Return to Transcripts main page

CNN Live Event/Special

FBI Director Louis Freeh Testifies Before Congress

Aired May 16, 2001 - 10:34   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: We want to take you live now to Capitol Hill, where FBI Director Louis Freeh is testifying now before a House Appropriations subcommittee. Let's listen in.

LOUIS FREEH, DIRECTOR, FEDERAL BUREAU OF INVESTIGATION: ... literally dozens and dozens of sessions before committees, hundreds more individually with members, I would have been surprised. But it has certainly been one of the highlights of my service here as director, and I want to extend my personal thanks and respect to all the members of the committee, past and present.

Mr. Chairman, with your permission, given the circumstances under which we appear here today, I would like to take a little bit of time to state for the record the facts known to me, known to others in the FBI, with respect to the records situation involving the McVeigh case. I would then also like to speak briefly and directly to the matter before the committee, which is our 1902 (sic) appropriated request.

Before I do that, however, just by way of introduction, I am very proud of the FBI, and I am particularly very proud this week as we celebrate and memorialize several things, first of all, the men and women in law enforcement who have fallen in the service of our country. This is also the time of remembrance for not just victims of tyranny and holocaust, but also people who have found for one reason or the other in time or circumstance the power of the state directed against them unfairly, unlawfully and with great consequences.

We are an agency involved in controversy. There is no question about that. What we do every day is controversial. We conduct investigations, surveillances. We bring facts to bear which may result in charges and convictions and sentences. We are constantly running aside and next to and hopefully never across the boundaries of the Constitution, of the rule of law, the statues which govern our conduct.

But we are an agency involved in controversial matters, the protection of our country, the protection of public safety. All of those ingredients that both seek to identify and deter those who would break the law, but simultaneously protect those who need protection under the law is a controversial line of work. We have acquitted ourselves, I believe, over the years very, very well with respect to the protection of these liberties. Not to say there are not cases or periods in our history -- Mr. Serrano, you mentioned one in particular to which I agree -- where the agency was not law-abiding and was not doing the things that the Constitution and the people we protect expect us to do.

I'd like to put into perspective some of the introductory remarks that were made. And I think all the questions that have been asked are fair questions and certainly need to be answered.

Mr. Obey referred to a person who was incarcerated -- it's a Massachusetts case -- for many, many years when exculpatory evidence was in the hands of the government, particularly the FBI. He's absolutely right about that. That is a very sad chapter in the history of this agency. And of course, we're talking about events that occurred in the 1980s and 1970s. What should be noted, however, it was the FBI of modern times, the FBI of 1998, 1999 that not only uncovered that evidence but has brought to bear the facts and circumstances which will allow the just prosecution of people, including former people associated with our agency, who broke the law.

I think that that's a very important perspective. It was the FBI's investigation, working with other law enforcement agencies and the U.S. attorney that brought that to bear.

With respect to the Birmingham case, yes, the Birmingham case is a disgrace to the FBI. That case should have been prosecuted in 1964. It could have been prosecuted in 1964. The evidence was available. My agency of which we are all ashamed failed to pursue that case.

The footnote, however, to that piece of history is very, very important. This case was reopened by the FBI in 1993, not only under my tenure, but on the initiative of the special agent in charge of the Birmingham office. The tape, which was subsequently used at the trial, was found by the FBI of 1993-1994. And this evidence was used to prosecute a case that should have been prosecuted years ago.

With respect to practices in the laboratory, yes, we've had tremendous problems -- technical problems, scientific problems, in the laboratory. But we addressed those problems. We not only appointed a director who came from the private sector for the first time in our history, who is a world-class scientist, but the peer review taking advantage of the inspector general's report has given us not only a state-of-the-art laboratory, which is being built with the committee's support, but which solves a lot of the technical problems and addresses all of the issues that came during the inspection.

Ruby Ridge was a great tragedy. It was a tragedy for the victims involved. It was a tragedy for the country and the FBI. But again, as of all these matters, there is another piece that has to go with this. In the wake of Ruby Ridge and Waco, we reformed totally our crisis management response. We created a new entity in the FBI, which you are familiar with -- the critical incident response group. That group, for the first time, balanced the tactical abilities of the FBI with its negotiating abilities, which were not used and which were eclipsed both at Waco and Ruby Ridge by the dominance of the tactical forces.

We created this new structure in response to the episodes of Ruby Ridge and Waco. And the result was quite apparent. If you look at the Freemen situation in Montana, you see the application of a new set of parameters and a new set of disciplines in a crisis hostage situation. The only person who lost his life in Montana, unfortunately, was an FBI agent, killed in the line of duty. No one else was harmed because we balanced as we had not done before negotiation with tactics.

The Jewell case, the major controversy with the Jewell case was that I interrupted his interrogation so he could be given his Miranda rights. Because my view of the situation was that he was in custody and was entitled to his rights.

With respect to the Wen Ho Lee case, that's a case that has been indicted. He has pled guilty to several of the charges set forth in the indictment. And the facts remain in that case that the crown jewels of the United States nuclear program were downloaded onto tapes and taken them out of a government reservation. And we made that case, we solved that case by a forensic computer examination of millions and millions of records which we did, Mr. Rogers, with the help of the technology of NIPC, with the help of the experts that we were allowed to hire, the computer scientists who made that case from the hard drives, not from the streets.

The espionage case, of course, we regret. And I don't want to say much about that because this is an active case. But I will tell you I am much more comfortable leaving the FBI having discovered the case, which is charged before the court, than not having found it. Every counterintelligence case successfully made is also a failure. It is simultaneously a success and a failure. And we will learn from that experience.

And I know this agency and my successor and the people who are working on this problem will fix many of the things which need to be fixed. But the fact of the matter is, we uncovered that case. We made that case and the charges now stand before the court.

I do not believe that there has been a failure of oversight on the part of the Congress. And I would say that with the most conviction. I could give you example after example, and I don't want to take all your time this morning. But I believe we are the most scrutinized agency in the federal government. I also believe we should be because of the enormous power that we have and the potential for abuse that the FBI would have without that scrutiny.

In my first year as director, I think I was up on Capitol Hill over 200 times testifying, speaking to members, calling them on the phone. I think I testified before committees more than any other member of the executive department. I've not done the statistics, but we testified before Appropriations Committees, before Judiciary Committees, before Intelligence Committees, before Government Oversight Committees, and everything that we do is carefully scrutinized, as it should be.

One example of that, Mr. Rogers, you mentioned it, was the IT program of the FBI. We came up here, myself personally, presenting first the ISI program and then the EFBI program, both of which turned out to be flawed, and we did not go ahead with those programs because of the questions that you and your staff properly raised, and that required us to go back to the drawing board, redesign what we had.

We were fortunate, as you mentioned, to bring Mr. Dees (ph) in, and we have now a program, a Trilogy program, which is going to work. So that's just one of many, many examples of the oversight by this committee which has clearly directed and redirected our efforts.

I would say the same with respect to the CALEA operation. We got off to a slow start, particularly the FBI. You took the leadership of that. We now have $500 million appropriation that has been appropriated in the process of being expended. And we have what we didn't have in 1994, which is the ability to keep conducting court authorized wiretaps. You directed our efforts, you stopped us, you sent us in different directions. That's the kind of oversight that we not only expect but which, in this case, was extremely helpful.

So I think that with respect to the oversight of the Congress, it has been very comprehensive, very effective. It should be. We should be, as I said many times before, the most scrutinized agency in the United States government because of the power that we have. But I think the work by the committees here has been excellent.

With respect to the technology issues, Mr. Rogers, which you raise, and which I thank you again for your support over the years, I would recommend anybody talk to the state and local law enforcement community around the country -- your sheriffs, your chiefs of police, the IACP, the Sheriffs Association, the District Attorneys Association. They will tell you that the delivery of the criminal justice information services by the FBI is excellent. Not to say that we don't have a glitch now and then, but the reliability of those programs -- and you're correct, Mr. Rogers -- some of them were very, very difficult in bringing them online, and we look a lot of responsibility for those mistakes. But the fact of the matter is they're all working. They're working well.

