[Senate Hearing 108-]
[From the U.S. Government Publishing Office]



 
DEPARTMENTS OF COMMERCE, JUSTICE, AND STATE, THE JUDICIARY, AND RELATED 
              AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2004

                              ----------                              


                        THURSDAY, APRIL 10, 2003

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:03 a.m., in room S-146, the 
Capitol, Hon. Judd Gregg (chairman) presiding.
    Present: Senators Gregg, Hollings and Kohl.

                         DEPARTMENT OF JUSTICE

                    Federal Bureau of Investigation

STATEMENT OF ROBERT S. MUELLER, III, DIRECTOR

                OPENING STATEMENT OF SENATOR JUDD GREGG

    Senator Gregg. The hearing will come to order.
    We appreciate Director Mueller taking time out of his very 
busy schedule at the FBI, which is obviously one of the premier 
agencies in this country for protecting our Nation in this time 
of heightened concern. The FBI has taken, I think, a dramatic 
role in the area of leading this effort and has a huge 
portfolio and, thus, it is nice to have the Director here to 
talk to us about his budget and about his game plan.
    And, Senator Hollings, do you have an opening statement?
    Senator Hollings. No. Thank you.
    Senator Gregg. So we will turn to you, Director.
    Mr. Mueller. Thank you, Mr. Chairman, Senator Hollings. I 
beg your indulgence for a short statement.
    Senator Gregg. Certainly.

                 OPENING STATEMENT OF ROBERT S. MUELLER

    Mr. Mueller. Let me just start by saying as I think you 
have pointed out, and due in no small part to the support we 
have had from this committee, the FBI is undergoing 
extraordinary and, I believe, positive changes. I believe we 
are more prepared today than we ever have been to meet the 
threats posed by terrorists, foreign intelligence services and 
criminal enterprises. The changes we have made in the past 18 
months, and many others that are ongoing, will ensure that the 
FBI stays on top of current and future threats well into the 
21st century.
    I believe that our fiscal year 2004 budget request will 
give us the resources we need to continue our positive 
momentum. As you are well aware, our total request is $4.6 
billion, and we are requesting program changes totaling $513 
million including 2,346 new positions, 503 of which will be for 
special agents.
    I would like to spend a moment walking you through some of 
our progress to date in certain areas, the assessment of the 
threats that we still face in this country, and the changes 
that we are making to align our resources to the threats we 
confront.

                            COUNTERTERRORISM

    As I know you are aware, our top three priorities currently 
are counterterrorism, counterintelligence and cyber crime. In 
turning first to counterterrorism, since the attacks of 
September 11th, the FBI has made the prevention of terrorist 
attacks our number one priority. I am pleased to report our 
efforts have yielded major successes over the last 18 months. 
As you are aware, we have disrupted suspected terrorist cells 
in Buffalo, Detroit, and Portland. And the recent apprehension 
in Pakistan of Khalid Shaikh Mohammed, a key planner and the 
mastermind of the September 11th attack, is also a significant 
achievement in the war on terrorism.
    We also have been successful in choking off terrorists' 
ability to fund their acts of terror. We have frozen $125 
million from more than 600 accounts around the world, and 
conducted 70 financial investigations with 23 convictions to 
date.
    Also in Pakistan, last month the Pakistanis apprehended 
Mustafa Ahmed al-Hawsawi, a major financial planner for Al-
Qaeda.
    As Al-Qaeda and other terrorist organizations change 
tactics, the FBI must be equally agile. We, too, must evolve, 
and we are evolving. We have dramatically increased our 
intelligence analysis and dissemination capabilities and are 
now focusing on long-term strategies to upgrade these 
capabilities.
    Our fiscal year 2004 request includes approximately $1 
billion in direct support for counterterrorism. Understandably, 
the number of counterterrorism cases has risen dramatically 
since September 11, 2001, and the recent capture of high-
ranking Al-Qaeda operatives and the information we have gleaned 
from their debriefings suggests that those numbers will 
continue to climb.
    We need to have the resources to handle those increased 
numbers of counterterrorism cases. Nearly 50 percent of all of 
our requested program changes in 2004, or $250 million, 
supports our counterterrorism mission. In particular, the 430 
positions proposed in the budget will strengthen investigative 
support in the field and improve counterterrorism management 
and coordination at Headquarters.
    Additionally, the requested amounts would support 66 of--
the 66 Joint Terrorism Task Forces we have nationwide, which 
are critical to facilitate information sharing and act as a 
first line of defense against terrorist attacks.

