1997 Congressional Hearings
Intelligence and Security

	FBI Oversight

Good morning, Mr. Chairman and members of the committee.

The issues you and the other members raise are critical and immediate. Many go to the core of the FBI and our ability to protect the American people. Some spill across multiple jurisdictions, impacting upon our state and local partners. Others are vital to our effectiveness as we prepare for the future. I appreciate greatly the opportunity to address them with you.

As an organization charged with confronting some of the most difficult issues our country faces -- serious crime, terrorism and espionage--the FBI must be and is a dynamic institution. We are constantly anticipating or reacting to new circumstances, new technology or new crimes. With your help, we are constantly reevaluating our resource allocations and investigative priorities, looking for new, more efficient ways to protect public safety and enforce federal law. New initiatives are constantly being undertaken, old programs that have lived out their usefulness are being discarded and existing functions are being improved and streamlined. It is our obligation to do so.

To the public, it is not news when the trains run on time. For the FBI, running the trains on time means arresting the suspect in the Unabomb investigation, using new strategies to peacefully end the Freemen standoff, working in the international arena to prevent the downing of eleven U.S. air carriers, capturing three spies, helping local jurisdictions significantly reduce the murder rates in their cities, or arresting over 900 telemarketers who were using fraudulent, high pressure tactics to bilk senior citizens out of their life savings. I am proud of our many successes and the men and women who accomplished them. They deserve great credit for the exceptional work they do everyday.

That is not meant to minimize the problems we do experience. For problems like those you have mentioned, Mr. Chairman, we must be held fully accountable, ensure they are candidly surfaced, thoroughly aired, and quickly and firmly corrected -- and the FBI does correct them.

I appreciate greatly the willingness of this committee, while holding us accountable, to help us in that regard, and to support our missions and our needs, helping us work through and overcome the extraordinarily difficult challenges we face. We depend on the confidence of the American people to accomplish our mission. The oversight and public airing of issues that you provide only serves to strengthen that confidence.

Today, I would like to talk about what the FBI is doing to prepare for the future, the next century, because perhaps unlike any time in our history, the nature of crime and terrorism is evolving at an unprecedented pace. New technology, new threats, new kinds of crime and a shrinking globe are continuously creating new issues. Because of this constantly changing environment, the FBI must anticipate, plan and prepare for the future to a degree and in ways never before imagined.

For example, not long ago, no one perceived that telephone systems could become untappable, that virtually unbreakable encryption would become commonplace, that people using powerful laptop computers in distant lands could steal in seconds sensational amounts of money, or that the marvels of the Internet could be used for evil against children.

International crime and terrorism have developed in nearly unimaginable ways. Complex frauds perpetrated here are controlled from Eastern Europe. Russian and Asian organized crime activity has become commonplace. New corridors have opened to continue the flood of drugs into America, and drug lords are now supported by the best technology money can buy.

Terrorism, both international and domestic, threatens us like never before. The country has for the first time suffered catastrophic attacks. In some parts of the world nuclear material floats across the black market to the highest bidder. We have arrested people here who possessed anthrax or ricen, an extraordinarily deadly chemical. Reliance on computers and other amazing technologies has inadvertently created vulnerabilities that can be exploited from anywhere in the world. Modern transportation and modern technology give terrorists abilities unheard of only a few years ago.

Yet the traditional crimes remain as well. Violent crimes and violent gangs have come to cities big and small. Small police departments -- ill-equipped to deal with gangs like the Bloods and Crips -- must now do so. Children continue to fall prey to violent abductors or pedophiles who now come into homes over modems and telephone lines. Massive health care fraud and telemarketing schemes defraud those in our society who are often most vulnerable. Drugs continue to flood our streets, and hate crimes and other egregious civil rights violations continue to happen with alarming frequency.

The decisions about meeting current demands versus preparing for the future are not easy ones. Achieving the proper balance is more difficult than ever before. The explosion of new technologies and the globalization of crime have become realities. The need for the right investigative tools is immediate. The necessity for strong partnerships between local, state, federal and international law enforcement is more urgent. Information must flow unimpeded and coordination at all levels must be superb if we are to continue to make inroads against these increasingly complex crimes. These are among the issues the FBI is addressing.

With help from Congress, the FBI is aggressively preparing for the future. Over the last three years a number of initiatives have been undertaken to prepare for what lies on the horizon.

Perhaps because of the manner in which the FBI initially handled the NCIC 2000 and IAFIS projects, their significance to law enforcement was lost. These two projects were the first in a series of critical infrastructure improvements necessary if the FBI is to be effective into the next century. They represent the future direction of law enforcement. Law enforcement must prepare now for new technologies, new kinds of crimes and terrorism, and the inevitable shrinking of the globe as transportation and technology advance.