The NCIC system was the latest addition, which also has worked well, identifying 71,000 people with criminal records who shouldn't have had guns and were not able to buy guns.

We are catching up a little bit in technology, but I think we're catching up with the bad guys. The technology is changing all around us every day. It's not a question of being unprepared for it, it's a question of getting the resources that we need to do the job, to protect the country, the people that we serve, and to do it in a dynamic manner where what we're expending and appropriating does not become obsolete in a short period of time. So I just wanted to take a moment to speak about those things.

We have had troubles in this agency. We've had failures. We've also had great triumphs, and I'm not going to take your time this morning to list those triumphs which Mr. Obey alluded to. We have a matter before a jury in New York City, which I will not talk about. But a trial so complex and so difficult and so expertly worked by the FBI -- your FBI -- and agents who went to East Africa to find evidence and witnesses, a case that the United States should never be entitled to make but for the dedication, skill and hard work of the FBI. The Rasam (ph) case recently convicted out in Los Angeles, major terrorist acts deterred from happening to the United States, to Americans, by the FBI work, and I'm not going to spend the time this morning to talk about the triumphs. But there have been very, very many, and I want to acknowledge that as I start my remarks.

With your permission, Mr. Chairman, I would like to address the issue with respect to the McVeigh case. As you know, the FBI has discovered and announced that documents and other items from FBI files apparently had not been turned over to the prosecutors handling the Oklahoma City bombing case, despite an unusual discovery agreement that called for broader than normal disclosure.

Last week, the FBI sent these items to the prosecutors in Denver who promptly delivered them to the defense attorneys. As Attorney General Ashcroft said Friday, a review of these materials disclosed no new information relative to the guilt or innocence of Timothy McVeigh. The underlying investigation and his guilt remain unchallenged.

Nevertheless, and regardless of how extraneous these documents may be, if they were covered by the discovery agreement, they should have been located and released during discovery. As director, I'm accountable and responsible for that failure, and I accept that responsibility. I will, however, outline steps that I am taking today to address the management aspects inherent in this particular failure.

By way of background, the FBI's investigation of the Oklahoma City bombing was a huge effort of enormous breadth. From the moment the bomb exploded on that horrific day, the FBI devoted every conceivable resource to investigating and solving this act of terrorism. During the course of the investigation, I am confident that we and the other agencies who aided us left no stone unturned. As a result, we collected massive amounts of evidence and reviewed literally a billion pieces of information.

To give you a few examples, we conducted over 28,000 interviews. We followed more than 43,000 investigative leads. We generated over 28,000 302s, investigative reports. We reviewed 13.2 million hotel registration records, 3.1 million Ryder Truck rental records. We reviewed over 600,000 airline reservation records and collected nearly 3.5 tons of physical evidence.

I am proud of the investigation and support teams who with their colleagues worked around the clock to solve this terrible crime. The investigation and prosecution of this case was a success story, a significant accomplishment, and it pains me to have the hard work and accomplishments of both investigators and prosecutors overshadowed by the events of recent days.

I regret the most that these events risk diminishing the enormity of their sacrifices and the superb quality of their service to the American people. I also regret the pain that this has caused the victims and family members who lost their loved ones.

The FBI committed a serious error by not ensuring that every piece of information was properly accounted for and, where appropriate, provided to the prosecutors so they could fulfill their discovery obligations. Because of the massiveness of this investigation and the implications inherent in being found guilty of such a horrendous crime, McVeigh and his attorneys were given access into government records far beyond what is provided for other defendants, far beyond documents that affect guilt or innocence. Once agreed, however, it was our unquestionable obligation to identify every document, regardless of where it was generated and regardless of where in our many, many offices it resided.

While I do not believe that the newly discovered documents will have any bearing on the convictions or sentences of either McVeigh or Mr. Nichols, I am not here to minimize our mistake or to make excuses. It appears that most offices of the FBI either failed to locate the documents and items in question, misinterpreted their instructions and likely produced only those that would be disclosed under normal discovery, or sent the documents only to have them unaccounted for at the other end. Any of these cases is unacceptable.

Because of the magnitude of this investigation and the vast amounts of information being gathered, the FBI established a separate command center, called the OKBOMB command post that operated essentially as a separate FBI field office. In the fall of 1995, the command post instituted a special case management and document tracking system which required all investigative materials to be sent to the Oklahoma City office for entry into a case-specific database.

Regardless of where a particular investigative lead was followed, whether in one of our 56 field offices in the United States, or in one of our Legats overseas, and regardless of the probative value of the information collected, if any, the investigative results were to be sent to the command post for uploading into their system. There were three principle reasons for this decision to enter all the data, physically, in Oklahoma City.

First, because the effort was so widespread and massive, the command post wanted to maintain close control over the investigation. By centralizing the evidence in document control, the investigators in Oklahoma City believed they could better ensure that the information was properly entered into the system, maintain the investigation's confidentially and more effectively identify and prioritize additional investigative leads.

Second, the FBI was converting to a new bureau-wide investigative information system, called ACS, the automated case support. And the investigators were uncertain about how this conversion would affect the ongoing investigation.

Third, during the first six months of the investigation, and because no such information was being generated worldwide, the OKBOMB command post had some difficulty ensuring that all field offices coordinated their investigative materials with the records maintained in Oklahoma City. Because of the latter, between August of 1995 and November of 1996, 11 separate communications were sent to the field offices requesting that all evidence be sent to the OKBOMB command post. On November 14, 1996, following a discovery hearing before the court, the command post discovered that certain surveillance logs still resided in the field office and not in the OKBOMB command post where they should have been and, therefore, had not been turned over to the defense attorneys during discovery.

The following day, November 15, 1996, I sent a strongly worded priority teletype to all field offices and all Legats, those are our overseas offices, directing that all investigative materials be sent promptly to the command post with written confirmation from the office heads. The command post investigators believed that this directive, combined with the previous request had caused all investigative materials, regardless of apparent relevance or value, to be forwarded to the command post and be entered into the OKBOMB database.

As we now know, there were still many offices that had failed to comply fully or precisely with the instructions given. As a consequence, the items now at issue were apparently never turned over to the prosecutors during the discovery period. The events that led to the recent disclosure began in February of last year. Recognizing the historical significance of this investigation and rather than wait the customary 25 years, all Oklahoma City office began the process of collecting OKBOMB records for archiving and preservation.

That office sent the communication to our Information Resources Division asking for assistance in storing records and evidence relating to the bombing investigation. The office wanted to ensure that all materials were maintained in excellent condition for future storage in the National Archives.

Following discussions with the National Archives and Records Administration, the FBI's archivist sent a communication to all field offices on December 20, 2000, setting forth procedures for maintenance and disposition of records relating to the investigation. I understand this process revealed one envelope that was unaccounted for, causing the Oklahoma City office to send a communication to all field offices on January 30, 2001, directing that everything remaining anywhere in the field, no matter what it was, be sent to Oklahoma City so it could be evaluated and prepared for archiving.

Beginning in late January of 2001 the Oklahoma City FBI office began receiving from most of our field offices boxes containing a variety of investigative materials, including witness interviews. In total, over 100 boxes of materials were forwarded to Oklahoma City during the last several months. Rather than merely storing the material for future archiving, a group of FBI analysts undertook the arduous process of double-checking everything by manually reviewing every item to ensure that each piece was already included in the OKBOMB database.

In other words, there was no legal requirement that they do this. All they had to do was collect the evidence for archival purposes.

What they did instead was, item by item, check each and every one of the documents received against the known database. By early March, an analyst had collected a number of documents that she had not been able to locate in any database.

