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USDOJ/OIG Special Report

The Handling of FBI Intelligence Information

Related to the Justice Department’s

Campaign Finance Investigation (July, 1999)

Unclassified Executive Summary

I. Background of the OIG Investigation

During the summer of 1996, the news media began reporting stories focusing on allegations of improper

fundraising practices during the 1996 Presidential campaign. Among these reports were claims that the

Democratic National Committee (DNC) had received large campaign contributions from foreign sources in

violation of federal campaign finance laws. These reports prompted members of Congress to ask Attorney

General Reno to authorize an independent counsel investigation into such claims.

After concluding that there was insufficient evidence to warrant the appointment of an independent

counsel, Attorney General Reno created the Campaign Finance Task Force (the Task Force) in late 1996 to

further investigate such allegations of campaign finance violations. In the meantime, Congress launched

two separate investigations into questionable fundraising practices during the 1996 Presidential election:

one by the Senate Governmental Affairs Committee (SGA) and the other by the House Government

Reform and Oversight Committee (HGRO).

Since 1996, the FBI’s National Security Division (NSD) had been conducting an intelligence investigation

into certain allegations involving the People’s Republic of China (PRC). Initial intelligence reporting

indicated that the PRC had mounted a plan during 1995 to influence U.S. politics by targeting Congress.

In early 1997, the FBI began providing SGA staff with limited briefings about the plan. In July 1997, SGA

Chairman Fred Thompson opened public hearings on the committee’s investigation into campaign finance

violations by claiming that the PRC had embarked upon a plan to influence the U.S. political process and

that there was evidence that the PRC plan had affected the 1996 Presidential election. Senator

Thompson’s claim was challenged by some members of the committee and disavowed by the Department

of Justice (Department).

On September 10, 1997, the Department, the National Security Agency (NSA), and the Central

Intelligence Agency (CIA) conducted a joint briefing for the Senate Select Committee on Intelligence

(SSCI) concerning the PRC’s efforts to influence U.S. politics. During that briefing, the CIA presented

testimony about two pieces of intelligence information related to the PRC that it had received from the

FBI.

1 The FBI had obtained this information as part of its aforementioned intelligence investigation and

had disseminated it to the intelligence community. However, the FBI had not previously provided the two

pieces of information to Congress.

Senator Thompson, who attended part of the September 10 SSCI briefing, directed the representatives

who appeared before SSCI to appear before him the following day. Senator Thompson wanted to know

why the FBI had not previously provided this information to his committee, particularly because members

of SGA had posed several questions specifically about the subject matter of this information during an

earlier briefing. On September 11, Director Freeh explained to Senator Thompson that although the

information had been collected by the FBI, he had been unaware of the information until the CIA included

it in its testimony for SSCI.

In the wake of the September 10 and 11 briefings, the FBI launched an internal review of NSD’s files to

ascertain why NSD had not disseminated the information to senior FBI officials. In late September 1997,

the FBI also briefed SGA, HGRO, and both the House and Senate intelligence committees on the two

pieces of FBI information that had been given to SSCI and SGA by the CIA at the September 10 and 11

briefings.

During the FBI’s internal file review, the FBI found eight additional pieces of intelligence information from

NSD intelligence investigations that the FBI considered potentially relevant to the congressional and Task

Force investigations and that it concluded had not been properly disseminated. The Department provided

these newly discovered pieces of information to the Task Force, SGA, HGRO, SSCI, the House Permanent

Select Committee on Intelligence (HPSCI), and the National Security Council (NSC) in November 1997.
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In late November 1997, the Attorney General asked the Office of the Inspector General (OIG) to conduct

a review to determine how these problems relating to the proper dissemination of potentially significant

intelligence information arose and how they could be prevented in the future. The Attorney General

requested that the OIG review practices for the dissemination of intelligence information related to the

Task Force investigation within the FBI, from the FBI to Main Justice, within Main Justice, and from the

FBI to the Task Force. In addition to intra-Departmental dissemination of this intelligence information, the

OIG also was asked to review the dissemination of intelligence information related to other agencies and

entities. Specifically, we reviewed dissemination practices between the Department and SGA, HGRO, the

intelligence committees, and the NSC. The OIG’s investigation focused on 10 pieces of intelligence

information that had been identified by senior Department officials as important information that was not

properly disseminated: the two pieces of FBI information that were briefed to Congress in September

1997 by the CIA and the eight pieces of information uncovered during the FBI’s September 1997 file

review.

The OIG’s inquiry was conducted using a combination of interviews and document reviews. In all, the OIG

conducted 123 interviews of 73 witnesses. These witnesses were personnel from Main Justice (i.e., from

the Attorney General’s office, Deputy Attorney General’s office, Criminal Division, Office of Intelligence

Policy and Review (OIPR), and Executive Office for National Security), FBI (i.e., from the Director’s office,

Deputy Director’s office, NSD, Information Resources Division, Office of Public and Congressional Affairs,

and several field offices), the Task Force, U.S. Attorneys’ Offices, the CIA, and several congressional

committees. We also reviewed more than 18,000 pages of information, almost all of which was classified.

