    I am going to assume the best and believe that he will take 
such action because he promised so quickly in January to force 
FBI officials to repay the Government for attending the 
retirement party of one of the retirees on the taxpayer's dime. 
So I hope to see some swift action in this case as well. 
Everyone at the FBI certainly needs to know that personal 
accountability carries consequences.
    Thank you, Mr. Chairman.
    Chairman Leahy. Thank you very much. Again, I thank you for 
the amount of time you have spent on this, not just now but 
over the years, in fact, and I appreciate that.
    Especially now that we are down to the last few days of a 
session, if you look at the list of committees meeting, every 
one of us is sitting in about four different committees, and I 
appreciate the senior Senator from Iowa taking the time to come 
over here for this.
    We will keep the record open for questions from others. I 
will put some of my own questions in the record and I think we 
can finish up on just a couple I have.
    Mr. Hooten, in the IG report, as I read it, one of the 
recommendations is that the general counsel review the FBI's 
policy regarding the destruction of documents while a case is 
pending. I have to imagine that you have warehouses full of 
documents, so you have got the management and other questions.
    But in the Corporate and Criminal Fraud Accountability Act, 
which I introduced to respond to the Enron-Arthur Andersen 
debacle--and I am not in any way tying that connection, but 
what made me start thinking about these document things is the 
Majority Leader and Senators Durbin, Harkin and myself are 
trying to close the loopholes on the destruction of documents 
by people in the financial services business, for the obvious 
reasons in this particular case, but for others. It makes me 
think that we want to make darn sure that we, the Government, 
are way above any question of reproach in the same area about 
document retention.
    Does the FBI have a clear policy on the destruction of 
documents while a case is pending?
    Mr. Hooten. Senator, I think I have been there nine or 10 
weeks now, so I am learning to.
    Chairman Leahy. Aren't you glad to be here?
    Mr. Hooten. I am, sir. I am very honored to be here, quite 
frankly.
    There are a couple of parts to the answer to this question. 
The first one is we do indeed have a lot of things that we need 
to destroy that are trash, quite frankly, extra copies of 
things, things that relate to things that have been destroyed 
50 years ago. We just don't know what we have. I think you said 
that correctly. So that is one thing. We do need to get rid of 
that because that helps us be more efficient all the way 
through.
    But the other thing is, with the new systems we will 
employ, we will know what we have and we will know when we have 
extra copies. We will know the retention period of certain 
kinds of documents. We have over 300 different classifications 
of records. Each one has a different kind of retention period, 
and so some we keep for 10 years, some we keep for 30 years, 
and so on. Some we accession to the National Archives at the 
end of a certain period, some we keep forever, others we can 
destroy at a certain time.
    I am finding a variety of ways to manage that now. One of 
my roles is to try and get that down into a very simple, very 
manageable way by using technology. It is the only way we can 
do it. It is just too big a job to be able to really monitor, 
be able to destroy the things we legally must destroy at the 
times we need to, be able to keep those things we need to keep, 
and be able to know what we have got and what we don't have.
    Chairman Leahy. But do you agree with me that especially on 
pending cases that such a uniform policy is vitally important?
    Mr. Hooten. Absolutely, sir.
    Chairman Leahy. I would feel that we must have something 
that both prosecutors and defense attorneys can say here is the 
rule; we know what is there and what it will be and we can go 
forward.
    Mr. Dies, if I could ask you--having Senator Grassley here 
makes me think about this. We have worked together to craft S. 
1974, the FBI Reform Act. We want the FBI director, whoever is 
the FBI director, to have the most effective law enforcement 
and counter-intelligence agency he can.
    Long after I am gone or you are gone, or anybody else, or 
currently here in the Senate or in the administration or 
anything else, we are still going to face terrorism threats. We 
are still going to have people that are going to break the law, 
and I think that we want to make sure in the 21st century that 
we are able to respond as well as we can to keep the highest 
standards of our own constitutional history, and so forth.
    Do you have a feeling or a position on S. 1974, the Leahy-
Grassley Act?
    Mr. Dies. I believe it is under review by the Department of 
Justice. A large part of it isn't in my field of expertise. The 
part of it that is that relates to information management--
frankly, I thought you had both creative and constructive ideas 
in there, and I would hope you are successful in getting these 
enacted.
    Chairman Leahy. Does anybody else want to add anything? Mr. 
Fine?
    Mr. Fine. I would like to add that the provision of your 
and Senator Grassley's bill that codifies the jurisdiction of 
the Office of the Inspector General over the FBI and the DEA is 
an important provision and we support that. We believe that it 
should be in the law so that people know it will continue and 
that another Attorney General, whatever he or she decides, 
knows that it is the law that the Inspector General has full 
authority throughout the Department of Justice. We support 
that.
    Mr. Chiaradio. Senator, in the other areas, again, the 
Department has not passed a comment on that.
    Chairman Leahy. I understand.
    Mr. Chiaradio. But we clearly have some things we are 
interested in in there that are very constructive, especially 
the SES disciplinary process, some things with our police 
force, and we are looking forward to seeing how the final Act 
comes out.
    Chairman Leahy. Well, we will continue to work with you. 
Everybody has respect for the FBI and our Department of 
Justice. We just want it to work because the threats are lot 
different than when the FBI started or anything else. We are 
not dealing with bank robber who hops in a 1930 Ford and goes 
running down a back road and you hope that maybe you can get 
the word to the sheriff in the next county to block him.
    We are dealing with money, information and everything else 
being transmitted instantaneously around the world. Our threat 
is not so much today that we are going to have some army march 
against us or an air force fly against us. We are far too 
powerful for that. It is not going to happen.
    I worry a lot more about a dozen well-committed people, who 
could care less what the penalties because they attempt to die 
in the attempt anyway, who drive a dirty bomb down Pennsylvania 
Avenue or across the Triborough Bridge or into Century City, in 
Los Angeles, or anywhere else. That worries me a lot more, and 
we want to be able to catch them. And as we have found 
tragically enough in the last few years, terrorists can be 
home-grown or they can be from abroad.
    And during that time, we will still have all the fraud 
cases and the major criminal cases, and we just want to make it 
work. We have certainly shown no hesitation to give money from 
the Congress, and we feel no hesitation to give you new powers. 
But with that money and those new powers comes the requirement 
for us not only to do our oversight, but for you to use it the 
best way you can. The four of you have a great deal of respect 
on both sides of the aisle here from the members, and utilize 
that and keep us posted.
    I appreciate very much your being here, and we stand 
adjourned.
    [Whereupon, at 11:20 a.m., the committee was adjourned.]
    [Submissions for the record follow.]
    [Additional material is being retained in the Committee 
files.]


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   REFORMING THE FBI IN THE 21ST CENTURY: THE LESSONS OF THE HANSSEN 
                             ESPIONAGE CASE

                              ----------                              


                         TUESDAY, APRIL 9, 2002

                                       U.S. Senate,
                                Committee on the Judiciary,
                                                   Washington, D.C.
    The Committee met, Pursuant to notice, at 10 a.m., in room 
628, Dirksen Senate Office Building, Hon. Patrick Leahy, 
Chairman of the Committee, presiding.
    Present: Senators Leahy, Grassley, DeWine, Hatch, Durbin, 
and Kyl.

OPENING STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM 
                      THE STATE OF VERMONT

    Chairman Leahy. Good morning, Senator Grassley, and I have 
been told Senator Hatch will be joining us.
    This is just another in a series of hearings, I think each 
one, though, of some significance. Since last summer, we have 
been holding regular oversight hearings on the future of the 
FBI and sort of the idea of how they prepare for the challenges 
of the 21st century. Actually, today's hearing is a stark 
reminder that some of the challenges facing the FBI are as old 
as the republic. We focus on the role of the FBI as a protector 
of the highly classified secrets that are really the crown 
jewels of our national security.
    We are, I think, extremely fortunate that Judge Webster is 
here today. He has a great deal of credibility on both sides of 
the aisle, credibility that is earned, which is, of course, the 
best kind. The report by the commission chaired by him 
demonstrates the vulnerability of the FBI in fulfilling its 
basic function of protecting our secrets. The American people 
depend more than ever on the FBI to protect it against 
terrorism, as we should and as the FBI knows we do, and that 
vulnerability has to end.
    It is this committee's responsibility to ensure the FBI 
becomes as great as it can be. This series of FBI oversight 
hearings is an important part of the process, as is the 
legislation that Senator Grassley and I have introduced to 
implement many of the FBI reforms recommended by Judge 
Webster's commission.
    The treason of former FBI Supervisory Special Agent Robert 
Hanssen was a shocking revelation, not only to all Americans, 
but also to the thousands of dedicated FBI agents and personnel 
who work around the clock and in far-flung places around the 
globe to make this country a safer place to live and raise our 
families. I know many of those men and women. I know how hard 
they work. I know the enormous sacrifices they go through, both 
themselves and their families, and I think how badly hurt they 
feel by what former Supervisory Special Agent Robert Hanssen 
did.
    I believe Attorney General Ashcroft was right to ask Judge 
Webster and other outside experts to evaluate the FBI's 
security programs in light of the Hanssen espionage case. This 
report is as thorough as it is chilling. The findings are not 
academic. They have important implications for the FBI's 
operations in the post-September 11 era.
    At least one of the significant deficiencies and security 
risks documented in the Webster commission report are the 
result of new policies adopted in response to the September 11 
attacks. Unfortunately, these new policies were done without 
proper consultation with security experts and raise problems of 
their own.
    The commission's findings and recommendations are crucial 
to the FBI's efforts to fight terrorism and protect national 
security, as will be the recommendations of the skillful 
Justice Department Inspector General, who is investigating 
other aspects of the Hanssen matter for report later this year.
    The report is another wake-up call to the FBI, but I worry 
that when some of these wake-up calls come, the institutional 
reflex has been to hit the snooze button and that has to 
change. With the oversight series of hearings which we began 
last year, we want to help the FBI break the pattern. I blame, 
to some extent, the Congress. We have taken basically for 
decades a hands-off policy toward the FBI and not done the kind 
of oversight that we should do, which is why I began these 
oversight hearings within weeks of becoming chairman. Working 
with the Attorney General, who feels that we should be doing 
it, and the Director of the FBI, who feels the same, and 
others, this committee wants to help them ensure that the FBI 
learns from past mistakes and becomes all the Nation needs it 
to be.
    The Webster report exposes within the FBI what the report 
calls a pervasive inattention to security, which has been at 
best a low priority in recent years. It describes an FBI where 
computers so poorly protect sensitive material that the FBI's 
own agents refuse to put important information on the FBI's 
official system. It paints a picture of the FBI where employees 
are not adequately trained in basic document security practices 
and where there is little analysis of security breaches.
    The Webster commission found not one or two problems, but 
serious deficiencies in most security programs it analyzed 
within the Bureau, and that when compared with best practices 
within the intelligence community, ``FBI security programs fall 
far short.'' It is an FBI security system that does not work, 
and there are three key findings from that report that we have 
to look at.
    First, the commission found that Robert Hanssen's 
activities merely brought to light broader and more systemic 
security problems at the FBI. For instance, Hanssen's ability 
to mine the FBI's computer system for national secrets for more 
than 20 years--20 years--points to a serious weakness in 
information security. Hanssen himself said that any clerk in 
the Bureau could have done the same, and yet he was promoted to 
sensitive FBI positions where he was entrusted with our most 
sensitive national secrets during a time when he was a paid 
Soviet spy. That is a problem. His ability to copy highly 
sensitive material and take it in and out of the building, and 
nobody stopped him, nobody asked, and nobody followed up.
    Second, the commission found that the best way to protect 
information is not to shut down information flow completely, 
either within the FBI or from the FBI to outsiders. Indeed, 
that type of reaction is inimical both to a free society and to 
effective law enforcement. Instead, the Webster Commission 
found the FBI needs to do a better job with what is known as 
defense-in-depth security, find out what is truly sensitive and 
then protect that.
    Finally, and most disturbing, the commission found that the 
systemic problems which allowed Robert Hanssen to compromise 
national security for so long are not ancient history but still 
permeate. Most alarming to me, the commission found that 
decisions since September 11 have resulted in substantial 
sensitive source material from FISA surveillance being made 
generally accessible on the FBI's computers to FBI personnel 
and then inadequately protected.
    This not only presents a security risk which has to be 
corrected ``as soon as possible,'' but it is the kind of breach 
that could create some real constitutional problems. We want to 
be able to prosecute those who are involved in terrorism or 
playing terrorism against us. Judge Webster knows, a former 
judge and FBI Director who understands prosecutions as well as 
anybody in this room, when you get such a prosecution, you want 
it to stick.
    I am afraid that some of these mistakes could allow 
loopholes to be created where we could not do that and we have 
to fix that. We have to fix it. We have to make sure that if we 
are going to be prosecuting somebody, we can make it stick. We 
have to make sure that we have done enough so that when 
somebody has sensitive information, they are willing to give 
sensitive material and know that it is going to be kept that 
way.
    I am one of the ones that helped write the USA PATRIOT Act 
that gave the FBI new surveillance power and the Webster report 
raises some very serious concerns in my mind.
    I get the impression that part of the Hanssen case, there 
was a circling of the wagons. Unfortunately, if the enemy is 
inside the circle, that does not do you much good and we have 
got to get outside that circle and attack the problems. I think 
Director Mueller has already taken some steps in the right 
direction and I commend him for that.
    One common sense proposal in the report stands out, 
establish a system under which security lapses at any one 
particular agency can lead to improvement throughout the entire 
intelligence community and thus have a coherent national 
policy. In fact, the commission specifically cites a proposal 
for such national security program that I made 16 years ago 
when I was Vice Chairman of the Intelligence Committee and 
Judge Webster was FBI Director. We made that report after the 
horrendous year of the spy, with Walker, Whitworth, Howard, 
Pollard, Chin, and other spies detected here. So these are 
things that we should be looking at.
    We find that most departments and agencies other than the 
CIA did not implement the requirements that were adopted after 
the Ames case. Not much has been done since Hanssen's arrest 
over a year ago. We do not go into the financial background as 
they should be. These are things that have to be improved.
    Back on the security issue, in 1997, the Justice Department 
Inspector General's report on the Aldrich Ames spy case 
specifically warned the FBI needed to develop and maintain a 
better recordkeeping system for tracking top secret documents, 
some of the very things Mr. Hanssen later stole. I wonder if 
then FBI agent and Russian spy Hanssen read the IG report, he 
knew that he could go on just as he did before, and this would 
end up in a filing cabinet somewhere. We cannot do that. That 
is why Senator Grassley and I have introduced S. 1974 to change 
that.
    I have a much longer statement which I will place in the 
record, but those are some of my concerns.
    [The prepared statement of the Chairman appears as a 
submission for the record.]
    Chairman Leahy. Senator Grassley, do you wish to say 
something?

STATEMENT OF HON. CHARLES E. GRASSLEY, A U.S. SENATOR FROM THE 
                         STATE OF IOWA

    Senator Grassley. I think you said everything that can be 
said on the subject. I think we ought to take advantage of this 
opportunity to thank Judge Webster for his excellent and 
thorough report on these security problems at the FBI. The 
results of the commission's review are almost painful and I do 
not think we need to belabor the revelations and problems it 
found because I think that we are all familiar with them by 
now.
    I would say that this is all the more disconcerting, 
though, because the FBI missed a number of pretty plain signs 
over the years that Robert Hanssen was up to no good. Just one 
of these instances should have sparked a very thorough 
investigation, the hacking software found in his computer. Yet, 
even as these instances piled up for more than a decade, no one 
could connect the dots. This cost the FBI and our nation 
tremendously. Hanssen was able to sell top secret information 
that damaged national security and led to the death of several 
people.
    I hope that the FBI works to adopt the recommendations in 
this report, and I know that the FBI reform bill that Senator 
Leahy and I have authored will address some of the security 
issues at the Bureau. I am happy to see the Webster report 
includes some of the bill's provisions, and just one of them 
would be the establishment of a cadre of career security 
professionals.
    Thank you, Mr. Chairman.
    Chairman Leahy. Thank you.
    Did you wish to say anything?

STATEMENT OF HON. MIKE DEWINE, A U.S. SENATOR FROM THE STATE OF 
                              OHIO

    Senator DeWine. Mr. Chairman, very briefly, I just want to 
thank you for holding this hearing, and Judge Webster, it is 
good to see you again. We appreciate your service to our 
country and your continued service with this very, very good 
report.
    Mr. Chairman, I am looking forward to Judge Webster's 
testimony and the testimony of the other witnesses. I would 
just make one comment before we start, and that is that these 
recommendations will do no good if they are not implemented, 
and these recommendations will do no good if they are not 
funded. I think we kid ourselves if we did not realize that 
this was going to cost money.
    It seems to me that the followup, the logical followup to 
Judge Webster and his commission's good work is for the FBI to 
very quickly do the cost analysis and to come to the U.S. 
Congress, come to the American people and be very, very candid 
and say, this is what it is going to cost. You make the 
decision as far as public policy, but we need to acknowledge 
that this is what the cost is going to be, because if we do not 
do that, we are not being honest with ourselves, and quite 
candidly, we are never going to be able to implement the 
recommendations that the Judge has made.
    So I thank the Judge, and Mr. Chairman, thank you.
    Chairman Leahy. Thank you very much.
    Judge Webster, the floor is yours.

 STATEMENT OF HON. WILLIAM H. WEBSTER, MILBANK, TWEED, HADLEY 
                AND MCCOY, LLP, WASHINGTON, D.C.

    Mr. Webster. Thank you very much, Mr. Chairman. Thank you 
for the opportunity to testify before the committee on behalf 
of the Commission for the Review of FBI Security Programs. I am 
going to keep my opening remarks brief because the commission's 
true statement is its report, which I have submitted and which 
you have.
    In March 2001, Attorney General John Ashcroft asked me to 
chair the commission at the request of FBI Director Freeh. The 
request came in the light of the newly discovered espionage of 
FBI Special Agent Robert Hanssen. Over the course of 22 years, 
Hanssen gave the Soviet Union and Russia vast quantities of 
national security information of incalculable value.
    The depth of Hanssen's betrayal is shocking, but equally 
shocking is the ease with which he was able to steal classified 
material. Usually, Hanssen collected the material during his 
normal daily routine, gathering up classified information that 
crossed his desk or arose in conversation with colleagues.
    The commission concluded that internal security has often 
been a low priority at the Bureau, frequently trumped by 
operational needs. Security training has been almost 
nonexistent and agents usually take on security duties as 
collateral responsibilities with every incentive to return to 
investigative operations full time.
    Although it is impossible to eliminate intelligence efforts 
directed against our national security, the commission 
attempted to recommend changes in FBI security programs that 
will minimize the harm those who betray us can do. The changes 
should also shorten the time between the defection of these 
individuals and their detection.
    Most globally, the commission recommends that FBI security 
programs be consolidated in an Office of Security, reporting to 
the Director. In addition to changes in Bureau policy, we also 
recommend that a system be established whereby security lapses 
in a particular intelligence entity lead to improved security 
measures throughout the entire intelligence community.
    Mr. Chairman, I would like to acknowledge the support 
afforded by the Department of Justice and the unstinting 
cooperation of FBI Director Mueller and Bureau personnel at all 
levels. The commission also noted the many steps the Bureau has 
taken to improve security in the light of Hanssen's treason.
    Finally, I would like to recognize the dedication of our 
professional staff and my colleagues on the commission, the 
Honorable Clifford Alexander, the Honorable Griffin Bell, the 
Honorable William Cohen, the Honorable Robert Fiske, the 
Honorable Thomas Foley, and the Honorable Carla Hills.
    At this point, Mr. Chairman, I would like to depart from my 
formal statement to add a few words of my own on a personal 
note and then I would be happy to respond to your questions.
    I am painfully aware that some of Robert Hanssen's 
activities took place intermittently when I was Director of the 
FBI, and while I worked hard to strengthen its 
counterintelligence capabilities to detect and capture the 
spies of hostile countries targeted against us, in hindsight, I 
took our own internal security procedures for granted and I 
share in that institutional responsibility. In fact, I raised 
that issue when I was asked to assume this responsibility and 
was assured that my perspective from 9 years at the FBI and 
four-and-a-half years at CIA would be useful.
    So with the authority of the Attorney General, I asked six 
distinguished Americans of unquestionable probity to serve with 
me as commissioners, and they have joined me in the conclusions 
of this report. I wanted this to be an honest report, and I 
believe that we have produced one.
    This report, Mr. Chairman, is not intended to reflect 
adversely on the integrity and dedication of the many thousands 
of men and women who have served their country in the FBI. 
Indeed, its purpose is to disclose the security vulnerabilities 
that could have been far more devastating had not the spirit of 
fidelity, bravery, and integrity been alive and well for all 
but a minute number of employees who betrayed their trust.
    I think we owe it to the men and women of the FBI who serve 
today and will serve tomorrow to address these vulnerabilities 
in ways that will best protect our country and yet permit the 
FBI to function fully and effectively in its many 
responsibilities for the protection of us all.
    Now, Mr. Chairman, I would be happy to respond to your 
questions.
    Chairman Leahy. Thank you very much, Judge Webster. 
Incidentally, that statement is also typical of your own candor 
and the credibility you have established in this town.
    Senator Hatch has joined us, and traditionally, I do want 
to give him an opportunity to make an opening statement.

STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM THE STATE 
                            OF UTAH

    Senator Hatch. Thank you, Mr. Chairman.
    I want to commend you, Judge Webster, for the excellent 
work you have done every day you have been in this town in so 
many ways and especially for your findings and for your work 
here. Again, everybody in this town knows that you are a person 
of immense integrity, and so are the others who have worked 
with you on this report.
    But over the course of the last year, we have become 
acutely aware of the damage that FBI Special Agent Robert 
Hanssen has done to our national security. Over 22 years, 
beginning in 1979 and continuing until his arrest in 2001, we 
are told that Hanssen gave the Soviet Union and Russia 
substantial amounts of vital information affecting the United 
States security.
    When Mr. Hanssen's activities were discovered, we all 
questioned whether his ability to jeopardize our nation's 
security was due to deficiencies in the FBI's internal 
security. Commendably, Attorney General John Ashcroft and then-
Director Louis Freeh responded quickly to the crisis by 
appointing Judge William Webster to lead a thorough and 
independent review of the FBI's internal security programs.
    This commission has now completed its task, and it is 
apparent from its extensive, well-written report that the 
commission was very meticulous in its investigation. The 
Webster Commission's comprehensive study will guide the FBI as 
it undertakes the critical task of transforming its internal 
security programs.
    I want to commend you, Judge Webster, the commissioners who 
served with you, and your staff for diligent work in compiling 
this report. I want to acknowledge in particular George Ellard, 
who was Senator Biden's chief counsel on this committee for his 
service as general counsel on this commission. Our nation owes 
a debt of gratitude to Judge Webster and the members of his 
able team for their dedication and for their thorough and 
important review.
    Reforming a multi-faceted institution like the FBI is no 
easy task. As the Webster report points out, an inherent 
tension exists between the Bureau's law enforcement function, 
which is grounded in shared information, and its intelligence 
function, which, by necessity, must be grounded in some degree 
of secrecy. Conflicts between operational and security 
objectives are common. The recommendations contained in the 
Webster report appear to strike a workable balance between 
these obviously competing objectives by advocating reforms that 
will increase the Bureau's security without jeopardizing its 
efficiency in the law enforcement area.
    I am pleased to learn that under the leadership of Director 
Mueller, and immediately before him Director Freeh, the FBI has 
examined its security programs and has already incorporated 
many of the security reforms the Webster commission has 
recommended. Most significantly, the FBI has established an 
independent security division led by an assistant director 
whose role is to plan and implement the FBI's security 
programs. As the Webster commission suggested, consolidating 
the FBI's security functions into a central office will not 
only increase the Bureau's focus on security matters, it will 
also ensure greater security coordination within the FBI.
    In addition, the FBI has improved the security of its 
information systems, instituted frequent polygraph examinations 
and access reviews, and developed a comprehensive security 
education awareness and training program. So we look forward to 
the FBI continuing to incorporate all of the reforms 
recommended by the Webster commission, as the Bureau has 
indicated it will.
    I want to take a moment to commend Director Mueller and his 
team. Director Mueller has been on the job only 7 months, and 
during virtually his entire tenure, he has been coordinating 
the FBI's response to the September 11 attacks. I am sure I am 
not alone in my admiration for the institutional reforms 
Director Mueller has already managed to accomplish under these 
trying conditions and circumstances. I believe, as a newly 
installed Director, Mr. Mueller should be allowed to implement 
his reforms, and as I know he is aware, to be accountable for 
the results.
    As I have said on countless other occasions, the FBI is one 
of the finest law enforcement agencies in the world. We have 
learned, however, we cannot let our respect for the FBI as an 
institution or for the many hard-working agents who are often 
asked to put their lives on the line blind us from the fact 
that the FBI has, on occasion, come up short of our 
expectations and that, indeed, is a serious matter.
    We must keep in mind, however, as the Webster commission 
has noted, the FBI is not the only governmental entity that has 
been betrayed by one of its trusted employees. The General 
Accounting Office has reported that between 1982 and 1999, 80 
Federal Government and contractor employees were convicted of 
espionage. That is an astounding number. As the Webster 
commission observes, with the exception of the Coast Guard, 
since the 1930's, every U.S. agency involved in national 
security has been penetrated by foreign agents. In this 
information-driven age, the FBI and all governmental entities 
must learn from their own mistakes and from those of one 
another to ensure that our nation's security is not jeopardized 
and that it is protected.
    I applaud Director Mueller for the significant steps he has 
taken in his brief tenure to address the FBI's security 
shortcomings. I have the utmost confidence that he will 
continue to capitalize on the Webster commission's study to 
improve the Bureau's security programs. In the months ahead, I 
look forward to hearing more about the FBI's progress, and I am 
convinced that under the able leadership of Director Mueller, 
the FBI will remain the world's standard in law enforcement.
    I want to pay special tribute to our committee chairman for 
holding these hearings and for showing the great interest that 
he has in these matters. This is important stuff.
    Again, Judge Webster, I just want to thank you on behalf of 
the American people for all the work you have done through all 
these years and for all the help that you have given this 
committee through all these years and for all of the great 
suggestions that you have made, not just in this report, but in 
the past, as well. You have been a real asset here in 
Washington and in our country and I just wanted to personally 
pay my own personal tribute to you.
    Mr. Webster. Thank you very much, Senator.
    Senator Hatch. Thank you, Mr. Chairman.
    [The prepared statement of Senator Hatch appears as a 
submission for the record.]
    Chairman Leahy. Thank you.
    Judge as you know, the Leahy-Grassley FBI Reform Act has a 
number of provisions on FBI security. One creates an FBI 
security career program. Another authorizes counterintelligence 
polygraph screening with, I think, pretty good safeguards 
against misuse. The third formalizes improved pay for the FBI 
police force that guards its buildings. The fourth requires a 
report to Congress on FBI's computer security. And a fifth, and 
this is something that Senator Grassley has spent years 
emphasizing, provides enhanced whistleblower protection in the 
FBI.
    Would these provisions be helpful in carrying out the kind 
of recommendations you have made in your report?
    Mr. Webster. Mr. Chairman, I believe that all of those 
suggestions which are incorporated in your bill offer promise 
for greater security and greater attention to security and 
greater understanding and training of security within the FBI. 
If I am not mistaken, I think there is also a passage asking 
the Inspector General of the Department to make a 
recommendation to you with respect to whether he or someone 
reporting to him should function as a special Inspector General 
for the FBI. I do not know the answer to that one, but I will 
follow that with a great deal of interest.
    Chairman Leahy. Thank you. The USA PATRIOT Act gave the FBI 
new electronic surveillance powers, some very significant, many 
of which will sunset in 4 years. I raise this because obviously 
the question of whether they sunset or not is going to depend 
upon how they are utilized. I made clear, though, at the time 
of the passage that this committee is going to have to do some 
very extensive oversight of how these laws are carried out.
    Your report actually is one of the very first chances for 
an independent body to evaluate the FBI in the post-September 
11 situation, and your report talks about the FBI's decision to 
place highly sensitive FISA, or the Foreign Intelligence 
Surveillance Act, information on the computer system. This is a 
system that is generally, as I understand, accessible to all 
FBI personnel during the same time as they were telling 
Congress they want to be entrusted with more powers under FISA 
because the information would be kept so close held and so 
specific that we could allow an expansion in FISA, this very 
extraordinary type of wiretap and search authority, something 
that we have allowed only under very limited carve-out.
    The FBI asked for more of it, saying this would be kept 
very, very closely. And yet, we find that they have put a lot 
of that on the computer system that just about everybody in the 
FBI could get hold of.
    You gave them a poor grade in handling that. First, you say 
that the FBI's action under September 11 presented a security 
risk to FISA information, which should be corrected as much as 
possible. And second, even though it was not the focus of your 
commission, which you said had a couple of circuit judges on 
it, former Attorney General, former U.S. Attorney, independent 
counsel. You are a former U.S. Attorney, circuit judge, FBI 
Director, and CIA Director. You criticize the FBI's handling of 
FISA material because it raises potential issues of 
constitutional law and, therefore, could hinder the Bureau's 
ability to construct cases that could be prosecuted.
    I have a lot of prosecutors that tell me, and I happen to 
agree with them, that we want to get these terrorists. We want 
to prosecute them. We want to convict them. But we do not want, 
because the procedures run foul, to see the case get thrown 
out.
    So what has been the reaction of the rest of the 
intelligence community to the FBI posting of FISA information 
in this kind of a data base?
    Mr. Webster. Mr. Chairman, I cannot really speak for the 
reactions of the other members of the community other than my 
understanding that those who were interviewed expressed some 
concern and dismay with what happened.
    I am going to speculate now, which is always a dangerous 
thing, but I think in the period immediately following 
September 11, with the desire to try to come to grips as soon 
as possible with what was behind all of this and the people who 
are responsible and what other plans there might be, there was 
an effort to get information out, including FISA information, 
without the people with the best of motives having fully 
consulted the security people for the possible consequences of 
putting that material into the automated case system where it 
was available to everyone.
    The FISA statute has been extraordinarily useful on behalf 
of the national security and intelligence community and for 
prosecutions, when appropriate. I have to confess that it was 
passed just about the time I arrived in Washington and Attorney 
General Bell wanted me to come up and talk to you in support of 
it and I was not sure that this statute was necessary. I 
thought there was an implied authority in the President to 
protect our national security by ordering electronic 
surveillance of those who are suspected of espionage or of 
acting in a hostile way to the United States.
    I have since been convinced it was a great statute. It is 
serving a very useful purpose. But it needs to be protected. 
That information contains affidavits, the whole process of 
getting an authority to conduct a national security warrant, 
especially after the Keith opinion required warrants in the 
case of domestic security cases in 1972. The ``t''s have got to 
be crossed and there has to be great care and a lot of very 
sensitive information is contained in the material that goes 
into the Justice Department, as you said, and is presented to 
this special court for authorization. But then to find it 
suddenly turned loose and put in the huge file where it is 
available to other people represents some serious potential 
problems.
    I think that my own conclusion is that had we had a 
security division in place, had we brought them to the table on 
this issue and listened to their advice, we would have done it 
differently.
    Chairman Leahy. In fact, that is really my point. If you 
had the security division, they could say, look, we want to do 
this. We want to get this information out as quickly as 
possible. What are our parameters? How do we do it? That is the 
important part to me, because everybody wanted to get any other 
terrorist who might be in this country, or potentially in this 
country. We had a devastating attack. We wanted to protect 
ourselves against it. We wanted to get the people responsible. 
Obviously, some were dead, but we wanted to get anybody else 
involved with that. We knew that there had to be more. Just 
instinctively, you knew that we faced more attacks and that 
there were more people available, so you wanted to do that, but 
you want to do it in such a way to protect your assets and you 
protect your ability to get a conviction.
    If we were in a closed session, there are cases--I am sure 
you can think of some, and we would probably be thinking of 
some of the same ones--where FISA has been extraordinarily 
helpful to us, but in getting the information, if that is made 
public, it would be very obvious just where it was we got that 
information and that door would close so fast.
    Mr. Webster. That is right.
    Chairman Leahy. We would take forever to replace it. For 
example, suppose Robert Hanssen had been able to access FISA 
information right from the computer on his desk. I think it 
would be pretty obvious to everybody there would be an enormous 
amount of damage he could have done.
    So I think the idea of having--and I agree with you--the 
idea of having a security division or procedure where you could 
just go and say, look, we have got a lot of information here, 
what can we use, what can we make accessible, and what--do we 
have to follow certain procedures in who is going to have 
access, I agree with you.
    Mr. Webster. Mr. Chairman, implied in what you have been 
saying and what I think I have been trying to say is that 
sometimes, people who make these authorizations do not really 
understand what putting something into the ACS system means and 
that is where security comes in.
    Chairman Leahy. And I do not question the motives. 
Everybody wanted to get--we all had the same motives. I think 
the Nation is probably as united as any time I have seen it in 
public life. It was united to find who did this and to get 
them. But for those who are going to be prosecuted, they want 
cases that can stand up. For those who are going to have to 
continue to mine sources that we had for the coming years to 
protect us, they did not want those sources to go away. That is 
what we have to be protective of.
    Your report recommends the FBI submit an initial report and 
a report annually for 3 years on how they plan to address and 
fix the security programs. The House and the Senate Judiciary 
Committees have primary oversight jurisdiction over the FBI in 
general and over criminal espionage cases, such as the Hanssen 
case in particular. Should we be getting that report that you 
speak of, for the FBI submitting an initial report and a report 
annually for 3 years on how they plan to address and fix these 
security programs? Are the House and Senate Judiciary 
Committees the appropriate places to receive that report?
    Mr. Webster. I think so. We may have said to the 
intelligence community and intelligence committees, and I think 
that is a matter between this committee, which has worked so 
long with the FBI, to work it out.
    Chairman Leahy. They should have it, too, but----
    Mr. Webster. We think it is important that the Congress be 
in the loop here, and Senator DeWine said something we may come 
back to, but understanding what is needed and the costs can be 
very important as the use of electronic filing and electronic 
techniques becomes more the order of the day and we are seeing 
less documents and more things put in a computer system that 
perhaps in the past has addressed security after the fact. You 
should be part of the process of making sure that the money is 
available, that the FBI is not starving for modern technology, 
which is, as you know, changing every two or 3 years. If they 
are changing every 10 years, it is not going to work.
    Chairman Leahy. I have young agents telling me that they 
are looking at equipment that was antiquated when they were in 
grade school or high school----
    Mr. Webster. That is right.
    The Chairman [continuing]. Being used there, and they just 
almost have to go back and learn how to use it, and if it is 
that antiquated, it does them no good.
    My last question is this. You talk about that the FBI does 
not have a viable program for reporting security incidents to 
headquarters. Now, on paper, they are supposed to report these, 
but we found some very chilling stories from whistleblowers 
that people are afraid to report security lapses because they 
are afraid it is going to hurt their career. I know one 
employee reported a security violation and ended up basically 
getting hounded out of the job for it. We have to have better 
whistleblower protection, do we not?
    Mr. Webster. I think so. I think the whistleblower 
protection that you provided for will be very useful in 
answering that problem.
    Chairman Leahy. Thank you.
    Senator Hatch?
    Senator Hatch. Thank you, Mr. Chairman.
    Judge Webster, we are all too aware of the circumstances, 
or should I say the numerous and significant security breaches 
that have occurred in almost every government agency. You have 
recommended in your report and again here today the creation of 
a system that will enable officials in one intelligence agency 
to learn from the mistakes of the others and the successes of 
the others, as well.
    I share your view that such a system is critical and long 
overdue, but would you elaborate a little bit on such a system, 
on how such a system will operate and who would participate in 
such a system and how would their findings be communicated to 
the relevant and appropriate agencies?
    Mr. Webster. Senator Hatch, we were purposely general in 
our recommendations there. We see a very clear need to share 
experiences so that there can be a top, a standard level of 
quality, and whether that is through the Director of Central 
Intelligence or some other vehicle, we did not attempt to 
decide in our recommendations.
    I am reminded that shortly after I undertook this 
responsibility, representatives of the Central Intelligence 
Agency came down to tell me about a number of the things that 
they were doing because I knew that among other things we would 
have to confront is whether or not the FBI needed to have a 
vetting procedure which, from time to time, would check on the 
people who were in sensitive positions to be sure that they 
were still everything that we expect of special agents of the 
FBI. The CIA had a long ongoing polygraph vetting program. The 
FBI did not. It did not have any when I was there. Director 
Freeh put in place a process for polygraphing prospective new 
entrants to the FBI, but there was no vetting process.
    So I wanted to know more about it, and when they came down 
to talk to me, I thought it was interesting that they said, 
``We do not want you to make the same mistakes we made,'' and 
they had reference, I am sure, and then they said so, to the 
300-odd agents that were put on hold, because ghost special 
officers with their careers on hold because of problems in the 
polygraph examinations that they took. They recommended that we 
have a more discreet, refined kind of vetting process that the 
agents could be comfortable about, that would know was 
necessary, but they were acknowledging they have made mistakes 
and here are some of them.
    I think, in answer to your question, there has to be a 
forum where those issues at the security level can be 
acknowledged and this is what we did about it, or another 
agency can say, here is what we recommend that you do because 
we had the same experience. It is as simple as that.
    Senator Hatch. Thank you. As I stated, I am most encouraged 
by the steps that the FBI has already taken to implement some 
of----
    Mr. Webster. Yes, they have.
    Senator Hatch [continuing]. Some of the reforms recommended 
in your commission's report, and I am pleased to learn that the 
FBI intends to institute all of the commission's 
recommendations or suggested reforms. Recognizing that the 
implementation process will require both resources and time, 
are there any particular areas of improvement that the FBI 
should accord top priority?
    Mr. Webster. I suppose each of us would have probably a 
different priority list. My first priority is to see that 
security division come together and be effective, and I would 
hope that they would have direct access to the Director. At 
this stage, I believe that they have access to an executive 
assistant director. In order to signal the importance of the 
division, I think they should have access to the Director, and 
out of that security division can come a number of other 
programs.
    I put training at a high level because there really is not 
much training in security outside of the National Security 
Division, and I think that is a process that is easy to build 
into the ongoing training programs.
    Looking at specifics, the information systems that are in 
the FBI, which are in the process of overhaul, are very 
important to the future of these programs and the future of the 
FBI's ability to function well. I would hope that some of the 
problems we have identified--and incidentally, this report 
refers to some 22 appendices which are still classified and 
they go into great depth about some of the technical problems. 
Some really are over my head, but I understand the problem. I 
would hope that in the information security area, continued 
attention be given to building in and responding to these 
security issues.
    I am concerned that Robert Hanssen was able to make copies 
of about half of what he was able to deliver to the Russians 
and the Soviets without anybody noticing or caring about it and 
he was able to walk out the door with them. He was also able to 
walk out the door with individual documents. But I believe that 
it is a smaller point but very important that copies of 
classified information are just as classified as the original 
documents and the procedures have to be worked out to limit the 
ability of people to wander over to a copy machine and make 
several copies and not be accountable for them. So there is a 
certain level of accountability there.
    Financial disclosure should be implemented in the FBI. They 
are not burdensome. We have all done this. I think you all have 
done them. I know I did them as a government officer and they 
provide a vehicle for looking for anything that would suggest 
that someone is engaging in activities or receiving 
compensation from some unknown source. Those are part of the 
vetting process.
    The polygraph is important. The FBI's program is more 
ambitious and aggressive than the one we suggested, but we 
suggested what we thought was a minimum which could be easily 
accommodated to a changing culture and a changing realization 
that polygraphs are not that intrusive. I took one when I was 
Director of the FBI and I took another one as Director of 
Central Intelligence and I understand why they are necessary. I 
understand their restrictions. But I think that is important to 
build it in.
    I also believe that we should not act on just a polygraph 
alone. We should act on the polygraph plus--plus other evidence 
of aberrational behavior, that we should not take people 
offline and subject their careers to perils because of some 
blip in the polygraph process.
    I suppose that if I had my druthers, I would be trying to 
see what more could be done to enhance the reliability and 
capability of the polygraph. I do not see much evidence that a 
lot of money has been spent to improve something that has been 
around for 20 to 30 years. Since it does have problem areas, I 
would say let us try to address them, but not give up an 
important tool.
    The vetting process is a means not only of detecting 
activity but of deterring people from the temptation to sell 
out their country when they know that the chances of their 
being detected more than simply on entry into the agency are 
there.
    So those are some of the things. I know I have neglected 
other things. Document security, personnel security, 
information security, and structural solidarity are key to it. 
But I have always felt that when we have a problem, as we did 
in the Keith case, which resulted in the 98 agents who had been 
engaged in ``black bag'' jobs under what they thought were 
lawful procedures back in the 1970's, came from not properly 
informing the agents themselves and educating them. Neither the 
Department nor the FBI told them about the Supreme Court 
decision other than to close all the following case due to a 
Supreme Court decision.
    Since that time, it seems to me training is important. If 
you tell special agents what the problem is and what is 
expected of them, they are the most responsive people on earth 
in doing their duty as they understand their duty. They need to 
understand and be trained in the importance of security.
    Senator Hatch. Thank you so much. I appreciate your 
service.
    Chairman Leahy. Thank you.
    Senator Durbin of Illinois, and then we will go to Senator 
Grassley.