She informed Danny Defenbaugh, the former head of the OKBOMB task force and currently the special agent in charge of the Dallas field office, but advised him that further research would be needed to determine whether these documents were in the OKBOMB files.

Shortly thereafter, on March 15 of this year, the Oklahoma City office sent another communication to all field offices and Legats requesting another search for all OKBOMB materials and immediate delivery of any items to Oklahoma City.

Following several weeks of additional research, the analysts completed their review and forwarded to SAC Defenbaugh copies of all materials which they were unable to locate in the OKBOMB database. SAC Defenbaugh received copies of the materials on May 7 and, following an initial review, sent the materials on May 8 to the prosecutor in charge in Denver.

That same day, the prosecutor, Assistant U.S. Attorney Sean Connelly orally advised defendant McVeigh's attorneys that the FBI had discovered additional materials. He copied the materials, delivered them to defense counsel on May 8, the same day he received them.

I first learned of this matter on May 10. The materials provided to the defense counsel total approximately 3,100 pages and consist of slightly over 700 separate items. Many are documents containing several pages. An additional seven items from our Baltimore field office were located on Friday and were provided to the defense counsel yesterday.

The materials came from 46 different field offices and one Legat. The field offices and number of pages from each are listed at the end of AUSA Connelly's May 9, 2001, letter to the defense counsel, which I believe the members of the committee have seen. The majority of the items, approximately 470 of 708, consist of 302s and inserts which were covered by the discovery agreement reached between the prosecutors and defense counsel.

Recognizing the significance of finding anything, however, on Friday evening, I ordered a complete shake-down of the FBI, telling each special agent in charge and assistant director that I would hold them personally responsible for this last effort. This latest scrubbing has produced additional documents which are currently being reviewed to determine whether they were covered by the discovery agreement and, if so, whether they have been produced. I understand these documents are of the same character as the others.

We will have to wait for the inspector general to complete his investigation before I have a full explanation of how this happened. Preliminarily, we have determined that there appears to be a number of reasons, no one pervasive.

For example, some offices wrongly concluded that the information was so extraneous that it was not covered by the request related to these prosecutions. Some offices forwarded summary results of investigation but not the underlying documents. Some offices forwarded copies of originals. Some offices turned investigative inserts into 302s and forwarded only the 302s. Some offices overlooked material when calling out responsive documents. Finally, some offices believed they sent the material but, in some cases, not in a form that could be uploaded into our existing system.

I would like to note, Mr. Chairman, that there was an unusually broad discovery agreement in this case. Under ordinary federal rules of criminal procedure, the vast majority of these items would not have had to be turned over to the defense, as I understand it.

Because of the extraordinary breadth of this investigation and the large number of interviews, over 28,000, the prosecutors and the FBI agreed to make available to the defense every interview report, regardless of whether the interview was material to the defense or extraneous to the core investigation.

There is a protective order in this case that prevents me, at this time, from discussing in any detail the substance of the materials at issue. However, I can say that I have no reason to believe that anything in the materials bears upon the convictions or sentences of Timothy McVeigh or Terry Nichols.

Several lawyers and agents from the Justice Department and the FBI conducted a page-by-page review of the material.

Nothing in the documents raises any doubt about the guilt of Mr. McVeigh and Mr. Nichols. In fact, many of the documents relate to early leads that developed no useful evidence or information of investigative value. For example, a number of our reports of interviews of witnesses who thought they had seen or had information about John Doe number two and, to a lesser extent John Doe number one. These include persons who had seen composite sketches and thought they recognized him and the subsequent interviews of the people that were named as possibly John Doe one or two.

Other documents relate to other early investigative steps that never produced anything of value, unsolicited tips proven wrong, people volunteering public source information, et cetera. Although I fully support the attorney general's decision to postpone the execution -- fairness and justice, of course, demand that -- I do not believe this belated disclosure of documents will affect the outcome.

To the contrary, it still appears that all Brady and other material reflecting on guilt or innocence was disclosed during discovery. In fact, while the timing can be rightfully criticized, our employees did exactly what they should have done in these circumstances. Regardless of the embarrassment, they have brought this to light, not the easiest thing to do, but clearly the right thing.

And I think if we talk about the culture of the FBI and the history of the FBI, we need to juxtapose this about unfortunate events that have happened in the past. This was a case where the people who protect this country and serve in the FBI did exactly what they were supposed to do. For eight years, I've been preaching core values to my associates, to tell the truth, to be honest, to be responsible, and this is a case where they have done that. The issue in the end is what can be done now to address what regrettably has become a recurring problem. After close examination, I am in agreement with those who have identified the bottom line as one of a management problem. This wasn't a computer problem, Mr. Rogers, this was a management problem.

We simply have too little management attention focused on what has become over time a monumental task. The FBI maintains over six billion pages of paper records and a similar number of automated records. It is a mountain growing bigger and busier with each passing day.

Rightly or wrongly, we are investigators focused on preventing terrorism and solving the most sophisticated crimes. Perhaps that is why the seemingly mundane tasks of proper records creation, maintenance, dissemination and retrieval have not received the appropriate level of senior management attention. We have expended considerable resources to ingrain in our employees core values and ethics. I'm very proud of that.

We have trained them in cutting-edge technics in the cyber world. The dizzying pace of the evolution of crime, terrorism and technology, I believe, have caused us to lessen our focus on a function so basic that perhaps we have taken it for granted. Well, not any more. In every instance when significant problems have arisen, it has boiled down to the need for more and better management. When our laboratory faltered, as I said, I brought in a world-class scientist to run the operation. It's now the best it has ever been.

With our automation infrastructure failing, I brought in a world- class computer executive to fix the problem. With Congress' help, that's being done. When Waco and Ruby Ridge demonstrated the need for better crisis management, I created a new structure and put a senior executive in charge that redesigned that function. And it has been exceedingly successful, as I mentioned before. This is no different.

Today, I'm announcing the following. I have instructed my deputy to form a search committee to hire a world-class records expert, a senior official who will be dedicated to this issue and this issue alone. I have instructed that a separate office of records management and policy be established, and we'll soon be seeking the required authorizations. This is a core function that deserves the full and constant attention of the entire FBI.

I have instructed this morning that every employee in the FBI immediately receive a block of instruction on every aspect of our existing records policies. These policies are good when followed, but they were not followed here.

Under the crush of everyday business, I suspect that many have forgotten some what was learned in basic agent's training. I've instructed that additional training be provided to all new employees, especially new agents, and that records training be included as required annual training just as ethics, EEO and other important subjects are.

I have instructed that the Trilogy automation plan be modified to include sophisticated document handling accountability and ordering functions to support enhanced line supervision of these issues. I have instructed that required agent file reviews include a specific focus on these issues.

When I became director, I established certain bright-line rules regarding conduct. These rules, strictly enforced, quickly had the desired effect. I have instructed the same be done here. In retrospect, the proper creation, filing and dissemination of our investigative records is as important to ensuring the rights of people whom we investigate and protect as compliance with other constitutional and procedural requirements.

Finally, I have instructed that the FBI stand down for a day to begin implementation of these initiatives and, more importantly, to ensure that every employee understands the importance of what must be done. We can and are fixing the automation aspects of this issue. We are down to management and human behavior. I believe that these immediate steps alone, in addition to recommendations from the inspector general and others, will get us where we need to be. We simply cannot allow the dazzle of technology and the complexity and breadth of our mission to dim the focus on a function that goes to the very core of what we do.

In short, this episode demonstrated that the mundane must be done as well as the spectacular. And I believe these steps will ensure that it be done.

Mr. Chairman, by your leave, I would either go into a very brief presentation of the budget request or yield to you at this point.

REP. FRANK WOLF (R-VA), CHAIRMAN: You can just submit that for the record, I think. That would be fine. There will be some questions, though.