The documents were obtained from various components of the Department and from intelligence

agencies and congressional committees.

Before being finalized, the classified version of the report was issued for review and comment to the

Attorney General’s Office, the Deputy Attorney General’s Office, the FBI Director’s Office, the National

Security Division, the Task Force, the Criminal Division, the Office of Intelligence and Policy Review, and

certain intelligence agencies. Individuals mentioned prominently in the report also had the opportunity to

review and comment upon it before it was completed. On July 12, 1999, we finalized the 576-page

classified report. That report, which was classified at the TOP SECRET/CODEWORD level, was provided to

the Attorney General, the Director of the FBI, and FBI’s National Security Division, and certain

congressional committees. This is an abbreviated, unclassified summary describing the main findings of

the classified report.

2. Summary of Findings

We found that many of the pieces of information that were identified by senior Department officials as

important, undisseminated material had in fact been disseminated to varying degrees within the

Department during the previous two years. Of the 10 pieces of ostensibly undisseminated intelligence

information that were the focus of the OIG investigation, the Attorney General had access to seven and

parts of two others and Director Freeh had access to five and part of another prior to the “re-discovery”

of that information in late 1997.

However, although many of these pieces of intelligence information were made available to the Attorney

General, Director Freeh, or senior Department officials, many of them were supplied in a fashion that

belied their significance. That is, they were not actually briefed – either orally or in writing – to the

Attorney General, Director Freeh, or their senior staffs. Rather, they were contained in routine documents

related to the Department’s use of the Foreign Intelligence Surveillance Act (FISA), serendipitously

included in memoranda on other subjects, or buried amid documents that were made available to the

Attorney General, Director Freeh, or their staffs. These were ineffective methods of communicating

important intelligence information to senior Department officials. Indeed, this explains why some officials

were unaware that they had received these pieces of information before.

We concluded that none of the FBI’s problems disseminating and reporting classified information

concerning the intelligence and Task Force investigations was attributable to intentional malfeasance or

purposeful obstruction of the Task Force investigation. Further, none was the product of an improper

intent to conceal information or prevent it from being disclosed to parties in the Department, Congress,

or the NSC. Rather, many of the problems we found were attributable to poor judgment on the part of

NSD personnel; well-intentioned misapplication of Departmental policy; attempts by individuals in NSD to

protect the division’s narrow interests without sufficient regard for the impact of their actions upon the

Task Force investigation; legitimate Departmental policy disputes about disseminating criminal and

intelligence information; problems in the use and maintenance of the FBI’s computer database systems;

and/or poor communication between members of the Task Force and NSD and among the various parties
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within the Department who were involved in the Task Force investigation. The unprecedented nature of

the parallel intelligence and Task Force investigations also contributed to complications in the handling of

classified information.

3. Facts

A. The PRC Intelligence Investigation

Most of the 10 pieces of information that the FBI re-discovered after the September 1997 hearings

were collected by the FBI prior to or during the FBI’s PRC intelligence investigation that was begun

in 1996 after several FBI field offices began receiving intelligence information suggesting that the

PRC had embarked on a broad-based plan to influence U.S. politics. The information being collected

by various field offices concerning the PRC plan culminated in 1996 in a decision by NSD to open

and supervise an overarching intelligence investigation at FBI Headquarters (FBI HQ) that would

administer the ongoing investigations being conducted by the field offices. In the meantime, NSD

received provocative reports from an FBI field office concerning alleged ties that a subject of the

FBI’s intelligence investigation had to the PRC government and to various U.S. political leaders.

Some of this information was contained in documents generated by the FBI and OIPR to which the

Attorney General and Director Freeh had access.

2. Convergence of the Intelligence Investigation and the Campaign Finance Task Force

Investigation

In December 1996, an FBI field office reported information concerning an individual who would later

become a subject of the Task Force’s investigation. That information would later be identified as one

of the 10 pieces of undisseminated information that were the focus of the OIG investigation. When

this piece of information was received by NSD, it was shared with the FBI’s National Security Law

Unit (NSLU) for advice on handling. In early January 1997, NSLU gave a copy of the teletype

containing the report to a Main Justice official who often handled intelligence matters. That same

official also supervised the Task Force, which had recently been formed to investigate allegations of

campaign finance violations. The Main Justice official discussed the information with other Main

Justice officials, including the Attorney General, and arranged for the Task Force to receive a

briefing on the FBI’s intelligence investigation. On January 10 and 13, 1997, NSD conducted

briefings on the intelligence investigation for the Task Force and senior FBI and Main Justice

officials.

Director Freeh closely followed the Task Force investigation. Accordingly, although he did not attend

the January 1997 briefings NSD conducted, he was informed in a January 30, 1997 memorandum

about intelligence information that related to the Task Force investigation. Director Freeh received

his first briefing on the intelligence investigation on February 5, 1997.