                          COUNTERINTELLIGENCE

    The second priority for us is counterintelligence. We 
have--we look at our counterintelligence mission in four 
sectors. First and most significant is the potential for an 
agent of a hostile group or Nation to produce or use weapons of 
mass destruction. Second is the potential for a foreign power 
to penetrate the intelligence community. Third is the targeting 
of Government-supported research and development. And finally, 
the fourth is the potential compromise of certain critical 
national assets spread across the United States.
    Just as we are transforming our counterterrorism program, 
we are also transforming our counterintelligence. We have 
reorganized the program and realigned our resources to 
concentrate on emerging threats. We now have full-time 
counterintelligence squads in 48 of the 56 field offices 
dedicated to investigating hostile foreign intelligence 
services. In the 2004 budget, we are requesting $63 million and 
599 positions of which 94 would be for agents.
    Let me turn for a second to briefly discuss the events that 
occurred yesterday in Los Angeles. As you are aware, I believe, 
yesterday in Los Angeles a retired FBI supervisor, Special 
Agent James J. Smith, was arrested along with a former 
intelligence asset, Katrina Leung. For many years, Smith, who 
had recruited Leung, served as her primary handler. The 
allegations against Smith and Leung are contained in criminal 
complaints which were unsealed yesterday. And because the 
matter is pending in Federal Court, I really cannot comment on 
the merits of these cases or on the strength of the evidence 
against Smith and Leung.
    I do want to point out, however, that when I learned of 
these--of this possibility in January of this year, we 
immediately took steps to address this issue. I brought in a 
person by the name of Randy Bellows who had done the report on 
Wen Ho Lee in the Justice Department, an experienced prosecutor 
from the Eastern District of Virginia, to go out to Los Angeles 
and review what had occurred in those cases and to come back 
and give me recommendations.
    Based on his recommendation, I appointed an Inspector in 
Charge, and it was the individual who was the lead agent in the 
Aldrich Ames case, to conduct a thorough covert investigation 
of the charges in Los Angeles. We gave him a task force in 
excess of 30 individuals who were separate and apart from the 
Los Angeles field office. And he conducted that investigation 
leading to the charges yesterday.
    I have also asked the Inspector General to look at the 
performance of the Bureau with regard to this and other cases 
out there. And I am not content to wait for the Inspector 
General's review. I have asked the Inspection Division to look 
at the managers who may have had some responsibility and 
immediately get back to me a report on their responsibility for 
what happened out there.
    I also want to point out that it is--we have, since January 
of last year, instituted a number of reforms out at the FBI 
Headquarters to ensure that these types of problems are 
corrected, not only out there, but throughout the FBI. In June 
of this last year, we established a rigorous Asset Validation 
Review Program to strengthen agent accountability and 
management oversight, and made significant changes in the 
senior management within the Counterintelligence Division. And 
as I have said before, we have promulgated a national 
counterintelligence strategy with centralized program 
management.
    We cannot minimize the problems in the Los Angeles program, 
but we have moved firmly to correct those problems. And quite 
obviously, I believe that to be an isolated event and I remain 
proud of the work of the many thousands of men and women of the 
FBI for the service they render every day to the United States. 
But we, as an organization, must learn from the mistakes of the 
past so that we do not repeat them in the future.

                              CYBER CRIME

    Leaving counterintelligence, the third priority is cyber 
crime. We, as just about everybody else in the United States, 
continue to see an explosive growth in cyber crimes. Last year 
we established a consolidated new Cyber Division at 
Headquarters to manage these investigations and to help us 
coordinate our public and private sector partners.
    In our 2004 budget request, we are requesting $234.4 
million to protect the United States against these attacks. We 
are seeking 194 positions, of which 77 would be for agents.
    In addition to the traditional cyber crimes, over the past 
6 years, we have seen cases involving child sexual exploitation 
grow in number from 113 to over 2,300. The requested resources 
for 2004 will help us to keep pace with this burgeoning 
caseload.
    Lastly in the cyber area, 6 out of 10 of our investigations 
currently require some level of computer forensic support. 
History tells us that the number of cases requiring this 
support will grow. These resources would allow us--the 2004 
resources which we request would allow us to expand our ability 
to conduct computer forensics examinations.

                          TECHNOLOGY PROGRESS

    A last moment on our technology progress. We have made 
substantial progress in the last 18 months. On March 28, we 
completed the Trilogy Wide Area Network. It was completed 3 
days ahead of schedule. There were some that said that we could 
not do it, much less do it on time. That wide area network has 
been deployed to 622 FBI locations. Over the last 18 months, we 
have also installed 21,000 new desktop computers and nearly 
5,000 printers and scanners.
    We are now focused on implementing the data warehousing 
capability that will bring together our information into a 
database or databases that can be accessed by agents throughout 
the world, as well as our analysts, as soon as that piece of 
information is developed.
    In today's world, we cannot afford to allow our technology 
to become obsolete. And it is essential that we preserve these 
investments by ensuring there is sufficient funding for life 
cycle operations and maintenance of systems and for technology 
refreshment, and the 2004 budget request includes a request for 
$82 million for this purpose.
    Mr. Chairman, in addition to the priorities I outlined 
today, the FBI is also requesting funding to continue 
restructuring our security programs, to augment nuclear DNA 
efforts, and to support our ongoing crackdown on corporate 
corruption.