 STATEMENT OF HON. RICHARD J. DURBIN, A U.S. SENATOR FROM THE 
                       STATE OF ILLINOIS

    Senator Durbin. Thank you very much, Mr. Chairman, and 
thank you very much for joining us today, Judge Webster.
    I think one of the things that struck me as I got into this 
issue was the whole question of computer technology at the FBI. 
I will have to say that as a result of an oversight hearing, 
what was it, the first in 10 years or more with this committee 
that Chairman Leahy sponsored, I was really just amazed at how 
bad it is--how bad it was.
    We brought up Mr. Dies, who was in the process of trying to 
update the computer technology at the FBI, and his report to us 
was really startling in terms of the inadequacy of the computer 
resources at the agency, and he identified for us some obvious 
things which, as a person in the private sector, he was stunned 
to find, and that is that there is no e-mail at the FBI--at 
least, there was not as of a few months ago, no access to the 
Internet. The whole security aspect of this thing was obviously 
open to compromise, as Hanssen proved over and over again.
    Now, I know that there is an effort underway, Trilogy, to 
make a dramatic change in this, and it is my understanding that 
some offices have already started to update the equipment and 
such. But as you got into this, what was your findings in terms 
of the adequacy of computer resources in addition to the 
security aspect? For us to criticize the INS for sending out a 
visa to someone who was a terrorist on September 11 is one 
thing, but for the FBI to be unable to communicate even within 
its own agency, let alone to the INS and other agencies, about 
dangerous individuals raises an even larger question. What did 
you find?
    Mr. Webster. As I said before, Senator, a good part of the 
appendices deal with the shortcomings and we have identified 
those on a classified basis, so if I speak in general terms to 
you, I would say that, primarily, the computer automation of 
data programs have been under-financed for years. There is so 
much evolution in the computer world today that it is strange 
to me to think that when companies are getting new equipment 
and new procedures every two or 3 years, that the FBI would go 
for 10 years trying to get along, limp along in an area where 
data was coming in at them from all directions and from other 
agencies sharing information with them and they did not have a 
proper place to take care of it.
    The Trilogy program was an effort to kind of pull 
themselves out of the swamp and to deal with what they had, to 
add to what they already had, and to look for what they needed 
in the future, but I am not satisfied that that is going to be 
enough. I think there needs to be a Congressional partnership 
here in making sure that they have the funds and that those 
funds are spent wisely and well. Put security right in there at 
the beginning of the architecture.
    Senator Durbin. Let me just make this a matter of record. I 
agree with you, and after September 11, I kind of picked this 
as my favorite project. Let us try to update the computer 
technology at the FBI. I contacted Director Mueller as well as 
the Attorney General's office, the Vice President, and Chairman 
Leahy spoke directly to the President about this. We were 
prepared to create some waiver situations so that they could 
obtain updated technology there and not be hamstrung by our 
procurement process. We were stopped by the OMB. The OMB says, 
no, no, we do not want to see that happen. There are ways to do 
this. There are ways to accomplish it.
    Now, this was 6 months ago, and I said at the time, all 
right, prove it. Come in with the technology. Do it on a timely 
basis. Bring this kind of information technology and the 
security associated with it that might stop people like Hanssen 
in the future.
    Well, I have not heard back, but I will tell you a number 
of us are very frustrated that what we thought was a good faith 
effort to give to the FBI the tools and weapons they need was 
thwarted by another Federal agency of this administration. We 
cannot expect to win the war on terrorism fighting with 
muskets, and when we do not have computer technology at the FBI 
up to the job of worldwide and global terrorism so that it can 
be a proactive force and security in place so that we can stop 
the likes of a Hanssen in the future, then, frankly, we are 
going to diminish our capability to protect America.
    Mr. Webster. I could not agree with you more, Senator. One 
of the areas that has been near and dear to my heart, in 
response to Senator Hatch's question, I guess I did not really 
mention it, but in the computer world, it would seem to me that 
we need more trip wires and that they have the ability to do 
that, trip wires that would identify someone who is off the 
reservation.
    We used to have, back in my primordial days, we used to 
have librarians who would recognize the fact that someone was 
asking for a file, who was asking for something outside their 
range of business and would report it. We need electronic 
librarians and ones that not necessarily just go to the case 
agent. They have that capability. A case agent can look and 
say, ``Who has been looking in my case file?'' But it would go 
to a part of the security apparatus who could quietly take 
steps to find out, was there something going on here?
    Senator Durbin. Did that not happen in the Hanssen case, 
where he, in fact, compromised the password of one of his 
superiors and gave as his excuse that he was setting up some 
new technology and the superior did not even report it, really 
did not----
    Mr. Webster. Something like that. There were a lot of 
capabilities that Hanssen had identified that he could do. 
Really, he was not a hacker because he did not need to hack. He 
had access to the crown jewels and there was no vetting process 
to see whether or not that was--but these electronic trip 
wires, it seems to me, appropriately place watching guard over 
the more sensitive files, would be useful and important. They 
cost money, but I think that they are important.
    Senator Durbin. Well, when you consider Hanssen's damage to 
America, it is certainly worth the investment to put these in 
place. Do you feel, had they been in place, that we might have 
detected his activity at an earlier point?
    Mr. Webster. I think that is true to a degree. 
Unfortunately, I call him my 500-year flood. He was positioned 
unlike most every other special agent. That was his job. He was 
in an area where he had almost unlimited access. Therefore, in 
his case, I think the likelihood of detecting it sooner would 
have been through a vetting process.
    Senator Durbin. Let me ask you this. Do you feel the 
culture at the FBI can change?
    Mr. Webster. Oh, yes, I do.
    Senator Durbin. Do you think the mentality, that J. Edgar 
Hoover-Elliott Ness mentality of the past, the fortress 
mentality, do not look inside, this is our kingdom, do you 
think it is open now to change along the lines that we have 
been discussing?
    Mr. Webster. I certainly do. I think we have all been 
chastened by this experience. It is a matter of training. It is 
a matter of understanding. And then, OK, that is it, let us 
make it work. That has been my experience throughout my 9 
years.
    Senator Durbin. I think the same of the new Director and I 
hope he can achieve that.
    Thank you, Mr. Chairman, and thank you, Judge Webster.
    Chairman Leahy. Thank you. I might note, Judge Webster, 
Senator Durbin has strongly pushed for a long time for not only 
increased funding, but better computers. He has done it with 
the Vice President. He has done it with the President. He has 
done it with Director Mueller and Attorney General Ashcroft. 
And, of course, he is right. Bob Dies, who has come here and 
testified, has emphasized that, the necessity to improve it.
    The way of just checking it, a lot of places have a thing 
that if you use a pass key to go into a room, it logs in that 
it was you and the time and everything else. It is relatively 
easy to do the same. We do it on our computers and everything 
else, who went in there, and then have the people with 
appropriate security constantly checking who went where when.
    The vast majority of people are very honest within the FBI. 
They would not be there if they were not honest and dedicated. 
But it is like having the two warehouses full of goods. One has 
got locks on it and an alarm system and one has unlocked doors. 
The crime is the same to break into either one of them and 
steal things, but you know which one is going to get broken 
into.
    Senator Grassley, again, a person who has spent an enormous 
amount of time on this subject, and I appreciate your taking 
the time from your other committees to be here today.
    Senator Grassley. Thank you very much.
    Once again, we thank you for your report, and I think your 
report makes very clear that we are never going to be able to 
eliminate all espionage attempts against the United States but 
that we ought to have as a goal, quite obviously, to make it 
more difficult to spy and easier to catch the spies.
    Now, Hanssen was a spy at the FBI for 20 years. Aldrich 
Ames was one for many years at the CIA. During these periods of 
time, directors came and went at both of these agencies. You 
even had your tenure during this time. Yet, it took so long to 
detect them.
    Based on your expertise and your background in intelligence 
matters, is there anything outside of your report that we can 
do to detect these spies earlier? I ask that question in the 
chance that not every idea you considered is in your written 
report.
    Mr. Webster. Senator, one thing I would say on the side, 
because it is not technically an issue of security, which was 
our charge here, I think it is ironic that almost every spy 
that we have found, both at CIA and at the FBI, has been found 
with the aid of recruited sources of our own in other hostile 
intelligence agencies who have given us a lead that we have a 
problem. The numbers that were listed by the chairman, not only 
the names that were listed by the chairman, almost all of them, 
I think perhaps all of them were found because we had an 
aggressive program of human intelligence recruiting assets on 
the other side.
    We do not want to neglect that just by trying to lock up 
our equipment. We have got to continue that capability and 
build on it. You will not always get very much information. In 
Pilton's case, or Howard's, we called him ``Bob,'' but we went 
from a series of things with little bits and pieces to find out 
who that person was. Pilton was 9 years later that we got the 
information, but Howard earlier, and so on. So I would say, let 
us not neglect our human intelligence development in the 
interest of security.
    Vetting, to me, and by that I mean periodic assessments. 
The background investigations must be taken seriously. I have 
had the sense over the years that sometimes because of the high 
level of trust that existed between special agents, they were 
more perfunctory than they were real. I go back to what 
President Reagan used to say, ``Trust, but verify.'' If you do 
not, you are going to have long periods of time.
    Hanssen never took a polygraph. He was never really 
subjected to a serious background investigation or a financial 
disclosure. Somewhat the same in the case of Ames, and they 
were so backlogged over there that I think there were anomalies 
that were not detected in the course of his examinations.
    So we have to do things in the more sensitive areas of the 
FBI to be sure that the people on board are still on board and 
the kind of people we thought they were.
    Historically, sadly to say, as I look back on the record of 
espionage in the United States, treason, these were volunteers. 
I had a conversation with a KGB general and a man who was his 
former residente in Moscow after the end of the cold war and 
wanted to know what did we think about their capabilities 
against us, and I said, well, your trade craft was excellent, 
but you should not take a lot of credit for recruiting because 
in almost every case that I know of, the American was the one 
who picked up the phone and made the contact or wrote a letter 
or took the initiative.
    We have to know when someone is of that frame of mind 
before he has had an opportunity to do damage, or at least to 
catch him as soon as he tries it. We can watch, and we do watch 
with our matrix systems very closely hostile intelligence 
service activities in the United States to see if they make 
contact, but that will not work in every case. We have to have 
a vetting process to which officers and agents willingly 
submit, and so it must not be demeaning. It must be a logical 
way of protecting ourselves, just as drug testing is the order 
of the day for people who deal in drugs, and that is not 
intrusive, in my opinion, as long as it is kept that way. 
People understand its necessity.
    That leads me to one of perhaps my biggest question marks 
in our report that I think has to be thought through, and that 
is this. Not everything in the FBI--in fact, the majority of 
what is done in the FBI does not involve sensitive national 
security issues. If we were to impose the same level of 
security on the entire operation of the FBI, we would be in 
danger of slowing this locomotive down to an unacceptable 
level.
    And so there has to be a way of looking at classified 
information that relates to our national security that is 
different than classified information that is maybe called 
``secret'' but is purely law enforcement in nature, has nothing 
to do with our national security issues. And we have to have a 
way of building a circle around those who deal in our most 
sensitive things and they have to be willing, for the trust 
that is given to them, to accept some additional intrusion on 
their private life.
    But to do that routinely for everyone in the FBI, I think 
represents a cost and impediment. I wish I had a quick and easy 
formula for this, but I think it is there. I think it can be 
drawn and I think that the computer systems and the access and 
the need-to-know issues can be focused primarily upon those who 
have the access to this kind of information we have been 
talking about this morning.
    Senator Grassley. Let me followup on the last point you 
made. Your report revealed that after the Paris attack last 
year, senior FBI officials lifted restrictions on access to 
information in the Bureau's computer systems. Some of this 
information was FISA-related, which obviously is highly 
sensitive. I am sympathetic to the need to share information, 
especially during times like this, but my primary concern here 
is that some of this information might betray the sources or 
methods used to obtain it. In your opinion, how much is at risk 
if FISA information is shared?
    Mr. Webster. Senator, I think there is substantial risk of 
damage here. The affidavits that are offered in support of FISA 
applications for electronic surveillance can disclose the names 
of the sources of that information, many of whom are valued 
assets of this country and whose identity, if disclosed, could 
result in personal damage or death to them and loss of 
important sources of information to us.
    I just do not think security was sufficiently at the table 
when that decision was made. There was a rush to get 
information out and I think that perhaps people who made the 
judgment did not fully understand the ACS system and what that 
meant in terms of easy access and availability of information, 
and this information was allowed to float up into it. I am sure 
that in the future, the first question will be what can we put 
out for everyone that will not damage our national security or 
our important sources and our important methods.
    Senator Grassley. My last question is maybe a little too 
cynical, but do you think government agencies are destined to 
only fix internal security after a spy is found?
    Mr. Webster. That seems to be the wake-up call, 
historically. This is a unique opportunity, I think, to build 
security into the automated systems, to build it into training, 
to make sure that the work is valued and respected, and we have 
not talked enough--I think one of the Senators this morning, 
members of the committee, talked about providing a career path 
in security for the FBI. I think that is necessary, but I would 
also say that security goes out into a lot of field offices 
where they may not be able to support a large security presence 
but there has got to be an effort made to have that work 
valued.
    If people see it as an impediment to their career or are 
asked to do it on a collateral duty basis or for a time-being 
basis, they are apt to think, if they do not value the work and 
appreciate its importance, they will think that I am being 
shunted off to something and it is going to affect my career 
and I do not want to do it.
    So we need people who, just as in the Justice Department, 
who provide outstanding services in security. We need to have 
people in the FBI who see that as their career and also are 
able to train and make aware other special agents of the 
importance of their work. It needs to be respected, and I think 
that the words ``pervasive inattention'' is a fairly accurate 
assessment of what it has been up to now, and I include myself 
in that category. It needs more attention and that is through 
training and awareness and respect for the career possibilities 
that good security work can produce.
    Senator Grassley. Thank you. Thank you, Mr. Chairman.
    Chairman Leahy. Senator DeWine?
    Senator DeWine. Chairman, thank you.
    Judge your commission report, I think, raises an 
interesting question, and that is can a law enforcement 
culture, which is really grounded in the sharing of 
information, coexist with an intelligence culture, which we all 
know is really grounded in secrecy, not sharing anything and 
compartmentalizing everything.
    The British do not seem to think so. They, of course, have 
Scotland Yard domestic law enforcement, but they have split the 
internal and the external security between M5 and M6. Do you 
think we should consider doing that with the FBI, in other 
words, splitting the law enforcement and the intelligence 
functions of the FBI?
    Mr. Webster. Well, I think it is always fair to consider 
it, but my own pretty well developed judgment on it is that 
that would not be a good idea, and if I may explain. We have 
field offices all over this country. Most of them are dedicated 
to primary law enforcement. But from time to time, as in New 
Mexico, for example, for Edward Lee Howard and others, you are 
going to find national security issues.
    I think it is important that the National Intelligence 
Division be sufficiently staffed to be able to deal with 
problems throughout the country. If you started building a 
whole separate organization, I suspect that we would be starved 
somewhere along the line, in unable to fund it or the 
administration would not support that kind of funding.
    Canada tried it. It has not done well in Canada. When it 
was part of the RCMP, I think there was far much more ability 
to find things, track things all throughout Canada, and I would 
go slow on that.
    But you came very close to what I was talking about 
earlier. I would find a way of building a wall around the 
information and the data that is collected for national 
security purposes so that that information was subject to the 
highest level of security and that you did not attempt to 
impose that on the entire FBI, where we had a very substantial 
risk of people who say, this is nonsense. This is slowing us 
down. We do not need this.
    We need security throughout the Bureau, but if we can find 
a way to flag the kind of information that we are concerned 
about, the kind that Robert Hanssen was delivering to the 
Russians, inside the Bureau, I think that is the answer.
    Senator DeWine. I think that is an excellent answer. 
Basically, you are saying we need some way internally to flag 
it, to wall it off so that it does not create problems on both 
sides of the wall.
    Mr. Webster. Exactly.
    Senator DeWine. I would like for you to put your hat back 
on as former Director of CIA. As I understand it, the DCI has 
the authority over the rules and regulations regarding 
classified information, whether that information is being held 
within the CIA or the FBI. What has been your experience as far 
as how often or how well the DCI actually utilizes that 
authority and is there a way to improve that?
    Mr. Webster. My impression is that they are using that 
authority more effectively today than I did when I was Director 
of the CIA. There is a tendency--we have all gone through 
periods--I had five-and-a-half years in the Navy in World War 
II and the Korean War and had responsibility for taking care of 
classified information aboard ship. After a while, it tends to 
be burdensome, particularly if you are busy. It is important 
that those rules be understood by people who can then interpret 
them to the people within whose agencies they work and that 
they be as clear as possible and that they not be so 
technically difficult that the special agent on the street 
cannot understand them and, correspondingly, will not try to 
understand them.
    Senator DeWine. But you believe that the DCI is utilizing 
that authority more today than historically?
    Mr. Webster. That is my impression, because we are in a 
kind of war right now and I think it is important that that be 
done.
    Senator DeWine. Just post-September 11, though?
    Mr. Webster. Well, I think it was going on before that. The 
outreach to the community has been stronger. There have been, 
as you know, the counterintelligence function that I started in 
1988 is headed by a representative of the FBI so that the FBI 
has its role in this process, as well. But the agency has 
always had a big security effort and the DCI orders, I believe 
they are called, or DCI rules are coming out more regularly now 
than I remember them.
    Senator DeWine. Judge, I want to conclude by getting back 
to something I said in my opening statement, and that is that 
the next step, I believe, is for the Bureau to do a cost 
analysis of your report. When you were doing your report, how 
much did you factor in cost and were you cognizant of that? You 
had a lot of experts there. I know you did not do a dollar-for-
dollar cost analysis or item-by-item cost analysis, but that 
had to be somewhere in the back of your mind.
    Mr. Webster. It was, and most of the appendices--not most, 
but a substantial number of the appendices have to do with not 
only the capability but what is involved in maintaining them. I 
do not know that we have any specific costs. We have some clear 
statements from people we interviewed and our own conclusions 
that the FBI has been woefully starved in this area.
    There has not been a real voice for change. The FBI is one 
of the most thrifty organizations I have encountered in 
American government. They try to get along with what they have, 
but they need a lot more than they have been given and they 
have not really made their case loud enough for people to 
understand how badly they have needed it. It has been a kind of 
``get the truck working again,'' as I think we say in the 
report.
    Senator DeWine. I think your report makes that case loud 
and clear and your testimony does, as well.
    Thank you, Mr. Chairman.
    Chairman Leahy. Thank you.
    Senator Kyl?
    Senator Kyl. Thank you, Mr. Chairman. I would like to put 
my statement in the record, if I could.
    I would just ask one question of Judge Webster so that we 
can move on to the next panel. I have been watching on 
television and I have read your statement and part of the 
report.
    Turning from the Hanssen case to another that has concerned 
me, the Wen Ho Lee case, that is a situation in which virtually 
every governmental agency involved--in fact, I think I can say 
every governmental agency involved--made significant mistakes. 
The cumulative effect of which was to prevent an adequate 
investigation and prosecution, in my view, and the FBI was a 
part of that.
    One of the concerns with respect to that case was at least 
as far a I am concerned, the disconnect between the field 
office and main FBI headquarters. The inability to share 
information back and forth because of something, I do not know 
whether it is directives, it is tradition, or what, and I would 
like your comments on the recommendations with respect to 
integrating better the information at the national headquarters 
with information in the field offices and working together as a 
team on investigations. Rather than the situation which seems 
to me to have pertained, which is the local field offices doing 
their thing, in many cases, unconnected to the national office, 
and both of them know something about something but neither 
knows what the other knows or knows that they know it, and, 
therefore, investigations are compromised. Could you comment on 
that, please?
    Mr. Webster. Senator Kyl, I agree with that observation. I 
served on the National Commission on Science and Security from 
the Energy Department following the Wen Ho Lee case and we saw 
enormous examples of differences in culture and attitudes and 
between scientists and law enforcement officers and others 
trying to come to grips with what was important in that case.
    I have a better example, I think, of what you are talking 
about in some of the post-9/11 period, when people in New York 
were reluctant to put their information into the ACS system 
because they knew that then it was available to anybody. 
Whatever the motivation, besides good security, that might have 
been there, teamwork, the term you use, is vitally important if 
these things are going to succeed, and sometimes getting the 
information to headquarters will make sure that headquarters 
recognizes something that is bigger than or more involved than 
the local field office has seen. But the field office has got 
to trust the system at headquarters in order to make sure it 
does not hold things back for whatever reason.
    Senator Kyl. Could you amplify with respect to your 
commission report what you recommend in that regard to bridge 
this gap, to overcome this problem?
    Mr. Webster. Well, it was a rather complicated thing that I 
do not think we have in the FBI because they had to deal with 
the scientists' desire to know and share and the security 
effort to protect our national resources. There, they came to a 
kind of risk assessment. How much risk is there? That has some 
value in the law enforcement in the sense that if you rate the 
risk unreasonably high for everything, people will stop paying 
attention to it and that is sometimes a problem, as well, when 
people say that is nonsense.
    In fact, some journalists suspect in the military that 
things get classified just to cover mistakes. I do not think 
that is really the case in many cases, but there have been 
enough situations to warrant that kind of feeling about it.
    There has to be a rational approach to how people share 
secret, top secret, information and how they make sure that 
people who have an interest in it get a chance to see it and 
draw that judgment. Some of the problems with the FBI, there 
are a number of cases which have attracted criticism that have 
involved one person knowing but not telling or not sharing and, 
consequently, something not getting done.
    Another example over at CIA--I do not mean to criticize 
them, but the whole issue of the bombing of the Chinese 
embassy, if you recall, in Central Europe. Some people knew 
that that was a Chinese embassy and not something else, but the 
people making the maps and the targeting did not know.
    The dilemma that needs to be addressed, and it can be 
addressed, is how do we keep from giving it to more people than 
need to know but be sure that people who have a rational need 
to know do, in fact, get it.
    Senator Kyl. Well, is the answer not to necessarily have 
headquarters put out a bulletin to all district offices or 
field offices saying, ``look, we have a problem in this 
regard,'' but rather to insist on knowing what is bubbling up 
from down below? Going back to the Wen Ho Lee case, again, the 
national headquarters had certain things it was trying to look 
for. The local office, the field office in Albuquerque was 
doing certain things and they were not talking to each other 
and part of the problem with that whole investigation was that 
lack of connection.
    Are there recommendations and are there changes being made 
to address that problem, and if so, what are they? Do you know?
    Mr. Webster. Well, I think that the appendices, which are 
classified, do contain that level of recommendation. We think 
that in terms of security as distinguished from investigations, 
we have addressed it in the recommendation for formation of a 
security division. The National Security Division has a 
responsibility for making sure that on national security 
issues, local field offices are appraised of what is going on 
and expected to return information in kind for analytical 
purposes.
    On pure law enforcement, I would hope that there are not 
too many cases where headquarters does not know about 
significant developments. I do not think we want to run law 
enforcement from headquarters, but we have to have, as you say, 
that interchange of information. The big problem is this 
enormous amount of information flowing into the automated case 
system without any real control over what happens to it, who 
sees it, its reliability, and so forth.
    Senator Kyl. I want to thank you. Thank you, Mr. Chairman, 
for holding the hearing and the attention you have given to 
this, as well as Senator Grassley, and Judge Webster, again, 
for your continued great public service. We appreciate it very, 
very much and look forward to visiting with you more on this.
    Mr. Webster. Thank you, Senator.
    Chairman Leahy. Thank you, Senator Kyl. Before we started, 
I told Judge Webster that every time he tries to retire from 
public service, we do not let him. We keep bringing him back.
    In fact, the day before your report was made public, the 
FBI had also issued a report about what they have done to 
improve security. Were you able to compare what they have done 
and what you have recommended?
    Mr. Webster. I was. I think, in general, they have moved on 
and listed the things they have already accomplished. 
Throughout our investigation, we shared what we were learning 
and where we were going and no attempt to hold back. This was a 
serious thing that the FBI needed to get moving on. We wanted 
to have a report that was in depth. We looked at all the facts 
and here they are, and in some cases, I anticipated there would 
be no surprises and there were not.
    They have moved even more aggressively on the polygraph 
route. They have indicated in some of their materials things 
that are not accomplished but planned, things that are coming 
forward. I think a substantial number of those are contained in 
our report and I am glad to see there is very little air 
between us on what needs to be done. The important thing is 
that the Bureau move on it.
    Chairman Leahy. And I think that is important. I realize 
you were not asked to go through the FBI's counterintelligence 
investigation, for example, in the Hanssen case, but just 
taking what is in the press, I mean, you talk about places 
where there were warning signs that should have come up. After 
Hanssen began spying for the Russians, his wife's brother 
raised concerns about his sudden affluence. Another FBI agent 
told the security office that he thought Hanssen's wife was 
getting money from her family.
    As brought up by several here, Hanssen hacked into his 
boss's computer and then claimed he was just testing the 
system. I do not have anything classified on my computer. 
Several of us have to handle classified material all the time, 
and if we do, we go to the special committee room where that 
is. But if I found somebody hacked into my computer in my 
office, they would have one heck of an explanation they would 
have to do.
    He was caught using a password break-in program. He was 
suspended for a week because of a physical encounter with an 
FBI employee. He took a stripper girlfriend with him on an 
inspection trip to the FBI office in Hong Kong. He was known to 
persistently seek information beyond his normal need to know. 
He had official knowledge of the Felix Block espionage 
investigation before Block was somehow tipped off. An internal 
FBI study recommended looking for Russian penetration inside 
the FBI, but that was dismissed. Both the FBI and CIA focused 
their investigation on the CIA rather than on FBI personnel 
with similar access.
    There are a lot of clanging bells. It is easy in retrospect 
to go back and say, oh, my gosh, look at this thread. It is 
like reading the mystery novel and in the last paragraph, 
somebody sits up and says, but do you not remember that, and 
that pulls it all together. But, unfortunately, it is not just 
a novel you put down and you pay $25 for it. It is something 
that we are ultimately going to pay hundreds of millions of 
dollars for.
    I do not mean that as a question, Judge, but I think it is 
very wise what you have done, and in the electronic age, where 
you do not have a file that is locked up in a cabinet 
somewhere, you have a file that is suddenly on every single 
laptop in the Bureau if not handled correctly, I think it is 
very important.
    I appreciate very much your responses on the issues of 
FISA, which I think is a major one of concern to prosecutors 
and others, and I think you have given very good warning to the 
things that should be done. We all want to catch a terrorist, 
but we also want to make sure that we can catch them next year, 
too, and not just now, and that we can stop them in the future.
    Senator Hatch, unless you have something further, or 
anybody else on the committee----
    Senator Hatch. I think we have kept the Judge long enough.
    Chairman Leahy. I am glad this committee does not have to 
do the normal billing from Milbank, Tweed, and I say that 
somewhat facetiously, Judge, but just again, the country 
benefits by your willingness to take on these kinds of 
activities and I thank you very much.
    Mr. Webster. Thank you, Mr. Chairman. If I may say, I am 
very grateful to the commission members and to our staff. They 
did a wonderful job. All of us felt it was a privilege and an 
honor to be helpful and we hope we have been.
    Chairman Leahy. Thank you.
    [The prepared statement of Mr. Webster appears as a 
submission for the record.]
    Chairman Leahy. We will take a 2-minute recess while they 
reset the table.
    [Recess.]
    Chairman Leahy. Thank you very much. First, I will put the 
Webster Commission report in the record. It will be included as 
part of our record, something I should have done before.
    In this panel, Mr. Szady and Mr. Senser will be testifying. 
Mr. Watson will be here. We are going to go to 5-minute rounds.
    I would note Senator Kyl raised a totally appropriate 
question. I believe that Mr. Szady is going to testify that he 
is centralizing all the espionage cases in one section, which 
should help address the problems that Senator Kyl raised, 
appropriately raised, about the Wen Ho Lee case.
    Mr. Szady, you are on, and I appreciate you also being 
here. You have heard all of Judge Webster's testimony. 
Certainly, if there is something you want to add to that, feel 
free.
    I would also note that, following our normal procedure, you 
all will see the transcripts of your testimony. If there are 
items you feel you should have added or want to elaborate on, 
we will make provisions so you can do that. This is to be 
helpful not only to the Senate Judiciary Committee, but also 
hopefully to help the whole Senate.
    Mr. Szady, go ahead, sir.

         STATEMENT OF DAVID SZADY, ASSISTANT DIRECTOR, 
COUNTERINTELLIGENCE DIVISION, FEDERAL BUREAU OF INVESTIGATION, 
            DEPARTMENT OF JUSTICE, WASHINGTON, D.C.