Thank you for your testimony. There will be a lot of questions. We're not going to use the five-minute rule, but I would ask members to respect the fact that there are many others that want to ask a question, and I'll move very, very quickly through mine. And hopefully, there will be a second and maybe even a third round.

One of the questions we were going to ask, but I think you answered it, you are not in any way suggesting that this was a question of lack of money. You said it was a question of...

FREEH: No, sir.

WOLF: OK, thank you.

Secondly, with regard to the broadness of the discovery agreement being so extensive, why wasn't there a thorough hand search conducted in addition to the electronic?

FREEH: That's one of the questions that we have to answer. I would have assumed that when an office was told to produce and deliver and transfer any and all records, that that would have to be done in part by hand. I assume it was done in part by hand in different instances, but for some reason in many, many different offices, this was not successful.

But I don't know is everyone did a search by hand or not.

WOLF: Forty-six of 56 failed; 10 did what you wanted them to do. Have you gone to the 10 to see what their understanding of your directive was versus the 46?

FREEH: We have started with the 46 and asked for written explanations, which we have summaries of.

WOLF: Wouldn't it make sense to go to the 10 that complied, to see what they did right?

FREEH: We will do that, too, sir.

WOLF: Also, on the collection, do all field offices adhere to the same procedures regarding collection, gathering and storage of important evidence? If an agent is working in Albany, N.Y., how does she or he know what evidence is being collected elsewhere in the country?

FREEH: Again, with a automated database, anyone could query to determine the contents of the database, including references to text interviews, references to 1A envelopes, which are physical evidence. That was not the case here because nobody in the field was uploading the materials into the ACS system. They were physically sending the materials at the direction of Oklahoma City to that office, where they were then uploaded by the people working on the task force.

But in a normal situation with ACS working properly and the Trilogy objectives achieved, you should be able to query the system to determine the amount of evidence, the number of 302s, even the text of the 302s, and references to the specific physical exhibits.

WOLF: Have you looked at your original communication to see if it was fuzzy or if it could have been misinterpreted, if it was just advisory or if was...

FREEH: No. There were 16 communications.

WOLF: Can you submit that for the record so we can see?

FREEH: Yes.

There were 16 communications, two sent from the director's office. And they are absolutely clear, as far as I can see, that everything and anything was to be retrieved and sent to Oklahoma City.

WOLF: If you can submit them for the record.

I don't want this hearing to go away without talking a little bit about the Hanssen case because that troubles me deeply, too. I would like to hear your comment. I am, again, speaking only for myself, and I've spoken to you about this privately, and I'd like you to mention it publicly. The process that the bureau and the Justice Department has set up I think is flawed in the sense that -- and let me just say, I think Judge Webster is a good man, a great distinguished record -- but he was at the bureau when Hanssen went bad in 1985. He was also at the bureau, at the agency, when the Ames situation developed.

Would it not be good to set up a team B, an outside group? And I looked at the group that were appointed yesterday -- or the other day in the paper, all good people, but all people who are sort of inside, that know each other, that are close to each other. Again, I am not casting any aspersions and saying anything negative. They're all good people, outstanding individuals.

But during the Reagan years, when they looked at the problems with regard to the Soviet Union, they had team A and Team B. They had an outside group. I think it was chaired by Mr. Pipes from Harvard, who came in totally not connected it with. I think the agency and the bureau has to do the same thing.

Have you all concluded that the Webster recommendation will be the final, or will there be any formal outside group made of people not necessarily in the bureau, but people with some sort of counterintelligence experience that will give it close review and rip it apart and make any recommendations to make sure that what happened never happens again?

FREEH: Yes, Mr. Chairman, we have. And there is a team B, and there is an alternative.

We have an inspector general investigation ordered by the...

WOLF: Is that team B, the inspector general?

FREEH: I think it is. The inspector general is going to do one comprehensive review of not just the security procedures, which is the very narrow area that the attorney general and I and the president have asked Judge Webster to look at; simply look at the internal security controls at the FBI during this period and make recommendations for whatever change, and give us whatever criticism is deserved, and I'm sure there's plenty.

The inspector general is looking at the broader counterintelligence failure, all of the bits and pieces that will go into, I'm sure, much more comprehensive recommendations. In addition, of course, the two intelligence committees are now conducting, with our assistance and participation, a full review, and I'm sure that that will result in reports and recommendations.

Whether there should be another outside group of counterintelligence experts, we don't reject that. It certainly is something that we would consider and I'm sure could be considered, but you have now a whole layered approach and independence coming from different sources to look at a problem and make recommendations.

WOLF: Well, I think you need somebody outside of the government, but somebody who has an understanding and somebody outside the building in addition to the inspector general. I sent a letter the other day -- we can talk about it -- asking for you to take a look at some things. But I just don't think that quite meets it, and it's very serious when an FBI agent goes bad, and as a result of that, that jeopardizes the security of the United States.

There were several men that were imprisoned in the Soviet Union as a result of that activity. And I just think you need to go back and bring a fresh outside, totally independent view of people who would just see things as they really are, and not somebody necessarily that's in the building that you see at lunch time or you see just totally, completely independent.

The last question I have, and then I'll recognize Mr. Serrano.

What are your thoughts with regard to having an inspector general in the FBI? The SEC has an inspector general for a very small agency like that. And because of the importance of the work that you do and the credibility is very, very important, what are your feelings about having an inspector general for the FBI?

FREEH: I don't believe it's necessary, given the structure that the Department of Justice has for many, many years long-standing, established and, I think, reformed and strengthened. We have, within the FBI, our own Office of Professional Responsibility, as you know. That is an office which reports to and is really under the authority and direction of the larger department Office of Professional Responsibility.

We do have an inspector general in the Department of Justice who regularly, as evidenced by the laboratory investigation, looks totally and comprehensively at all operations. Historically, one of the concerns about a politically appointed inspector general in the FBI is that the FBI, unlike many of the other agencies that have inspector generals, work on very sensitive cases, not just on the national security side, but on the public corruptions side and the political side. And that there needs to be some insulation from the inquiry and the access to those kinds of cases, even under legitimate predicates from the normal course of events. That's why the structure was set up differently and, I think, it's something that certainly should be reconsidered, relooked at. I know the committees are going to do that.

I would encourage them to speak to attorneys general past who have presided over the system and who, I believe, will give very, very good arguments why the investigative nature of what we do is significantly different from other agencies that have politically appointed inspector generals. And that there needs to be some insulation in that regard.

WOLF: What about the CIA?

FREEH: The CIA does not conduct criminal investigations. The CIA does not have the sensitivity that we bring into our criminal investigations from the moment a case is open until the moment it goes into a court and beyond. I think it's a very, very fine and important distinction.

WOLF: But to a certain extent, I think the argument that you're making almost makes the case. I believe in my mind, I think it would be good for you or good for the director to have someone that they trusted that completely would go wherever and asked the tough questions and be very, very aggressive. And my sense is that you almost make an argument for having one in the FBI certainly much greater.

There are activities in the SEC with regard to prosecutions. There are activities with regard to the FAA with regard to prosecutions. But I sense it would be a good idea to have one, particularly in light of the McVeigh and also some of the other things that went on over the last eight years. My sense is that the inspector general at Justice did not cover themselves with glory because I never saw them commenting on some of the things that, quite frankly, I think should have been commented on.

With that, I'll recognize Mr. Serrano.

REP. JOSE E. SERRANO (D), NEW YORK: Thank you, Mr. Chairman.

Let me once again congratulate you, Director Freeh, on your openness. I repeat, based by the media attention today, you came here with a lot of people are expecting you to say some things, and I think you've said a lot and you've faced it head on.

With that in mind, I'd like to ask you a two-part question. One, if we could force you to stay and advise the new director, whoever he or she may be, what would you advise that person to do for and to the agency? What would be your vision for that person or that vision for yourself, had you stayed on to complete your term?

