U.S. Security Study: FBI Fails to Require Money Disclosures by Agents

The FBI has failed to comply with a presidential order that requires agents who work with the nation's most closely guarded secrets to disclose details of their finances, according to a report that quotes spy Robert Hanssen as saying the lapse helped him elude capture.

The report, harshly critical of security within the FBI, said it found serious problems years ago and as recently as October.

As quoted in the report, Hanssen outlined how the security shortcomings aided his 22-year spying career for Moscow.

"The only thing that possibly could have uncovered my espionage activities was a complete investigation of my financial positions and deposits to bank accounts," Hanssen told investigators, according to the report from a commission led by William H. Webster, a former CIA and FBI director.

Hanssen has pleaded guilty to selling secrets in exchange for $1.4 million over the two decades.

The Webster report, released Thursday, also disclosed that one month after the Sept. 11 terror attacks, FBI officials deliberately lifted restrictions on internal investigative files and widely exposed within the bureau sensitive information from secret wiretaps and searches granted under the 1978 Foreign Intelligence Surveillance Act.

Such FISA information — traditionally used for tracking down spies — cannot be used in criminal cases under U.S. law. Some critics questioned whether the FBI may have accidentally revealed the identities of its clandestine agents overseas or the targets of its U.S. spy-hunting cases.

FBI Director Robert Mueller "is committed to ensuring that's not going to happen again," said Kenneth Senser, the bureau's new security chief. He said the move would have allowed any current spies in the FBI to read those files, "but there would be a record that the agent tried to get into the file," Senser said.

The FBI defended its hurried decision in light of the extraordinary events of Sept. 11.

"There was so much concern about the possibility of another impending attack, we wanted to make sure we didn't possess some piece of information that would be predictive of that," Assistant Director John Collingwood said. "We didn't know any other way to do it, other than making everything available."

The Webster report, which focused largely on the Hanssen case, agrees with Hanssen that the FBI could have detected his espionage earlier with better checks of his family's finances.

He paid cash for a large addition to his home in Vienna, Va, which could have tipped off FBI spy-hunters.

Any business transactions in excess of $10,000 cash must be reported to the Internal Revenue Service on a specific form. Under IRS rules, the FBI can review the forms freely. IRS spokesman Don Roberts said the agency could not answer whether the FBI ever has sought the information, because it does not track requests.

Attorney General John Ashcroft said the Webster report "demonstrates how a trusted insider, through repeated acts of betrayal and treachery over more than 20 years, was able to exploit deficiencies in FBI internal security systems and procedures to cause grievous harm." Ashcroft said he was pleased with FBI reforms being put in place.

"While we can never completely eliminate the possibility of a trusted person betraying his country, we can, we must and we are making these changes part of our everyday way of doing business," FBI Director Robert Mueller said.

Citing Hanssen's own interviews with some members of the commission, the report said Hanssen's motivation for spying was money. His family was financially strapped after his transfer by the FBI in 1979 to New York, and he wanted to "get a little money" from espionage and then "get out of it."

By 1999, near the peak of Hanssen's most recent spying activities, he complained to the Russians of high credit-card debt, and said that college tuition for some of his six children and two mortgages on his home were creating an "atmosphere of desperation." A year later, he boasted to the Russians: "Generally speaking, you overestimate the FBI's capacity to interdict you."

The Webster report accuses the FBI of failing to comply with instructions from President Clinton in August 1995, in response to the arrest of Aldrich Ames, a veteran CIA agent who pleaded guilty in 1994 to selling secrets to Moscow for $1.3 million during nine years.

The new report says Hanssen started spying in 1979, roughly six years earlier than previously believed.

Clinton's executive order required U.S. employees who worked with classified information to file written disclosure reports about their finances, including information about holdings by their spouse and dependent children.

The order also permits intelligence agencies to ask the Treasury Department to search bank records and other financial databases to verify that FBI employees, for example, do not have unusually large bank accounts they are unable to explain.

But the FBI "does not require employees or contractors to complete a financial disclosure form" except for a few senior officials, according to the Webster report. It said financial information provided by others at the FBI "is in response to a limited series of questions on a standard form, which has little adjudicative value."

The report recommends a new system that would "compare employee-generated data with external sources to determine whether the employee has unreported or unexplained wealth of excessive indebtedness."

The FBI's new head of security, Kenneth H. Senser of the CIA, this week described plans to use commercial database and other records to verify the financial disclosures that FBI employees make. Records of property sales, car purchases or other transactions could alert spy-hunters that an FBI agent is spending too freely.

"We've got to be a little more innovative in vetting people," Senser said.

When the CIA began using a similar system, some employees complained that these checks invaded their privacy, but the CIA defended their use because of the Ames case.