    Mr. Szady. Mr. Chairman, if I could, on a personal note, I 
doubt if many people in here know where Winooski, Vermont, is, 
but it is a pleasure to testify before a fellow Michaelman.
    Chairman Leahy. What year, Mr. Szady?
    Mr. Szady. Nineteen-sixty-six.
    Chairman Leahy. You are just a few----
    Mr. Szady. Just a few years after you.
    Chairman Leahy. You are a youngster. Thank you.
    Mr. Szady. Mr. Chairman and other members of the committee, 
I would like to express my appreciation to you for inviting me 
to share my thoughts and provide with you an update on changes 
we are making to the counterintelligence program at the Federal 
Bureau of Investigation.
    I am pleased to be appearing jointly today with Kenneth 
Senser, Assistant Director of the FBI's recently established 
Security Division. By necessity, the cooperation between our 
two divisions is complementary and seamless. Our Director is 
committed to protecting the full range of U.S. national 
security interests and has made counterintelligence, along with 
counterterrorism, and prevention his highest priorities.
    Because the world has changed so dramatically, the FBI is 
making significant changes to its counterintelligence program. 
Our end goal is to more effectively and efficiently detect, 
prevent, and disrupt hostile foreign intelligence activity 
directed against the United States and its interests. The FBI 
appreciates your support as we continue to implement these 
changes across our organizations.
    First, I would like to provide a very brief assessment of 
the characteristics of foreign intelligence threats of the 21st 
century, for they provide a basis for understanding our new 
national, centrally managed counterintelligence strategy.
    The United States faces an intelligence threat that is far 
more complex than it has ever been. The threat is increasingly 
asymmetrical as it seeks to exploit the areas where there is a 
perception of weakness within U.S. national security approach 
and organization. Traditional notions of counterintelligence 
that focus on hostile foreign intelligence services targeting 
classified national defense information simply do not reflect 
the realities of today's more complex international structure.
    Foreign targeting of the elements of national power, 
including our vibrant national economic and commercial 
interests, continues to evolve. While traditional adversaries 
were limited to centrally controlled national intelligence 
services, today's adversaries include not only these 
traditional services, but also non-traditional and non-state 
actors who operate from decentralized organizations. Moreover, 
the techniques and methodologies used to target classified and 
sensitive and commercially valuable proprietary information 
march forward with the advance of technology.
    This new environment and the uncertain future that 
accompanies it present the FBI with new challenges. The FBI's 
role as the leader of the nation's counterintelligence efforts 
requires that we understand all dimensions of the intelligence 
threats facing the Nation and match them with new, innovative 
investigative and operational strategies. The FBI must 
continually assess and measure its performance against ever-
evolving threats found in these new and different environments.
    The constant parade of new technologies, the 
vulnerabilities created by them, the extraordinary value of 
commercial information, and the globalization of everything are 
but a few examples. The FBI must focus its resources on those 
actors that constitute the most significant intelligence 
threats facing the nation, wherever that might come from, and 
in all of these new arenas.
    In response to the increasingly complex intelligence threat 
environment, the FBI is taking measures that reorient its 
counterintelligence strategy, prioritize intelligence threats, 
and make the requisite organization and managerial changes to 
ensure U.S. national security interests are protected. The 
following initiatives are underway.
    We recognize that in order to mitigate the intelligence 
threats our country is now facing, we must continually redesign 
our counterintelligence program. Historically, when the threat 
lines were more clearly drawn, counterintelligence at the FBI 
was largely decentralized, with field divisions setting local 
priorities and assigning resources accordingly.
    To effectively recognize and counter the extremely diverse 
intelligence threats now evolving, a new more centralized and 
nationally directed, focused, and prioritized program is more 
effective. By centralizing our program, we will ensure the 
ability of the FBI to be more proactive and predictive in 
protecting the critical national assets of the country. 
Centralization cements accountability regarding 
counterintelligence program direction, control, and leadership. 
Moreover, a centralized counterintelligence program facilitates 
the FBI's cooperative and collaborative interaction with other 
members of the United States intelligence community. The 
counterintelligence environment must be transparent.
    Our national strategy will be totally integrated with the 
Office of the National Counterintelligence Executive to ensure 
that our efforts are focused on policy-driven priorities and 
that we are positioned to protect identified critical national 
assets. Our efforts will also be seamless with the CIA to 
ensure that our counterintelligence efforts extend worldwide.
    As part of this nationally directed strategy, I have 
undertaken a comprehensive strategic planning effort that is 
providing the FBI with the framework in which to prioritize and 
address intelligence threats. This framework is based on 
community-wide analysis and direction and recognizes that there 
can never be unlimited resources, so we must be focused on the 
greatest threats. This will better position the FBI for the 
future by changing our performance expectations, management 
practices and processes, and work force.
    The central elements of this initiative are development of 
clear strategic objectives and operational priorities in 
support of those objectives; a highly trained and specialized 
counterintelligence work force with a management team that 
reinforces counterintelligence as a specialized priority career 
within the FBI; a much stronger operational component within 
the Counterintelligence Division, to include a stronger program 
management; an ongoing system of accountability that clearly 
defines responsibility for all elements of counterintelligence; 
an enhanced communication strategy that is more effectively 
communicating counterintelligence policy, plans, and 
priorities; and greatly enhanced analytical support that relies 
more extensively on a highly specialized discipline is 
necessary.
    Accepting responsibility to prevent and disrupt foreign 
intelligence threats and espionage from threatening U.S. 
national security requires the Counterintelligence Division to 
adopt a more proactive posture. One organizational change that 
I have made consistent with this goal is the establishment of a 
Counterespionage Section within the Counterintelligence 
Division from existing base resources. This new section is 
responsible for managing all of our major espionage 
investigations. The section evaluates and prioritizes all 
existing espionage cases.
    In order to meet the challenges ahead of us, I am ensuring 
that the most important resources the Counterintelligence 
Division has, its human resources, have the appropriate tools 
available to effectively implement our mission. While the FBI 
has historically provided counterintelligence training to new 
special agents, we now need a systematic approach to a 
comprehensive counterintelligence training regimen applicable 
throughout the agent's career. We are studying this training 
program and will implement it shortly. Agents and analysts 
assigned to work counterintelligence should have a systematic 
and integrated training program.
    Analysis, as I said, is another area of my focus. 
Counterintelligence analysis is central to our program, to 
ongoing investigations and operations. I think today's 
challenges require much greater reliance on and bringing in 
much greater numbers of outside subject matter experts, also, 
to bolster our efforts in understanding.
    Information management and intelligence sharing are also 
two areas that we are improving, in concert with the directives 
established by Director Mueller regarding these subjects. The 
technology being put in place at the FBI will vastly increase 
our capability to maximize the value of what we know, and even 
more basic, to know what we know. These new technologies will 
be the thread that ties the community together.
    In summary, counterintelligence and counterterrorism are 
the FBI's leading priorities. If we are to successfully 
mitigate the asymmetrical intelligence threats facing us today 
and in the future, a new approach, new ways of thinking, and 
better technology are required. We are in the process of 
redesigning the counterintelligence program at the FBI. It will 
be much more centralized to ensure the program is nationally 
directed, prioritized, and that appropriate management and 
accountability measures are in place. The Counterintelligence 
Division will continue to work closely with the Security 
Division to ensure that our activities are complementary and 
that the FBI is able to comprehensively address any internal 
threats.
    Through our ongoing comprehensive strategic planning 
process, we are ensuring that our counterintelligence 
priorities, performance, expectation, and management practices 
are designed in a manner that is responsive to ensuring our 
national objectives. We are working to not only ensure that 
counterintelligence personnel have the best possible tools to 
conduct their work, but also to enhance the training and 
experience among counterintelligence personnel and to bolster 
counterintelligence as a specialized and vital career within 
the FBI. Thank you.
    [The prepared statement of Mr. Szady appears as a 
submission for the record.]
    Chairman Leahy. Mr. Senser?

 STATEMENT OF KENNETH H. SENSER, ASSISTANT DIRECTOR, SECURITY 
   DIVISION, FEDERAL BUREAU OF INVESTIGATION, DEPARTMENT OF 
                   JUSTICE, WASHINGTON, D.C.

    Mr. Senser. Good morning, Chairman Leahy, Senator DeWine. 
Hopefully, I will not be forced to tell you what I was doing in 
1966.
    I spoke to you initially in July----
    Chairman Leahy. You piqued my curiosity, but no, you will 
not be forced to tell.
    Mr. Senser. Thank you. I spoke to you initially in July of 
last year to discuss our assessment of the FBI's security 
program and the need to transform this program into an 
operation capable of addressing the diverse and formidable 
threats facing the Bureau. I am very pleased to be back in 
front of you today to give you our update on the progress in 
that matter, but also to commend Judge Webster for the 
extraordinarily thorough and helpful product that he and his 
commission provided.
    As I discussed in my testimony last year and as highlighted 
in Judge Webster's report, the security program at the FBI is 
in need of critical reform. Suffice it to say that every 
element of the security program requires improvement in some 
form or another. On a positive note, we have made substantial 
progress in the last year, but make no mistake that an 
incredible amount of work is still required. Very smart people 
are going to need to take time to carefully formulate and 
implement these reforms.
    I also testified during my July testimony that prior to 
Hanssen's arrest, the FBI identified seven areas that required 
critical and immediate focus. Thanks to Judge Webster, we have 
received recommendations that provide us with specific and 
sound guidance in each of these critical focus areas.
    Within my statement for the record, we identify in some 
detail the specific accomplishments we have made, as well as 
those initiatives we plan on making. I have described these in 
somewhat of a generic format in order to avoid giving our 
adversaries a more detailed plan of our countermeasures, but I 
am prepared to provide the committee with a more substantive 
briefing in a closed session.
    Immediately after Hanssen's arrest, the FBI initiated some 
interim security enhancements that we had discussed in July, 
specifically, the limited expansion of the polygraph program, 
the use of more extensive auditing in our automated case 
support system of those persons accessing the most sensitive 
FBI files, the establishment of an enhanced reinvestigation 
analysis capability, and some more generic enhancements 
designed to facilitate a change in the Bureau's culture 
relative to security, and also to elevate the role of security 
at the FBI.
    Since July, we have made a number of other noteworthy 
changes, to include, for example, in December of 2001, 
establishment of the Security Division, for the first time in 
the history of the FBI, having somebody responsible as the 
Director of Security operating at an assistant director level 
and with access to Director Mueller in order to bring forward 
issues of concern.
    We have also initiated the comprehensive review of security 
policy and have begun to build a foundation for a comprehensive 
security education, awareness, and training program. We have 
taken significant steps in building a robust information 
assurance program, hopefully to address many of the issues 
cited by Judge Webster in his report. And we have also improved 
the vetting that is done to establish trustworthiness, both 
initially and on a continuing basis for our employees. Finally, 
we have taken steps to more tightly control the information 
that is present in hard copy documents at the FBI.
    In summary, we intend to deliver not just a series of 
manuals and policies, but to effect a dramatic adjustment in 
the security culture at the FBI. Continuing security education, 
widespread security awareness, and making security an accepted 
and normal part of everyday business is our challenge.
    As I have already mentioned, this is a long-term effort. We 
will continue to carefully examine those recommendations 
supplied by Judge Webster and his commission and will carefully 
study the classified appendices that he referenced. In 
addition, we will also review the Department of Justice Hanssen 
study that we expect later this year in an attempt to evaluate 
their recommendations and ultimately build a stronger action 
plan.
    Mr. Chairman, Senator DeWine, I appreciate this committee's 
support and the support of your colleagues that you have 
provided to the FBI so that we are able to faithfully discharge 
our duty and do what we can to protect the interests of this 
great nation. Thank you.
    Chairman Leahy. Thank you very much.
    [The prepared statement of Mr. Senser appears as a 
submission for the record.]
    Chairman Leahy. I have had, actually, indirectly some 
discussion of this, but I will go directly and I will ask this 
of Mr. Watson. After September 11, we realized there is a lot 
of material, odd documents and even some electronic 
surveillances that had not been translated. I had asked both 
Attorney General Ashcroft and Director Mueller to go back and 
review things that were available to us and to them prior to 
September 11, not to destroy anything that just because it may 
have been sent may have been overlooked. But the Director even 
went on TV, issued a plea for translators. Some of these 
languages, you find in kind of a small community here in this 
country, a fairly close-knit community often, who speak the 
language. Some may even have ties to foreign governments. So if 
you are in a crunch, you have got to hire them on the one hand. 
On the other hand, you have an obvious security concern. Judge 
Webster mentioned this in his report, on page 58.
    What is the FBI now doing to check and do security and 
monitoring to make sure that we do not, in our need to get 
these translators, we do not get somebody that could create a 
bigger problem than the solution they might give us?

  STATEMENT OF DALE WATSON, EXECUTIVE ASSISTANT DIRECTOR FOR 
    COUNTERTERRORISM/COUNTERINTELLIGENCE, FEDERAL BUREAU OF 
     INVESTIGATION, DEPARTMENT OF JUSTICE, WASHINGTON, D.C.

    Mr. Watson. Senator, that question, I guess the answer lies 
into the system that we have in place to make sure, one, the 
need to get the information translated, as you well pointed 
out, as well as the security balance, and there is a definite 
security procedure that individuals go through in order to be 
hired as a translator. There are some conditions where we can 
pick up contract employees that are not going to be permanent 
FBI employees but still have the security risk. There is always 
a balance there of being able to get the information that we 
have collected translated and weigh out those considerations 
with individuals that are going to translate that material.
    Since 9/11, we have made some progress in that area and 
that is definitely a priority, not only with us, I know with 
all the other intelligence communities and we are working 
closely with the security folks to make sure that we do not 
bring someone in that translates it and steals it at the same 
time.
    Chairman Leahy. The Webster report talked about the self-
policing that can be done on these things. FBI employers or 
contractors, if they learn of a violation, just come forward 
and report it. But then you get some concerns where that is 
seen as whistleblowing and it actually gets discouraged. Do you 
feel there is more they can be doing to encourage people, if 
they think that there is a security violation, to come forward 
and report it?
    Mr. Watson. Yes, sir, and we have--which the Director is 
fully aware of and fully supports, that employees, if they 
detect inappropriate activity, security violations or unethical 
activity, that they have an obligation to report that, and 
there is a mechanism set up to report that. I know you and 
Senator Grassley are concerned about that, is that being done, 
but I can say that with my experience in the Bureau and I think 
with Mr. Szady's, I mean, I am not sure of any instance where 
anybody would look the other way on a security violation or a 
matter of ethics or a criminal violation that should not be 
reported.
    Chairman Leahy. We may want to followup on that privately--
--
    Mr. Watson. OK, sir.
    Chairman Leahy [continuing]. But let me ask Mr. Senser, you 
referred to the commission's report as a road map for the FBI, 
but you also say some of the identified vulnerabilities are 
more critical than others. Is the FBI going to accept 
everything that is in the report or what is going to happen?
    Mr. Senser. When I mentioned that some of these 
vulnerabilities were more critical than others, I was referring 
to a prioritization that has taken place in the sense of trying 
to address those gaps that could pose the most damage 
immediately, for example, the gaps in our information system 
security, where large elements of the population may have 
access to very sensitive information, and certainly 
establishment of this robust information assurance program is 
at the top of our list as one of the initiatives that we are 
trying to move forward very quickly.
    In addition, from a prioritization standpoint, the 
education and awareness of our employees, as Judge Webster 
mentioned, making sure that people understand at the beginning 
what the proper way is to handle materials and how sensitive 
they are. I also believe that in most cases, people want to do 
the right thing and if they know what that right thing is and 
understand it, then they will be more apt to comply.
    Then in addition to that, this security violation process 
and making sure, again, from education and awareness, that 
people understand where to go with their concerns and that 
there is a mechanism for centrally addressing them, tracking 
them, and taking action on them.
    Chairman Leahy. Mr. Watson, I am not going to ask Mr. 
Senser this because he cannot give himself a promotion, but 
Judge Webster and the commission would like to give him one. 
They would like to recommend elevating the position of the 
Security Director to a status that reports directly to the FBI 
Director. Is that a recommendation being considered by you?
    Mr. Watson. Yes, sir, and I think that has been proposed as 
the Security Division, and I would like to say that one of the 
things in the commission report was making security a priority. 
I can tell you from the operational side that we view that as a 
critical piece, in view of the Hanssen matter, and we fully 
support that and as a full partner and taking considerations in 
for security as well as what we are trying to do operationally.
    Chairman Leahy. I am going to give you a couple of 
questions for the record, but I want to make sure that both 
Senator Grassley and Senator DeWine have a chance to ask 
questions. I have some other questions for all of you.
    One area, and you have heard us talk about it a great deal 
here, is the question of material that may be FISA-related 
material. I cannot underscore how much attention I want given 
to this. We gave the FBI some very expanded powers, but 
assuming that with those, that there are some very, very strict 
ways of keeping track of the information. FISA has been a very 
helpful tool in going after terrorists, but I cannot think of 
anything that would more quickly destroy the ability to use 
FISA than to have the information spread all over and into 
places where, on the one hand, our own constitutional 
safeguards should not go, but then second, from our own 
intelligence security places it should not go because so many 
times it is going to be sources and methods. Without going into 
specific cases, if we were back in a secure room, you and I 
could come up with some of the exact same ones, you cannot let 
these go out.
    So I will have a specific question on it, but please, if 
you are doing any debriefing back at the home office, you can 
tell them that I am very concerned, and I know several others 
are, on this FISA issue. We want to help. We want FISA to work. 
But, boy, the rules have got to be followed.
    Mr. Watson. Senator, we are committed to following the 
rules and we understand the sensitivity of FISA information and 
how to protect that and that is a vital piece of our 
investigative efforts, and we thank you for the PATRIOT Act and 
what you allowed to do. Just let me reassure you that we are 
not wholesalingly throwing out FISA information.
    Chairman Leahy. I understand. I just want to make sure that 
we do not do it in such a way that it, in effect, is sitting 
there in the box where people can take it, I mean the 
electronic box, and----
    Mr. Watson. We understand.
    Chairman Leahy. No, I am not suggesting you are, but you 
and I could both look very quickly at some of this FISA 
material and know, just looking at it, it should not go any 
further. But if it is out the door, there are others who might 
not look at it that closely.
    Mr. Watson. That is understood.
    Chairman Leahy. Senator Grassley?
    Senator Grassley. I thank you very much. Mr. Senser, the 
first couple of questions I am going to ask you deal with the 
timing of your changes which just came out, and then I want to 
ask you about some of the things that you are planning to do 
that are not done yet. This is from your remarks.
    The question that is most on my mind is why it took until 
just last week for the FBI to announce so many reforms and 
changes for better security. The announcement, Wednesday of 
last week, was timed 1 day before the release of the Webster 
report.
    I have two issues. First, can you or anybody else here from 
the FBI answer why the Bureau did not learn from the mistakes 
of other agencies with spies, and why could the FBI not have 
years ago put in security measures across the board like other 
agencies did, like expanded polygraphs, looking at employee 
finances, and better document security. In fact, in regard to 
employee finances, I believe that Mr. Hanssen himself said if 
they had been put in place, that would have caught him. So that 
is my first question.
    Mr. Senser. I think your question is a very good one 
relative to why the Bureau did not adopt the recommendations 
that were made as part of the Ames case or Pitts or the other 
prior espionage cases, and obviously not being an FBI employee, 
I cannot specifically answer that question.
    I can tell you that I have gone back and listed those 
recommendations that came out in those previous cases and 
mapped the initiatives that we are planning and have 
accomplished against those recommendations to ensure, in fact, 
that we are going to take those into consideration. In fact, I 
have had a matrix put together, not just of the former 
espionage recommendations, but of all recommendations that have 
come out, both on internal studies and external studies of 
which we are aware, in order to ensure that no recommendation 
has gone unreviewed.
    In terms of the timing of the enhancements, as I mentioned, 
shortly after Hanssen's arrest, former Director Freeh initiated 
a number of interim security improvements, and essentially, we 
have not stopped since then. This has been a continuing process 
of making changes as we can, things that were within our 
purview, and steps to improve the security posture. As Judge 
Webster mentioned, we have worked very closely with the 
commission and his team in order to ensure that we were going 
in the right direction and that the things we were 
contemplating and proposing were not off track. So we have been 
working very carefully to try to keep this on a parallel track, 
not just waiting until the commission issued their report, but 
trying to move ahead with reforms and enhancements as the 
commission did its work.
    Senator Grassley. Then could I ask the purpose of the press 
conference last week, if all this was going on parallel to the 
report? I guess I asked the question. What was the purpose of 
the press conference, then?
    Mr. Senser. The purpose was to simply make a positive 
statement as to the steps the Bureau was taking relative to 
security.
    Senator Grassley. I guess I see it as kind of a preemptive 
strike, but let me go on to the next point, and this is in 
regard to the number of security measures that are under the 
planned part of your prepared remarks from last week, called 
``Transforming the FBI's Security Program.'' Could you tell me 
how many of these planned security changes were planned before 
the FBI received the Webster report?
    Mr. Senser. I would say--I would like to say all of them. I 
would say 99 percent of them. As I say, this is--I like to 
think of this as a joint effort between the commission and 
myself. Obviously, they did not share with me the nature of 
their recommendations per se, but we have had a very close 
relationship over the 13 months of their work and bounced lots 
of ideas off each other in terms of where we were headed.
    Many of these initiatives that we have proposed are 
included in our fiscal year 2003 budget submission in order to 
try to obtain the funding and the resource levels needed to 
actually effect these changes. So most of this has been on the 
record for some time.
    Senator Grassley. The Webster report paints a scary picture 
of the FBI where almost anyone can access almost any kind of 
information on the computer system, where insiders can get 
right out of a building with top secret papers, and where no 
one could connect the dots on Robert Hanssen's spying. I 
realize that many of the security reforms will take some time 
to take effect and really make a difference and others are 
still on the drawing board, but when we see this, we fear that 
the Bureau's security measures are not yet in place to catch a 
spy. We learned from the Hanssen case. Now, that is not saying 
that there is a spy in the FBI because I do not know that there 
is, but there is real concern about a gap until security is up 
to speed.
    How certain are you about the FBI's internal security right 
now? Would a spy be detected, do you think, with the things 
that have taken place?
    Mr. Senser. I think we are still at substantial risk 
relative to what we have to do, and again, this is going to be 
a period of time that we are going to have to build expertise 
and put the infrastructure in place to really support the kind 
of effort that is needed to successfully bring the matter under 
control. I would say certainly that with a lot of the things we 
have done, such as the expansion of the polygraph program, that 
there is a greater possibility that if there were somebody 
operating inside the FBI today, that there is a better chance 
of detecting them than there was a year ago. But certainly, I 
cannot say with certainty that that person would be detected.
    Senator Grassley. Mr. Chairman, I think what I am going to 
do is submit two questions for Mr. Senser for answer in 
writing.
    Chairman Leahy. Thank you. In fact, I will keep the record 
open for at least 24 hours so that member Senators who have 
conflicts today can submit questions.
    Senator DeWine?
    Senator DeWine. Thank you, Mr. Chairman.
    Mr. Senser, the Webster Commission report characterizes the 
Bureau's existing computer system, and I quote, as ``an old car 
broken down in a ditch.'' Congress allocated $379 million in 
November 2000 for the FBI's Trilogy initiative, but the 
commission says this sum will merely get the old car out of the 
ditch, not provide the Bureau with state-of-the-art information 
systems. How much more funding do you think is needed to 
provide the FBI with the state-of-the-art information systems?
    Mr. Senser. Well, I think there are----
    Senator DeWine. Short-term and long-term?
    Mr. Senser. Right. I think there are two issues there. One 
is the issue of this state-of-the-art information system, which 
I would have to defer to Bob Dies relative to business needs 
from an information technology standpoint.
    The second part of that question, though, deals with this 
robust information assurance program. The FBI received as part 
of our counterterrorism supplemental roughly $56.7 million to 
begin the process of building an information assurance program. 
We are currently working with the appropriations staff to 
deliver a--well, actually, we have delivered, but we are 
working with them on the spending plan for that money so that 
it can be released and that we can move forward on that.
    That is the initial investment in information assurance, 
but it is going to take outyear investment, as well, both from 
the standpoint of maintaining the improvements we have made as 
well as adding some additional improvements, and there are 
moneys in the fiscal year 2003 intelligence request for some 
capabilities that will assist us greatly in building the kind 
of program that could have potentially detected a Hanssen, the 
kinds of things such as auditing, real time intrusion detection 
capabilities, and so on.
    So, again, we have a very ambitious plan on the drawing 
board and it is going to take support into the out years to 
make that happen.
    Senator DeWine. It seems to me that the burden is on the 
FBI to tell this Congress and to tell the American people what 
it is going to take, and that is obviously a continuing burden, 
once we are beyond the publicity of the report and today's 
headlines, because these systems obviously are not built 
overnight. They are not maintained overnight. They are not 
improved overnight. So I just assume that the FBI is going to 
continue to do that.
    Let me ask you this. Is there anything in this report of 
substance that the FBI disagrees with?
    Mr. Senser. No. I mean, the fact is, as I said, that we are 
very appreciative of the work of Judge Webster and the 
commission and while certainly there are semantic differences, 
perhaps, in some areas----
    Senator DeWine. Right.
    Mr. Senser [continuing]. But the substance of the report is 
solid and we are working hard to address these issues.
    Senator DeWine. Have you done a total cost analysis? You 
talked a little bit about, or a great deal about the cost, but 
have you done a total--has the FBI sat down and said, OK, this 
is what this is going to cost? You have not had much time to do 
that, but----
    Mr. Senser. Yes.
    Senator DeWine [continuing]. As far as the report is 
concerned.
    Mr. Senser. Right. As I mentioned, we prioritized our 
approach to this knowing that time was of the essence. Once we 
identified--in fact, we had identified those seven critical 
focus areas I mentioned prior to Hanssen's arrest, but 
subsequent to his arrest, we built a prioritized approach that 
outlined 15 categories of enhancements that we felt were 
critical to pursue. Because of the, again, the fact that there 
was not much time, we staged those enhancements to get to the 
most critical, or get the most critical into our fiscal year 
2003 budget request, and as Director Mueller had testified in 
front of the Appropriations Committee, that 2003 request for 
security totals around $78,065,000.
    In terms of the big picture, however, we recognize that 
many of the things that we are going to have to explore, we are 
not going to know the full extent until we really get some 
people on board with the expertise that can look at it. Again, 
the Webster report will help us considerably there, but there 
are areas in the physical and technical security realm as well 
as the police protection side that we are going to be building 
into our 2004 request and beyond.
    Senator DeWine. One last question, Mr. Chairman. Mr. 
Senser, my understanding is the FBI has not, as of this date, 
complied with Executive Order 12968. This is the order that 
requires Federal employees and contractors to complete 
financial disclosure forms. Is that correct?
    Mr. Senser. That is correct.
    Senator DeWine. Are there plans to adopt this disclosure 
and monitoring program, as the commission's report recommends?
    Mr. Senser. Absolutely. In fact----
    Senator DeWine. Do we have a time table on that?
    Mr. Senser. Well, one of the things that Director Mueller 
did shortly after coming in was, as part of his internal 
reorganization of the FBI, looked at internal resources that 
could come to the security program and identified a number of 
positions that ultimately were sent to security. Of those, 
there is a number of positions, five, in fact, that we have 
identified to form the basis of this financial disclosure 
program. We are advertising now for people that have the kinds 
of skills in financial analysis that will allow us to develop 
the foundation.
    We have also spoken with other intelligence community 
members as well as the Department of Defense and their 
personnel security research people that have a fairly solid 
foundation in financial disclosure programs. So there is very 
definitely a plan.
    We are also working with the policy coordination committee 
structure as part of the NSC and one of their subgroups who is 
dedicated to actually establishing financial disclosure 
programs within the executive branch, because, in fact, there 
are a number of agencies, as well, that have never adopted this 
requirement and we are going to be a part of the effort.
    Senator DeWine. Do you have a time table?
    Mr. Senser. I would like to have something in place within 
the next 6 months in terms of----
    Senator DeWine. In place, meaning that I have to fill out 
the information, the process is there, you know what to do with 
it, et cetera?
    Mr. Senser. In terms of having the foundation in place, the 
infrastructure, the guidance, and being able to go out to our 
people and educate them and say, here is the basis of our 
program. This is why it is important. This is what we would 
like you to do.
    One of the lessons learned from previous implementations 
was that the financial disclosure program was not always well 
accepted and we are going to try to, again, build on that in 
order to ensure that the people understand the reasons behind 
this, what we are going to do with the information, how we are 
going to safeguard it, and that all those protections are in 
place before we begin.
    Senator DeWine. So I guess I take it from your answer--I am 
not trying to be argumentative here, but I take it from your 
answer that it is really not going to be up and running in 6 
months. I mean, you are going to be moving down the road, but--
--
    Mr. Senser. The plan is to begin implementation in 6 
months. Whether we have a fully capable program or not, I would 
say no.
    Senator DeWine. Well, we look forward to working with you 
on this and all the other recommendations. It is obviously 
going to be an ongoing problem and it does come back to money. 
It comes back to implementation and how well you all do in your 
management, of course, but it also comes back to the money. I 
think the more information that you can supply this Congress, 
the better off the country is going to be on that. Thank you 
very much.
    Thank you, Mr. Chairman.
    Chairman Leahy. Thank you.
    I want to wrap this up, but the question that occurs for 
me, and for Mr. Szady, when the FBI agent Earl Pitts was caught 
and convicted in 1997, he had been spying for Russia, he was 
debriefed. He was asked about some other spies and he stated he 
did not know for certain, but he did mention Robert Hanssen, 
who had hacked into an FBI computer, and the report that we 
have seen says the FBI did not followup on that information. 
Why not?
    Mr. Szady. You sort of summarized all the abberations a 
little while ago with Hanssen. This was one of them. When he 
was interviewed, he did say--he did not say that Hanssen was a 
spy or anything along those lines, but he did allude to the 
fact that Hanssen had hacked into a superior's computer. The 
reason it was not followed up on is because everybody was fully 
aware of that. We knew it had happened. It had happened in the 
past. We thought the explanation at that time was viable and we 
were willing to let it go at that. At the same time----
    Chairman Leahy. It did not ring a bell, why was Pitts aware 
of this? I mean----
    Mr. Szady. Well, there were----
    Chairman Leahy. And Pitts is a Russian spy, and the fact 
that he is sort of volunteering that, I mean, did everybody in 
the building know that Hanssen----
    Mr. Szady. Yes, pretty much. That is right, Senator.
    Chairman Leahy. They did a study afterward, a damage 
assessment that recommended, and I will speak generally, but it 
recommended looking for another Russian penetration in the FBI. 
That was rejected. Following Hanssen's arrest, a former FBI 
assistant director is quoted in the press as saying the study 
was right, but for the wrong reasons. The FBI and Justice 
Department have kept this classified, so without going into any 
classified details, are you satisfied that the FBI was right to 
reject this recommendation, particularly--well, were they 
right?
    Mr. Szady. Well, the investigation to find Hanssen--what we 
have to remember is there were investigations ongoing since the 
1980's. We knew we were hemorrhaging. Even after Ames, we 
realized that there was somebody else. I think it was mentioned 
here earlier that the focus went on the CIA, but all our 
analytical efforts and everything at that time pointed in that 
direction.
    We at no time, though, eliminated the FBI, which seems to 
be a story that is out there. We kept going back to the FBI as 
a possible source for this hemorrhaging. The issue was that our 
analytical effort, our reporting that we were getting from 
around the world indicated that it was more likely in the CIA, 
so we put our resources into that particular arena.
    But at no time do we ever think there is no vulnerability 
for having a spy within our midst, if you will. This is an 
ongoing problem and always will be. Espionage is a crime. So 
our focus with a new espionage section is to say you just 
cannot rest on your laurels and you cannot say there is not a 
spy in any particular government agency. And hopefully, we can 
be preventive and proactive in the future.
    Chairman Leahy. And before everybody goes back, somebody is 
looking with suspicion at everybody around and feel they have 
got to report the person who ordered borscht at lunch and not a 
good American hot dog.
    Mr. Szady. Right.
    Chairman Leahy. The vast, vast, vast majority, I mean, 
almost everybody who has worked for the FBI and the CIA are 
there because, one, they are patriotic, two, they are 
competent, and three, they are dedicated or they would find 
something else to do. There are enough difficulties with the 
job in the first place. I think the American public has to 
understand that, too. It is not as though we suddenly have an 
FBI and a CIA riddled with spies or embezzlers or anything 
else. We do not. We have some extraordinarily good men and 
women there. You know them and I know them.
    I think, though, that like in everything else, it is like 
the wonderful person who helps take up the collection every 
week at church. You still want to make sure that there are 
checks and balances in there, because unfortunately, sometimes 
there is somebody, for whatever reason, who goes bad. It is 
rarely ever ideological reasons, but if it is for the reasons 
of money or blackmail or something like that, sometimes with 
the right steps they can be more easily found.
    We will keep the record open. I want to thank all three of 
you. I know you have spent an enormous amount of time on this. 
I know you have spent a great deal of time with my staff and 
Senator Hatch's staff and others in preparing for this hearing. 
I do very, very much appreciate it. Thank you.
    [Whereupon, at 12:24 p.m., the committee was adjourned.]
    [Questions and answers and submissions for the record 
follow.]
    [Additional material is being retained in the Committee 
files.]