3. The Task Force’s Access to NSD’s Intelligence Material

NSD began providing certain intelligence information to the Task Force after concluding that such

information might be of lead value to the criminal investigation. However, NSD had concerns about

the Task Force’s access to its intelligence information because of Departmental policies that

restricted the sharing of intelligence information with criminal investigators and because of

concerns that its sensitive sources and methods might be compromised if the Task Force gained

access to NSD’s intelligence. Consequently, NSD devised a process for providing the Task Force with

intelligence information that would limit the amount of raw intelligence the Task Force would review

or receive. This process involved furnishing the Task Force with paraphrased versions of intelligence

information NSD was receiving from its intelligence investigation. These excerpts were contained in

documents called “letterhead memoranda” or “LHMs.”

The process of creating LHMs for the Task Force was a time-consuming effort for NSD that required

the assistance of agents from outside the unit and even from the field offices. Agents were brought

to FBI HQ for one-month assignments to assist in the LHM-drafting process. The Task Force

received its first batch of LHMs in mid-January 1997. The Attorney General’s office also arranged to

receive copies of the LHMs that NSD produced for the Task Force.

On February 14, 1997, NSD transmitted a teletype to all FBI field offices requesting that

information received since 1995 on efforts by several foreign governments to target or influence

U.S. political officials or political campaigns be transmitted to NSD. Most of the field office
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responses were received by February 19, and on February 22, 1997, NSD delivered to the Attorney

General a copy of the packet of teletypes received in response to the February 14 field office

canvass. The Attorney General gave the packet of teletypes to then-Deputy Attorney General (DAG)

Jamie Gorelick. OIPR reviewed the packet of teletypes for DAG Gorelick and drafted a memorandum

on February 27, 1997, summarizing noteworthy information contained in the packet. OIPR then

gave the packet to the Task Force. However, NSD retrieved the packet shortly after the Task Force

received it, because NSD had not understood that anyone other than the Attorney General and DAG

would have access to it. The packet was never returned to the Task Force, and the Task Force would

not again have unfettered access to that information until late 1997.

While NSD was committed to using the adapted LHM system to furnish the Task Force with

intelligence information, attorneys on the Task Force had misgivings about the process. Task Force

attorneys believed it was important to review the raw information underlying the LHMs rather than

relying solely on paraphrased documents prepared by NSD personnel who had no connection to the

Task Force. Consequently, the Task Force attempted to gain access to the material underlying the

LHMs. However, NSD officials resisted the Task Force’s efforts to review the raw intelligence

material. This prompted a series of discussions between Main Justice and the FBI in an attempt to

resolve the dispute over the Task Force’s access to NSD’s raw intelligence. Although the issue was

raised at a series of meetings, it was never resolved, even after senior FBI officials had stated that

the Task Force would receive the material that it sought. All of the issues concerning the Task

Force’s access were not resolved until mid-September 1997, when the Attorney General directed, in

the aftermath of the September 10 and 11 congressional briefings, that the Task Force obtain

access to all relevant intelligence information.

4. NSC and the PRC Intelligence Investigation

In February 1997, White House Counsel Charles F.C. Ruff contacted the Department twice seeking

information regarding PRC involvement in attempts to affect U.S. policy. Ruff’s request related to

Secretary of State Madeleine Albright’s plans for an official visit to China that month.

The Department’s first response to Ruff’s request merely reiterated information that the FBI had

supplied to the NSC in a June 1996 briefing about the PRC’s plan to influence Congress. After Ruff’s

second inquiry, the FBI and Main Justice conferred over the appropriate amount of information to

provide in response. Some officials advocated providing only a limited response because they

believed that providing investigative information to the White House about the PRC and campaign

fundraising violations was akin to briefing the subject of an investigation about that investigation.

Ultimately, the White House Counsel only received copies of teletypes concerning the PRC plan to

influence Congress that had previously been transmitted to the White House.

Both the FBI and Main Justice sought to ensure that information that might undermine the criminal

investigation was not disseminated to the White House. However, there were disagreements over

the implementation of this policy. Some senior FBI officials expressed objections to briefing the NSC

about information potentially related to the criminal investigation but derived from the intelligence

investigation. In contrast, senior Main Justice officials believed more broadly that intelligence

information bearing on national security should be given to the NSC. In the aftermath of this

disagreement, the FBI chose not to attend NSC briefings on the intelligence investigation, although

the FBI continued to review the content of any such briefings.

Following the White House Counsel’s request for information, DAG Gorelick directed OIPR and the

FBI’s Office of Professional Responsibility (OPR) to review the FBI’s intelligence material to examine,

inter alia, whether the FBI had disseminated salient information about the PRC plan to Main Justice,

NSC, and the intelligence community. Their report (the OIPR/OPR Report), which was finalized in

May 1997, after DAG Gorelick had left the Department, found that there were shortcomings in the

FBI’s dissemination practices. The report, which included a brief summary of noteworthy

information from the intelligence investigation, was given to senior FBI and Main Justice officials,

including the Attorney General and Director Freeh. The report contained some of the intelligence

information that would later be considered undisseminated.

5. Congress and the Intelligence Investigation

The Department usually provides intelligence information to Congress through the congressional

intelligence committees and relies upon those committees to make information available to other

committees as necessary. In the context of the briefings related to the PRC intelligence
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investigation, the Department deviated from this policy. The Department instead briefed SGA,

HGRO, SSCI, and HPSCI directly. Although the committees were briefed at different intervals,

Department officials claim that they attempted to provide each of the committees with the same

information.