                           prepared statement

    I believe that my Bureau is in the process of turning a 
corner in its history. We have made substantial changes to 
better equip us to protect America over the last 18 months. We 
must continue to evolve. We must continue to grow. And with 
your support, we can give our agents the resources and tools 
they need to carry out their mission of protecting America.
    Thank you for the opportunity to give a brief statement.
    Senator Gregg. Thank you, Director. We appreciate that.
    [The statement follows:]
              Prepared Statement of Robert S. Mueller, III
                              introduction
    Good morning. Chairman Gregg, Senator Hollings and members of the 
Subcommittee, I welcome the opportunity to appear before you to discuss 
the FBI's fiscal year 2004 budget request. The FBI is undergoing 
extraordinary, positive change, to better meet the threats posed by 
terrorists, foreign intelligence services, and criminal enterprises. We 
have changed our organizational structure to address the greatest 
threats facing our country, to be more dynamic and flexible, and to 
ensure accountability. And we are dramatically upgrading our 
information technology. These changes, and many others that are 
ongoing, will ensure that the FBI stays on top of current and future 
threats well into the 21st century.
    The FBI's fiscal year 2004 budget request will give us the 
resources we need to keep this positive momentum. Our total request is 
$4.6 billion. We are requesting program changes totaling $513 million, 
including 2,346 new positions, 503 of which are Special Agents. This 
morning, I would like to briefly walk you through our progress to date, 
our assessment of the threat and the changes we are making to align our 
organization and resources to address the threat.
    Before beginning, let me make one caveat to my testimony. We are 
still analyzing the impact of the 2003 Omnibus Appropriations Act on 
our 2004 request. It is possible that some changes to the request may 
be required to reflect the 2003 enacted level. We will be working with 
the Appropriations Committee on this analysis.
                       counterterrorism progress
    The prevention of another terrorist attack remains the FBI's top 
priority. We are thoroughly committed to identifying and dismantling 
terrorist networks, and I am pleased to report that our efforts have 
yielded major successes over the past 18 months. Over 228 suspected 
terrorists have been charged with crimes, 113 of whom have been 
convicted to date. Some are well-known--including John Walker Lindh and 
Richard Reid. But, let me give you just a few recent examples:
  --In March, Khalid Shaikh Mohammed was located by Pakistani officials 
        and is in custody of the United States at an undisclosed 
        location. Mr. Mohammed was a key planner and the mastermind of 
        the September 11th attack. Since the arrest, the FBI worked 
        with other agencies to disrupt his financial network in the UAE 
        and Pakistan and we are continuing to get extremely valuable 
        information from him.
  --On March 16, Abdullah al-Kidd, a U.S. native and former University 
        of Idaho football player, was arrested by the FBI at Dulles 
        International Airport en route to Saudi Arabia. The FBI 
        arrested three other men in the Idaho probe in recent weeks. 
        And the FBI is examining links between the Idaho men and 
        purported charities and individuals in six other jurisdictions 
        across the country.
  --In February, members of the Palestinian Islamic Jihad, including 
        Professor Sami Al-Arian, were arrested by the FBI and charged 
        under Racketeering Influence and Corrupt Organizations with 
        operating a racketeering enterprise from 1984 until the present 
        that engaged in violent activities.
  --Six individuals in Portland, Oregon, were arrested by the FBI and 
        charged with conspiracy to join al Qaeda and Taliban forces 
        fighting against U.S. and allied soldiers in Afghanistan. All 
        six have entered plea negotiations.
  --And, in Buffalo, the FBI arrested seven al-Qaeda associates and 
        sympathizers. These individuals, members of a suspected sleeper 
        cell, were indicted in September 2002 for providing material 
        support to terrorism.
    In addition, we are successfully disrupting the sources of 
terrorist financing, including freezing $125 million from 62 
organizations and conducting 70 financial investigations, 23 of which 
have resulted in convictions.
                        counterterrorism threat
    Despite these successes, tangible terrorist threats remain. During 
this period, we are clearly focused on immediate threats to the nation 
because of the war in Iraq. In order to respond to potential threats, 
our Strategic Information and Operations Center at FBI Headquarters and 
our field special command posts are operating on a 24 hour basis. We 
established an Iraqi Task Force. And, our agents have interviewed over 
9,000 individuals and are obtaining important information to help 
protect the American public.
    But, even as we guard against this potential Iraqi threat, we 
believe that for the foreseeable future, the al-Qaeda network will 
remain one of the most serious threats facing this country. While the 
United States has made progress in disrupting al-Qaeda at home and 
overseas, the organization maintains the ability and the intent to 
inflict significant casualties in the United States with little 
warning.
                   changing to meet terrorist threats
    As al-Qaeda and other terrorist organizations change their tactics, 
the FBI, too, must evolve. And we are evolving.
    Our new Analysis Branch in the Counterterrorism Division has 
produced 30 in-depth analytical assessments, including a comprehensive 
assessment of the terrorist threat to the homeland. We have also 
improved analyst training and dramatically beefed up our language 
translation capabilities.
    I am now focusing on long-term strategies to enhance our ability to 
collect, analyze, and disseminate intelligence. I have put in place a 
new, formal structure that will enable the FBI to assess gaps and to 
establish formal policies and strategic plans for intelligence 
collection. A new Executive Assistant Director for Intelligence (EAD/I) 
will have direct authority for the FBI's national intelligence program, 
and will ensure that we have optimum intelligence strategies, 
structure, and policies in place.
    We are establishing, in every field office, Intelligence units 
staffed with Reports Officers. These specially-trained individuals 
collect and extract intelligence from FBI investigations and share that 
information with our law enforcement and intelligence partners.
               fiscal year 2004 counterterrorism request
    Our fiscal year 2004 request includes approximately $1 billion in 
direct support for counterterrorism. Nearly 50 percent of all requested 
program changes, or $250 million, supports counterterrorism. In 
particular, the 430 positions proposed in the fiscal year 2004 budget 
will strengthen operational support around the country and improve CT 
management and coordination at FBI Headquarters. New personnel would 
provide an increased level of guidance, legal advice, and operational 
support to investigators on the front line of the war on terrorism. We 
must also continue to grow our cadre of strategic analysts. The number 
of FBI counterterrorism cases more than doubled last year, and with the 
recent capture of high-ranking al-Qaeda operatives, the number of cases 
will continue to climb.
    The requested amounts would support 66 JTTFs--critical multi-agency 
task forces that facilitate cooperation and information sharing, and 
act as a ``first line'' for preventing terrorist attacks. It would 
expand vital international partnerships by adding new FBI Legal 
Attaches in Sarajevo, Bosnia; Kuwait City, Kuwait; Tashkent, 
Uzbekistan; Kabul, Afghanistan; and Belgrade, Serbia, and by enhancing 
our presence in several existing locations to handle a growing 
workload.
    Approval of this budget request would also improve FBI crisis 
response capabilities, so we are prepared to respond to the scene of a 
terrorist attack at home or abroad quickly and effectively, with the 
equipment we need.
                      counterintelligence progress
    Mr. Chairman, so far this morning I have focused on the terrorist 
threats facing this country. Our counterintelligence efforts are also 
vital to national security. I want to emphasize that the FBI is 
thoroughly engaged in fighting the serious threat from foreign 
intelligence services and their assets. The FBI had several successful 
investigations in this area. Last month, Brian Regan agreed to accept a 
life sentence for attempted espionage and unlawful gathering of defense 
information. In October 2002, Ana Montes was sentenced to 25 years in 
prison following her plea of guilty to one count conspiracy to commit 
espionage on behalf of Cuba.
                      counterintelligence threats
    Intelligence threats fall into four general categories. The most 
significant--and our top counterintelligence priority--is the potential 
for an agent of a hostile group or nation to enhance its capability to 
produce or use weapons of mass destruction. A second threat is the 
potential for a foreign power to penetrate the U.S. Intelligence 
Community. A third threat is the targeting of government supported 