The FBI has spent the last three years preparing for the transition into the next century -- but more needs to be done. I would like to briefly mention some of the initiatives underway that can be discussed in open session.

On the technology front, Congress in 1994 passed the Communications Assistance to Law Enforcement Act (CALEA) to preserve one of law enforcement's most valuable investigative techniques -- court-authorized wiretapping -- which was being lost to new technology. Since then, and amidst much public misunderstandings, the FBI has been working with the telephone companies to develop cost effective solutions. After literally hundreds of meetings, we are now certain solutions can be implemented. By enacting this law and providing the initial funding, Congress has addressed one of the most difficult, complex issues ever to confront law enforcement.

Encryption is an equally difficult issue. Law enforcement is in unanimous agreement that the widespread use of robust non-key recovery encryption ultimately will devastate our ability to fight crime and prevent terrorism. Uncrackable encryption will allow drug lords, terrorists, and even violent gangs to communicate with impunity. Other than some kind of key recovery system, there is no technical solution.

Several bills have recently been introduced in Congress that address certain aspects of the encryption issue. The legislative proposals introduced thus far would largely remove existing export controls on encryption and promote the widespread availability and use of any type of encryption, regardless of the impact on public safety and national security, and these proposals do not address the public safety issue associated with the availability and use of encryption within the United States. We are now at an historical crossroad on this issue. If public policy makers act wisely, the safety of all Americans will be enhanced for decades to come. But if narrow interests prevail, law enforcement will be unable to provide the level of protection that people in a democracy properly expect and deserve. I do not believe it is too late to deal effectively with this issue.

New and evolving computer and information technologies likewise present law enforcement with the imposing and significant challenge of protecting the nation's critical infrastructures and electronic networks from criminal and terrorist computer attacks. Recognizing this trend for the future, the FBI has established the Computer Investigations and Infrastructure Threat Assessment Center (CITAC) to coordinate the criminal, counterterrorism and counterintelligence responsibilities of the FBI relating to computer intrusions and threats and analytical effort. Its creation allows the FBI to analytically cross disciplines and investigative programs, and to view cases from both law enforcement and counterintelligence perspectives. Through CITAC, the FBI will be better positioned to prevent and counteract threats to computers, information technologies, and components of critical national infrastructures. CITAC and the components under CITAC provide support for law enforcement at all levels and every Special Agent in Charge of an FBI field office has a working group of local officials identifying local critical infrastructure, vulnerabilities and planning and preparing for foreseeable contingencies.

As the FBI itself disclosed, there were problems with the FBI Laboratory -- one major problem being its physical facilities and equipment. The Lab has and continues to pioneer new techniques, but as science and technology rocket ahead, the current location has become dangerously outdated. With the approval and funding Congress has provided, the FBI is constructing a state-of-the-art teaching laboratory at the FBI Academy. Not only will this facility allow the FBI to maintain cutting edge forensic technology well into the next century, but it also will permit substantially more support for state and local law enforcement.

Consistent with the Lab's robust use of computer support for programs like DRUGFIRE and CODIS, the FBI in partnership with the University of Louisiana has begun development of LEO--Law Enforcement Online. As envisioned, LEO will bring to police departments -- large and small -- forensic, investigative and instruction support never before imagined. For the first time, small departments -- the vast majority of police departments have fewer than 10 officers -- will be permitted ready and immediate access to critical resources and assistance from the FBI.

In the area of counterterrorism there are two significant initiatives in addition to CITAC that I would like to mention.

Presidential Decision Directive-39 assigns to the FBI responsibility for reducing vulnerabilities to terrorism by an expanded counterterrorism program. Part of the expanded program includes countering the terrorist threat from the use of weapons of mass destruction.

The FBI is working closely with the Department of Defense to carry out authorized weapons of mass destruction programs, such as Nunn-Luger. We are actively undertaking initiatives to employ all necessary measures, assets, and resources to achieve these objectives.

During the past year, the FBI has implemented several new programs to meet this challenge. These are not conducted in a unilateral manner, but with the FBI working with many other United States government agencies and state and local agencies to coordinate crisis management.

These programs involve the FBI's role in the interagency community to assist in the training of law enforcement and emergency first responders throughout the United States; to issue and update contingency plans for FBI field offices and other crisis management agencies; to participate in interagency exercises; to create the domestic emergency support team; and to implement the joint Department of Defense/FBI international training initiative in the former Soviet Union.