While the House and Senate intelligence committees were briefed with comparable regularity, HGRO

received fewer briefings than the intelligence committees and SGA received more. It appeared that

SGA’s efforts to obtain information from the Department drove the briefing schedule for the other

committees.

SSCI HPSCI SGA HGRO

5/16/96 5/16/96 2/27/97 7/24/97

3/6/97 1/31/97 3/6/97 9/22 or 9/23/97

3/14/97 5/1/97 3/25/97 11/14/97

4/23/97 9/23/97 5/5/97 12/4/97

9/10/97 11/7/97 7/14/97 3/4/98

9/22 or 9/23/97 12/4/97 7/28/97

11/7/97 9/11/97

12/4/97 9/23 or 9/24/97

11/7/97

12/4/97

According to Director Freeh, he and the Attorney General met with Senator Thompson soon after

SGA began its investigation. They explained to the Chairman that they would seek to find a means

by which the FBI and Main Justice could provide information to SGA to support its oversight

function while continuing to protect grand jury information and the integrity of the criminal

investigation. Director Freeh said he and the Attorney General also told Senator Thompson that if

the Department obtained evidence of a crime that was important to national security, such as clear

evidence that the PRC plan influenced the Presidential election, it would consider providing that

information to SGA. Notwithstanding this discussion, a protocol for providing information to SGA

was never worked out to the committee’s satisfaction.

6. Discovery of the Undisseminated Intelligence Information

After the September 10 and 11, 1997 briefings to SSCI and SGA, Director Freeh directed NSD to

review its files to ascertain why the two pieces of FBI intelligence information that had been briefed

to those committees by the CIA had not been disseminated to senior FBI officials. In addition,

NSD’s file review was intended to ascertain whether there was any additional information that

should have been provided to Congress. That review and subsequent searches turned up another

eight pieces of information in NSD’s files that are the subject of the OIG investigation. In November

1997, these 10 pieces of information were provided to the Task Force, Main Justice officials,

Congress, and the NSC.

4. Tracking the Dissemination of Information

The OIG report provides an exhaustive account of how each of the 10 pieces of information that the FBI

determined had not been properly disseminated were handled within the Department. We tracked each of

those pieces of intelligence information through the Department to determine who had access to it and

when. We accounted for every opportunity that Department personnel had to learn of this information,

regardless of whether it was disseminated using an appropriate means. The chart below provides a

pared-down account of the report’s findings about Department officials’ access to the 10 pieces of
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information, which are identified only by number. The notations in the columns represent each time a

particular Department official or component had access to one of the 10 pieces of intelligence

information.

NSD Director Freeh and/or

Sr. FBI Officials

Attorney

General and/or

Sr. Main

Justice

Officials

Task Force

INTELLIGENCE

INFORMATION #1

Late 1995 FBI

Teletype.

5/97 OIPR/OPR

Report.

AG: 2/97 FBI

Teletype Packet;

5/97 OIPR/OPR

Report.

DAG: 2/97 FBI

Teletype Packet;

2/97 OIPR

Memo; 5/97

OIPR/OPR

Report.

2/97 FBI

Teletype

Packet; 2/97

OIPR Memo.

INTELLIGENCE

INFORMATION #2

Early 1997 FBI

Teletype; 1996-1997

OIPR Documents.

Freeh: 1996-1997

OIPR Documents.

1996-1997 OIPR

Documents.

INTELLIGENCE

INFORMATION #3

Late 1996 FBI

Teletype.

Freeh: 1/97 Director’s

Note; 2/97 Briefing.

Sr. Officials: Late 1996

FBI Teletype; 1/10/97,

1/13/97, 2/97 Briefings;

1/97 Director’s Note.

AG: Early 1/97

discussion w/

Dept. official;

2/97 FBI

Teletype Packet.

DAG: 2/97 FBI

Teletype Packet;

2/97 OIPR

Memo.

Other Sr.

Officials: 1/13/97

Briefing; 2/97

FBI Teletype

Packet; 2/97

OIPR Memo.

Late 1996 FBI

Teletype;

1/13/97

Briefing; 2/97

FBI Teletype

Packet; 2/97

OIPR Memo.

INTELLIGENCE

INFORMATION #4

1 Early 1995, 3 Late

1996, and 2 Early

1997 FBI Teletypes.

Freeh: 4/23/97 SSCI

Briefing.

Sr. Officials: 2/97 and

6/97 LHMs.

AG: 2/97 FBI

Teletype Packet;

4/23/97 SSCI

Briefing; 7/97

LHM

DAG: 2/97 FBI

Teletype Packet;

2/97 OIPR

Memo.

Other Sr.

Officials: 2/97

Teletype Packet;

2/97 OIPR

Memo.

2/97 FBI

Teletype

Packet; 2/97

OIPR Memo;

2/97 and 6/97

LHMs.

INTELLIGENCE

INFORMATION #5

#5A Mid-1997 FBI

Teletype.

Sr. Officials: 8/97 LHM. AG: 9/97 LHM. 8/97 LHM.

#5B Early 1997 and Mid-
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1997 FBI Teletypes.