And secondly, how would you like your tenure to be remembered? And for those who will set out to criticize your work, how would you like to combat that?

FREEH: Mr. Serrano, with respect to my successor, it should be a person of absolute integrity and independence and ability, both on the legal side and maybe also on the investigative and prosecutorial side.

I think I would advise them that we continue to need in the direst fashion outside non-FBI bureau, non-FBI culture management skills. As I mentioned, the FBI laboratory, which ran fairly well for many years, was always presided over by an agent scientist. We brought in a world-class scientist, Dr. Kerr, to run our laboratory in the aftermath of the inspector general report and valid criticism and recommendations. It's the first time we ever had an outside scientist who thought of peer review, who thought of things that we never incorporated into the normal course.

When I was choosing a general counsel, we always had as the head of our legal affairs an FBI agent who was a lawyer, which was great. And we had many honorable and good people in that job. We never had anybody who prosecuted a case. We never had anybody who knew what Brady obligations were, who knew what discovery allegations are in the course of giving information to a defendant in preparation for trial. So I brought in people who were fine lawyers but also experienced prosecutors.

With respect to the information technology, again, we had wonderful people working in the FBI. When I got there, we had agents writing code for the IAFIS program. Their heart was in the right place, but they don't do that for a living. They didn't have the experience and the depth and the knowledge to be writing code for a multi-million dollar technical system.

So I brought in an expert, an expert who was kind enough to come into the government, who is a world-class information scientist. And he has redesigned, I think to the committee's satisfaction, a proposal which was previously flawed and which I brought up here several times asking you to consider. He looked at it, and he said, "It's a three- legged horse, and it needs the following changes," which we then made. And it's going to work, and I'm proud that it's going to work. It took me a long time to get him there. I should have done that early on.

So I think my recommendation would be we've got to have that -- going beyond the integrity and the other personal attributes that I mentioned. It's got to be someone who understands we need a lot of management help in an agency that is very old, but moving very quickly into new areas and new venues.

Your last question, how is my tenure going to be remembered? You know, I don't know. I hope it's going to be remembered well. My main emphasis, at least over the last eight years, has been on our core values, which are to me the most important part of what we do. Core values of telling the truth, being honest, respecting people's rights, being fair, having compassion, making sure that we are reminded constantly of our humanity, but also the power that we wield.

One of the little footnotes, I hope to my tenure, I require each of our new agents classes to come up and spend a day at the Holocaust Museum in Washington. And when I instituted that, people said, "Why are you doing that?" I said, "Because I wanted the FBI agents who leave the academy with enormous power to realize the potential for abuse of that power, and how the people we protect and the people who rely on us look to them for the protection of those rights."

I was in Kenya two weeks ago basically to go over and thank the police officers who put together a case we never could have put together, the East African bombings case without their help. When we landed in Nairobi, two Americans were freed. Two Americans who were businessmen from California, who thought they had a business deal on the Internet and went over to Nairobi, and instead of meeting a business partner, they met a gang of hostage-takers who locked them up, used their telephone to call their relatives and extorted money on threat of killing them.

They were e-mailing the threats directly from the location where the two hostages were being held. The FBI, the FBI agents in Nairobi, which is an office that I opened after the bombings, the agents were the actual officers who went in there with the Kenyan police to rescue these two people. Those people would have been killed had they not had the assistance and help of those two FBI agents.

When they got them out, the two hostages who were very, very grateful -- this got a lot of publicity back here in the United States -- they said, "There is another hostage that these guys are holding." Nobody knew about this hostage. This was another American who was taken four months before that. Nobody knew he was gone. The FBI agents with the Kenyan police went back and they got him out.

That ability to work overseas, to protect Americans, to exploit the e-mail -- which goes back to our technical ability, Mr. Rogers -- all of that stuff was put into place to deal with some of these new challenges.

So we hope they will remember well. In service, I've been very proud of 27 years of service. I hope I've done some contributions of value to the bureau and the country.

SERRANO: Thank you, Mr. Freeh. And one of the moments that certainly a lot of people in this country were very pleased to see the result was initially something that so many of us or most of us should have been and are, I think, disturbed by. That was the information that Director Hoover had blocked bringing a case for the 1963 bombing.

And that brings to mind the thought that there might be now a desire on the local level to bring up more cases that are still sitting around, unfortunately, that have not been resolved. What do you think would be the FBI's role and what should be the FBI's role if local prosecutors, state prosecutors, municipal prosecutors bring up these cases?

FREEH: I think we should support them as we did in this case. As you know, this case was done in state court with a federal prosecutor, but the investigative agency was the FBI. We did the De La Beckwith case a short time ago. There are many of these cases which are being looked at. These are civil rights cases from the '60s and the '70s. And I think our mission ought to be to vigorously reinvestigate, repursue evidence, obtain new evidence and bring those cases, particularly because there's no statutes of limitations for a lot of those crimes.

SERRANO: Do you have any idea how many cases may still be open, or...

FREEH: I'm aware of a couple. I'll try to get you some specific numbers on that.

SERRANO: Let me now move on quickly to the issue that I praised you on before. In a hearing that we had here when Mr. Rogers was chairman, in response to a question about an issue in Puerto Rico and actually in parts of the 50 states, regarding the independence movement and what we know now to be the persecution of the FBI, where people simply for favoring independence for Puerto Rico were followed, where stories were fabricated about them, files were kept very closely, and so many had their careers totally ruined and their reputation ruined, professional people, not professional people. And this was not only in Puerto Rico, but in New York and New Jersey and Hartford, Connecticut, and so many other places.

Through your efforts, a historic moment took place in that your agency began to release these files, which will amount eventually to 1.8 million files. You assigned a team of people to work on it. And in many cases, a lot of what needed to be done has been done.

Now, we're terrified at the thought that a new director does not have a mechanism in place to continue to release these files. In addition, you told us that at a certain time, you would be giving us whatever information was available on the unsolved mysteries surrounding the deaths of a couple of members of the independence movement and the alleged, but believed very strongly, torture or mistreatment of the leader of that independence movement who spent 27 years in federal prison.

Should I have concern that this release of these materials, which, incidentally -- and I must also compliment you on this, the material, some of it had been released in the '70s, very little. But the stuff that is coming out now, the files, has 95 percent more information that had been deleted in the '70s. So it's much more, many more number of files, but much more information.

How concerned should I be that this will stop now?

FREEH: You need not be concerned. You have my commitment and the institution's commitment that's going to continue. The director is the only political appointee in our agency. Everyone else is there for career. And my deputy, Mr. Collingwood, who you know, who has the direct supervision of this, Mr. Parkinson, our general counsel, thank goodness for the FBI, are going to stay there, even after I depart. And they will ensure, I commit to you, that this will continue, and we'll bring this to the fruitful and logical conclusion it should have been brought to 20 years ago.

SERRANO: I have one related question, Mr. Chairman, before we move on because I know we have a lot of members who want to ask a lot of questions today. There seems to be a concern or a shortcoming on the part of the agency as to people who speak other languages. And there's been talk about information available to the agency which hasn't been translated or transcribed in time to act accordingly. And it seems to me like such a strange thing that in this day and age, you wouldn't have agents or personnel that would speak all of the languages of the world. What is the situation with this?

FREEH: We have some great difficulties and challenges in many of these languages. And you are absolutely correct. We have many documents and many investigative materials which are not translated. Sometimes they're in a summary form, but no one has really gone in there and looked at them.

We have a very difficult time competing with everyone else, particularly the private sector, in the area of languages, particularly Arabic and Farsi and some of the very critical ones to some of the work that we perform.

We are on a GS schedule, which means, you know, if we find an Arabic speaker in New York City, we can pay them about a fifth of what they could get almost any other place in town. So we have a very, very difficult time competing.