research and development. The individuals awarded research and 
development contracts in support of ongoing operations and war-making 
capabilities constitute the highest risk. The fourth threat is the 
potential compromise of Critical National Assets (CNAs). The nation's 
CNAs are those persons, information, assets, activity, R&D technology, 
infrastructure, economic security or interests whose compromise would 
do damage to the survival of the United States.
                 changing to meet intelligence threats
    Just as we have worked to transform ourselves within the 
counterterrorism program, we have made significant changes to the FBI's 
counterintelligence program. Last May, when I announced the second 
phase of the FBI reorganization, I indicated that we would be 
refocusing our counterintelligence program to focus on the four threats 
I outlined. That effort is progressing with a centralized, nationally 
directed program. We established a Counterespionage Section responsible 
for overseeing all of the FBI's counterespionage efforts, including 
economic espionage, and we clarified our priorities and objectives in a 
``National Strategy for Counterintelligence.''
    With your support, we reprogrammed 216 positions from criminal 
investigations to counterintelligence, and we now have full-time 
counterintelligence squads in 48 of the 56 field offices.
          fiscal year 2004 counterintelligence budget request
    For fiscal year 2004, we ask your support for program changes 
totaling $63 million and 599 positions, including 94 agents, to further 
our counterintelligence strategy. These resources would provide the 
necessary investigators, analysts, and surveillance capabilities needed 
to address emerging global threats, bolster both our fixed and mobile 
surveillance capabilities, and improve our ability to detect espionage 
activities targeting national assets and universities.
                          cyber crime progress
    Next, I would like to discuss our third priority--cyber. We have 
created a consolidated new Cyber Division at Headquarters to manage 
investigations into Internet-facilitated crimes, to support 
investigations throughout the Bureau that call for technical expertise, 
and to help us coordinate with public and private sector partners.
    This strategy is proving successful. Our computer intrusion 
program, for example, has identified over 5,000 compromised computers, 
and resulted in 320 convictions and $20.4 million in restitutions. 
During 2002, Innocent Images National Initiative investigations 
resulted in 692 arrests, 648 indictments/informations, and 646 
convictions. And despite using only 5 percent of all FBI resources, the 
Cyber Program is facilitating investigative activities across all 
Bureau programs.
                           cyber crime threat
    Unfortunately, we are seeing explosive growth in cyber crime--both 
traditional crimes such as fraud and copyright infringement that have 
migrated on-line, and new crimes like computer intrusions and denial of 
service attacks.
    To date, terrorists have posed only low-level cyber threats, but 
some organizations are increasingly using information technology for 
communication. Terrorist groups are increasingly computer savvy, and 
with publicly available hacker tools, many have the capability to 
launch nuisance attacks against Internet-connected systems. As 
terrorists become more computer savvy, their attack options will 
increase.
                     changing to meet cyber threats
    Looking forward, our Cyber Program will focus on identifying and 
neutralizing: (1) individuals or groups conducting computer intrusions 
and spreading malicious code; (2) intellectual property thieves; (3) 
Internet fraudsters; and (4) on-line predators that sexually exploit or 
endanger children. Our success will depend on maintaining state-of-the-
art technical capabilities to handle complex investigations and forming 
and maintaining public/private alliances.
                    fiscal year 2004 budget request
    For fiscal year 2004, the FBI is requesting $234.4 million to 
protect the United States against cyber-based attacks and high-
technology crimes. This request represents program changes of $62 
million and 194 positions, including 77 agents. These resources will 
enable the FBI to staff computer intrusion squads in field offices, 
enhance technical capacities to identify persons illegally accessing 
networks, and provide funding for the training and equipment we need to 
more aggressively investigate cyber incidents. The requested resources 
will enable the FBI to increase its efforts to detect the sexual 
exploitation of children on the Internet. Over the past six years we 
have seen these cases grow in number from 113 to over 2,300. We must 
increase our commitment here. Finally, the resources would allow us to 
expand our ability to conduct computer forensics examinations. Right 
now, 6 out of 10 investigations require some level of computer 
forensics support. History tells us that the number of cases requiring 
this support will continue to grow and that the number of forensic 
examinations required per investigation will also continue to grow.
                          technology progress
    I would like to touch on our efforts to upgrade FBI technology. 
Over the past two years the FBI has made significant progress in 
modernizing our information technology infrastructure to better support 
our investigative needs. On March 28, we completed the Trilogy Wide 
Area Network--three days ahead of schedule. High-speed local area 
networks have been deployed to 622 FBI locations. Over 21,000 new 
desktop computers and nearly 5,000 printers and scanners have been 
provided. The Enterprise Operations Center, which will manage our 
computer networks, becomes operational early this spring.
    We are now focused on implementing a corporate data warehousing 
capability that is key to FBI intelligence, investigative, and 
information sharing initiatives as well as to our records management 
system.
    Trilogy will change the FBI culture from paper to electronic. It 
will replace redundant searches of stove-piped systems. Agents will 
search multiple databases--linking thousands of data points of 
evidence, leads and suspects--through a single portal. Trilogy is the 
base for a modern computer architecture. Trilogy computers, servers, 
and networks will support state-of-the-art applications. Using Trilogy 
to transport, the Integrated Data Warehouse will link 31 FBI databases 
for single-portal searches and data mining. The Collaborative 
Capabilities program will allow electronic data sharing with other 
agencies.
                    fiscal year 2004 budget request
    We are now at the point in our information technology upgrade where 
it is essential that we preserve these investments by ensuring there is 
sufficient funding for life-cycle operations and maintenance of systems 
and for technology refreshment. The fiscal year 2004 request includes 
increases of $82 million to fund technology refreshment and operations 
and maintenance. These resources will ensure that the equipment we have 
deployed stays in good working order, and that it is replaced in an 
orderly manner. The FBI can never again allow its equipment to become 
obsolete.
                             other programs
    We are completely restructuring our internal security programs and 
processes. We have created a dedicated Security Division and are 
consolidating security functions under a single management structure. 
As we implement these changes to improve security, we are addressing 
recommendations in the Webster and Rand reports. The fiscal year 2004 
request includes increases of $37 million and 126 positions, including 
32 agents. These resources will fund polygraph examinations, guard 
services, and other security expenses.
    The FBI Laboratory's R&D efforts generated more than 120 projects, 
providing more than 100 deliverable products to the operational units, 
58 technical publications, and 126 scientific presentations, in the 
last three years. The FBI's Combined DNA Index System software is used 
by 185 domestic and 23 foreign laboratories. The fiscal year 2004 
request includes $3.28 million and 32 positions funding nuclear DNA and 
the Federal Convicted Offender Program.
    I will conclude with the FBI's Criminal Program. We have opened 
more than 85 major corporate fraud investigations. At the end of fiscal 
year 2002, the FBI had five corporate fraud investigations with losses 
in excess of $1 billion. Currently, this number has increased to eight. 
Forty-five FBI field offices are participating in multi-agency 
corporate fraud working groups. The fiscal year 2004 request includes 
$16 million and 164 positions, including 54 agents. The request will 
fund additional investigators to support this initiative.
                                closing
    The FBI has turned a corner in its history. With the support of 
Congress, we have been able to make dramatic and substantive changes. 
Our transformation continues because the threats facing the U.S. 
homeland continue to evolve. I want to reassure you that we are 
committed to protecting this country from those who seek to harm us 
through acts of terror, espionage, cyber attacks, or criminal acts. 
Every citizen must be able to enjoy the basic freedoms this great 
nation provides. The men and women of the FBI understand their roles in 
these challenging and uncertain times. With your support, we can give 
them the resources and tools they need to carry out our mission.
    Thank you.