INTELLIGENCE

INFORMATION #6

Early 1997 and Mid1997 FBI Teletypes.

INTELLIGENCE

INFORMATION #7

Early 1997 and Mid1997 FBI Teletypes.Sr. Officials: 10/97

LHM.

AG: 10/97 LHM. 10/97 LHM.

INTELLIGENCE

INFORMATION #8

12/96, 4/97, 5/97

Intelligence Agency

Reports; Mid-1997

FBI Teletype.

3/97 and 8/97

Director’s Notes.

4/97 OIPR

Memo.

INTELLIGENCE

INFORMATION #9

Mid-1997 and Late

1997 FBI ECs; 10/97

contact w/ FBI Field

Office #1.

Sr. Officials: 10/97

LHM.

AG: 10/97 LHM. 10/97 LHM.

INTELLIGENCE

INFORMATION #10

#10A Early 1997 EC on

Database Search;

10/97 contact w/ FBI

Field Office #1.

AG: 7/97 LHM 7/97 LHM;

9/97 FBI Field

Office #1 File

Review.

#10B 7/97 FBI Closing

Memo; 10/97 contact

w/ FBI Field Office

#1.

9/97 FBI Field

Office #1 File

Review.

#10C 6/92 FBI Memo; 7/97

FBI Closing Memo;

10/97 contact w/ FBI

Field Office #1.

9/97 FBI Field

Office #1 File

Review.

#10D Early 1995 FBI

Teletype; 1995-1996

OIPR Documents;

7/97 FBI Closing

Memo; 10/97 contact

w/ FBI Field Office

#1.

Freeh: 1995-1996

OIPR Documents.

1995-1996 OIPR

Documents.

9/97 FBI Field

Office #1 File

Review.

#10E 10/97 contact w/ FBI

Field Office #1.

9/97 FBI Field

Office #1 File

Review.

5. Analysis and Recommendations

As outlined above, we found that much of the information that was the focus of the OIG investigation was

previously given to senior Department officials before being “re-discovered” in late 1997. However, in

many cases the officials’ access to the information was haphazard. In many cases, the fact that the

information was provided by happenstance meant that senior officials were unaware that they had ever

received it. With few exceptions, the dissemination problems the OIG found were not attributable to any

single cause. Rather, they appear to have resulted from the confluence of multiple factors. We found that

many of the problems we uncovered were avoidable and could have been minimized or eliminated if the

appropriate efforts had been made. Others were the result of faulty Department practices that increased

the likelihood of such problems occurring. A summary of our findings and recommendations follows.

A. Issues Related to Dissemination to Senior FBI Officials

Our investigation revealed that poor judgment exercised by certain NSD personnel concerning the

dissemination of information was a factor in the breakdown in the flow of intelligence information

within the FBI. However, there were many other factors that also contributed to the dissemination
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problems the FBI experienced in this matter.

1. Poor Communication and Dissension Within NSD Affected the Dissemination of Information

Beginning in mid-1997, Director Freeh gave special instructions to NSD officials regarding

what information he wanted to receive from NSD’s PRC-related intelligence investigation,

directing that he be briefed on information from that investigation that otherwise would not

have been briefed to his level, including information of doubtful or unknown reliability.

Similarly, NSD officials issued instructions to NSD personnel regarding what information they

wanted to receive from that investigation. Although Director Freeh and NSD officials may

have believed that their instructions were clearly communicated, there was in fact no uniform

understanding within the FBI chain-of-command as to what information needed to be shared

with them. It is unclear whether Director Freeh’s and NSD officials’ instructions were too

vague, miscommunicated, or simply misunderstood.

In addition to NSD’s problems in disseminating information up the chain in a timely manner,

we also found that NSD did not disseminate information in a consistent manner. NSD

operational personnel at times ignored or contradicted analysts’ evaluation of information,

creating situations in which the import of intelligence information was the subject of

disagreement within NSD. For example, there was disagreement within NSD over the

characterization of certain individuals as PRC agents, and this disagreement prompted NSD to

send mixed messages in its dissemination of information about these alleged agents. Even as

the FBI began to distance itself from such characterizations in congressional testimony, it was

continuing to make statements in documents concerning the FBI’s intelligence investigations

that were ambiguous and could have been interpreted as claiming that an individual was

indeed a PRC agent. Poor coordination early in the investigation between different units of

NSD also contributed to dissemination problems, although such problems improved by mid1997.

2. NSD Was Unduly Reluctant to Disseminate Intelligence Information Outside of NSD

NSD exhibited undue reluctance to disseminate intelligence information outside of the

division. In regard to dissemination to the Task Force, many NSD personnel cited concerns

about jeopardizing intelligence sources and methods. Others explained that their reservations

were prompted in part by the strictures of Departmental guidelines governing intelligencesharing. While both of these constitute legitimate reasons for NSD to be cautious about

sharing its intelligence information, these concerns needed to be balanced against

countervailing concerns, such as the Task Force’s need for the intelligence information to

conduct its investigation and the Attorney General’s need to have intelligence information

related to congressional inquiries. We concluded that NSD did not strike an appropriate

balance between its needs and those of the Task Force and Main Justice. We suggest that the

Criminal Division, OIPR, and the FBI resolve the issue of their conflicting understandings of

the Departmental guidelines concerning intelligence-sharing, and that the guidelines be

amended accordingly. We also recommend that the FBI publish guidance to its agents

explaining the guidelines and underscoring the need to adhere to them.