One of the reasons that I had proposed to the committee and the Congress several years ago an exemption from Title V for the FBI, which we briefly got. Unfortunately, it didn't perpetuate itself. But the exemption from Title V would give us the ability in New York, for instance, to pay a salary where we could recruit and compete, where we can never do it under the GS scale. We could also get scientists and technical people that otherwise would never come to the FBI except for patriotism, like some of the people sitting here in the room.

So this is going to be a continuing problem not just for us, but all the other agencies that are going to need this kind of instantaneous review and comprehension.

SERRANO: Thank you, Mr. Chairman.

WOLF: Mr. Rogers?

REP. HAROLD ROGERS (R), KENTUCKY: Thank you, Mr. Chairman.

Director Freeh, your last appearance before this subcommittee, I guess, the eighth annual appearance for your budget request, all of which I've been privileged to be present at. You have presided over the FBI during a time of great change in the country and the world. You have ushered the FBI into international investigations now by establishing overseas offices of the FBI that did not exist before your tenure.

You have brought the FBI into the new world of counterterrorism and solved some very complex cases in that arena. You've ushered the FBI into the cybercrime era, which is complicated beyond anyone's understanding, I think, almost. And you steered the FBI during some very difficult years that I know tested you in a major way.

You've maintained, in my judgment, the high integrity that you brought to that office and that you carried with you as a federal judge and a federal prosecutor in New York City under trying times, and you presided over a huge increase in the budget of the FBI over these eight years. In fact, $1 billion increase to the FBI over the last five years alone, with thousands of new agents and thousands of new personnel, not to mention the new laboratory and other improvements. And I'm sad that this is your last...

KAGAN: We've been listening in as FBI Director Louis Freeh answers questions in front of the House subcommittee -- Appropriations subcommittee. We will return to this coverage in just a moment. First we get in a quick break. And we'll be back after this.

(COMMERCIAL BREAK)

KAGAN: And we go ahead and resume our coverage. This is Harold Rogers, a Republican from Kentucky, asking questions of FBI Director Louis Freeh.

Let's listen in once again.

ROGERS: ... get tarnished, unforunately, by this -- things like the McVeigh document matter. But I trust that that will not be a permanent blight. Let me quickly ask you about that.

In your statement about the McVeigh matters, among other things, you say, quote, on page 1, "As Attorney General Ashcroft said Friday, a review of these materials disclosed no new information relative to the guilt or innocence of Timothy McVeigh," end of quote. There are other portions in your statement that are of similar import.

Now I wanted to talk to you briefly about this, with the short time that we have, about what kind of information this is and how relevant it is to the guilt or innocence of the defendant. Now, I'm an old prosecutor, an 11-year state's attorney back home. I practiced law in the private sector before that, so I'm familiar with orders of the court requiring both sides to show each other what kind of evidence you have. That's standard procedure and was true in this case.

I gather in this case, however, the court ordered you and the FBI and the agents and all other parties to go well above and beyond what normally is required to be shown. And you're to show anything and everything that might have some bearing on the case. Is that generally true?

FREEH: Yes, sir, that's exactly the scope of it. It was broad.

ROGERS: And so it was as broad as you could make it. That's not normally the case, is it?

FREEH: That's not normally the case, nor is it required by the federal rules of criminal procedure.

ROGERS: Now, could it be that some of the field offices that got this routine piece of paper from the office saying, "Turn over the documents in the X case," is it possible that some of them could have said, "Well, that's the routine thing, let's turn over these documents because they are relevant to the case," and didn't realize that this court order went way above and beyond what's normal? Is that possible?

FREEH: It could have been, Mr. Chairman. But again, there were 16 different requests made, and although they might not recite the words of the discovery order or agreement, they clearly call for anything and everything, and there shouldn't have been any misunderstanding.

Now, we have to wait and have the inspector general speak to case agents and supervisors to get exactly what their understanding was. But to answer your question, it should have been clear from the communications that everything and anything should have went because that was the nature of this very extraordinary order.

ROGERS: You say in your statement, on page 12, that some officers wrongly concluded that the information was so extraneous -- the information they were being asked to turn over -- was so extraneous that it was not covered by the request of the court. What do you mean by that?

FREEH: Well, I think that what that explains is some of the, at least, preliminary explanations that they didn't think a particular item in a specific office was necessary. Let me just give you a "for instance." We had individuals who would come into the FBI office and give us a public document, and the agent would receive that and put a 302 together saying this was received -- absolutely no nexus or relevance, I would argue, to the case, never contemplated any kind of discovery rule.

But under this order, because it was a 302, we agreed to give it over. So, could that agent have looked at that serial and said, "They can't be asking for this"? If they did, I think it was the wrong interpretation. Maybe the order should have been clearer, and those 16 teletypes didn't do the job, and that's what we have to find out.

ROGERS: So in a general way, can it be said that the documents that we're talking about, that were not turned over, that those documents are, at best, remotely connected to the case, are so extraneous as to be not helpful to McVeigh in any way?

FREEH: That's the way they've been described by the lawyers and the prosecutors who reviewed them, that set forth in Mr. Connelly's letter. That's my understanding. I would like these documents to become public. And there's a protective order that prevents that now. But ultimately, they will be, and people can make their own determination.

ROGERS: Do you know how many documents were actually turned over in the normal process in the case?

FREEH: Thousands and thousands and hundreds of thousands, plus access to databases and millions of more records.

ROGERS: So could we say, millions of items...?

FREEH: Yes, sir.

ROGERS: ... were turned over. And the ones we're talking about here that were not turned over, how many are there?

FREEH: We're talking about 700-plus documents or things or items.

ROGERS: None of which have any relevance to the guilt or innocence of Tim McVeigh?

FREEH: No, sir.

ROGERS: No, sir, what?

FREEH: They do not.

ROGERS: So it seems to me, like, maybe there's been a big much more to-do made of this than the record reflects. Is that a fair statement?

FREEH: Well, yes and no. In terms of guilt or innocence, in terms of not only the evidence in this case, but the subject's admissions, the letters that he's written, the reference to murdered children as collateral damage -- I think was the words that he used -- the evidence in this case is overwhelming. So in terms of guilt and innocence, no, nobody should worry that someone was victimized or that someone's rights were not protected.

On the other hand, we have an obligation in the FBI to produce, in this case, every single one of those records.

ROGERS: I understand.

FREEH: And we failed in that, and we're responsible...

ROGERS: I understand.

FREEH: ... and the country should have a better ability to rely on us than that.

ROGERS: I understand that. But if these documents are of no importance to whether or not the man is guilty, I know you have to turn them over. But what I'm asking you is, does it make any difference to the case, that when they see the documents, will it make any difference in the case?

FREEH: Ultimately, a judge is going to decide that, if necessary. As far as I'm concerned, as a former judge, as a prosecutor, as an investigator, absolutely no difference as to guilt or innocence, particularly given the circumstances following his conviction.

ROGERS: Well, now, some of these documents that we're talking about, you say the field office has forwarded summaries of those documents.

FREEH: Yes, sir.

ROGERS: But not necessarily they didn't send along the underlying document, but the summary of the document was sent.

FREEH: Yes. But we had agreed to provide the actual 302, and we did not do that in some cases.

ROGERS: What is a 302?

FREEH: 302 is the actual recitation of the interview or investigative matter. So what happened in some cases, as I understand it, that information was put into a teletype and the teletype was sent. But the underlying 302, which we promised to hand over, was not handed over, so we violated the order.

ROGERS: So those are some of the documents we're talking about?

FREEH: We have some in that category. ROGERS: And what percent of the total is that? Small amount.

FREEH: I don't know. I would be hazarding a guess.

ROGERS: But nevertheless, the summary of them was turned over.

FREEH: In many cases, that's correct.

ROGERS: And now you're going to send the actual documents.