With funding provided by Congress, the FBI established a hazardous materials response capability within the FBI Laboratory so that we can fulfill our role in terrorist incidents where chemical or biological agents or nuclear materials are suspected or involved. In addition, the FBI upgraded the training provided to federal, state, and local law enforcement, firefighter, and public safety officers through the FBI's Hazardous Response School at Redstone Arsenal, Alabama, and we are developing a capability to exchange forensic information with other foreign governments so that we can improve our ability to link terrorist incidents and identify persons responsible for terrorist acts using these types of weapons.

In addition, the FBI has established the Counterterrorism Center to coordinate and combine the resources and expertise of federal agencies in the fight against terrorism. The Center is designed to combat terrorism on three fronts: international terrorism operations both within the United States and in support of extraterritorial investigations; domestic terrorism operations; and countermeasures pertaining to both international and domestic terrorism. Agents and intelligence analysts now work side-by-side with personnel from sixteen other federal law enforcement agencies, intelligence organizations, and federal departments. This center facilitates communications, cooperation and coordination among the participating agencies -- A critical element during crises. Since the establishment, interagency cooperation has included both intelligence sharing and joint operational planning. I believe this Center will serve as a model of cooperation in the future.

There seems little doubt about the necessity for an effective international law enforcement program. National borders no longer constrain criminals and terrorists. Preparing for the next century, I believe, requires establishing now the relationships--cop-to-cop relationships--necessary to ensure effective law enforcement in the international arena. To do otherwise risks any hope of a coordinated international effort and could slow the spread of policing under the rule of law.

Toward this end, last year we presented to Congress, and Congress approved, a four-year plan for doubling the number of FBI Legal Attache Offices, from 23 to 46. The plan, also approved by the CIA, the Department of State and the Department of Justice, is designed to place Legats where they will be the most effective in supporting American law enforcement. FBI Legats are not intelligence officers. They are stationed abroad solely in furtherance of the FBI's law enforcement and counterterrorism missions, constantly interacting with local police for the benefit of both countries.

In addition to the expanded number of Legats, an initiative that likely will pay enormous dividends in the years to come is the International Law Enforcement Academy in Budapest. Working hand-in-hand with the State Department and other agencies, we now train 250 students per year, all officers from the former Eastern Bloc countries. This coupled with a greatly enhanced foreign police training program that conducts classes both here and abroad greatly expands the FBI's ability to conduct investigations that have international aspects and spreads throughout the region the fundamentals of policing under the rule of law.

In order to help strengthen every aspect of FBI operations, I also appointed Michael A. Defeo, a distinguished career prosecutor and senior official of the Department of Justice with extensive experience in extremely sensitive internal inquiry investigations, to head up our new independent Office of Professional Responsibility. We have doubled the number of employees -- from approximately 30 to 60 -- dedicated to identifying, investigating, and adjudicating allegations of serious misconduct of FBI employees. Through this office, the FBI will continue to police itself with the same vigilance we place on fighting crime throughout the U.S.

To better combat violent crimes, the FBI currently has established 152 Safe Streets Task Forces (SSTFs) in 54 field offices. The mission of these task forces is to establish long-term proactive investigations, focusing on violent crimes and the apprehension of violent fugitives. SSTFs are comprised of 718 FBI Special Agents, 1131 state and local officers and 174 other federal law enforcement officers. The impact that these task forces have had within their communities has been impressive. For example, the Northern Connecticut Violent Crimes Safe Streets Task Force was created in January 1994. That same year, there were 58 murders in Hartford, Connecticut; however, this last year the murder rate fell to 28, a 51% decrease.

While white collar crime investigations may not be as visible to the average American, they can have just as serious affect upon their lives. The FBI has increasingly expanded its approach to investigating white collar crime. For example, health care fraud is a multi-billion dollar problem affecting nearly every American. Using the new laws Congress enacted last year, the FBI has greatly expanded its health care fraud program and now routinely conducts joint investigations with the Inspectors General, Medicaid Fraud Control Units, and private companies special investigations units. The FBI now has Health Care Fraud Task Forces in seven field offices investigating clinical laboratories for fraudulent marketing and billing practices. Since October 1996, three national health care laboratories have agreed to pay the government over $625 million in civil settlements, and two corporations pleaded guilty to criminal charges of conspiracy and filing false claims.

Another white collar crime investigation, "Senior Sentinel," continues to combat fraudulent telemarketers who prey on senior citizens, often bilking them out of their life savings using phoney "pitches" and high pressure tactics. To date, over 900 persons have been charged through information developed in this investigation.