3. The FBI Needs to Improve Its Capacity to Create and Disseminate “Finished” Intelligence in a

Timely Fashion

Misunderstandings over the interpretation of raw intelligence material that NSD disseminated

to senior FBI and Main Justice officials contributed to problems in this case. Indeed, at times

NSD personnel and senior FBI and Main Justice officials had dramatically different impressions

about the importance of such information. We do not believe that NSD should generally

disseminate raw and unevaluated intelligence within the Department. We believe that it is

often difficult for senior FBI and Main Justice officials to interpret intelligence information

without being given the proper context for the information and without the analysis of capable

intelligence analysts. The circulation of a "finished" intelligence product (i.e., one that has

been subjected to analysis and contains corroborated information) will also ensure that only

information that meets some standard of reliability is disseminated by NSD, thereby reducing

or eliminating misinterpretation of or overreaction to unreliable reporting. The FBI should

hone its capacity for producing finished intelligence reporting so that it can quickly provide

policymakers in the Department with a product that is intelligible and that contains NSD’s
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collective and definitive analysis of the information. The FBI has apparently already begun

working on such an effort.

4. The Global Security Section’s Responsibilities Were Overwhelming

NSD’s Global Security Section handled all of the information generated in connection with

NSD’s PRC-related intelligence investigation. The Section Chief of the Global Security Section

appeared to bear a tremendous amount of responsibility, perhaps too much for a single

position. This may have hampered the ability of the Section Chief to closely monitor events in

that investigation. The Global Security Section’s responsibilities relate to numerous counterintelligence issues involving a large number of countries. In addition, the amount of

information that had to be processed and converted into LHMs by a single unit within the

Global Security Section was immense and overwhelmed that unit. We urge the FBI to consider

whether its current apportionment of responsibility among the sections comprising NSD

places a reasonable burden on the Global Security Section Chief and upon the personnel

working under that Section Chief.

5. There Was Apparent Disparity Between Information That Was Provided to Congress and

Information Used to Justify Intelligence Operations

As late as December 1997, information in documents prepared by the FBI that the

Department used to justify certain intelligence activities was inconsistent with information

that the Department briefed to Congress. These documents, which were drafted by the FBI

and OIPR, characterized a certain individual as an “agent.” Yet, the FBI told HGRO, SGA,

SSCI, and HPSCI that the same individual was not in fact an “agent.” We recommend that the

FBI take action to correct any misimpression fostered by the manner in which it characterized

this individual. To avoid this problem in the future, we suggest that similar information that is

provided to Congress – or any other entity outside the Department – be coordinated with the

appropriate components of the Department.

2. Issues Related to Dissemination to Senior Main Justice Officials

There was considerable confusion among OIPR, the Task Force, and the FBI over who was

responsible for disseminating PRC-related intelligence information to senior Main Justice officials

and the Attorney General. We believe the Task Force was principally responsible for disseminating

intelligence information related to its criminal investigation. The Task Force made such

disseminations principally by making the LHMs it received from NSD available to senior Main Justice

officials and the Attorney General. We believe the FBI was responsible for disseminating intelligence

information on the PRC that was unrelated to the Task Force investigation. To the extent that it did

so, it did so through the documents it sent to OIPR.

1. Lines of Authority and Reporting Need to Be Better Delineated

There was a notable lack of understanding among the representatives of OIPR, the Criminal

Division, the FBI and the Task Force concerning their respective roles in the dissemination of

intelligence information. A Departmental component’s mission should define the scope of its

responsibilities. However, in the context of the Department’s intelligence functions, there are

overlapping roles that blur lines of responsibility. Because of confusion over who bore the

responsibility for briefing certain information, no one marshaled the information and took

responsibility for reporting it within Main Justice. However, the Task Force provided

intelligence information related to its investigation to the Attorney General and Main Justice

officials through dissemination of the LHMs it received from NSD.

The missions of OIPR, the Criminal Division, and the FBI regarding intelligence operations and

dissemination of intelligence information to the Attorney General should be better defined.

Their interlocking and overlapping responsibilities in regard to criminal and intelligence

information should be more clearly delineated.

2. No Component of Main Justice Has Access to NSD’s Intelligence Information

Main Justice currently does not possess a reliable and routine means of keeping apprised of

NSD’s intelligence operations and information. To the extent that information is provided to

Main Justice, it is either provided on an ad hoc basis or through sketchy information contained
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in FISA applications and annual memoranda that serve as the basis for NSD’s ongoing

intelligence investigations of U.S. persons. The Department must decide whether it is

advisable to make the FBI singularly responsible for disseminating intelligence information to

senior Main Justice officials or whether instead a Main Justice component should have greater

access to NSD’s intelligence, thereby creating the capability in a Main Justice component to

keep the Attorney General adequately informed about the FBI's intelligence matters. In

keeping with its mission, OIPR is the logical Main Justice component to assume a greater role

in obtaining intelligence from NSD.