                            COUNTERTERRORISM

    Senator Gregg. Maybe you could give us your thoughts on 
where we stand in fighting terrorism.
    Mr. Mueller. Looking at it from our perspective alone, the 
FBI is responsible for understanding the terrorist threats 
within the United States. Each month as we reorient our work 
force, as we increase our information technology (IT) 
capability, as we grow analytical capability, as we bring on 
more translators, as we focus on addressing counterterrorism as 
our number one priority and, as everyone in the organization 
comes to understand that, I think we have grown in our 
capability of understanding the threats within our borders.
    That does not mean that we could not still face individuals 
coming into the United States, sleepers who come in 
individually under our radar screen and, pursuant to some plot 
originated and directed overseas, contemplate a terrorist 
attack. But each month I believe that we have moved to better 
our capabilities and understanding of the terrorist threats 
within our borders.
    And if you couple that with the successes overseas, the 
arrest of Abu Zabaydah, the arrest of Ramzi Binalshibh, the 
detention of Khalid Shaikh Mohammed, the detention of Mustafa 
Ahmed al-Husawi, and our continuing debriefings of these 
individuals, our view of the capabilities of Al-Qaeda becomes 
more transparent and it gives us more confidence that we have 
an understanding of plots in the past, plots that were on the 
table as future possibilities.
    We still face a substantial threat, principally from Al-
Qaeda and their desire, willingness, capabilities, and unity of 
mission to kill Americans. So on the one hand, I think we are 
doing a much better job both here and overseas. On the other 
hand, we still face a substantial threat.
    Senator Gregg. What percentage of the agents are now 
involved in counterterrorism?
    Mr. Mueller. I believe it is up to--let me just check for a 
second if I could.
    Senator Gregg. Yes.
    Mr. Mueller. Yes, it is 23 percent. I had to check my 
figures.
    Senator Gregg. And what percentage are involved in the 
counterintelligence? And is that an overlapping number?
    Mr. Mueller. It is not an overlapping number, although--let 
me just--let me see if I can give you the figures, the 
percentage.
    I was just informed that we generally do not--I would be 
happy to provide the number of counterintelligence in closed 
session. Generally we do not give out the percentages or the 
numbers in open session.
    I will tell you that it is not an overlap. However, the--
since September 11th, my directions to the SACs, Special Agents 
in Charge, around the country is that their first priority is 
counterterrorism. There should be no counterterrorism lead that 
goes unaddressed. And consequently, we have overburned, as you 
would say, in counterterrorism substantially in the wake of 
September 11th, and that continues to drop until October of 
this year. And then as we ginned up for the response to the, at 
that time, probable incursion into Iraq, the numbers that were 
dedicated to counterterrorism ramped up again.
    And so there will be and there has been in the wake of 
September 11th, and there has been in anticipation and during 
the war in Iraq, a number of individuals who have been taken 
from other programs, including counterintelligence, to meet the 
short-term needs of addressing the September 11th 
investigation, and then the responsibility for protecting the 
United States from terrorist attacks which might have been 
associated with the war in Iraq.

                          CHICAGO FIELD OFFICE

    Senator Gregg. Let us take the field office, arbitrarily 
choosing Chicago as a large one. How many agents approximately 
do you think you have there? Do you know?
    Mr. Mueller. I just do not have that off the top of my 
head.
    Senator Gregg. Let us say it is 500. What----
    Mr. Mueller. I would say----
    Senator Gregg. What percentage----
    Mr. Mueller [continuing]. Yes, probably 500 or 600 in 
Chicago.
    [The information follows:]

                Number of Agents in Chicago Field Office

    As of April 10, 2003, the Chicago Field Office had a Funded 
Staffing Level of 422 agents.

