Facing More Fire At The Fbi

FBI director Louis Freeh is about to be embarrassed again by his own troops. On Capitol Hill, the FBI is already under fire for mishandling the investigation of Chinese espionage at the nuclear lab at Los Alamos, N.M. For years, the FBI's spycatchers focused on a single suspect, the Taiwanese-born scientist Wen Ho Lee. Criticized at congressional hearings for casting too narrow a net, senior FBI officials doggedly insisted that the investigation was on course and blamed the Justice Department for failing to grant the bureau a license to wiretap. But NEWSWEEK has learned that bureau officials failed to disclose persistent misgivings by their own gumshoes. As far back as December 1998, the FBI's field office in Albuquerque, N.M., raised concerns that the investigation was superficial and failed to look at other suspects outside of Los Alamos. Though Freeh was getting briefed on the case every day, he was never told of these qualms, which appeared in a half-dozen memos. Now that the case against Wen Ho Lee appears to be weak, the revelation of the FBI's own suppressed doubts is sure to set off another round of bureau-bashing in the press and on Capitol Hill.

On and on it goes for Freeh and his beleaguered bureau. Allegations of cover-ups of the shootings at Ruby Ridge, Idaho, of smearing the wrong suspect in the Atlanta Olympic bombing, of misinterpreting evidence in the FBI lab, of hiding tapes showing that agents used incendiary devices during the tragic raid at Waco, Texas. No one is accusing Freeh of wrongdoing or deception. But ultimately, the director has to bear responsibility for the bureau's damaged credibility. His woes are a mirror of the FBI's deep-seated problems.

When he was appointed in 1993, Louis Freeh--former altar boy, street agent, prosecutor and judge--was supposed to be the bureau's savior. He radiated street smarts and moral purity. He vowed to draw a "bright line" on ethics. But after six years, he seems isolated and besieged. His aides bicker constantly with the Justice Department. He is persona non grata with President Clinton, who regards him as self-righteous, and some of his own agents accuse him of a double standard on ethics.

What went wrong? In part, Freeh foundered on an FBI culture that is insular and defensive. The FBI has long covered up its mistakes--even from its own director. Freeh has made the glare of publicity worse by proclaiming "zero tolerance" for ethical lapses but then not always sticking to his promise, especially when senior officials are involved. The director is torn between his desire to show his agents that he is a "stand-up guy" and the need to prove that the FBI is not only the best law-enforcement agency, but the cleanest. Although his spokesman, John Collingwood, says Freeh is unfazed by the march of bad headlines, the FBI director seems trapped in a downward cycle: crises breed defensiveness and cover-ups, which create more crises, resulting in lower morale, and heightened cynicism in the ranks.

Freeh's problems began almost right away. The FBI's internal investigation of the 1992 shootings at Ruby Ridge gave a mild hand-slap to top agency officials overseeing the operation. In 1995, Freeh promoted one of them, Larry Potts, to be his number two at the bureau. But then an outside Justice Department investigation informed Freeh that Potts had allegedly joined a cover-up about the true facts at Ruby Ridge. Furious, Freeh suspended Potts, and the two old friends have barely spoken since. Potts denied the allegations and was never prosecuted.

Suspending Potts might have sent a signal--but subsequent events have blurred the "bright line" Freeh has tried to draw. "The perception of disparate treatment is well in place in the bureau," acknowledges Frank Perry, chief of the FBI's law-enforcement-ethics unit. (Perry believes Freeh is committed to addressing the problem.) If a lowly street agent is caught using his squad car to pick up his children at school, he faces an automatic 30-day suspension. But top officials are widely believed to get off easy for more serious offenses. FBI agents point to the lenient treatment accorded a group of top officials who were caught two years ago in flagrant abuse of their expense accounts. When Potts left the bureau in 1997, his buddies flew into Washington from around the country for a farewell dinner. They billed the government, claiming "official business"--a nonexistent "ethics seminar" at the FBI training academy. A panel of senior officials known bitterly by street agents as "the club" let their fellow chieftains off with a mild rebuke. Instead of being accused of fraud, the charge was softened to "inattention to detail."

Freeh did not intervene. Nor did he step in when FBI agents were found to have signed false arrest warrants--a serious breach--in Connecticut. The case was especially sensitive because the senior agent on the task force had a reputation as a tough gumshoe, with several high-profile arrests. The agent was given a five-day suspension, but then had his pay restored by an internal FBI review panel. Gregory Dillon, the Connecticut state investigator who exposed the false arrest warrants ("They were pure fiction," he told NEWSWEEK), wrote Freeh, hoping that the FBI director would enforce his "bright line." Freeh did nothing.

What explains Freeh's inaction? According to aides, he believed that interfering with the normal disciplinary process would be improper. The FBI director, who declined to be interviewed by NEWSWEEK, has to juggle competing values, say his friends in the bureau. Honesty is important, but to many agents the most important value is loyalty. FBI agents expect their director to stand up against second-guessers and outsiders. Freeh sometimes seems stuck in the middle. After the FBI was caught covering up the use of incendiary grenades at Waco, Freeh gave a speech to FBI agents in Las Vegas. To their cheers, the director stoutly defended the bureau, predicting that the FBI would be exonerated of wrongdoing. Later that night, however, as he spoke privately with friends, he seemed weary and down, complaining that the attacks were coming from all sides.

He was right. Freeh proposed that the bureau investigate its own performance at Waco with a task force of 40 FBI agents. His superiors at the Justice Department ridiculed his suggestion, according to a senior Justice official. The FBI, they argued, could hardly be expected to police itself when as many as 100 FBI agents may have known about the incendiary devices at Waco and not flagged their existence to the Hill or Justice. In the end, the Clinton administration appointed an outside investigation under former U.S. senator John Danforth, who is an Episcopal priest.

The director has little room to maneuver. He long ago alienated Clinton by calling for a special prosecutor to investigate campaign-finance abuse. (Privately, he finds Clinton's ethics to be "shocking," says a friend.) Repeatedly asked by reporters if he has confidence in Freeh, the president refuses to answer. When a reporter at a recent White House picnic asked Clinton about some campaign-finance allegations, the president reddened and shot back, "The FBI wants you to write about that rather than write about Waco."

Freeh has four more years to serve of his 10-year term. With six children to raise, he has at times been tempted by seven-figure offers to join a big New York law firm. But friends say that he wants to hang on long enough so Clinton can't appoint his successor. Oliver (Buck) Revell, a top FBI agent for decades, asserts that not since J. Edgar Hoover's rift with Attorney General Robert F. Kennedy in the early '60s has an FBI director been so isolated from the administration. Hoover's motto was "Never embarrass the bureau." In his day, it was possible to hide the FBI's mistakes and excesses. But in an age of scandal and exposure, it's the attempt to cover up that's most likely to embarrass. Curiously, that's a lesson the Feds seem not to have learned.