3. Issues Related to Dissemination to the Task Force

NSD instituted certain measures, such as the use of LHMs, to protect the sources and methods used

to gather the intelligence information that was being disseminated to the Task Force. NSD’s

reluctance to provide raw intelligence information to the Task Force was also the product of OIPR’s

aggressive criticism of NSD’s FISA intelligence-sharing practices in past criminal cases. While NSD’s

efforts to protect its sources and methods were made in good faith, NSD’s actions were predicated

in part on a misunderstanding of the law and Departmental policy governing intelligence-sharing

and were focused too much upon protecting sources and methods.

1. Poor Communication and NSD’s Intransigence Hampered the Task Force’s Access to

Intelligence

Poor communication between NSD and the Task Force and NSD’s intransigence stymied the

Task Force’s efforts to obtain access to NSD’s Foreign Counterintelligence case files. While the

Task Force raised complaints to the FBI Deputy Director’s level about its limited access to the

intelligence information, the problem persisted and was not resolved until the Attorney

General directed in September 1997 that the Task Force would receive access to the

intelligence information.

2. LHMs Should Not Be Used to Disseminate Large Quantities of Intelligence Information to a

Criminal Investigation

The use of LHMs prevented the Task Force’s criminal prosecutors and investigators from

having access to the raw intelligence material, which hampered their ability to assess the

importance of the intelligence information in NSD’s possession. The fact that the Task Force

was reduced to reviewing LHMs instead of the raw material was also undesirable because of

occasional errors in the system: at least some of the LHMs created by NSD were never

received by the Task Force; others contained incomplete information.

The LHM system was a flawed means of disseminating information to the Task Force. While

the LHM system may have protected NSD’s sources and methods, it was an extremely laborintensive and cumbersome method of providing the information. In lieu of LHMs, the system

instituted by NSD and the Task Force in late 1997 after LHMs were abandoned should be used

in any similar investigation. Task Force agents and prosecutors can review the raw intelligence

material in unredacted form in NSD’s offices and obtain a redacted copy for Task Force files.

3. The Task Force Should Have Been More Familiar with the FBI’s Databases

We found that the Task Force’s initial understanding of the FBI’s information-management

capabilities did not allow it to fully appreciate how to use the FBI’s databases to best effect.

This problem was ameliorated later when program analysts began working directly with the

Task Force. We recommend that any task force that is using the FBI’s databases obtain at

least a basic appreciation of the various search strategies used to retrieve data from the

databases and have direct access to analysts to formulate its searches.

4. Issues Related to FBI Databases

The Task Force and NSD used the FBI’s Automated Case Support system (ACS) and other databases

to obtain information on the individuals and organizations that had become subjects of the Task

Force investigation. However, problems in the way information was entered or searched in the

databases, and the way that search results were handled within the FBI, resulted in incomplete

data being provided to the Task Force.
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1. FBI Practices and Policy Have Handicapped the Usefulness of the FBI’s Databases

We found that many of the documents that were discovered in late 1997 regarding two key

subjects of the Task Force investigation could not have been found using the FBI’s databases.

Indeed, because of the FBI’s failure to enter information into its databases in a manner that

would take advantage of the databases’ search capabilities – or in some cases its failure to

enter information at all – some of the crucial information about these individuals’ ties to the

PRC was irretrievable. The FBI’s procedures for culling information from its teletypes and

electronic communications and inputting it into its databases essentially make it impossible

for the FBI to state with confidence that a database search has yielded all information in the

FBI’s files about a particular subject. The problems we found with the databases are

engendered by certain FBI administrative regulations that allow agents to forego entering

important investigative information into the system. We recommend that the FBI amend its

practices and regulations so that more, rather than less, information is entered into its

computer databases.

2. Renewed and Improved Training on ACS Is Needed for Agents

Many of the FBI personnel we interviewed were not well versed in the use of the FBI’s

database systems. They also harbored beliefs about the ACS system, such as that information

in ACS is not secure from unauthorized access, which have prompted agents to forego

entering information into the system. We believe that supplementary training for agents, who

are principally responsible for the information that is entered into ACS, is crucial to the

integrity and utility of the ACS system.

3. Foreign Names Caused Difficulty

We found that confusion over Chinese names – in particular, difficulty in determining which

name was an individual’s surname – contributed to problems with the name searches

performed for the Task Force. It is important for the FBI to ensure that its database operators

are conversant with the format of foreign names and that they search the databases in a

manner that will take into account errors that may have been made entering the foreign

names into the system.

5. Issues Related to Dissemination to Congress and NSC

Throughout the Task Force investigation, Main Justice and the FBI have sought to balance their

competing obligations to provide intelligence information to policymakers and to protect the

criminal investigation. Department officials described this as a delicate, deliberative process in

which the Department struggled to address the needs of the congressional committees and NSC

while avoiding doing anything to compromise the criminal case. Department officials were no doubt

well-intentioned in this regard, and they did try to set up procedures for reviewing proposed

congressional or NSC briefings that would ensure that the criminal investigation would be protected.