Another area upon which I have placed special emphasis is the investigation of hate crimes. According to the Uniform Crime Report, there were nearly 8,000 reported hate crimes in 1995. While no crime belongs in our society, this classification of crimes is particularly heinous. To place ourselves in a better position to prevent and investigate these crimes, the FBI implemented a three-year plan during this last year to enhance our civil rights program. Beyond adding additional personnel to investigate these crimes, we are developing working relationships with the civil rights community -- partnering with all the national civil rights organizations to formulate models for reporting hate crimes, educating the community on hate crimes and the FBI's role, and developing FBI/community group partnerships on the state and local level.

To further enhance the FBI's leadership role in crimes against children, I recently directed each field office to designate two Special Agents to assist and coordinate efforts in these matters. These agents receive specialized training and are a point of contact and resource for state and local agencies involved in the investigation of these crimes. In addition, the FBI has established the Child Abduction/Serial Killer Unit to serve as a clearinghouse. Through this network of agents, we have developed a web of resources which can be quickly mobilized when a crime is reported. The first few hours are critical in a child abduction case; we must be ready to act at a moment's notice. In addition, the FBI has garnered success in investigating child pornography through its Innocent Images Investigation. Since its inception in June 1994, we have indicted 94 people and convicted another 104.

Reducing the influence of the La Costra Nostra (LCN) organizations in American society has long been a goal of the FBI. Towards this end, the FBI initiated Operation Button Down just over a year ago. The ultimate goal of this initiative is the elimination of the LCN as the most dominant organized crime enterprise in the United States. During the first year of the initiative, Button Down offices have indicted and/or convicted a total of 4 bosses; 3 underbosses; 3 consiglieres; 46 capos; 48 soldiers; and 331 associates. There are also 65 forfeiture matters pending in Button Down offices. Since March 6, 1996, these offices have seized assets worth an estimated $116,310,210; currently, approximately $225 million are pending forfeiture in LCN cases.

The FBI has also been active in two specific new initiatives designed to stem the flow of drugs into our country. Through the Southwest Border Initiative and the Puerto Rico Initiative, we are working closely with our federal and local law enforcement partners effecting a coherent strategy to battle drug trafficking and public corruption in these regions.

I have been particularly proud of the FBI's outstanding work in investigating and arresting individuals guilty of espionage. Since the arrest of Aldrich Ames, the FBI and CIA have instituted a whole new set of measures to improve information sharing and cooperation. This enhanced cooperation enabled the FBI to identify, investigate and arrest Harold James Nicholson on November 16, 1996. Nicholson is the highest ranking CIA employee to be caught spying. In addition, the FBI also conducted a successful internal investigation and arrested FBI Supervisory Special Agent Earl Edwin Pitts on December 18, 1996. In February, he pleaded guilty to conspiracy to commit espionage and attempted espionage charges.

In another very serious developing aspect of this type of crime, economic espionage has the potential to wreak havoc with trade, commerce and business in this country. The Economic Espionage Act of 1996 provided law enforcement with a tool to deal more effectively with trade secret theft. As a result, we have begun a major economic espionage initiative. Government and corporate proprietary economic information sustains the health, integrity, and competitiveness of the American economy. The passage of the Economic Espionage Act has facilitated our ability to act decisively on these matters.

Despite its successes, it is apparent that the FBI has made mistakes. We candidly admit those mistakes and have moved quickly and decisively to solve the problems and prevent them from happening again.

There is no better case in point then the problems in the FBI Lab. The problems identified by the Inspector General should never have been permitted to develop. There was a clear and serious failing in not adequately detecting these problems and, in many instances, not moving swiftly enough to resolve them. The FBI did not react properly to the obvious warning signs. In the final analysis, I believe the FBI's major failure was in not seeking accreditation sooner.

In addition, our prior reviews of the Lab did not go far enough. That is why we cooperated fully with the Inspector General. It was the right thing to do. We knew there were serious problems that needed to be fully identified and fixed. I acknowledged that in 1994, having begun then to make substantial improvements and repair obvious shortcomings in our procedures. Ultimately, we adopted all of his recommendations and made numerous other improvements of our own, many were begun prior to the Inspector General's inquiry. That is also why I previously instructed the Lab to seek full accreditation and why we are going to hire a top-notch scientist to run the Lab.

Other scientists have also been hired, and over the last several years we have hired more than 100 new professional forensic examiners, many with advanced degrees. These changes will substantially improve the FBI Laboratory, and most will be applied across the entire Lab. In any case, the process of obtaining full accreditation as well as our decision to inspect the remainder of the Lab using outside experts will ensure that the continuing confidence and praise expressed by the International Association of Chiefs of Police and the National District Attorneys Association is fully justified.