    Senator Gregg. What percentage would be doing 
counterterrorism, and what percentage would be doing 
counterintelligence, and what percentage would be doing what 
they have always done in Chicago, chasing city officials?
    Mr. Mueller. I would be happy to get you those figures, but 
I can tell you in the wake of September 11th, there would have 
been a ramp up, a substantial ramp up in which probably 50 to 
60 percent of the agents in the months from October 2001 to 
April, May or June 2002, were addressing counterterrorism.
    As you got further away from September 11th, the numbers 
would drop back and be addressing the other programs, so that I 
would venture to say in a place like Chicago, 30 percent would 
be doing counterterrorism at the low point, August, September, 
before we started ramping up for Iraq. Now it is probably 
higher. And it certainly has been higher in the last several 
weeks because we completed, around the country, interviews in 
excess of 9,000 individual Iraqis who have provided us with 
tremendous information helpful to the forces overseas. But we 
have undertaken and completed 9,400 interviews around the 
country and we had to use agents from different programs.
    So if you look at it today, the percentage who would be 
working on what we say is counterterrorism would be a lot 
higher. If you looked at it back in August, I would say 
probably 20 to 30 percent of the Chicago office was working on 
counterterrorism. A lesser percent would be working on 
counterintelligence. A lesser percent would be working on 
cyber. And then a substantial number in the overall criminal 
programs, probably close to 40 percent, 30 to 40 percent, would 
be on all of the criminal programs. That would be public 
corruption, violent crime, gangs, organized crime, all lumped 
together under the criminal programs.
    [The information follows:]

 Clarification: Percentage Increase of Agents in Chicago Field Office 
Focusing on Counterterrorism Prior to September 11 to May/June of 2002, 
                        and During War With Iraq

    ``In the wake of September 11, there would have been a ramp 
up, a substantial ramp up in which probably 50 to 60 percent of 
the agents in the months from October of 2001 to April, May or 
June of 2002, were addressing counterterrorism.''
    In fiscal year 2001 (October 1, 2000-September 30, 2001) 
12.1 percent of all FBI field agents Bureau-wide were working 
counterterrorism. In the Chicago field office, 14.1 percent of 
agents were working counterterrorism.
    From October 1, 2001 through December 31, 2001, 52.4 
percent of all FBI field agents were working counterterrorism. 
In the Chicago field office, 34.7 percent of agents were 
working counterterrorism.
    From October 1, 2001 through June 30, 2002, 34.5 percent of 
all FBI field agents were working counterterrorism. In the 
Chicago field office, 26.7 percent of agents were working 
counterterrorism.
    ``As you got further away from September 11th, the numbers 
would drop back and be addressing the other programs, so that I 
would venture to say in a place like Chicago 30 percent would 
be doing counterterrorism I would say at the low point, August, 
September, before we started ramping up for Iraq. Now it is 
probably higher.''
    From October 1, 2002 through December 31, 2002, 22.3 
percent of all FBI field agents were working counterterrorism. 
In the Chicago field office, 19.2 percent of agents were 
working counterterrorism.
    From October 1, 2002 through March 31, 2003, 24.4 percent 
of all FBI field agents were working counterterrorism. In the 
Chicago field office, 19.6 percent of agents were working 
counterterrorism.
    The chart below illustrates these figures.
    The number of FBI agents involved in counterintelligence in 
the Chicago office is classified. The classified response is 
provided in a separate document.

             SUMMARY CHART OF AVERAGE FIELD AGENT ONBOARD FOR TOTAL FBI AND THE CHICAGO FIELD OFFICE
----------------------------------------------------------------------------------------------------------------
                                                               Bureau \1\                    Chicago \1\
                                                     -----------------------------------------------------------
                     Time Period                        Avg.     Avg. CT   Percent    Avg.     Avg. CT   Percent
                                                       Agents    Agents   of Total   Agents    Agents   of Total
                                                       Onboard   Onboard   Agents    Onboard   Onboard   Agents
----------------------------------------------------------------------------------------------------------------
Fiscal year 2001: 10/1/00-9/30/01...................     9,048     1,092      12.1       384        54      14.1
Fiscal year 2002, 1st Qtr: 10/1/01-12/31/01.........     8,904     4,666      52.4       377       131      34.7
Fiscal year 2002, 3rd Qtr: 10/1/01-6/30/02..........     8,791     3,029      34.5       371        99      26.7
Fiscal year 2003, 1st Qtr: 10/1/02-12/31/02.........     8,826     1,964      22.3       381        73      19.2
Fiscal year 2003, 2nd Qtr: 10/1/02-3/31/03..........     8,884     2,172      24.4       378        74      19.6
----------------------------------------------------------------------------------------------------------------
\1\ These number do not include Supervisory Special Agents.

                       COUNTERTERRORISM TRAINING

    Senator Gregg. What percentage of the curriculum at 
Quantico is dedicated to counterterrorism?
    Mr. Mueller. I can tell you that it has increased. I do not 
know the exact percentages. The basic skills, and by that I 
mean the skills that cut across all of the various substantive 
programs of the Bureau, probably take up 50 or 60 percent--and 
this is off the top of my head, and I would have to get you the 
exact figures. It is probably 50 to 60 percent.
    Thank you. For a percentage--I can tell you that since 
September 11th, we have added 32 hours of counterterrorism and 
counterintelligence training to the--on the counterterrorism 
and counterintelligence curriculum for the new agents. We also 
are putting in a separate training session specifically for 
counterintelligence.
    [The information follows:]

Percentage of Curriculum at Quantico Dedicated to Counterterrorism (CT)

    Currently, New Agents receive 116 hours of Investigative 
Training. Of these, 55 hours (approximately 47 percent) are 
dedicated directly to counterterrorism and counterintelligence 
training. Because these two training initiatives are extremely 
inter-related, singling out CT-exclusive training is difficult. 
All other training, such as Legal, Forensics, and Firearms, is 
an integral part of New Agent Training, but is not program-
specific. Additionally, CT analysts are also trained at 
Quantico in the College of Analytical Studies. The training 
includes a basic six-week course. Several advanced analyst 
courses have been developed as well.