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REFORMING THE FBI IN THE 21ST CENTURY: REORGANIZING AND REFOCUSING THE 
                                MISSION

                              ----------                              


                         WEDNESDAY, MAY 8, 2002

                                       U.S. Senate,
                                Committee on the Judiciary,
                                                   Washington, D.C.
    The Committee met, Pursuant to notice, at 2:05 p.m., in 
room SD-106, Dirksen Senate Office Building, Hon. Patrick J. 
Leahy, Chairman of the Committee, presiding.
    Present: Senators Leahy, Feinstein, Feingold, Schumer, 
Durbin, Edwards, Hatch, Grassley, DeWine, and Sessions.

OPENING STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM 
                      THE STATE OF VERMONT

    Chairman Leahy. This hearing marks the continuation of the 
Judiciary Committee's series of FBI oversight hearings that 
began last summer. We have considered the report of former 
Senator John Danforth on the Waco confrontation, the Webster 
Commission report on FBI security in the wake of the Hanssen 
espionage case, and the Justice Department Inspector General's 
report on the disclosure of FBI documents in the Oklahoma City 
bombing case.
    We have heard the important perspectives of FBI agents and 
senior officials about what they believe the FBI must do to 
address morale and accountability problems and to improve the 
Bureau's security counterespionage programs, computer systems, 
and information management practices. The members of this 
committee have paid close attention and on April 25 we voted 
unanimously to report to the full Senate for consideration the 
FBI Reform Act of 2002, S. 1974.
    The risk of catastrophic terrorism, as we know so vividly 
from 9/11, from the anthrax attacks, and from the threat of a 
dirty bomb, all of these things have made amply clear that 
nothing is more critical to the safety of the American people 
than a well-organized and skillfully managed FBI that uses its 
vast powers and resources effectively, while adhering always to 
our Constitution and laws.
    The FBI has two key and overlapping missions: protecting 
our national security by rooting out spies and terrorists, and 
protecting our public safety by investigating criminal 
activity. This hearing looks at how the FBI can reorganize and 
refocus its efforts to perform both missions with the resources 
made available by the President and the Congress.
    You can't plan for the future unless you know what might 
have gone wrong in the past. That is why I wrote to the 
Attorney General on October 25, 2001, requesting that relevant 
material be preserved. On November 8, 2001, I recommended 
asking Judge Webster's commission to review the FBI's pre-9/11 
performance.
    While the Attorney General did not commission outside 
review, this committee has an obligation to understand what 
happened. Both Attorney General Ashcroft and Director Mueller 
have assured me that if there is material that turns up as they 
review that had been overlooked prior to September 11, it will 
be preserved.
    When Judge Webster came before us to describe the 
deficiencies in FBI security that allowed Robert Hanssen to spy 
for the Russians undetected for more than 20 years, he 
described the institutional vulnerabilities of the FBI as 
``shocking'' and ``devastating''--this from a man who is a 
former Federal judge, a former FBI Director, and former CIA 
Director.
    When the Justice Department Inspector General told us that 
widespread failures by the FBI led to the belated disclosure of 
documents in the Oklahoma City bombing case, the FBI's current 
Executive Assistant Director for Administration testified that 
the Director had made the IG's report ``recommended reading for 
all FBI management and supervisory personnel.'' I commend 
Director Mueller for doing that.
    In each case, though, before we looked at it, the response 
was to minimize responsibility. The American public was told 
Hanssen was ``too smart to get caught.'' The American people 
were told that computers, not people, caused the delay in the 
production of documents in the Oklahoma City case.
    But the Webster Commission and the IG report made clear 
that the FBI's security flaws enabled Hanssen's spying, and 
that bad judgment as well as computers contributed to the 
production delays in the Oklahoma City case. In both cases, 
even more than that, a major participating cause was the basic 
nature of the FBI itself.
    We are still in the same position regarding the 9/11 
attacks as we were before the Webster Commission and the IG 
reports. We are told that the conspirators were too clever to 
have been caught. We are being told the hijackers avoided 
detection because of meticulous planning and everything else. 
We hear that nothing short of a member of the inner circle 
turning himself in would have provided sufficient foresight to 
prevent the attacks.
    Now, these explanations may be actually right, but the 
American public has a right to ask if they are. There may be 
more to the 9/11 story than the skill of the enemy, just as 
there was more to the story of Hanssen than his intellect and 
more to the story of the Oklahoma City documents than 
computers.
    Press reports say that the FBI failed to pursue pre-9/11 
leads effectively, including warnings about two hijackers, and 
just last week a memorandum of concerns of the FBI's Phoenix 
office about the possibility of terrorists at U.S. flight 
schools months before the 9/11 attacks.
    The FBI provided the committee a single paragraph from the 
Phoenix memorandum that recommends that the FBI set up contacts 
at flight schools and other Government agencies to monitor 
certain foreign individuals. I hope the Director will help us 
get to the bottom of this incident because this is the type of 
thing I was asking about.
    Were there things that the Department of Justice and the 
FBI overlooked prior to September 11, not to make scapegoats 
out of people, but to protect us from the next September 11, 
because the only way you learn is if there was a mistake and if 
the mistake is admitted and made public and we find out what 
went wrong and we don't make the same mistake again.
    This committee certainly shouldn't be hearing about some of 
these mistakes coming to light only when we read it in the 
paper. I am getting somewhat concerned when some of these major 
things I find, while highly secret, I suppose, I read about on 
the front page of the New York Times and then I get a briefing 
subsequently.
    As I said before, if that is the way it should be, then 
each day mark a copy of the New York Times top secret and 
deliver it to me and I will get the information faster, I will 
get it in more detail and, of course, I get that wonderful 
crossword puzzle.
    We will want to look at the idea of deemphasizing things at 
the FBI. Are there too many carjackings, too much domestic 
violence, too many simple drug possessions, too many driveby 
shootings? Part of that is our fault; we have Federalized far 
too many things as it is.
    I know the Director is confronting hard decisions about how 
to refocus the FBI's mission and reorganize the Bureau. We may 
ask tough questions about those decisions, but if history 
teaches us anything, it is that asking the tough questions is 
in the best interests of the American people.
    Frankly, Director Mueller, if we didn't have a lot of 
confidence in you, we wouldn't be spending the time to have 
these hearings.
    I will put the remainder of my statement in the record.
    [The prepared statement of Senator Leahy appears as a 
submission for the record.]
    Chairman Leahy. Mr. Thompson, please feel free to go ahead.

 STATEMENT OF HON. LARRY D. THOMPSON, DEPUTY ATTORNEY GENERAL, 
            DEPARTMENT OF JUSTICE, WASHINGTON, D.C.

    Mr. Thompson. Chairman Leahy, members of the committee, 
thank you for inviting me to appear today to review our 
progress in strengthening the Federal Bureau of Investigation. 
This task is among our preeminent and most urgent missions at 
the Department of Justice because of the FBI's central role in 
preventing and disrupting terrorist attacks against our 
homeland.
    The Department's success in this effort is critical to 
restoring the full confidence of the American people in the FBI 
and to enable the FBI to fulfill its counterterrorism mission 
and its many other important missions with distinction.
    On June 20 of this year, the Attorney General directed the 
Justice Department's Strategic Management Council to conduct a 
comprehensive review of the FBI and to make recommendations for 
reforms. The Strategic Management Council is a group that I 
chair, composed of senior Justice Department officials, 
including the FBI Director and heads of other major Justice 
Department agencies.
    The Attorney General gave three specific directives to us 
in performing this review. First, he directed that a private 
consulting firm be hired to conduct a management study of the 
FBI, with particular attention to the issues of information 
technology, personnel management, crisis management, and 
performance appraisal.
    Second, the Attorney General directed that a wide array of 
views be solicited from individuals and organizations within 
and outside the Justice Department, including Congress.
    Third, the Attorney General directed that we take into 
account three other reviews then underway regarding the FBI--
the Webster Commission's review of the FBI's internal security 
practices in the wake of the Hanssen espionage matter, the 
Inspector General's investigation of that same matter, and the 
IG's study of the FBI's document-handling procedures in the 
Oklahoma City bombing case.
    As directed, the Department retained a management 
consulting firm last July to conduct this review. The 
consultants conducted an extensive analysis of the Bureau, 
including interviews with a wide variety of FBI personnel and a 
thorough examination of the FBI's information technology 
infrastructure. The consultants then submitted a report for 
consideration by the Department's Strategic Management Council.
    To fulfill the Attorney General's directive to solicit a 
wide range of informed opinion, my staff and I conducted 
informal interviews with a broad cross-section of individuals, 
including, among others, former Attorneys General and Deputy 
Attorneys General, former FBI Directors and Deputy Directors, 
Members of Congress and their staffs, leaders of organizations 
representing State and local law enforcement authorities, heads 
of other Federal law enforcement agencies, and current senior 
Justice Department officials, including a number of United 
States Attorneys.
    Mr. Chairman, in addition, we have carefully examined the 
Inspector General's final report concerning the belated 
production of documents in the Oklahoma City bombing case, as 
well as the report of the Commission for the Review of FBI 
Security Programs, chaired by Judge Webster. We anticipate 
receiving the Inspector General's report concerning the Hanssen 
case in the next few months, but we have already received 
preliminary comments from the IG's office regarding FBI 
internal security practices.
    Now, although we began work on this project immediately 
following the Attorney General's directive in July of 2001, the 
terrorist attacks of September 11 changed both our timing and 
our perspective. Those attacks brought into immediate focus the 
need to intensify our counterterrorism efforts and accord an 
even higher priority at the FBI to the counterterrorism 
mission.
    Moreover, the attacks caused us to shift our focus from 
investigating crimes with an eye toward prosecution to 
detecting, preventing, and disrupting terrorist plans. We are 
now in the process of developing specific recommendations for 
the Attorney General, Mr. Chairman. That process is still 
underway. However, we have not yet formalized our 
recommendations to the Attorney General.
    While Director Mueller already has initiated improvements 
at the Bureau in a broad range of areas, I would particularly 
like to commend him for the measures that the FBI has 
instituted to strengthen its counterterrorism capabilities.
    The FBI's Joint Terrorism Task Forces have been expanded to 
47 field offices, and by August of this year will be operating 
in all 56 field offices. The JTTFs have effectively merged the 
resources of a constellation of Federal, State, and local law 
enforcement agencies through cooperative information-sharing.
    Making use of the PATRIOT Act's provision expanding 
information-sharing, the FBI now communicates more efficiently 
and successfully in disseminating critical, time-sensitive 
information about the threat of terrorist attacks to State and 
local law enforcement, as well as other Federal agencies.
    For example, the FBI's NCIC data base, accessible by over 
650,000 State and local law enforcement officers throughout the 
country, has been expanded to include the names and identifying 
information of subjects of domestic and foreign terrorism 
investigations. The FBI is expediting security clearances for 
appropriate State and local law enforcement officials.
    The FBI has also established a new Office of Law 
Enforcement Coordination to institutionalize information-
sharing and coordination with State and local officials. The 
FBI also has recently established a College of Analytical 
Studies and an Office of Intelligence, and has committed to 
hiring more than 100 intelligence analysts to enhance its 
ability to gather, analyze, and share national security 
information. In addition, Mr. Chairman, the FBI has already 
begun to take steps to enhance its internal security procedures 
and modernize its information technology infrastructure. Once 
we have completed our review, we will forward our 
recommendations to the Attorney General.
    We look forward to continuing to work together with this 
committee to sustain the FBI's as our bulwark in the defense of 
our freedom. This will be a detailed and demanding task 
requiring a dedication to persevere long beyond September's 
flush of fury and grief. We at the Department of Justice are 
committed to this effort, not only to begin it, but to follow 
through and achieve our goal and the goal of Director Mueller 
to restore the FBI to its proper place as the preeminent law 
enforcement agency. Accomplishing this objective is clearly in 
our national interest.
    That concludes my prepared comments and opening statement.
    [The prepared statement of Mr. Thompson appears as a 
submission for the record.]
    Chairman Leahy. Thank you very much.
    I think before we start questions, Director Mueller, why 
don't you go ahead, sir?

  STATEMENT OF HON. ROBERT S. MUELLER, III, DIRECTOR, FEDERAL 
  BUREAU OF INVESTIGATION, DEPARTMENT OF JUSTICE, WASHINGTON, 
                              D.C.