However, the Department’s briefing practices in this case were problematic in a number of respects.

1. There Is Lingering Disagreement Between the FBI and Main Justice Concerning the Briefing of

the NSC

Throughout the Task Force investigation, the FBI and Main Justice have disagreed over

whether to brief the NSC on matters related to the intelligence and Task Force investigations.

Because of the FBI’s concerns about briefing the NSC regarding the criminal investigation –

concerns motivated both by the desire to protect the integrity of the criminal investigation

and by fear of the potential political fallout from such a briefing – FBI representatives have

not attended NSC briefings related to the intelligence or Task Force investigations. We

recommend that the FBI’s appropriate role in such NSC briefings be discussed and agreed

upon by senior Main Justice and FBI officials.

2. The Department Abandoned Previous Standards for Briefing Congress and the NSC During the

Task Force Investigation

Past Departmental practices and policies for briefing Congress and the NSC were either

abandoned or severely amended in the context of the intelligence and Task Force

investigations. In order to satisfy the committees’ demands for information, and because the
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Department was concerned about being accused of withholding relevant information from the

committees, the Department adopted a policy of briefing the committees, and later the NSC,

on information of unknown reliability rather than waiting until that information could be

corroborated. The Department also departed from its bright-line standard of resisting

requests to share information about pending criminal investigations.

There appeared to have been some initial confusion within the Department regarding the

standard for determining what intelligence information would be briefed to Congress, since

the information that was briefed at different points during 1997 did not conform to a

consistent standard. Moreover, FBI and Main Justice officials failed to explain in a clear or

consistent manner to the congressional committees – in particular to SGA – the standard that

was being used. This contributed to the congressional committees’ confusion over the type of

intelligence information they could obtain and exacerbated SGA’s frustrations over the amount

of information it was receiving from the Department.

The handling of information related to the intelligence and Task Force investigations may

undermine the Department’s ability to adhere to its more restrictive practices in the future,

which is troubling because some of these restrictive practices were instituted to protect the

integrity of investigations and the rights of those under investigation. Department officials

need to establish a clear policy regarding standards for briefing Congress and the NSC on

intelligence information.

The Department also needs to promulgate standards for determining when information

relating to criminal investigations may be briefed to Congress or the NSC. If the Department

deviates from a bright-line policy of not commenting on pending criminal investigations and

does not promulgate guidelines concerning such comment, it creates perilous circumstances

for officials who conduct congressional briefings.

3. The Department Needs to Improve Its Record-keeping for Congressional and NSC Briefings

We found that in contravention of FBI regulations and directives, the FBI lacks any organized,

complete record of its congressional briefings related to the intelligence and Task Force

investigations or the materials used for these briefings. The records memorializing what was

briefed by the FBI are inadequate and no records exist at all of questions asked and

responses provided during briefings. Main Justice records were no better. There should always

be some record of the content and occurrence of these briefings, because the information that

was conveyed to Congress or the NSC may later become important, as it did in March 1997,

when the White House claimed that the FBI had instructed NSC staff not to tell their superiors

about the PRC plan.

6. Conclusion

When information from NSD’s intelligence investigation appeared to become relevant to the Task Force’s

investigation in late 1996, the Department was forced to confront the difficult issue of providing criminal

investigators conducting a high profile, politically charged investigation with sensitive intelligence

information. In addition to deciding how to use and disseminate intelligence information within the

Department, Department policymakers also had to contend with Congress’ demand for information about

both the criminal and intelligence investigations. Furthermore, the belief among some Department

officials that the White House was a subject of the criminal investigation – at least in regard to allegations

concerning illegal foreign campaign donations – prompted them to argue that the Department should not

provide the NSC with information from the intelligence investigation, notwithstanding the fact that the

PRC’s actions presented potential national security concerns. None of these issues was simple and, as

demonstrated in the OIG’s report, the Department addressed each of these issues with varying degrees of

success.

We have concluded that no single individual or decision is responsible for the array of problems that we

found. Rather, the shortcomings in the Department’s handling of the intelligence information had multiple

causes spanning from the exercise of poor judgment to counterproductive institutional practices. Unless

changes are made to address the broad spectrum of problems that we found, the difficulty that the

Department experienced handling the materials in the intelligence and Task Force investigations will

persist.
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The OIG report includes recommendations that we believe will help prevent the reoccurrence of the

problems we found. However, such recommendations will only prove effective in the future through the

good-faith, cooperative efforts of the individuals and entities within Main Justice and the FBI. Indeed,

such efforts could have prevented many of the problems that arose between the Task Force and NSD and

between Main Justice and the FBI. The OIG is committed to assisting the Department in resolving these

issues.

_____________________________

Michael R. Bromwich

Inspector General

July 14, 1999

Special Investigative Counsel

Leonard E. Bailey

Jason M. Weinstein

OIG Investigative Team

Ann Ihnat Prentice

William F. Johnson

Cynthia A. McGrory

Kimberly A. Thomas

1 These two pieces of information are referred to as “INTELLIGENCE INFORMATION #1” and

“INTELLIGENCE INFORMATION #2” in the chart that appears on pages 11-12.