                              FBI CULTURE

    Senator Gregg. I guess my question goes to this: How much 
has the culture changed? I mean, does the agent in the field 
today think that he is primarily a counterintelligence, 
counterterrorism agent? Or does he still think he is a super 
police officer----
    Mr. Mueller. I think the----
    Senator Gregg [continuing]. Or she?
    Mr. Mueller. No, I think that there are a couple of ways of 
looking at it. At the outset I would say when we talk about 
culture and when you think on it, if you looked at your FBI 
agent, the FBI agent is patriotic needless to say, dedicated, 
honorable, wants to do the job that is set by their country, in 
the same way that the military is. When a person joins the 
military, they do what the President directs for the military, 
to be one place one day and the next place the next day.
    In the past, we have been focused on cases with the 
expectation that a case would go to court. I believe since 
September 11th, almost everyone in the organization understands 
that you have to look at a piece of information as a piece of 
information, whether it is a piece of information for purposes 
of intelligence or a piece of information that can be used all 
the way into a courtroom. But it is very important for that 
piece of intelligence, that piece of information available to 
be looked at in a larger context of the intelligence mission of 
the Bureau.
    I have heard and believe that around the country, agents 
who want to do counterterrorism find that the skills that they 
have developed on the criminal side lend themselves to 
counterterrorism investigations, and that the mix of 
counterintelligence or counterterrorism experience is ideal. 
There are those around the country, and there probably always 
will be, who prefer doing drug investigations or white collar 
crime investigations. But I believe that the Bureau has shifted 
remarkably since September 11th to address and understand the 
importance of the intelligence function.
    I also have to give them the tools to do it. I have to give 
them the analysts. I have to give them the information 
technology. I have to develop the reports officers, and strip 
off the sources and methods so that we become a greater part of 
the intelligence community. I have to develop a cadre not just 
of reports officers, but intelligence officers who will look at 
things not just from the case perspective but also from the 
perspective of a particular strategic target, and adopt that 
which MI5 does well in certain areas in order to be successful.
    And the last point I would make is the--I have looked at 
MI5. I have looked at other intelligence areas, and I believe 
that the combination we have of intelligence capability and law 
enforcement capability under one roof is by far the best way to 
go, and avoids the stovepiping that we see elsewhere.
    Senator Gregg. I have a lot of other thoughts and 
questions. But I will turn to Senator Hollings.
    Senator Hollings. Thank you, Mr. Chairman.
    I first observe, Director Mueller, that you are not in any 
trouble. Otherwise, this table would be filled up, you know.
    It is not all of us here, just us chickens.

                               TERRORISM

    With respect to the status of terrorist that the chairman 
asked about, of course the real question is: Are they creating 
them faster than you get rid of them? You meet every morning 
and brief the President I believe.
    Mr. Mueller. Yes, sir.
    Senator Hollings. I wonder about the statement made by 
Mubarak in Cairo to the effect that we are creating 100 bin 
Ladens. That is what we have really got to worry about. We have 
got to make sure that we bring, as we are doing now, a quick 
end to Saddam. Otherwise, when we get that government going, 
but more particularly get the President's roadmap for peace in 
the Middle East ongoing--I notice that Chirac has announced a 
different roadmap. Tell the President to stick to his roadmap 
because--that is the creation of the terrorism.
    I mean, you can put on all of these numbers of agents, 
dedicate so many more agents to terrorism rather than to drugs 
or to crime or white collar, this or that, but unless and until 
we get to the source of the creation of them, they are creating 
them fast. That was the whole--but we have got our fingers 
crossed right now about the victory in Iraq. We have hit the 
bowl. The question is whether the follow-through is going to 
really work. And it is going to be extremely difficult to get 
all of these religious sects and get a democratic government. 
It is going to be tough.
    But that is the answer to the question of the status of 
terrorism, because it could be that we are creating them faster 
than you can get rid of them.
    Otherwise, on the culture, that is another difficult job 
that you have. And you talk about the agent out there, and 
you--it is a question of how do you get them so that they 
believe they are beyond the law or they can out-trick the law 
or they devolve into corruption or that kind, where they swap 
sides. We have had Miller and Hanssen, for one thing. I would 
have burned Hanssen. I do not know where you all get this that 
you can get more--I mean that was one clear-cut case and the 
files got him. So we had all the more that we could have gotten 
out of him.
    And if you do not really treat it as treason they will 
continue to say, ``Well, the jail is not so bad.'' I know we 
have built one down in South Carolina. I went to see it, and 
they had better rooms in the jail than they had the Citadel 
when I went to school. They have TV there. They have exercises, 
you know, and you can play ball in the afternoon and all of 
that kind of stuff. So the fellow who is hungry and out there--
I have worked on jails--if he does not have a pretty good go at 
it, he said he can get three squares and a warm place, and they 
get into crime.
    Similarly, if there is no real penalty and they get just 
wonderful security and three squares, what is the risk? You 
know what I mean.
    Mr. Mueller. Yes, sir.

                          COUNTERINTELLIGENCE

    Senator Hollings. Otherwise, we and the State Department 
swap around our ambassadors and chiefs of stations. We find--is 
there a swap-around system particularly in counterintelligence, 
where they just do not stay there and get corrupted in that 
sense? The Methodist ministry does that. I know we do that with 
Circuit judges in South Carolina.
    Somehow we have got to give polygraphs to everyone in 
counterintelligence. Every 3 years, I think, is the practice. 
When last did J.J. Smith get a polygraph?
    Mr. Mueller. I am not certain, Senator, on J.J. Smith. I 
can tell you that on the--on Ms. Leung, the other individual, 
she was polygraphed back in the 1980s but not more recently 
than that. I have to----
    Senator Hollings. Well, now----
    Mr. Mueller [continuing]. Tell you that we have changed our 
policy in the wake of----
    Senator Hollings. You have changed your policy?
    Mr. Mueller. We have changed our----
    Senator Hollings. Thank goodness.
    Mr. Mueller. We have dramatically improved our----
    Senator Hollings. I asked Judge Freeh about Hanssen----
    Mr. Mueller [continuing]. Use of polygraphs.
    Senator Hollings [continuing]. And he had not had one in 20 
years.
    Mr. Mueller. I also took one before my confirmation.
    Senator Hollings. Yes, sir.
    Mr. Mueller. So I have been through it along with everybody 
else, and it was an experience.
    [The information follows:]

   Most Recent Polygraph of Special Agent James J. Smith, Subject of 
               Espionage Case in Los Angeles, California

    Operating under previous policies, Agent Smith never 
received a polygraph examination, as he retired prior to the 
Hanssen case. Under the current polygraph policies, an agent in 
a similar position would be subject to periodic 5-year 
reinvestigations requiring a counterintelligence-specific 
polygraph, and would also be subject to random testing. In 
addition, all new employees are subjected to a pre-employment 
polygraph.