    Mr. Mueller. Thank you, Mr. Chairman. If I could, I want to 
take a moment just to thank, because I have the opportunity to 
do so, those who participated in the investigation of the pipe 
bomber, Helder, who was arrested yesterday, particularly State 
and local law enforcement, who did just a terrific job together 
with ATF and other agencies in identifying the person who was 
responsible and tracking that individual down. I want to thank 
our colleagues in State and local law enforcement for the 
cooperative effort we had in resolving that situation.
    Mr. Chairman, the FBI faces daunting challenges from an 
increasingly volatile world situation. Terrorists at home and 
abroad threaten U.S. interests at unprecedented levels. Foreign 
intelligence services continue to target U.S. secrets and 
technology, often for their own country's economic advantage. 
Cyberspace is threatened by increasingly malicious criminal 
activities. Organized crime of all types operates without 
regard to geographic borders. And, most obvious, the tragic 
events of September 11 have changed the American landscape 
forever.
    Responding to these challenges requires a redesigned and 
refocused FBI--imperatives reinforced by the recent findings of 
Inspector General Fine and Judge Webster. We must refocus our 
mission and our priorities, and new technologies must be put in 
place to support new and different operational practices. We 
must improve how we hire, manage, and train our work force, 
collaborate with others, and manage, analyze, share, and 
protect our information. All will be necessary if we are to 
successfully evolve post-9/11. Most would have been necessary 
even absent 9/11.
    I believe that we all recognize that given the scope and 
pace of needed change that the FBI is in a period of 
transformation. This transition is not only organizational and 
technological, but also cultural. I am more impatient than 
most, but we must do these things right, not simply fast. 
Refashioning a large organization takes not only a reformer's 
zeal, but also a craftsman's patience. The task of transforming 
the Bureau is a national priority and worth the large 
expenditure of effort by all of us involved.
    Nevertheless, despite the large scope of the challenge, I 
believe we are making progress on all fronts. I very much 
appreciate your recent comments, Mr. Chairman, when you said 
that ``The men and women of the FBI are performing the task 
with great professionalism at home and abroad. Americans have 
felt safer as a result of the full mobilization of the FBI's 
dedicated Special Agents, its expert support personnel, and its 
exceptional technical capabilities,'' because, as you have 
indicated, Mr. Chairman, it is our people who are our greatest 
asset.
    Change has many dimensions. We are not only structurally 
different, but we are fundamentally changing our approach in a 
number of areas, most notably counterterrorism, 
counterintelligence, and technology.
    As the committee knows, many of these initiatives are works 
in progress, with final decisions still to come. Currently, I 
am working closely with Deputy Attorney General Thompson, the 
Attorney General's Strategic Management Council, and our own 
executives on all of these issues, and I anticipate being in a 
position to discuss them in depth with you in the coming weeks. 
I am also meeting with our Special Agents-In-Charge for the 
third time next week to consult with them as we continue to 
work through the complex issues inherent in remaking the FBI.
    Central to any successful structural change at the FBI is 
new technology. As this committee knows from prior hearings, 
our information infrastructure is far behind current technology 
and it cannot support the robust analytical capacity we need.
    Fortunately, Congress has provided us substantial funding 
and we are deploying new hardware and networks on an 
accelerated schedule. Having to so dramatically replace the 
entire infrastructure rather than make incremental 
improvements, as is common in the private sector, makes the 
replacement process more difficult. I am continuing to bring in 
extremely talented individuals to assist in this endeavor, and 
will keep Congress regularly advised about both the progress we 
make and the difficulties we encounter.
    Just as we change our technology, we must reshape and 
retrain our work force. Operating within a culture that most 
jobs were best done by agents, former Director Freeh began 
changing that nation and we are accelerating this approach. We 
are hiring subject matter experts in areas like IT, foreign 
languages, internal security, area studies, engineering, 
records, and the like.
    There has also been much in the media about coordination 
with State and municipal authorities, what is commonly referred 
to as information-sharing. After a series of meetings with our 
law enforcement colleagues and State homeland security 
directors, it became clear that our history of solid personal 
relationships alone was not addressing the basic information 
needs of our counterparts. They have our attention and we are 
doing much better. Adding 650,000 officers to our efforts is 
the only way to make this truly a national effort, not just a 
Federal effort.
    To move forward on this broad range of issues, we took a 
significant step in the process of change with a major 
reorganization of the FBI. The first phase established four new 
Executive Assistant Directors who report directly to me and 
oversee key areas of our work: counterterrorism and 
counterintelligence, criminal investigations, law enforcement 
services, and administration.
    This structure should reduce the span of control of the 
former Deputy Director position, which was a management concern 
raised here on Capitol Hill and in internal and external 
reviews of the Bureau. These changes also have increased 
accountability and strengthened executive-level management of 
day-to-day operations, and permitted a greater focus on 
strategic management issues.
    This reorganization addressed a number of significant 
issues, many of them raised before this committee in previous 
hearings. We created a stand-alone Security Division, headed by 
an experienced professional from the CIA. We included in the 
reorganization a Records Management Division, lead by an 
experienced records expert who also has appeared before this 
committee.
    We also have established an Office of Law Enforcement 
Coordination that will not only improve relationships and 
information-sharing with State and local police professionals 
and others, but will also help the FBI tap into the strengths 
and the capabilities of our partners. We are hiring High Point, 
North Carolina, Police Chief Louis Quijas, an experienced 
executive, to head this new office.
    At the same time, the ongoing reorganization responds 
directly to the events of September 11 by putting a 
coordinating analytic umbrella over counterterrorism and 
counterintelligence. The new structure creates the Office of 
Intelligence, which will focus on building a strategic analysis 
capability and improving our capacity to gather, analyze, and 
share critical national security information, an initiative 
supported by our new College of Analytical Studies at Quantico.
    The continuing reorganization also creates a new Cyber 
Division dedicated to preventing and responding to high-tech 
and computer crimes which terrorists around the world are 
increasingly exploiting to attack America and its allies. Our 
old approach was fractured and not well-coordinated. This new 
Cyber Division will move elements of the Criminal Investigative 
Division and the National Infrastructure Protection Center into 
one coordinated entity. This change will bring together various 
cyber initiatives and programs so that we are better focused, 
organized, and coordinated in working with our public and 
private sector partners.
    We are now in the second phase of our reorganization. As 
part of this phase, we are developing a comprehensive strategy 
to permanently shift resources to supplement the substantial 
new resources Congress has already provided in the fight 
against terrorism and in support of our prevention effort.
    Given the gravity of the current terrorist threat to the 
United States, the FBI must make the hard decisions to focus 
its available energies and resources on preventing additional 
terrorist attacks and protecting our Nation's security.
    At the same time, I want to assure you and others in 
Congress that we will continue to pursue and combat 
international and national organized criminal groups and 
enterprises, civil rights violations, major white-collar crime, 
and serious violent crime, consistent with the available 
resources and the capabilities of, and in consultation with, 
our Federal, State, and municipal partners.
    We believe the changes to date and those that will be 
proposed in the near future are vital to ensuring that the FBI 
effectively satisfies its national security, prevention, and 
criminal investigative missions. They represent important steps 
in the difficult process of change.
    What emerged from the events of 9/11 leaves no doubt about 
the need or urgency for change. As you pointed out, Mr. 
Chairman, in your opening remarks, our investigation of 9/11 
paints a sobering portrait of the 19 hijackers and makes clear 
that they carried out their attacks with meticulous planning, 
extraordinary secrecy, and extensive knowledge of how America 
works.
    While here, the hijackers did all they could to stay below 
our radar. They contacted no known terrorist sympathizers, they 
committed no crimes, they blended into the woodwork. In short, 
the terrorists managed to exploit loopholes and vulnerabilities 
in our systems to stay out of sight and to not let anyone know 
what they were up to, beyond, as you pointed out, a very closed 
circle.
    The patience, skill, and exploitative approach used by the 
hijackers means that our preventive efforts must be massive, 
globally collaborative, and supported by ample technology and 
analytical capability. It means that the information possessed 
by every agency, both here and abroad, both Federal and local, 
must go into the multiagency prevention mix and be acted upon.
    And it does mean, Mr. Chairman, that we need to look at the 
lessons of the past and learn from those lessons of the past 
and make certain that we do not repeat them, and to the extent 
that there are organizational or institutional weaknesses or 
failures, remedy those institutional weaknesses or failures.
    Now, in response to 9/11, and with an eye toward preventing 
future attacks, we have strengthened ties with the Central 
Intelligence Agency. We have placed key staff in each other's 
command centers. We are members of the Foreign Terrorist 
Tracking Task Force, and as I believe the Deputy Attorney 
General pointed out, we have expanded the number of Joint 
Terrorism Task Forces around the country, which include both 
Federal as well as State and municipal officials.
    Perhaps as important, within the FBI we have centralized 
accountability within the counterterrorism program under a new 
assistant director. Among the new programmatic tools at his 
disposal will be the Financial Review Group to focus on 
disrupting the flow of financial resources to terrorists, the 
Telephone Applications Group, and new data-mining capabilities. 
We are also establishing flying squads so we have the 
flexibility to send agents wherever they are needed when a 
particular threat or crisis arises.
    But foremost among the lessons I think we have learned in 
retrospect is the need for a substantially greater and more 
centralized analytic capability, resident at headquarters, but 
available anywhere in the world, available to anyone, anyplace 
in the world who is combatting terrorism.
    We need a capacity with ample resources, better technology 
and better training, one that is better intertwined with other 
agencies, domestic and foreign, Federal and local, and all the 
information that they may possess.
    We are designing our new counterterrorism program and 
technology, standing up an Office of Intelligence, changing our 
training at Quantico, and hiring subject matter expertise with 
that exact premise in mind. The capacity must be in place to 
permit every piece of information from every source to be 
rapidly evaluated from an analytical perspective.
    It is also important, as we search for ways to improve our 
Nation's capacity to prevent terrorism, for America to look at 
these attacks in context. The terrorists took advantage of 
America's strengths and used them against us. They took 
advantage of the freedoms we accord to our citizens and guests, 
particularly freedom of movement and freedom of privacy. As 
long as we continue to treasure our freedoms, we always will 
run some risk of future attacks.
    In addition, the terrorists also took advantage of the 
openness of our society. Fifty million people, Americans and 
guests, entered and left America during the month of August 
2001, the month preceding the September 11 attack. The vastness 
of this number highlights the dynamic openness of our society. 
It is also the source of our economic strength and vitality.
    But this openness brings with it vulnerabilities, as 9/11 
so terrifyingly showed. America will continue to be free and 
open, and we at the FBI believe that our job is to protect 
those freedoms, not reduce them in the cause of security. 
However, these attacks highlight the need for a different FBI, 
a more focused FBI, a more technologically adept FBI, an FBI 
that is more reliant on outside expertise and better equipped 
to process and use the vast quantities of information available 
to us.
    As I finish, Mr. Chairman, let me just say that I and the 
27,000 men and women of the Bureau were as devastated as 
anybody by the attacks of September 11 and remain deeply 
affected. But with this has come the conviction to do 
everything within our power to reduce the risks that Americans 
run in the exercise of their freedoms.
    It is to this goal that all of the reorganization, reform, 
technology, and new personnel are committed. But ultimately, 
standing behind all the capabilities that we have now and that 
we are working to build is a cadre of FBI professionals, men 
and women who exemplify courage, integrity, respect for the 
law, and respect for others. We are extremely proud of how they 
have performed over the past 8 months. As, Mr. Chairman, you 
have indicated, they have worked long days and nights, 
sacrificing time with their families to get the job done. It is 
an honor to appear before this committee representing those 
27,000 individuals.
    Thank you for according me the time, Mr. Chairman, for my 
statement.
    [The prepared statement of Mr. Mueller appears as a 
submission for the record.]
    Chairman Leahy. Thank you, Director, and I agree with you; 
it is an honor to represent them. We have some very fine men 
and women there. I know many of them, nowhere near as many as 
you do, but we should be very proud that they are there.
    You were on the job less than a week before the 9/11 
attacks. You handled that crisis as though you were born to the 
job, even though that is not the job you wanted to have, none 
of us wanted to have, anything happening that terrible. I have 
talked to you a number of times since that day. This is your 
first formal appearance before the committee and I just wanted 
to use the opportunity to commend you for the way you have 
taken charge at the FBI. I also want to commend Attorney 
General Ashcroft for the support he has given you, and Deputy 
Attorney General Thompson.
    I want to commend the FBI for the swift arrest of the young 
man who has now been charged with placing pipe bombs in 
mailboxes across the Midwest.
    I appreciate what you said about State and local government 
and other Federal agencies who work with you. Not only is it a 
fact, but I know they are going to appreciate you commending 
them for that.
    I know that a lot of postal workers and Americans were 
vastly relieved when they checked the mail this morning, which 
made me think of another investigation near and dear to my 
heart, the anthrax investigation. As I said earlier to you, it 
is like the Mark Twain character. Now that I have received one 
of the anthrax letters, and the Mark Twain character being 
ridden out of town on a rail, if it wasn't for the honor, I 
would just as soon walk.
    I think it is important for the American people, and the 
Postal Service employees in particular, to know that the FBI is 
expending enormous resources on finding the murderer who sent 
the anthrax letters. And that person is a murderer; numerous 
people have died.
    On November 9, the FBI made public a profile of the 
suspect. Since then, you have engaged the help of the 
scientific community. You have collected Ames strain samples 
from almost 20 sources. You have done hundreds, actually 
thousands of interviews. You have done genome sequencing, 
carbon dating, reverse engineering.
    Following all the interviews and the tests, have you 
changed the profile of the suspect that the FBI came out with 
last November?
    Mr. Mueller. Well, Mr. Chairman, the profile that we came 
out with then was based on certain information that we had at 
that time. The results of additional interviews, the results of 
the tests that we have done to date--many of them are 
preliminary--have not warranted at this time a revision of that 
profile.
    I should say that as the investigation does on--I am 
occasionally asked where is the investigation, where are we in 
the investigation? I want to assure you and the public that it 
is not in any way stalled. Everyday, we receive new leads with 
regard to potential individuals, and we have an ongoing, very 
thorough laboratory investigation undertaken.
    Unfortunately, the letter that had most of the anthrax was 
what has become known as the ``Leahy letter,'' but that has 
enabled us to conduct tests that, prior to receipt of that 
letter or finding that letter, we were unable to perform. Those 
tests are ongoing and are very helpful to the course of the 
investigation.
    I mention the profile because FBI Assistant Director Dwight 
Adams, the new head of the FBI Lab, has been very helpful to me 
and my staff. He has explained a lot of the complex tests on 
the anthrax sample. The FBI has had to rely on scientists 
familiar with anthrax and bio-weapons research. It is not 
something that normally--well, to my knowledge, has never come 
before the Bureau before.
    But that may be the same community from which the anthrax 
murderer comes. He works in a lab, has a scientific background, 
is comfortable working with extremely hazardous materials, and 
so on. Some scientists have stated publicly that the 
perpetrator may be one of their own.
    Are we going to have to reach a point where the FBI can 
develop more of this expertise on its own? And I don't mean 
that as a criticism, because nobody has ever seen this sort of 
thing come up before.
    Mr. Mueller. We are in the process of developing our 
expertise. I will tell you we have changed the recruiting 
profile, for instance, to include scientists and others with 
scientific as well as computer backgrounds, for exactly this 
reason. We are developing our expertise in the laboratory as we 
go along.
    However, with something like this where we come to find 
that there are various scientists with various views, we have 
found the best way to obtain the best qualified laboratories 
and individuals is to pull together a group of individuals 
highly respected in their fields and attain names from them, 
and then discuss with particular laboratories and particular 
scientists the tests that they would perform.
    One thinks at the outset of an investigation like this you 
can go to one scientist and that particular scientist will have 
all the skills necessary to tell you what you need in order to 
conduct the investigation. But what we find is you need 
different skills in different scientists, different areas of 
expertise to look at the DNA, the genetic makeup, the chemical 
makeup, and the like. Accordingly, when we are faced with a 
situation such as this in the future, I think the model that we 
have developed here is probably the model we will follow in the 
future.
    Chairman Leahy. Last week, a wire service reported that 2 
months before the September 11 attacks, the Phoenix Office of 
the FBI recommended contacting flight schools nationwide where 
Middle Easterners might be studying. The FBI has provided the 
committee a single declassified paragraph from the otherwise 
classified Phoenix report that recommends the FBI set up 
contacts with flight schools and other government agencies to 
monitor certain foreign individuals coming into this country to 
attend these schools. The paragraph specifically references 
certain suspicions about how these flight schools were being 
used.
    Can you tell us what the suspicions were and whether any 
actions were taken in response to the Phoenix report?
    Mr. Mueller. Mr. Chairman, the Phoenix electronic 
communication contains suggestions from the agent as to steps 
that should be taken, or he suggested taking to look at other 
flight schools. It was based on an investigation that this 
agent and others in Phoenix had conducted and were conducting, 
and to date is not over.
    In the course of that investigation, the agent determined 
that there were individuals who were looking at flight schools, 
as well as other airline academies, for a variety of positions; 
yes, pilots, but also perhaps as roles in security or elsewhere 
in an airport.
    He made a recommendation that we initiate a program to look 
at flight schools. That was received at headquarters. It was 
not acted on by September 11. I should say in passing that even 
if we had followed those suggestions at that time, it would 
not, given what we know since September 11, have enabled us to 
prevent the attacks of September 11.
    But in the same breath I should say that what we learned 
from instances such as that is much about the weaknesses of our 
approach to counterterrorism prior to September 11, and let me 
spend a moment, if I could, to describe what I perceive to be 
some of those weaknesses.
    First, we in the FBI have been a reactive organization, 
generally, as opposed to a proactive organization. That comes 
because we perceive ourselves as being law enforcement. We 
start from the presumption of we gather evidence and then when 
we have enough evidence, we arrest people and prosecute them. 
In the future, we have to be more proactive. We cannot wait 
until we have evidence of a crime having been committed, but 
have to take what evidence we have and make predictive 
observations to avoid the next attack.
    Second, one of the lessons learned is that we are a 
dispersed organization. Our headquarters in the past has been a 
coordinating entity, with our SACs and the agents in the field 
doing all of the investigation. In the future, we have to 
particularly centralize intelligence-gathering, intelligence 
analysis, and intelligence dissemination from headquarters, 
which brings me to the third thing.
    Prior to September 11, we did not focus as we should on our 
analytical capability, understanding that we have to take every 
piece that may be provided to us and put it in a larger 
framework, in a larger puzzle.
    We have changed dramatically to address some of these 
shortcomings. We have beefed up headquarters, with the 
understanding that the Counterterrorism Division and the 
Assistant Director must not just coordinate, but direct and 
manage investigations in the future, so that when something 
like this occurs, when there is a suggestion made, we would 
then pursue it, and pursue it aggressively. We have beefed up 
our analytical capability, which includes individuals, 
analysts, and have sought even more analysts. Part of beefing 
up our analytical capability quite obviously is the technology 
which we also have sought. So we have used instances like this 
in order to try to reshape and redefine how we address 
counterterrorism.
    Chairman Leahy. I will come back to this, and I have some 
questions for General Thompson, too, but I will yield to 
Senator DeWine, going on the usual early bird rule.
    Senator DeWine. Thank you, Mr. Chairman. I do have to go to 
the Intelligence Committee. I appreciate it very much.
    Thank you for joining us. We appreciate it very much. We 
appreciate the work that both of you are doing.
    Mr. Director, you and your team are really redefining the 
role of the FBI. I don't know of any FBI reorganization in my 
lifetime that that has shifted the FBI's focus to such an 
extent.
    I think as you lead this change that your natural 
inclination for candor will work to your advantage because you 
are faced with setting priorities every single day. You have 
had to already make some horribly difficult and tough choices.
    I think, though, that it is very important for you to 
continue, to involve the American people in that debate and 
that setting of priorities. As you shift thousands of agents to 
this new war effort and as the posture of the FBI changes, 
maybe forever, there are going to be things that simply will 
not get done. I think it is important for this Congress to know 
what is not getting done and for the American people to know 
what is not getting done.
    My information would indicate that your work on white-
collar crime, for example, is not getting done to the extent 
that it previouly was being done. My information would indicate 
to me that, in the area of anti-drug efforts, you are not able 
to do what has been done in the past.
    When you are dealing with the anti-drug problem, the 
American people may say, well, local law enforcement can do 
that. They do that every day. We know that. But what is 
important for the American people to understand, and what I 
would like you to comment on, is the unintended consequence of 
shifting resources away from the long-term work that your 
Department does on drug cases--you are the ones who do the 
long-term work with informants and work these cases for months 
and months, and sometimes for years. That work leads you and 
other law enforcement agencies to identify other violent 
criminals. So you are not going to be able to get to those 
violent criminals because you are not doing the drug work.
    I would just like you to comment on that. I don't have any 
problem with where you are going with priorities, but I think 
we all need to know what the consequences of these decisions 
are. I would just like for you to comment and if you disagree 
with the premise, please say so, as I know you will.
    Mr. Mueller. Starting off with your noting that we have not 
been doing particularly since September 11 all that we had been 
doing in white-collar crime and narcotics prior to September 
11, that absolutely is true because the investigation after 
September 11 required almost half of our agent population.
    I mean, we had approximately 6,000 agents working on the 
investigation in the weeks and immediate months following 
September 11. We also put together a substantial task force 
operating out of Washington, D.C., to address the anthrax 
threats. That quite clearly has meant that agents who would be 
doing other things would not be able to work on, say, white-
collar or other types of programs.
    I will tell you that since September 11, as we have run 
through in excess of 300,000 leads, the numbers assigned to 
counterterrorism have dropped rather dramatically and we are 
currently down to around 4,000, maybe 3,500 to 4,000 that are 
still working terrorism matters.
    What I have been engaged in for several months is looking 
at a three-stage process and reassigning resources, it seems to 
me, that we need to determine exactly what number of resources 
we need to address counterterrorism around the Nation. I have 
sought the input and received the input from the special 
agents-in-charge of the various divisions so that I know what 
in their minds they think they need to discharge the 
counterterrorism responsibilities. It goes without saying, 
however, that to the extent that we have any lead in 
counterterrorism that should be followed up, every SAC should 
make that the first priority regardless of what we do down the 
road.
    The first part of the process or the equation was to 
determine how many additional agents we need to do 
counterterrorism. Once that is done, I have to look at each of 
the programs, with the help of the SACs, to determine from 
whence those agents come.
    The last part of that process is if we are going to take 
agents from one of those programs, who is going to pick up the 
slack, who is going to fill the void that is left by our moving 
to another program, which requires conversations and 
consultation not only with State and local law enforcement but 
our other Federal partners, as well as Congress.
    I am at the latter stages of that process, so I would 
expect in the next couple of weeks, two to 3 weeks, to be back 
up here talking with various Members of Congress to give you an 
indication as to where I think these additional resources 
should come from. But I see it as a three-tiered process, I 
guess I should say.
    The other thing I should point out is I am somewhat 
reluctant to make wholesale shifts between offices, for 
instance, because I have experienced in the past, where there 
is a crisis or a challenge, we may have thrown agents at that 
challenge and once the challenge is met those agents stay where 
they are.
    I am reminded of the savings and loan scandal, where we had 
agents back in the early 1990's that went to Dallas and other 
places. Many of those agents are still there, although the need 
is not there. Consequently, I want to make certain that when we 
reassign agents to different programs, to counterterrorism, we 
do know who is going to be picking up the slack and they will 
have worthwhile tasks to perform, and that we ought to be 
flexible down on the road in adjusting.
    That is, in broad view, my philosophy as we go through this 
process.
    Senator DeWine. Thank you, Mr. Chairman.
    Chairman Leahy. Thank you.
    Senator Grassley had to go back to another hearing. He did 
want me to make these three sentences for him. He wanted to 
thank you, Director Mueller, and the FBI for the way you 
handled the investigation of the pipe bomb cases. Senator 
Grassley said the bombs injured a number of people in his home 
State of Iowa, and he is grateful and pleased that the FBI 
could wrap this up and get a suspect in custody. Senator 
Grassley said further that he appreciated the call you made to 
him yesterday, letting him know what was going on.
    The Senator from California.
    Senator Feinstein. Thanks very much, Mr. Leahy.
    Good afternoon, Mr. Mueller, Mr. Thompson. I think you 
know, Mr. Mueller, I have a very great respect for you. You are 
straightforward and direct and there aren't any artifices, and 
I for one really appreciate that.
    I think you know that yesterday I sent you a letter asking 
some questions about this electronic communication known as the 
Phoenix memorandum, and I would like to ask you some questions 
about it. As I member of Intelligence, I have read a copy of 
the original electronic communication and I must tell you that 
it strikes me as something that does not require a great deal 
of analysis. It is what it is, it is very straightforward.
    In the reports that I read in Intelligence, it is much more 
consequential than many of them that I read on almost a daily 
basis now, much fuller, much more descriptive. So I would like 
to ask just a few questions from my letter, but before I do, 
Mr. Chairman, I would like to ask that this letter, dated May 7 
to Mr. Mueller, be placed in the record, if I might.
    Chairman Leahy. Without objection.
    Senator Feinstein. Let me begin with the first question on 
it. Who, by name and title, within the FBI was provided this 
electronic communication? Was the EC or its contents brought to 
the attention of the Director of the FBI? If so, when. If not, 
who was the highest ranking FBI official made aware of the EC 
or its contents?
    Mr. Mueller. Senator, let me just say I received a copy of 
your letter this morning and I glanced through it. To the 
extent that I can answer the questions, quite obviously I will.
    Senator Feinstein. I understand that.
    Mr. Mueller. But there is a lot that you request in terms 
of information that I am not on top of.
    Senator Feinstein. I understand, I understand.
    Mr. Mueller. I am not certain as to the highest-level 
individual who received it. I do not believe at this juncture 
that it went so high as the Director of the FBI, but I am not 
certain how high it went in the hierarchy. I think that was the 
thrust of that first question.