FREEH: Yes.

ROGERS: No surprise.

FREEH: I don't think so.

ROGERS: And then some of the documents that you're now turning over that you discovered are originals that you had sent copies of in the original order to turn over documents. Is that correct?

FREEH: Yes, sir.

ROGERS: So now, instead of sending just copies, you're going to send the originals?

FREEH: We're going to send everything.

ROGERS: No surprise?

FREEH: No surprise.

ROGERS: And then, some of the documents and information that were sent, were sent, but they were not in a form that could be uploaded into your existing technological system. Is that correct?

FREEH: In OKBOMB, at the task force. Yes, sir.

ROGERS: So was that material delivered to the court?

FREEH: Again, in some instances, I don't think that it was. I think that's in the category of things that I mentioned, which were not put into a database, uploaded, to use your words, and then made available to the defendants.

ROGERS: Now, as you say in your statement on page 13, and I'm quoting and summarizing. Under the ordinary rules of criminal procedure, that you practiced when you were a prosecutor and then presided over it when you were a federal judge, and that I practiced in Kentucky, under normal ordinary rules of criminal procedure, as you say in your statement, "The vast majority of the items we're talking about would not have been required to be turned over to the defense."

FREEH: That's correct.

ROGERS: You had 28,000 interviews, and you had tons of material that were turned over. And what we're talking about here is really insignificant, irrelevant documents that have no bearing on the case.

ROGERS: Is that a fair statement?

FREEH: That is my understanding and the understanding of the people of the people who have reviewed these materials. Yes, sir.

ROGERS: Thank you very much, Mr. Freeh. Thank you.

WOLF: Mr. Obey?

REPRESENTATIVE DAVID R. OBEY (D), WISCONSIN: Mr. Director, I'm sorry I couldn't stay for the whole hearing. I had two other hearings I had to deal with, but I have been informed of your statement earlier and I appreciate it.

I won't go into again the litany of problems that I discussed in my initial statement. I just want to observe, again, that I'm sure you don't like to be here in this position today. It's a lousy way for you to go out on your watch, and...

KAGAN: Once again, we've been listening to the House Appropriations subcommittee, as it basically grills the FBI director, Louis Freeh. And he offers his answers on a number of topics, but the main topic today: exactly what happened in the case of Timothy McVeigh.

We're going to get in another break and resume our coverage in just a bit.

(COMMERCIAL BREAK)

KAGAN: We go back now to Capitol Hill once again. This is the House Appropriations subcommittee asking questions of FBI Director Louis Freeh.

OBEY: ... they are failing you and failing us. I'm sure you're as angry and as upset as we were when you learned about the McVeigh problem. But, frankly, I think some of the other problems that have been raised are far more serious than the McVeigh problem. That just happens to be the one that gets the attention and has the glitz to it this morning, but it's not the fundamental problem.

Let me ask you, you had a failure by 46 of the 56 field offices to provide the information that you asked for repeatedly.

FREEH: Yes, sir.

OBEY: You have a compliance review process, as I understand it. How many of these 46 offices were subject to that process since the orders to provide those McVeigh files were made? And in how many instances were the failure of those offices to comply brought to your attention as a result of compliance reviews?

FREEH: I'll give you much more specific information on this. We have, as you correctly referred to it, an inspection compliance process. We have an inspection division that goes from field office to field office, that goes from headquarters division to division, doing full audits with respect to financials, compliance with regulations of all the many, many things that this process has developed over years. And I think people in the Department of Justice and people in the government will tell you that our inspection process, which looks for compliance, is a rigorous one.

I would say most of these 46 field offices, particularly between 1995 and the present were probably subject to an inspection. I'll give you the exact numbers and which ones were inspected and where they may have been related or similar failings reported and asked for corrections in those reports. I just don't know the answer as I sit here.

OBEY: It had been my understanding that each entity within the bureau is subject to that process once every three years.

FREEH: That's correct.

OBEY: Wouldn't that mean, therefore, that all of the agencies involved had been reviewed at least once since your orders went out?

FREEH: I would venture to say that's probably accurate, but I'll get you the specific numbers.

OBEY: Shouldn't that process have uncovered the fact that those files weren't turned over?

FREEH: Not necessarily those files, unless they inquired about that particular case. What it should have and maybe otherwise could have identified is that in that particular office the record retrieval system and protocols were ineffective. That assistant U.S. attorneys had complained, that defense lawyers had complained that in the course of cases, like this case, they were not given and received access to those things they should have.

OBEY: So then the system that you had to review the performance of these agencies, in fact, failed to turn up this crucial piece of information for you?

FREEH: The inspection process did not identify the failing in this case, that's correct.

OBEY: So the answer is yes?

FREEH: Yes.

OBEY: That I find frustrating. I would hope that we could count on that not happening in the future. But given the past track record of the agency, I'm dubious.

What also troubles me is what the bureau does to evaluate not just whether it's complying with its own rules, but whether, in fact, those rules themselves make any sense and will, in fact, do the job. Do these various programs and operations work the way they are supposed to work? Are they accomplishing their stated goals, things like that? How many evaluations, how many full-blown evaluations of the counterterrorism program took place while you were director?

FREEH: Internally?

OBEY: Yes.

FREEH: We probably have, you know, a series of inspection reports on the program. I couldn't tell you how many.

OBEY: I'm not talking about the first kind of review that you're talking about. I'm talking about how many performance evaluations, top to bottom, of the counterterrorism program were conducted while you were director?

FREEH: I don't know the answer to that. I'd have to get the...

OBEY: It is my understanding that there have been none. I'm not certain of that, but that's my understanding based on the limited time I've had to look at it. I would like if you would check the record, and if there were any occasions when you had a full evaluation of the counterterrorism program, I'd like to know what they were and when they took place.

What about the counterintelligence program? How many internal, full-blown evaluations of that program were conducted on your watch?

FREEH: Again, there have been inspection reports. There have been...

OBEY: Those are different things.

FREEH: They are different things. We inspect the program and the division. In terms of the evaluation, again, there's evaluations...

OBEY: To see that the rules are followed, my point is...

FREEH: A substantive evaluation.

OBEY: ... when did your people sit down and give a "no holds barred" internal evaluation of whether or not -- not whether the rules are being complied with, but whether the rules made any sense, whether you organize the right way, whether you have the right targets, whether you had the right procedures.

FREEH: With respect to the counterintelligence program, this was done as recently as last year in a very extensive manner. We had a joint FBI-CIA evaluation of the entire counterintelligence program not just in the FBI, but in the community.

OBEY: Before or after the celebrated event?

FREEH: Well before. And we recommended to the president that a new counterintelligence strategy, program, protocol be adopted. With substantiative changes, the prior administration approved it and the current administration executed it; a top-to-bottom review of the evaluation of our success and failures and goals in the counterintelligence area.

OBEY: Are you saying there was one review?

FREEH: That was the most recent one. I'll check if there was any before that.

OBEY: OK. What about the organized crime and white collar crime operations?

FREEH: Again, I'll have to check and give you an accurate answer on whether an evaluation was done, when it was done and I just don't have the answer to those.

OBEY: What about external audits or evaluations? Has the inspector general of the Department of Justice sought a broader agenda in evaluating bureau activities?

FREEH: In some cases, they've done that, and with respect to the Laboratory Services Division, with respect to the Criminal Justice Information Services Division, there have been broad-scale reviews and evaluations and reports, as I have seen them. We also get them from the Congress, from the GAO here.

OBEY: Did you support the inspector general's efforts to broaden his evaluation activities beyond simple audits?

FREEH: I didn't support them. I also didn't object to them. We facilitated and helped all the requested reviews and inquiries that were made.

OBEY: Well, I have some other questions I'll provide for the record, Mr. Director. But I guess I would just say again in closing that I find it incredibly frustrating that year after year the agency which is supposed to be the quintessential example of excellence in law enforcement winds up being an example of Mr. Foul-up, and I guess I...