We are continuing to work very diligently to solve the problems in the Lab. There are many important efforts underway, not the least of which is construction of a new state-of-the-art teaching laboratory I mentioned previously. I am very confident these efforts will be successful and all the Lab problems will be fixed. We, including the new head of the Lab, will dedicate ourselves to working even harder to prevent new problems from arising in the future.

The same is true for the files issues. An antiquated system coupled with a lack of immediate management oversight allowed a process to develop many years ago that lacked key safeguards. Failing to protect FBI files from misuse or the possibility of mishandling or misuse are issues that resonate with concern with the American people. They understand the fundamental privacy issues that were involved. Maintaining the sanctity of the information we collect and ensuring it is only released appropriately are two of our greatest responsibilities. The FBI must protect that which it lawfully collects. I am fully confident we now have in place the appropriate safeguards and oversight of the system. As with the Lab, we have made fundamental changes, institutional changes that will be effective far into the future, that will prevent a reoccurrence of these kinds of problems.

It is my responsibility when mistakes occur to ensure the FBI reacts quickly and wisely to address the situations. I believe the FBI is doing just that and with success. Post Waco and Ruby Ridge, we created the Critical Incident Response Group. Its success was apparent in the Freeman standoff when every lesson we learned earlier played out to a peaceful resolution. While the significance of the moment went nearly unnoticed, it represents a fundamentally new way of doing business.

NCIC 2000 and IAFIS are other examples, different in kind, which demonstrate the FBI's willingness to take aggressive corrective actions. Both projects are now on track, with new management teams and constant high-level oversight. Both projects are also benefiting from a robust partnership with local and state law enforcement. This partnership will ensure we deliver what the users need.

Finally, there are remaining issues important to the FBI and law enforcement that we look forward to working on with this committee. These items are critical for our continuing ability to address the most serious crimes and terrorism and to permit the FBI to have the capability to deal with current and future technology. Briefly, they are:

• Continued funding for CALEA: Congress authorized $500 million in 1994 to reimburse telephone companies for their direct costs associated with developing and retrofitting existing telephone equipment that will not support court authorized wiretaps, pen registers and trap and traces. Thus far, Congress has only partially funded CALEA. Because progress with the telephone companies has reached a critical stage and some are ready to move forward, it is essential we be permitted to obligate existing funding and receive future funding as envisioned in the 1994 law.
  
  
• The enactment of a balanced legislative solution to the encryption issue that addresses law enforcement's public safety needs is badly needed. I do not believe it is too late to do so. The bills introduced thus far fail to address law enforcement's needs. In my opinion, the enactment of these bills would have a serious negative impact on public safety and national security. Any solution that ignores the public safety and national security concerns risks grave harm to both.
  
  
• Multipoint electronic surveillance authority: Modern telephone technology has created issues never envisioned in 1968 when wiretapping was first authorized. We now see criminals who buy dozens of cellular telephones at once, discarding each after using it for only a short period of time. Prepaid calling cards and the use of clone cellular phones have become commonplace. These and other technologies make current surveillance methods obsolete. Congress partially addressed this issue in 1986 with the passage of the Electronics Communications Privacy Act. This proposal does not expand the scope of existing court-authorized wiretapping, rather it would harmonize the legal showing for wiretapping with that for "roving" oral intercepts. In recent testimony, a copy of which has been provided to this committee, I laid out the initiatives underway and still needed to continue to effectively attack terrorism. More needs to be done if law enforcement is to keep pace with the technology certain to be used by terrorists and other criminals alike. Progressive, long term strategies need to be developed, authorized and ultimately funded to ensure that law enforcement at all levels remains effective in the next century and has available the tools and technologies necessary to get this job done.

Mr. Chairman and members of the committee, I would like to conclude this very detailed account of FBI programs and plans by briefly recalling to you the human dimension of the FBI's work. Since I became director -- and through your good offices -- I have had the great honor and pleasure of watching 2,210 men and women train and graduate from the FBI Academy as new FBI Agents. They have been rigorously trained in law enforcement, in survival skills, in cyber skills, and in ethics and ethical decision-making. I am proud and confident in their ability to work on the street, to protect the people they are sworn to protect, and to meet the challenges of 21st century law enforcement.

At the same time, I have also, since becoming director, attended the funerals of five Special Agents. All were slain in the line of duty, by gunfire. All were men and women at the peak of their lives. All left grieving families behind.

We can never forget that law enforcement is a hard trade in a violent world -- and that the FBI programs and plans we discuss today are nothing without the men and women who put their lives on the line, every day, to protect people. On their behalf, I would again like to thank you for your willingness, while holding us fully accountable, to support our mission and our needs, and to help us work through and solve the extraordinarily difficult issues we face. I will now be glad to take your questions.