    Senator Feinstein. Right. Now, the reason I am asking the 
questions that I am is not to be critical, because it is very 
easy to be a Monday morning quarterback, but to say when 
something like this comes through let's look at the process 
that governs it because clearly a lot of things could have 
happened with that. In my judgment, it is something that 
perhaps should have gone right to the Director of the FBI, and 
perhaps he should have even sent it to the President.
    Let me ask another question. It is my understanding that 
the standard method by which the FBI disseminates intelligence 
is by way of a letterhead memorandum, often called an LHM. Was 
an LHM drafted based on the information contained in the EC, 
and if not, why not?
    Mr. Mueller. Let me again caution my remarks by saying I am 
not certain. I have not seen all the paperwork with regard to 
that EC. I quite obviously have seen the EC. In terms of 
whether there was a letterhead memorandum, I am not aware of a 
letterhead memorandum that had been prepared, but I am not 
certain that the premise that intelligence information is only 
distributed by letterhead memorandum is accurate also.
    I have seen that intelligence information quite often is 
distributed by way of EC. So I am not certain that there was a 
letterhead memorandum, but I am not certain that that makes 
some difference.
    Senator Feinstein. All right.
    Mr. Mueller. Could I respond to one thing in terms of the 
procedures?
    Senator Feinstein. Absolutely.
    Mr. Mueller. I think it important--I know you have seen the 
full letter--to understand that the individuals who were 
mentioned in that letter, and there were a number, were, and 
perhaps some may continue to be under investigation. So I just 
wanted to point that out as we continue this dialog.
    Senator Feinstein. I am not going to state what was in that 
at all.
    Let me ask you this question: Was the EC or information in 
the EC provided to FBI personnel assigned to the Director of 
Central Intelligence's Counterterrorism Center?
    Mr. Mueller. Before September 11, I do not believe so, but 
I am not certain on that. But I do not believe so.
    Senator Feinstein. I think that this is a very worthwhile 
exercise to go through this because I suspect that nothing 
happened with it. Now, having said that, the question then 
becomes, well, what should have happened to this and how many 
other things perhaps are falling between the cracks.
    Particularly after Mr. Moussaoui was arrested, which 
happened a month after this, it should have been a real signal 
that something was going on. Then, about the same time as the 
Phoenix memo, United States intelligence--I guess the CIA--
issued a warning that there was a heightened risk of a 
terrorist attack on Americans, possibly on U.S. soil.
    So there were two things out there that should have alerted 
something in the system to these. At the very least, run them 
through State's data base, see where the visas came from, see 
how many visas are out and where they are to people in similar 
circumstances.
    I think if it did drop between the cracks, I think there is 
a serious problem because if one thing drops, others probably 
have as well. That is why I think this is an instructive 
exercise. I mean, if I had seen that, I would have sent it 
right to the President. I feel that strongly about this kind of 
thing.
    I think the more I read in open-source information about 
the FBI at this period, particularly books on terrorism in this 
country, one of them by Stephen Emerson, for whom I have a 
great deal of respect, the FBI was very much constrained in 
what it did and in how it acted. I found some of the things in 
the book really surprising.
    I just wonder if you have any comment. Have you looked at 
that memo as to where it went at all and what happened with it?
    Mr. Mueller. Yes.
    Senator Feinstein. Can you tell us anything about how it 
was treated?
    Mr. Mueller. Well, it was my understanding again--and we 
are providing every document, as you well know, to the 
Intelligence Committee on that. My understanding is that it was 
in the section, it was looked at in the section. I believe the 
agent was aggressive, was good, and the suggestion was a good 
one.
    It was a monumental undertaking. There are more than 2,000 
aviation academies in the United States. The latest figure I 
think I heard is something like 20,000 students attending them, 
and it was perceived that this would be a monumental 
undertaking, without any specificity as to particular persons. 
The individuals who were being investigated by that agent in 
Phoenix were not the individuals that were involved in the 
September 11 attack.
    All that put aside for a second, though, it is a very 
worthwhile process and a process we are undertaking to change 
what we do in response to that instance and others where 
perhaps we did not have the analytical capability, we did not 
have the people who were looking at the broader picture to put 
the pieces in place. That is how we have to change.
    We are, as I said a few moments ago, and have been, a law 
enforcement agency and we have been more reactive than 
proactive. We have not built up the intelligence capacity or 
capability as we should. One of the things we are doing is 
putting in an Intelligence Office, and I have requested from 
George Tenant an individual from CIA to head it up. That 
provides two things to us. One, it provides us a person who is 
experienced in intelligence-gathering, analysis, and then 
dissemination. It also links us better than we have been in the 
past with the CIA.
    So do I wish that we had more aggressively followed up on 
that suggestion at the time? Yes. Are we taking steps to 
address what the failings or weaknesses were prior to September 
11? Absolutely.
    Senator Feinstein. Thank you. My time has expired. Thank 
you.
    Chairman Leahy. Senator Edwards?
    Senator Edwards. Thank you, Mr. Chairman.
    Mr. Director, I join my colleagues. We all have enormous 
respect for you and appreciate very much the job you are doing.
    I also want to ask you about the Phoenix memo, recognizing, 
of course, that you weren't there at the time. First of all, I 
think that the American people are entitled to know why it 
appears at least that red flags were ignored before September 
11, and I think the FBI has a lot of explaining to do. I think 
our responsibility is to sort of get to the bottom of this and 
find out what happened. Let me just followup on some of Senator 
Feinstein's questions.
    As I understand it, the memo, to the best of you knowledge, 
never went as high as the FBI Director. Is that correct?
    Mr. Mueller. I have not asked Louis Freeh whether he saw 
it. I do not believe it went to the Director, no.
    Senator Edwards. And it also didn't go to the CIA Director. 
Is that correct?
    Mr. Mueller. I do not believe it did.
    Senator Edwards. Now, when the Moussaoui investigation 
began a month or so later, after July--I think it began in 
August of 2001--did that arrest in August lead to any renewed 
response to the Phoenix memo?
    Mr. Mueller. I am not certain whether at headquarters 
somebody said this is the same type of thing. I am not certain 
what the agent did in Arizona. To the extent that you are 
asking whether there was any additional effort made on flight 
schools as a result of putting Moussaoui together with the 
Phoenix EC, I do not believe that to be the case.
    I believe we looked at the Moussaoui case as a red flag. I 
mean, one of the red flags you talk about was Moussaoui, and we 
go out and at the response of the Pan Am flight academy--and 
they had found him to be somewhat difficult and different, and 
called up the FBI--we go out and interview Moussaoui and we 
have no basis to arrest Moussaoui. He has committed no crime.
    He is a student who is a little bit odd in the course of 
what he is trying to do, and the only way that we can address 
Mr. Moussaoui is to find that he has overstayed his welcome in 
the United States, is out of status, and we have INS arrest 
him. So red flags went up.
    The agent in Minneapolis did a terrific job in pushing as 
hard as he could to do everything we possibly could with 
Moussaoui. But did we discern from that that there was a plot 
that would have led us to September 11? No, I rather doubt it. 
But should we have done more in terms of the Phoenix EC? Yes.
    Senator Edwards. Well, I think one of our responsibilities 
is to determine what you could have figured out based upon 
followup that didn't happen, as it turns out.
    But if I understand it correctly, you got the memo in July 
from Phoenix making specific recommendations. About a month 
later, the Moussaoui investigation and arrest occurred, roughly 
a month later, relating to a similar topic, obviously. The 
Director of the FBI, to the best of your knowledge, didn't know 
about the Phoenix memo. The Director of the CIA did not know 
about it. Is that all accurate?
    Mr. Mueller. I think that is accurate.
    Senator Edwards. OK.
    Mr. Mueller. I will tell you I think that is accurate 
because I have not followed the trace of----
    Senator Edwards. If that turns out not to be true, would 
you let us know that, please?
    Mr. Mueller. Sure.
    Senator Edwards. I also am a member of the Intelligence 
Committee and I have seen the memorandum, and I also believe 
that it at least appears to have been an enormous red flag.
    Let me ask you about three things that were reported in the 
newspaper about the memo and get you to respond to them, if I 
can. First, and this is from the New York, it says ``Phoenix 
believes that the FBI should accumulate a listing of civil 
aviation universities and colleges from around the country,'' 
and I am quoting from the newspaper now.
    Did the FBI do that?
    Mr. Mueller. Not to my knowledge, until after September 11. 
It did, after September 11, but not before September 11.
    Senator Edwards. Not before September 11.
    Second, ``FBI field offices with these types of schools in 
their areas should establish the appropriate liaison.'' Did the 
FBI do that before September 11?
    Mr. Mueller. After September 11, not before.
    Senator Edwards. But not before?
    Mr. Mueller. Not to my knowledge.
    Senator Edwards. Third, ``FBI headquarters should discuss 
this matter with other elements of the U.S. intelligence 
community and task the community for any information that 
supports Phoenix's suspicions.'' Did the FBI do that?
    Mr. Mueller. That, I am not certain about, at what level. I 
am not certain about that.
    Senator Edwards. You indicated earlier that the Director of 
the CIA didn't know about it. But you think there is a 
possibility something else occurred?
    Mr. Mueller. It is a possibility, but I would only say a 
possibility that somebody down the chain had conversations with 
persons at the CIA. I just don't know whether that happened or 
not.
    Senator Edwards. The FBI has said in a statement, and you 
have indicated something similar to this today, that none of 
the people identified by Phoenix are connected to the 9/11 
attacks. That is, I assume, accurate and a fairly narrow 
statement.
    Did any of those people have any connections to Osama Bin 
Laden or any terrorist groups?
    Mr. Mueller. The persons who were being investigated by the 
agent in Phoenix?
    Senator Edwards. Correct, that is the question.
    Mr. Mueller. I am not certain without going back and 
looking and checking. There were a number of individuals that 
were listed in that EC and I am not certain. I cannot recall.
    Senator Edwards. Whether they are connected to Bin Laden or 
whether they are connected to any terrorist group, you don't 
remember either one?
    Mr. Mueller. Well, I know that we believed that one or more 
were connected with terrorist groups.
    Senator Edwards. But you are not sure whether it was Bin 
Laden?
    Mr. Mueller. I am not certain whether it was specifically 
Al-Qaeda or Bin Laden.
    Senator Edwards. Are those people still at large?
    Mr. Mueller. I hate to get into it in open forum. Let me 
just put it that way. I would be happy to answer that----
    Senator Edwards. That is fine. I accept that.
    Well, Mr. Director, thank you for being here. We appreciate 
your answers to these questions. I hope you can understand why 
we are concerned about this, obviously with the magnitude of 
what happened and the information that was apparently available 
both in July and then in August, before the attacks.
    I do believe we have a responsibility to get to the bottom 
of this, and we appreciate your help with it. I know you also 
want to get to the bottom of it.
    Mr. Mueller. We share every interest in seeing what 
happened, what lessons are to be learned, so we do not repeat 
those lessons. We are making every effort to cooperate and 
fully disclose anything and everything to the Joint Committee.
    Senator Edwards. Thank you, Mr. Director.
    Thank you, Mr. Chairman.
    Chairman Leahy. Thank you.
    Senator Feingold?
    Senator Feingold. Thank you, Mr. Chairman.
    Chairman Leahy. I believe you came in first. Senator Durbin 
is next, I want you to know.
    Senator Feingold. Thank you, Mr. Chairman, for your 
leadership and for holding a hearing on this important subject.
    Deputy Attorney General and Director Mueller, thank you for 
joining us today. I sincerely want to thank you for your long 
hours and hard work, particularly since September 11. It is 
important that you are here to discuss with us how the 
administration plans to reorganize the FBI to use its resources 
and skills most effectively to attend to the greatest criminal 
and national security threats to our Nation.
    Before I get to my questions, and since the Deputy Attorney 
General is with us today, I would like to take this opportunity 
to reiterate here on the record that I hope he, the Attorney 
General, and President Bush are still committed to ending 
racial profiling.
    It has been more than a year since President Bush pledged 
to end racial profiling, and it is almost 1 year since 
Representative Conyers and I introduced legislation, the End 
Racial Profiling Act.
    Mr. Thompson, we have talked about this before and you have 
made some very powerful statements on it. I would request from 
the Department an update on the status of its deliberations on 
our bill and whether it remains committed to a ban on racial 
profiling. This is more of a request than a question, but if 
you would like to respond briefly, I would like you to do that 
at this time.
    Mr. Thompson. Senator Feingold, I can assure you that the 
Department, and specifically the Attorney General and myself, 
remain committed to doing everything we possibly can to 
eliminate racial profiling, to eliminate race being used as a 
basis for law enforcement actions. You and I have discussed 
that in the past.
    We are working hard to bring to fruition our studies with 
respect to racial profiling at the Federal level. Since 9/11, 
our efforts have required some updating and we are in the 
process of getting that completed, but we are not standing 
still with respect to this important topic. The Department is 
committed and is actively taking a leadership role with respect 
to racial profiling at the operational law enforcement level, 
with respect to providing training to Federal agencies, with 
respect to data collection, the use of race as a factor in law 
enforcement actions.
    So we hope to complete our studies in as timely a manner as 
possible, and we will get to the conclusion of this, I can 
assure you.
    Senator Feingold. Do you still support a ban on racial 
profiling?
    Mr. Thompson. Yes, sir.
    Senator Feingold. Well, good. I don't see any reason why we 
can't work together to get a bill to the President's desk.
    Mr. Thompson. We look forward to working with you.
    Senator Feingold. Very good.
    I would also like to tell you about another matter. 
Director Mueller, I understand that, a part of the FBI's 
renewed focused on antiterrorism is the creation and 
maintenance of a so-called watch list of potential terrorists, 
and I want to tell you about an incident in Wisconsin a few 
weeks ago.
    A group of close to 40 peace activists were planning to 
travel to Washington, D.C., to participate in workshops and 
demonstrations. I understand that as the members of the group 
were checking in at the Milwaukee Airport, at least one person 
and possibly more apparently triggered a possible match on the 
watch list. And because at least 20 members of the group had 
bought their tickets together and the possible match was 
triggered by someone in that group of 20, all 20 travelers were 
detained for questioning.
    It turns out that none of the members were determined to be 
security threats and all were ultimately cleared to fly. 
Unfortunately, these passengers were scheduled to be on the 
last flight to Washington for that day, and because it took so 
long to clear the passengers, some of these passengers missed 
their flight and had to wait until the next morning to travel 
here.
    Now, of course, we all recognize that we need increased 
security measures at our Nation's airports and all passengers 
are understandably enduring some inconvenience and longer wait 
times before boarding their flights. Nonetheless, I think the 
incident does raise some concerns.
    How, if you could tell me, could these Wisconsin residents 
trigger the watch list? Can you assure this committee and the 
American people that the FBI has not and will not include on 
the watch list persons who exercise their lawful rights of free 
speech and freedom of association to express their views that 
may be at odds with the policies of the U.S. Government?
    Mr. Mueller. Well, as to the last statement, absolutely I 
can assure you, Senator, and the American public that we would 
never put a person on the watch list solely because they sought 
to express their First Amendment rights and their views.
    With regard to that incident, I am not familiar with the 
details as to why one or more of those individuals was on the 
``no fly'' list. There are a number of participants and 
contributors to that. I will tell you from the perspective of 
the FBI, prior to September 11 we had no mechanism for alerting 
State and local law enforcement that there were individuals in 
the country for whom we had no paper, we have no arrent 
warrant, they have no crime triggering an arrest piece of 
paper. Nonetheless, we believe they are an individual or 
individuals that we need to talk to because we have gotten 
intelligence from the CIA or elsewhere that they may be 
associated with terrorism.
    We needed some mechanism to alert State and locals. We have 
used NCIC to do so, understanding that it is critically 
important that we have State and locals identify a person has 
been stopped, not necessarily detained, but get us the 
information that the person has been stopped at a particular 
place.
    We are very careful, once we have interviewed a person we 
need to interview because we have information that they may be 
associated with a terrorist or have information relating to a 
terrorist, that the name be removed from the watch list. It is 
important for us to have some mechanism to try to find 
individuals within the United States who may be committing 
terrorist acts.
    On the other hand, we understand the responsibility of 
making certain that once a person is interviewed, they are 
removed from the watch list, and that we have various 
gradations on the watch list depending on the threat and 
depending on whether there is any paper outstanding on the 
individual.
    Senator Feingold. I think following that a little bit in 
terms of these lists, do they contain only the names of the 
suspected terrorists? If so, how does the FBI define who is a 
terrorist for purposes of determining whether somebody should 
be placed on the list? Just give me a sense of what the factors 
are to determine if somebody should be on the list.
    Mr. Mueller. Well, I am going to tell you that prior to 
September 11 there were two individuals, and the CIA gave us 
the names of these two individuals and said that they had been 
at a meeting in Kuala Lumpur with known terrorists and we 
needed to find them. They actually happened to be two of the 
hijackers, as it turns out. They came through immigration, they 
say, staying at Marriott in New York City. Well, that does us 
no good. We have no mechanism to try to identify those persons.
    Senator Feingold. So it is as narrow as being at the 
January 2000 meeting in Kuala Lumpur?
    Mr. Mueller. With terrorists, yes, with terrorists.
    Senator Feingold. What would be the other category?
    Mr. Mueller. You can have associates of terrorists, in the 
wake of September 11, for instance.
    Senator Feingold. How do you define ``associates of 
terrorists?''
    Mr. Mueller. Well, in the wake of September 11, we go to 
the flight schools and say, OK, this individual was a hijacker. 
Who were the friends? Were there any companions that he hung 
around with? If there were, we want to identify them. We want 
to know whether that individual is in the United States 
contemplating a terrorist act.
    The only way we can identify that person is that person is 
stopped, but we put in identifying--there are differences in 
names, but where we have it--and I would say in 99 out of 100 
circumstances we put in dates of birth, information that we 
gather from the passports as they come into the United States 
so that there is some specificity.
    Senator Feingold. I appreciate that. Let me just ask, does 
the FBI have a procedure for helping airline security quickly 
determine if someone whose name comes up on a list is actually 
the person that the FBI intends for security to stop?
    I understand in this instance, at least one analysis of 
this instance was that it was just that somebody's name was 
similar to somebody else's name.
    Mr. Mueller. Well, we have a 24-hour watch that is the 
recipient of telephone calls, but it may not be the FBI. Other 
agencies also have persons that they put, for a variety of 
reasons, on the watch list, not just the FBI.
    Senator Feingold. I guess my time is up. I will come back 
on another round.
    Chairman Leahy. Thank you.
    Senator Durbin?
    Senator Durbin. Thank you very much, Mr. Chairman.
    General Thompson and Director Mueller, thank you for 
joining us. I want to return to this Phoenix memo. I am very 
troubled by this and I think that it is likely to become a 
major concern for Americans because in my committees on Capitol 
Hill we have been assured and reassured that the tragedy of 
September 11 was unanticipated. It came as a startling surprise 
to those who followed terrorist activities, and it was 
understandable because our theory about hijacking for the 
longest time had been be submissive, be cooperative, and 
everything will work out. We came to learn on September 11 that 
we were just plain wrong.
    Let me go back to this Phoenix memo, if I can, and I 
believe a question was asked earlier, did the FBI agent in 
Phoenix in communicating this memo link any of his concerns 
with Osama Bin Laden?
    Mr. Mueller. I am not certain of that. I would have to go 
back and read that memorandum.
    Senator Durbin. If such a linkage were made, would you 
agree that the Office of Counterterrorism should have paid 
special attention to that memorandum?
    Mr. Mueller. I think the Counterterrorism Section should 
have--it did pay some special attention to that memorandum. 
There were specifics in there that required further 
investigation, at least one other office. That other office was 
alerted. I would agree that it should have disclosed that 
memorandum or discussed that memorandum with the CIA.
    Senator Durbin. But that was done, to your knowledge?
    Mr. Mueller. I do not know whether that was done at a lower 
level.
    Senator Durbin. Director Mueller, will you be releasing 
this memorandum?
    Mr. Mueller. It is still a classified memorandum. There are 
aspects of the memorandum that, in my view, still should remain 
classified because it is an ongoing investigation. The 
memorandum in full has been disclosed to the Intelligence 
Committee. In terms of releasing the memorandum, publicizing 
it, no, I would not support that.
    Senator Durbin. Would you release a redacted form of this 
memorandum?
    Mr. Mueller. We have released, I believe, and sought 
declassification of that which I think we can. In other words, 
there is a paragraph of it that I know has been released. I am 
not certain whether there are any other areas of it that can. 
We would have to look at that and get back to you.
    Senator Durbin. But the FBI, the Department of Justice, or 
some other agency, to your knowledge, actually contacted the 
press for this May 4 story that was reported in several 
newspapers about the memorandum?
    Mr. Mueller. Contact and trigger the----
    Senator Durbin. Yes.
    Mr. Mueller. No, not to my knowledge. No. I want to say no. 
It came as some surprise.
    Senator Durbin. Do you believe as you testify today that 
the FBI ignored a clear warning about the pending events of 
September 11 by not responding properly to this memorandum?
    Mr. Mueller. Yes, I would disagree with that statement. I 
think the recommendations of the agent are something that we 
should have more aggressively pursued. I do not believe that it 
gave the sign post to that which would happen on September 11.
    Of the warnings that we had, the stopping of Moussaoui, the 
arrest of Moussaoui, brought the Bureau, and particularly the 
agent in Minneapolis, to the belief that this individual is the 
type of individual that could and might be the type of 
individual to take a plane and hijack it. In fact, if I am not 
mistaken, in one of the notes, the agent in Minneapolis 
mentioned the possibility of Moussaoui being that type of 
person that could fly something into the World Trade Center.
    Senator Durbin. Press reports focus on Embry Riddell 
University in Prescott, Arizona, as the concern of this Phoenix 
agent. Certainly, Moussaoui was involved in another aviation 
school, if I am not mistaken.
    Mr. Mueller. In which one?
    Senator Durbin. Moussaoui was involved in training at 
another school.
    Mr. Mueller. Yes, that is correct.
    Senator Durbin. So the FBI felt within a few weeks that 
taking action against Moussaoui at another school was 
appropriate. Was that memo taken into consideration, do you 
believe, in that decision?
    Mr. Mueller. I am sorry. Which decision would that be?
    Senator Durbin. The decision to pursue Moussaoui, to arrest 
him.
    Mr. Mueller. I don't believe the Arizona EC was factored--I 
am not certain, but I do not believe the Arizona EC factored 
into the decision to arrest Moussaoui. It was the agent who 
went out to Pan Am aviation school who determined that this 
person presented a threat, had no basis to arrest this person, 
but saw that he was out of status and asked the INS to arrest 
him.
    Senator Durbin. I want to reiterate that I know that this 
happened before you were in your position of leadership, but I 
think it reflects on what we are discussing today, the process 
at the FBI and how it has been pursued. I believe the Phoenix 
memo is going to come to be one of the most important documents 
in our national debate about whether we did enough to protect 
America from the attacks of September 11.
    It strikes me that a memo coming from an agent of the FBI 
to the counterterrorism office in Washington which identifies 
concerns about terrorists and their linkage to other terrorist 
organizations involved in aviation training, and calls on the 
agency to move quickly to respond at several different levels 
with limited impact, limited effect, from what we hear today, 
is going to be a source of further investigation and concern.
    I urge you, if it is possible, to release this memo, even 
in redacted form, so that there is no element of concern that 
we are not being frank and candid with the American people 
about what happened. I hope that you will consider that.
    Mr. Mueller. I will.
    Senator Durbin. Thank you. Thank you, Mr. Chairman.
    Chairman Leahy. I would note that this committee made that 
request about a week ago of the FBI. We are still waiting and 
hope at the very least we can make it available to members.
    Director, in addition to the Phoenix memo, the press 
reported that Filipino authorities alerted the FBI as early as 
1995 that at least one of the Middle Eastern pilots who trained 
at American flight schools had proposed hijacking a commercial 
jet and crashing it into Federal buildings. A month before 9/
11, the FBI arrested Zacarias Moussaoui as a result of his 
suspicious behavior at a flight school.
    Was the information in the Phoenix report or the 
information provided by the Filipino authorities in 1995 
considered by the FBI when it was determining whether to seek a 
FISA search authority on Moussaoui?
    Mr. Mueller. I am not certain about that, Mr. Chairman.
    Chairman Leahy. Do you suppose we can get an answer on that 
for the record?
    Mr. Mueller. Sure.
    Chairman Leahy. We can discuss whether we could get FISA or 
not, but I would think that if the press reports are accurate 
about the information provided by the Filipino authorities, 
that is something that should have been considered.
    Mr. Thompson, I noticed that twice in your testimony you 
referred to an expensive and extensive study done by what you 
call a private consulting firm and a management consulting 
firm. Actually, the unnamed firm is Arthur Andersen, the same 
Arthur Andersen that is prosecuted by the Department of Justice 
in a Texas courtroom today.
    While the Attorney General has recused himself from that, 
and appropriately so, you have not, and also appropriately so. 
So I am going to ask you a few questions.
    I was concerned about Arthur Andersen in early January and 
asked about the role Arthur Andersen played in the Department's 
review of the FBI. The Department's response in February stated 
that only the audit practice was under investigation, not the 
consulting practice used for the FBI review.
    Shortly after Arthur Andersen had completed its work on the 
FBI, on December 14 OMB asked the General Services 
Administration to determine whether to allow Arthur Andersen to 
continue doing business with the Government. In the end, both 
Arthur Andersen's consulting and auditing practices were 
suspended from further Government work based upon its 
unsatisfactory record of integrity and business ethics.
    What reliance, if any, are you placing on the Arthur 
Andersen report as you move forward with FBI reorganization?
    Mr. Thompson. Mr. Chairman, let me just briefly explain to 
you the background by which Arthur Andersen was selected to 
participate in our review, if that would be helpful.
    Chairman Leahy. They were selected prior to the Enron 
debacle.
    Mr. Thompson. That is correct.
    Chairman Leahy. I understand that, but what reliance are we 
having on their report today?
    Mr. Thompson. We are relying on certain aspects of the 
Andersen report. The Attorney General also asked us to review a 
number of other reports and to undertake a number of other 
steps in coming to conclusions, and taking into consideration, 
before we made our recommendations to him.
    For example, Mr. Chairman, he asked us to consider the 
report of the Webster Commission. He asked us to consider the 
two IG reports, the one that dealt with the Oklahoma City 
bombing documents and the one that dealt with the internal 
security problems of the FBI in the wake of the Hanssen matter. 
As you know, he also asked us to conduct interviews of 
individuals both within the Department of Justice and outside 
of the Department of Justice, including Members of Congress.
    So the Andersen report, which was completed before the 
issues of the Enron investigation arose--the Andersen report, 
along with the other documents and studies and our interviews, 
will all be considered in our recommendations to the Attorney 
General.
    Chairman Leahy. So the Andersen report will be one of the 
things you rely on?
    Mr. Thompson. Yes, sir.
    Chairman Leahy. The FBI Reform Act codifies the Attorney 
General's decision last year to authorize the Justice 
Department Inspector General to investigate cases of FBI 
misconduct. The FBI Office of Professional Responsibility would 
still have an extremely important role. The Office of 
Professional Responsibility, OPR, would continue to investigate 
FBI misconduct allegations, especially those the IG chose not 
to handle.
    But they also make crucial recommendations, Director, to 
you on disciplinary sanctions, and so OPR leadership is 
important because of the message it sends throughout the FBI. 
Last year, several FBI officials who had sterling records of 
ethical integrity described these problems at a committee 