KAGAN: We've been listening into the House Appropriations subcommittee as they go ahead and ask questions -- chief among their questions, what they want to know: what happened in the case with Timothy McVeigh and how the files were misplaced and suddenly showed up only days before he was set to executed -- which, by the way, was supposed to be this morning. That now, according to the Attorney General John Ashcroft, has been put off at least until June 11.

(COMMERCIAL BREAK)

LEON HARRIS, CNN ANCHOR: If you are just joining us, we have been spending most of the morning in this hearing in this House Appropriations subcommittee.

KAGAN: As they've been asking some tough questions of FBI director Louis Freeh -- let's go ahead and bring in our justice correspondent Kelli Arena, who's been listening in as well. Kelli, some tough questions, but also some frank answers from the director.

KELLI ARENA, CNN CORRESPONDENT: That's right, Daryn.

The bottom line here: FBI director Louis Freeh admits that his agency made a very serious mistake, but he insists that the documents that were recently turned over to Timothy McVeigh's defense attorneys have absolutely no bearing on the case.

(BEGIN VIDEO CLIP)

LOUIS FREEH, FBI DIRECTOR: While I do not believe that the newly discovered documents will have any bearing on the convictions or sentences of either McVeigh or Mr. Nichols, I'm not here to minimize our mistake or to make excuses.

It appears that most officers of the FBI, either failed to locate the documents and items in question, misinterpreted their instructions and likely produced only those that would be disclosed under normal discovery, or sent the documents, only to have them unaccounted for at the other end. Any of these cases is unacceptable.

(END VIDEO CLIP)

ARENA: Freeh also revealed that even more documents surfaced since Friday which will be sent to all interested parties. Freeh says that this is not a case of a computer or infrastructure problem. He blames it on FBI management and says, to that effect, the FBI will be searching for a records expert -- someone who will help the agency to deal with compiling and storing information in the future -- Daryn.

KAGAN: Kelli, thank you so much. I'm sure you'll be listening in as we go ahead and continue our coverage.

HARRIS: That's right -- congressmen continue searching for their answers from the FBI director.

REP. TOM LATHAM (R), IOWA: ... made some comments, and Mr. Obey touched on it, about the culture of the FBI. And I also serve on Energy and Water, and one of the major problems and reasons for the problems at the Energy Department -- and security has been the culture of the agency -- that just security is not an issue.

Is there a, quote, "cowboy culture," and if there is or not, tell me. But also if you think there is a cultural problem, would you identify what should be done in the future to address it.

FREEH: I think we have to be extremely diligent and conscious about culture, which I do think existed at one point. Maybe when I was a young agent in 1975, where FBI agents and perhaps the institution tended to think of themselves as the best, which is not necessarily a bad thing, but if it's the best that we can never make a mistake and everybody needs us and we're the only game in town, then that's a significant culture problem. I think we were caught up in that for maybe a long period of time for all the wrong reasons. I think that's changed very substantially.

I alluded before to, you know, our training with respect to ethics and law enforcement obligations. Again, I don't march the new agents up to the Holocaust Museum because I want them to do something on Saturday. I want them to understand the potential for abuse and tyranny that any law enforcement agency, even in a democracy, is susceptible to and capable of.

FREEH: I mentioned before Waco and Ruby Ridge. You know, we got it wrong in those two instances. And there's people in my agency who don't like to hear me say that.

But what we did is we used our very capable tactical abilities to the exclusion of our negotiating skills. The negotiators were second fiddle on both those occasions. The tactical people ruled the roost and made all the decisions. As a result, we lost opportunities to negotiate a settlement.

We changed that. I changed that completely, structurally, I believe attitudinally, by creating a whole new structure where I put on a parity the tactical commander and the negotiator so they were equal in authority and influence in this particular situation.

That's why I think the Freemen situation turned out right. Nobody got hurt. Nobody was in a rush to do a tactical operation. We talked our way out of there. We used third-party negotiators, which we had never used before, because they weren't FBI agents. It worked. It worked better. And there's a significant sea change in the agency with respect to handling those types of things.

I'll give you another example, in terms of the culture, that I think was a dysfunctional one in the counterintelligence area. We had a dysfunctional relationship with the CIA for years and years, particularly during the Cold War, when you might think the two agencies should have been working together. It was an absolutely dysfunctional relationship.

That has changed enormously. And I don't blame the CIA for that as much as I blame the FBI for that. It has changed significantly. We are now working not only counterintelligence cases, but counterterrorism cases, joined at the hip.

I would ask you to talk to any of your peers on the Intelligence Committee or the Judiciary Committee and ask them two questions. One, have you heard of any problems, infighting and turf problems and competition, between the FBI and the CIA? You will not get, I predict, anyone saying that that's the case.

Please ask the members of the Judiciary Committee: Are there any problems between the FBI and the DEA, where there were for years? The answer to that will be no. You never hear about those problems.

We are not at loggerheads with state and local and foreign counter police agencies. We're working very closely with them. We've spared you that headache, you shouldn't have that headache. But that is the result of a culture change of an agency that was in many cases a one-way street, from our point of view. But that's different now, and I believe that's part of the control and part of the assimilation into the larger community that we've seen, and I'm very proud of that.

LATHAM: Thank you for the answer.

On an issue that's very important to my district and my state, it was reported this week that officials in Britain suspect bio- terrorists of illegally introducing the so-called foot and mouth disease in the country's livestock population to protest the slaughter of livestock for human consumption.

Obviously, coming from a farm state, the prospect of a similar incident in the United States is very, very frightening, and also the possibility of introducing something like mad cow.

Could you provide us, I guess, with some reassurance as to your efforts to prevent similar incidents of bio-terrorism in the U.S.?

FREEH: Yes, sir.

LATHAM: There are some groups out there, I mean, farm groups, things like that, which would be, It think an asset to you, watching what's going on in that part of the country. If you could just tell me what's happening.

FREEH: We're very engaged in this area. We have in our counterterrorism division a unit that specializes in the -- we call them weapons of mass destruction -- ABC-type threats. But they include, of course, foot and mouth virus, anthrax. We have had some very successful cases over the last couple of years, in, for instance, interdicting a plan to use live bubonic plague against actually a police officer; people making ricin in their basement, which was going to be used in an act of terrorism.

We take from the Aum (ph) incident in Japan, the sarin gas potential attack as one that is contemplated, which is why with all the special events in the country, whether it's the Olympics next year in Salt Lake City, the presidential nominating conventions, all of the World Cup games, we plan and build into that preparation the risk that someone would use an agent of chemical, biological or other one to commit an absolutely horrific and devastating act of terrorism, either against the United States or anyplace else.

FREEH: We have received the intelligence that you referred to with respect to the hoof and mouth disease. We have not made much credibility out of it or, more importantly, any logical leads that have been taken to follow up on that information, but we take it very, very seriously.

We have a specialized unit, a new unit in our laboratory, which deals with biochemical threats and has the ability to do analysis. We have a program called our InfraGuard program where we do go out to private industry, including, I think, the agricultural industry, to be aware of these kinds of threats and the potential for harm in that area. So it's a major part of our counterterrorism program and one that works, again, in very close coordination with the other federal agencies, including the consequence management agencies such as FEMA, so we have vaccines, we know where they are in the country if we were to need them.

HARRIS: We have been listening to outgoing FBI Director Louis Freeh in his testimony before the House Appropriations Subcommittee. He is being grilled today in the wake of the revelations that the FBI did not turn over all of the documents that it was supposed to have turned over to both the Timothy McVeigh defense team and the prosecution in that particular case. Thousands of documents have just been turned over, in recent days.

We've just been hearing, in this installment, Director Freeh basically explaining some of the cultural changes that he has instituted in the FBI.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com