Plan for FBI Anti-Spy Branch Advances

WASHINGTON — Atty. Gen. Janet Reno has approved a plan to create a branch of the FBI devoted solely to catching spies and plugging holes in national security that have been exposed by recent allegations of Chinese espionage, sources said Friday.

The plan will likely go to the White House for a final go-ahead.

Counterintelligence efforts are now handled in concert with counter-terrorism activities at the FBI’s National Security Division, but the plan approved by Reno would split off the spy operation into its own area, giving it a higher priority and tighter oversight in the bureau, the sources said.

In the wake of the 1995 Oklahoma City bombing and other terrorist activities, “there has been so much attention paid in recent years to the terrorist side of the [FBI’s] operation that it was felt it would be prudent to divide out” the counter-terrorism efforts, one law enforcement source said.

Members of the Senate Intelligence Committee were apparently briefed on the restructuring plan behind closed doors in recent days. FBI Director Louis J. Freeh and CIA Director George J. Tenet appeared before the panel in a closed hearing Wednesday.

Intelligence officials also are moving ahead with plans to create permanent squads of FBI counter-terrorism agents inside the national laboratories as a means of better protecting national security secrets. The labs have been the flash point in the counterintelligence debate in recent months, as lawmakers in Congress have pressed allegations that the Chinese had managed to infiltrate the labs to gain access to nuclear weapon secrets.

A former scientist at the Los Alamos lab in New Mexico, Wen Ho Lee, remains under investigation by the FBI in connection with those allegations. He was fired in March, weeks before it was discovered that he had downloaded thousands of top-secret computer files into an unsecured system, but he has not been charged with any crime.

His lawyer maintains that Lee has never engaged in espionage.

Both Reno and the FBI have also come under sharp criticism for their handling of the Lee investigation. Reno’s aides refused an FBI request in 1997 to wiretap Lee, a decision that has led some of Reno’s critics in Congress to call for her resignation. But others maintain that the FBI bears the blame for bungling the investigation, missing key evidence and ignoring other sources of potential leaks beyond Lee.

The possibility of restructuring counterintelligence activities has been under discussion by senior intelligence officials for months, but the allegations surrounding Lee and the Chinese have accelerated those discussions in recent weeks, officials say.

The establishment of a new FBI center devoted solely to counterintelligence, if it is implemented, would mark the second major restructuring in the area in five years.

In 1994, after revelations that CIA agent Aldrich H. Ames had been a well-paid mole for the Soviet Union, the FBI took over key counterintelligence duties from the CIA in an effort to keep better watch on possible leaks and avoid a repeat of the embarrassing, and costly, episode.

It was unclear if the FBI restructuring would result in increased funding for counterintelligence activities. FBI officials could not be reached for comment late Friday.