oversight hearing, and their courage and devotion to the 
Bureau's interests were extraordinary. I got letters, calls, e-
mails, and so on, from agents all over the country praising 
them.
    What are your views on the need for OPR leadership to send 
the right ethical signals throughout the Bureau?
    Mr. Mueller. It is critically important that we have an 
OPR, what in a police department would be an internal affairs 
unit, that is perceived as being fair, is fair, and therefore 
perceived as being fair, expeditious. That is one of the things 
that I am looking at.
    I believe that in looking at the workload, we have taken 
too long to resolve certain cases. We are looking at the 
possibility of delegating some of the smaller issues to the 
SACs to free up OPR to work on cases more quickly and get the 
resolutions resolved as quickly as possible.
    We have tried to eliminate any discrepancies between the 
handling of cases, whether it be an agent or somebody in the 
SES, and we are still working at that. But it is critically 
important that OPR be, and be perceived as, fair and 
expeditious.
    Chairman Leahy. Thank you. I have other questions, but 
Senator Schumer is here.
    Senator Sessions, did you want to ask questions?
    Senator Sessions. Yes.
    Chairman Leahy. Go ahead.
    Senator Sessions. Mr. Chairman, I appreciate the 
opportunity to ask a few questions.
    It is great to see two fine citizens before us, Larry 
Thompson and Bob Mueller. No government could have finer public 
servants than they, or have the experience and background and 
do the job that they do. I know, as Deputy Attorney General, 
Mr. Thompson has to deal with a lot of frustrating issues, 
trying to get people to agree and work together. But he has the 
skills to do that, and proved that as United States Attorney in 
Atlanta, and I had the opportunity to work with him. My 
admiration for Mr. Mueller is unbounded as a career 
professional prosecutor of the highest order.
    Mr. Thompson, you remember, I am sure, when President 
Reagan appointed William French Smith as Attorney General, and 
the Associate Attorney General was Rudy Giuliani and he 
established law enforcement coordinating committees. That was a 
direction to the United States Attorneys and all Federal 
agencies to work with local agencies, to have meetings and a 
formal committee to identify the law enforcement priorities in 
that district and to focus on those priorities. In other words, 
use the Federal resources within the area to the highest 
priorities of the area, somewhat diminishing the idea that 
everything should be decided in Washington.
    I thought that was a great success. I think you thought so, 
too, so I will ask if you are troubled by the priorities 
appearing to be awfully tough from the top of the FBI down.
    Mr. Thompson. Senator Sessions, I do agree that the LECCs 
remain an important law enforcement tool to help the Federal 
law enforcement agencies and to help focus our Federal 
resources and lash them up, if you will, with our State and 
local colleagues and to focus on the particular crime problems 
in individual districts.
    One of the things that the Attorney General has done and 
the Director has done with respect to our important efforts 
against terrorism is to again try to use various mechanisms to 
focus our Federal resources with our State and local 
colleagues.
    For example, in each judicial district there has been 
established antiterrorism task forces, which are coordinating 
mechanisms with respect to the U.S. Attorneys to work with 
their State and local colleagues to identify particular issues 
as it relates to terrorist incidents and how to respond to 
terrorist incidents.
    The Director has expanded the FBI's Joint Terrorism Task 
Forces, which again are investigative bodies but which do take 
into consideration the use of various State and local resources 
in this important effort. So I think this kind of approach to 
Federal law enforcement is important and effective.
    Senator Sessions. Well, I suppose that we would not dispute 
that terrorism is the No. 1 priority for the Federal Government 
at this time, so I don't mean to diminish that. But it may not 
be the No. 1 priority in a given district, or there may be 
varied leads, investigations, or activities that need to be 
undertaken in a given Federal FBI SAC area.
    Mr. Mueller, are we sure that we will still be able to give 
appropriate credit to agents who do important bank robbery 
cases or important bank fraud cases, or contribute to important 
drug cases? Are we creating a circumstance in which the FBI is 
basically saying these are our priorities, you are expected to 
work these and virtually only these, and the end result would 
be to pull back from cooperation with local law enforcement in 
developing the priorities of the district?
    Mr. Mueller. I don't think we can respond in that way. To 
the extent that an SAC in a particular division has a 
counterterrorism responsibility--and one of the reasons that we 
need to give additional resources to the counterterrorism 
program is you have to develop sources, you have to develop 
contacts, you have to develop intelligence. And that is often a 
thankless job in the sense that it does not result in a 
prosecution that is something you can grasp and take credit 
for.
    So we have to emphasize the counterterrorism program in 
each of our offices, but I do not want agents sitting on their 
hands with nothing to do. So what I have asked each of the SACs 
to do is determine the extent of the workload for agents on the 
counterterrorism program in their particular division, and then 
I want to get them that resource, and it may come from other 
programs.
    But with regard to where that SAC takes the manpower from, 
the SAC should have some say in that because what is good for 
one SAC in Los Angeles may not be good for the person in 
Birmingham. The threat in a particular division should be 
evaluated, and the SAC should have perhaps more flexibility 
than the SAC has had in the past in devoting those criminal 
resources to the threat in a particular division once the 
priority of counterterrorism, counterintelligence, is 
discharged.
    Senator Sessions. With regard to setting priorities, which 
I would indicate to mean if there is a conflict in time, the 
highest priorities would be served first, I am comfortable with 
that. I just do not think we should create a circumstance in 
which we don't have time to do identity theft matters. That is 
a matter of importance to this committee right now. I believe 
we are not sufficiently investigating bankruptcy fraud. I think 
there is a lot of it. It is a Federal court. No one else should 
do it but the FBI, in my view, and they haven't committed 
enough there.
    So there are some things that I think need to be done. I 
don't want to see a message go out that so overwhelms the 
agents that they believe the only thing they can do to gain 
favor or earn merit is a terrorist or homeland defense-type 
issue.
    Thank you, Mr. Chairman.
    Chairman Leahy. Senator Schumer?
    Senator Schumer. Thank you, Mr. Chairman.
    First, let me thank each of you for your service to our 
country.
    My colleagues have discussed a lot of questions regarding 
FBI organization, reorganization, efforts after 9/11, and 
anthrax. I have some followup questions that I would like to 
put in writing, but I would like to address to Mr. Thompson----
    Chairman Leahy. We will leave the record open for questions 
in writing from all Senators.
    Senator Schumer. Thanks, Mr. Chairman.
    Now, I would like to ask Mr. Thompson--I just want to take 
a moment to address with you the extraordinary action taken by 
the Department yesterday. The Justice Department used footnotes 
in two Supreme Court briefs to announce a massive change of 
course in our Nation's gun control policy. For the first time 
in 60 years, the Federal Government is saying that the right to 
bear arms is an individual right.
    First, this decision wasn't made after discussion, debate, 
or any open dialog whatsoever. It wasn't made in consultation 
with Congress or the States, and it wasn't put forward with the 
kind of detail and analysis that such a significant policy 
change would usually come with. Instead, it was done 
undercover, buried in footnotes.
    Now, the broad principle that there is an individual right 
to bear arms is shared by many Americans, including myself, but 
there are limits on those rights. We limit freedom of speech, 
the First Amendment, when we say you can't falsely shout 
``fire'' in a crowded movie theater. At the same time, we 
should be able to put restrictions on who can own guns, and 
how, when and where they may be possessed.
    At his confirmation hearing, Attorney General Ashcroft 
swore to enforce and defend all existing Federal gun laws. In 
answer to questions from me, he said, ``I understand that being 
Attorney General means enforcing the laws as they are written, 
not enforcing my personal preferences.''
    Then he also said, ``I believe that there are 
constitutional inhibitions on the rights of citizens to bear 
certain kinds of arms, and some of those I would think good 
judgment, some of those I would think bad judgment.'' These are 
his words. ``But as Attorney General, it is not my judgment to 
make that kind of call. My responsibility is to uphold the acts 
of the legislative branch of this Government in that arena, and 
I would do so and continue to do in regard to the cases that 
now exist and further enactments of Congress.''
    Well, Mr. Thompson, it just would appear on its face that 
the Attorney General is doing a 180-degree about-face from what 
he told us not too long, without any consultation, any notice, 
any discussion. It is no way to do business and I am sort of 
shocked by it.
    The Department of Justice is saying that the right to bear 
arms is subject to ``reasonable restrictions,'' but the devil, 
as always, is in the details. So I have a series of questions 
for you about what constitutes a reasonable restriction.
    First, is the Federal ban on assault weapons a reasonable 
restriction? Is the Federal ban on felons owning firearms a 
reasonable restriction? Has the Justice Department considered 
how State laws would be impacted?
    For example, New York has a strict licensing and 
registration law. Does the Attorney General's Justice 
Department believe that the law is unconstitutional? Is 
Maryland's 7-day waiting period unconstitutional? How about 
California's ban on Saturday night specials?
    The District of Columbia, a city that was not only the 
Nation's Capital but once it was the Nation's murder capital, 
has the strictest gun laws in the country. Unless you are law 
enforcement, you pretty much can't have a gun in D.C. Federal 
prosecutors enforce D.C.'s gun law. It seems almost by 
definition, without discussion, that what the Justice 
Department said in a footnote would overturn that D.C. law.
    So I would ask you the answers to these questions. What is 
the Justice Department's actual view, given that in these two 
footnotes they reverse 60 years of Government policy, something 
not reversed by any previous administration, Democrat or 
Republican? What is the view on these questions?
    Mr. Thompson. Senator, the footnote that you refer to, as I 
understand it, was contained in a pleading that was filed by 
the United States, by the Solicitor General's office, in 
opposition to a cert petition in which an individual was 
convicted of a gun crime. That was in the Fifth Circuit. The 
case was Emerson.
    Following the Emerson decision, the Attorney General sent a 
memo out to all United States Attorneys in which he committed 
and set forth his and the Department's view that we are going 
to aggressively continue to vigorously and aggressively 
prosecute and enforce the gun laws, and we are going to 
vigorously defend the gun laws against constitutional attack. 
He also set forth in that memorandum the position which the 
court in Emerson recognized in its decision, the Fifth Circuit, 
that the Second Amendment is an individual right.
    The footnote was appropriate, in my judgment, as sort of a 
duty of candor to the Supreme Court to let the Supreme Court 
know what the Attorney General had communicated pursuant to the 
Department of Justice----
    Senator Schumer. So it was a reversal of policy, a dramatic 
reversal of policy. I mean, there was a 1939 case whose name 
slips my mind--he will write it down and give it to me--that 
said, no, the right to bear arms was related directly to the 
ability of States to raise a militia.
    Mr. Thompson. I understand that.
    Senator Schumer. There has been a great deal of discussion 
about that over the last 62 years about whether that is right 
or wrong.
    Do you disagree that the footnote wasn't a real change in 
the policy of the United States Government?
    Mr. Thompson. No, sir. I believe the footnote was 
appropriate in the context of this litigation, in which the 
Fifth Circuit embraced in its decision the Second Amendment 
individual right to bear arms, and in the context of a duty of 
candor to the Supreme Court in opposition to this petition.
    But to answer your concern, Senator, the Attorney General 
and the Department are both committed to vigorously enforcing 
the guns laws and are committed to enforcing those laws against 
constitutional attack.
    Senator Schumer. Sir, with all due respect, we don't know 
what you think the gun laws are. You say you will enforce the 
law. That is what the Attorney General said at his hearing.
    If I might, Mr. Chairman, could I go on a little bit here?
    Chairman Leahy. Yes.
    Senator Schumer. Yet, they have done what every newspaper 
today called a dramatic reversal.
    Let me ask you this specific question. Would this footnote 
that there is an individual right to bear arms now mean that 
there will be a change in policy in regard to the District of 
Columbia's approach which says unless you are law enforcement, 
you don't have a right to bear arms?
    Mr. Thompson. I don't know. I don't want to get too far 
into discussing the implications of this case because it is 
pending litigation.
    Senator Schumer. No, that is not this case. I am asking how 
you would interpret the new law, the new way the Justice 
Department reads the Second Amendment in regard to D.C.'s law, 
not in regard to the Emerson case, which is a pretty narrow 
case.
    Mr. Thompson. I can only interpret, Senator, how the 
Justice Department will enforce Federal laws.
    Senator Schumer. This is Federal.
    Mr. Thompson. Well, D.C. is a different situation. You are 
talking about the D.C.
    Senator Schumer. It is enforcement. It is under the 
Attorney General's direct supervision.
    Mr. Thompson. If you are talking about enforcing the gun 
laws, then as I said before, the Department is going to 
vigorously enforce the gun laws. In fact, we have an 
initiative, Project Safe Neighborhoods, in which we are 
vigorously enforcing crimes committed with guns.
    Senator Schumer. I understand you are doing certain other 
things. I would like to get an answer to my specific question, 
which is will the Justice Department continue to enforce the 
District of Columbia's gun law which says you can't have a gun 
unless you are law enforcement? That is basically what it says.
    Mr. Thompson. As I understand your question, the District 
of Columbia, while it is controlled by the Congress, is not the 
type of situation in which I am prepared to answer a question 
with respect to criminal enforcement. That is what the Attorney 
General addressed in his memo to all the United States 
Attorneys.
    I don't believe it would have any impact on the District of 
Columbia. As I understand it, it is a D.C. City Council 
ordinance.
    Senator Schumer. But enforced federally, and if you are 
making a constitutional ruling here or a constitutional 
assumption that the right to bear arms rests with the 
individual, it would seem to contradict D.C.'s law.
    Mr. Thompson. I mentioned to you the Attorney General's 
memorandum to all the U.S. Attorneys, and as I understand his 
memorandum, I do not think that the footnote nor his memorandum 
would change the way we would view the D.C. law that was passed 
by the D.C. Council.
    Senator Schumer. The same with New York City's laws, which 
are not as strong as D.C.'s, but strong, that talk about 
licensing and registration, fairly strict licensing and 
registration where you need some rationale to have a gun?
    Mr. Thompson. Yes, sir.
    Senator Schumer. And there are no plans afoot to then have 
another footnote 3 months from now saying that the D.C. law is 
wrong? Let me ask you one other question. Answer that one and 
then----
    Chairman Leahy. The Senator's time has expired.
    Senator Sessions. Well, Mr. Chairman, I would like to clean 
up after he is through.
    Chairman Leahy. I am going to give the Senator from Alabama 
the same amount of time as the Senator from New York. As he 
knows, I always try to balance that out.
    We will have time for another round, but Senator Feingold 
has been waiting for his round. Then it will be my turn next. I 
will go to the Senator from Alabama and he will be given the 
same amount of time. I always try to be fair.
    Senator Sessions. You always do.
    Chairman Leahy. Senator Feingold?
    Senator Feingold. Thank you, Mr. Chairman, very much.
    For both of you, the Justice Department has consistently 
refused to provide any information at all on individuals that 
are being held as material witnesses. The administration has 
even refused to reveal the number of individuals being held as 
material witnesses or which courts have issued warrants.
    At the same time, I am afraid there are disturbing reports 
that the authority to detain material witnesses is being abused 
to lock up individuals who cannot be jailed on other grounds. 
Press reports have identified more than 20 individuals who may 
have been jailed on this ground. Again, all of these people are 
Arabs or Muslims, and some apparently were never even 
questioned by a grand jury or court before being released. The 
Washington Post reported earlier this week that one individual 
was jailed as a material witness after coming forward 
voluntarily to provide information to the FBI about the 
hijackers.
    A Federal district court in New York last week ruled that 
the Justice Department used the material witness authority 
improperly to lock up an innocent individual for almost 3 
months in connection not with a criminal trial, but with a 
grand jury proceeding.
    A fundamental constitutional value of this country is that 
individuals may not be locked up unless they have been accused 
of or convicted of a crime. A very narrow exception, of course, 
is provided in the material witness statute, but only under 
very specific circumstances, and only until the witness' 
testimony can be preserved for trial.
    Given the total secrecy surrounding the Department's use of 
material witness warrants, and given the news reports that have 
come out so far on the Federal court's ruling, how can the 
American public be reassured that the Government is not simply 
jailing Arabs and Muslims arbitrarily?
    Mr. Thompson?
    Mr. Thompson. Senator, as a Federal prosecutor and as U.S. 
Attorney, I in my office routinely used material witness 
warrants to secure the appearance of a witness before a grand 
jury. The Department has routinely used these warrants in that 
way. That is the way, for example, Terry Nichols was detained 
in connection with the Oklahoma City bombing investigation.
    The decision of the judge in the Southern District of New 
York, to my knowledge, is the first time that the material 
witness statute was held to be not applicable to a grand jury 
proceeding. This is an appropriate law enforcement technique in 
connection with certain kinds of investigations, especially in 
connection with terrorism investigations, whether they are 
international terrorist investigations or domestic terrorism 
investigations, like the Oklahoma City bombing case.
    So you have a decision by one judge that, to my knowledge, 
is counter to how this statute has been interpreted. I would 
respond to your question by saying that there is nothing 
inappropriate by the way this statute and this law enforcement 
technique is being used in these investigations.
    Senator Feingold. Mr. Mueller, do you want to respond to 
that?
    Mr. Mueller. Only to say that whenever one has to get a 
material witness warrant, one gets the material witness warrant 
from a judge and you have to make a showing before the judge in 
order to get the material witness warrant. You have to make a 
showing to the judge that there is testimony that you want to 
obtain before the grand jury, and once that testimony has been 
obtained then ordinarily the person is discharged.
    I am not aware of an instance where there is an individual 
who has been detained for whom we did not want to have 
information given to the grand jury about certain activities 
related to terrorism, not just something out of the sky, but 
related to terrorism. So I think you can assure the American 
public that this process is monitored by the judiciary and it 
is engaged in for the purpose of obtaining testimony from 
individuals who otherwise would not be forthcoming, individuals 
who do not want to cooperate, but for which we need the use of 
the grand jury so that they are compelled to testify under 
oath.
    Senator Feingold. Well, I appreciate that answer. I am 
concerned that there would be abuses in this area, but I 
certainly will want to follow that up.
    Let me ask you another question that is more on the sort of 
pragmatic side of this. I mentioned earlier the story in the 
Washington Post on Sunday about an Egyptian immigrant who 
voluntarily came forward to help the FBI after the September 11 
attacks.
    Eyad Alrababa went to the FBI because he had some contact 
with two of the hijackers and thought he could be helpful to 
the investigation. Instead, he was rewarded with 7 months in 
Federal custody, almost entirely in solitary confinement, on a 
material witness warrant, followed by his conviction for a 
fraud matter unrelated to the 9/11 attacks. Eyad, who is 
engaged to a U.S.-born citizen, now faces deportation once he 
is released from prison.
    Now, in this case and the case involving a Jordanian 
student, don't you think such use of the material witness 
statute might discourage people from within the Arab and Muslim 
community from coming forward with information to help us 
combat terrorism?
    Mr. Thompson?
    Mr. Thompson. What was the name of the individual again?
    Senator Feingold. Eyad Alrababa.
    Mr. Thompson. I am not familiar with that particular case. 
But as Director Mueller said, if the material witness warrant 
was presented to a court with sufficient facts and sufficient 
predicate activities and necessity pled, then I think the 
American public could be assured that that was a proper use of 
the warrant.
    I don't think it would necessarily be counterproductive or 
some kind of negative implication to otherwise law-abiding 
citizens, whether they be of Arab American background or any 
other background, from cooperating with law enforcement 
authorities, Senator.
    Senator Feingold. Mr. Mueller?
    Mr. Mueller. I did read the article, and I understand the 
individual and I think his girlfriend were awfully voluble with 
the press in terms of their side of the story. I venture to say 
there is another side of the story in terms of information that 
was sought by the prosecutors and the investigators. Again, it 
was a judge supervising this process, and the one item that you 
did note is that the individual pled guilty to certain offenses 
at the end of the day.
    Senator Feingold. Thank you, Mr. Chairman.
    Chairman Leahy. Thank you very much.
    As I said, I will skip my time and go to the Senator from 
Alabama.
    Senator Sessions. Well, Mr. Chairman, thank you for your 
courtesy.
    With regard to the material witnesses, they can have 
lawyers, they can write to the newspaper. They are not held so 
they can't communicate with the outside world. Is that correct?
    Mr. Thompson. That is correct, Senator.
    Senator Sessions. All the Department is saying, as I 
understand it, is they are not going to voluntarily list the 
names of everybody that is being held, for reasons that the 
individual may not want their name being out. Maybe their 
family would be subject to reprisal if they knew that they may 
be talking to the Government or are being held by the 
Government. There are a lot of reasons someone might not want 
their name put in the paper, but they could do so if they 
wished. Is that not correct?
    Mr. Thompson. That is correct, Senator. There are 
legitimate privacy and security concerns with respect to that 
kind of information being made public.
    Senator Sessions. I just don't see that we have a problem 
there. Of course, a judge has to approve the material witness 
warrant.
    Also, under the habeas corpus rule, Mr. Mueller, a 
defendant can ask to be brought before the judge and require 
the Government to justify why they continue to hold them. That 
is the Great Writ that we have in this country. It does apply 
to these cases, does it not?
    Mr. Mueller. It does, but I have not seen a circumstance 
where if a material witness, apart from habeas corpus, but a 
material witness held by a judge where, through the lawyer, 
there was some reasonable necessity for being brought before 
the judge, the judge would decline to take that opportunity to 
find out what the concern was.
    Senator Sessions. Well, I just think it would cast the 
wrong impression to suggest that they are held in secrecy, they 
can't talk to a lawyer, they can't communicate with their 
family, they can't write a letter out of the prison. Those 
things are not true. If they want to write the New York Times 
to say they are being held, they can write them.
    With regard to the matter of gun control, this question of 
whether or not the Second Amendment is a matter of individual 
rights is a matter, I think, that is important. I think it is a 
matter of individual rights.
    Isn't it true, Mr. Thompson, that Professor Laurence Tribe, 
the liberal professor, in his constitutional law book, who has 
studied this issue in depth, has written that it is, in fact, a 
matter of individual rights?
    Mr. Thompson. That is my understanding, Senator.
    Senator Sessions. To say that in a footnote does not mean 
anything other than that you are candid with the court about 
what the position of the Department of Justice is with regard 
to that issue.
    Frankly, with regard to the District of Columbia, if their 
law is so broad that it says only police officers can possess 
firearms, I hope you will not make a concrete position to 
suggest you would never question the validity of some of those 
laws. It may be that on careful review that some of them may 
not withstand constitutional muster.
    We know, of course, that most of the gun control laws have 
been upheld repeatedly, and I assume the Department is not 
opposing any of the general laws that we use to enforce against 
gun violations.
    Mr. Thompson. I understand that point, Senator, and I would 
just point out in further response that I think people here, 
and perhaps even the media, are forgetting that the briefs in 
question, the briefs that Senator Schumer referred to here--the 
brief that was filed by the Department of Justice actually 
defended existing gun laws. It took the position of defending 
existing gun laws and a conviction. As I said in my response to 
Senator Schumer, the Attorney General and the Department are 
committed to a vigorous enforcement of our existing gun laws.
    Senator Sessions. In fact, do you believe that this 
Department is enhancing the number of convictions and 
prosecutions under the existing Federal gun laws?
    Mr. Thompson. I would hope so.
    Senator Sessions. The United States Attorney in Alabama 
told me he was substantially increasing the number of 
prosecutions in his district for gun violations. I have 
criticized the former Department of Justice under President 
Clinton for allowing those prosecutions to plummet by as much 
as 40 percent. While they wanted to pass laws that bound 
innocent people, at the same time they were allowing the 
prosecutions of criminals with guns to go down.
    The question of possessing a firearm during commission of a 
crime, possession after conviction of a felony, filing false 
documents to obtain a firearm--all the traditional bread-and-
butter statutes that we have in law--are not jeopardized by 
this footnote about individual rights, are they?
    Mr. Thompson. No, sir.
    Senator Sessions. Not even close to it?
    Mr. Thompson. No, sir.
    Senator Sessions. This Department not only defends those as 
being legal and constitutional, but is stepping up prosecution 
of those cases, are you not?
    Mr. Thompson. That is correct, and in connection especially 
with our Project Safe Neighborhoods.
    Senator Sessions. Well, I just think that we need to be 
more rational here about how we approach this. We have a group 
that says airplane pilots can't even have a gun in the cockpit 
in case somebody breaks in and tries to take over the airplane. 
If they are trained properly, I am amazed that people would 
object to that.
    I think the chairman is concerned, as I am, that a law 
officer who might cross a jurisdictional line could be arrested 
because he is carrying a gun that he carries every day of his 
life in his work.
    So I just think it is important for us to know that this is 
not an action in this footnote that would in any way undermine 
the commitment of this Department of Justice to not only 
continue enforcement, but to enhance the enforcement of gun 
laws. Would you agree with that?
    Mr. Thompson. That is correct, Senator. I would agree.
    Senator Sessions. Thank you, Mr. Chairman.
    Chairman Leahy. Just think how easy it would be if all 
States had Vermont's gun laws. Just so you understand what that 
means, we have very limited ones. Anyone can carry a loaded 
concealed weapon in Vermont. There is no permit required. We 
would even allow you to.
    Senator Sessions. Even a United States Senator from 
Alabama?
    Chairman Leahy. From Alabama.
    There are two specific things. During deer season, you are 
limited to the number of rounds you can have in your semi-
automatic assault weapon to give the deer a chance. This is 
true. I mean, this is actually what the law is. Signs go up on 
the outskirts of Montpelier, our State capital, which notify 
that during deer season, if you are hunting inside the city of 
Montpelier, like on the State House lawn, you can only use 
buckshot. I do not want to start a sudden sweep to Vermont, but 
that is the law.
    This does create a problem, however, and that is during 
deer season so many out-of-state tourists stop to photograph 
those signs, usually with the State Capitol prominently in the 
background, that we have had a number of fender-benders, but 
the law will probably stay the same.
    As I read the opinion we discussed, incidentally, the 
judge's opinion just recently discussed, the person in New York 
was held, one, in solitary. Two, he was shipped across the 
country. And, third, his own lawyer couldn't find him for some 
time. That makes it a little bit more difficult to file habeas 
corpus. Most people wouldn't know how to file habeas corpus. 
Their lawyer might, but the lawyer has got to find them first.
    Gentlemen, we are about to have a vote on the floor on a 
matter not too far down the coastal highway with Vermont, a 
matter that we have some interest in, the farm bill. So I will 
submit the rest of my questions for the record.
    I do want to say I appreciate very much your being here. 
General Thompson, you have had to take on extra duties and I 
appreciate the way you have taken them on.
    Director Mueller, I just want to state for the record that 
I have called you on a number of very difficult issues, some 
where I have had questions and members of this committee have 
had questions, and your candor is most appreciated. I think the 
kind of candor and directness you have shown is going to serve 
the Bureau well. There are many who want that.
    You have a national treasure in the men and women who work 
there, and the training they undergo and the standards they 
have to uphold. We want to make sure that that doesn't get 
submerged in bureaucracy, but is encouraged to do the best for 
this country in a very dangerous time. So I appreciate that.
    We will stand adjourned.
    [Whereupon, at 4:11 p.m., the committee was adjourned.]
    [Questions and answers and submissions for the record 
follow.]
    [Additional material is being retained in the Committee 
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