    Senator Hollings. I was on the Intelligence Committee, and 
we knew good and well where the leaks were in the staff, and so 
you never ask a man to do something that you are not going to 
do yourself. We learned that in the war. So I went over to the 
Capitol Police; it was a 2-hour thing. And the first question, 
I started my answer, I said, ``Well, in my humble opinion,'' 
and the damn needle just went right straight across.
    Senator Gregg. I am not sure a polygraph has been designed 
that would be able to handle your answers----
    Senator Hollings. But in any event----
    Senator Gregg [continuing]. Or understand them.

                         DOMESTIC INTELLIGENCE

    Senator Hollings. When 9/11 occurred, it was like--it is 
like that, ``When in danger, when in doubt, run in circles, 
scream and shout.'' And one of the screams was, ``We need a 
whole new division of domestic intelligence rather than the 
FBI. I think you are handling it. You are reorganizing it, but 
it has sort of been top secret in that sense that--I have 
explained to colleagues what you have been doing. Somehow you 
have a PR man. That is all J. Edgar had. Find out his 
descendant and get him.
    And tell what is going on, that can be told, because they 
do not realize the tremendous effort you have made on domestic 
intelligence.

                                TRILOGY

    With respect to the Trilogy, as I understand you said you 
were going to have a cost overrun of $137.9 million. And we 
asked you to take it out of the hide of the budget, and that 
was going to require a reprogramming.
    Mr. Mueller. Yes, sir.
    Senator Hollings. Have you got that reprogramming request 
before us?
    Mr. Mueller. I have the--it is over at the Department of 
Justice at this point.
    [The information follows:]

              Status of the Trilogy Reprogramming Request

    As of April 10, 2003, the Trilogy reprogramming request was 
at the Department of Justice. The request was forwarded to the 
Office of Management and Budget (OMB) on April 17, 2003, and 
approved by OMB on April 25, 2003. On May 21, 2003, the request 
was transmitted to Congress.

    Senator Hollings. I see. What about keeping, now, that 
Trilogy up to date? If we get all of this stuff and everything 
else like that, but do we have an ongoing plan to keep it 
moving and going?
    Mr. Mueller. Yes, absolutely. Yes. Let me back up a second 
and say that----
    Senator Hollings. Yes.
    Mr. Mueller [continuing]. I would take responsibility for 
the cost overruns.
    Senator Hollings. Yes.
    Mr. Mueller. When I came in, it took me a while to 
understand the information technology or lack thereof in the 
Bureau, and the current plans to upgrade it. And it takes a 
while to get it into my head because I am not a computer 
programmer at all. But as we went along, it seemed to me that 
our plans and what we had budgeted for and what Congress had 
given us would be inadequate to the mission that we had, in the 
sense that it was not upgrading our essential databases, giving 
and putting it into a new, upgraded database architecture that 
would be a platform for the future. And as has been described 
to me by others in the Bureau, what we were doing in the 
previous budget was putting lipstick on a pig.
    Senator Hollings. Yes.
    Mr. Mueller. In other words, the pig is our old databases 
and we are putting a GUI, Graphical User Interface, on it that 
would make everybody happier in terms of input and output, but 
would not enable us to use the analytical tools that we needed. 
So I had them go back to scratch. And in going back to scratch 
and developing the database structure that I believe will be 
the foundation for the future, it ended up costing more. That, 
coupled with the fact that we had two contractors and we need 
an integrator, is principally responsible for the overruns.
    Now, I believe that those changes that we have made are 
absolutely indispensable to our ability to continue to refresh 
our information technology down the road. It makes no sense for 
us to have and put into place that which will be obsolete in 2 
years. And we are increasingly looking at and focusing on what 
we do in-house as a foundation for the future, whether it be 5 
or 10 years down the road, and enhancing our capability to get 
commercial-off-the-shelf, COTS, products in to augment what we 
are doing, as those COTS products get developed by the various 
contractors out in the field.
    So we have asked for, I believe, something in the range 
of--what is it? $82 million, is it? Yes, $82 million in the 
2004 budget, principally directed at enhancing our information 
technology.
    [The information follows:]

 Clarification: Amount Requested for Information Technology in Fiscal 
                               Year 2004

    In fiscal year 2004, the requested increase for information 
technology is $82 million. The FBI requests $80 million for 
Trilogy operations and maintenance (O&M) and technology 
refreshment and $2 million for the Top Secret/Sensitive 
Compartmented Local Area Network O&M.

    Mr. Mueller. As to the $137.9 million, you are right. You 
did say take it out of our base funding, and we are taking it 
out of our base funding. We have the reprogramming over at the 
Department of Justice. And I am looking at the information 
technology dollars with a view to making certain that every one 
of those dollars is spent wisely.

              CRIMINAL JUSTICE INFORMATION SERVICES (CJIS)

    While I am on this subject, because it is important to the 
future of the Bureau----
    Senator Hollings. Yes.
    Mr. Mueller [continuing]. I will tell you that we have 
tremendous capabilities out at CJIS, for instance, Integrated 
Automated Fingerprint Identification System, or IAFIS, the 
fingerprint databases, NICS, National Instant Criminal 
Background Check System----
    Senator Hollings. How long does it take with the 
fingerprint thing? If I am----
    Mr. Mueller. Seconds.
    Senator Hollings [continuing]. The highway patrol and I 
take a fellow and I have his fingerprints----
    Mr. Mueller. Seconds.
    Senator Hollings. Seconds?
    Mr. Mueller. Seconds.
    Senator Hollings. It used to take 1 month or 2 months.
    Mr. Mueller. Seconds.
    Senator Hollings. Yes, good.
    Mr. Mueller. And with the expansion of our database, we 
have a number of cases now where we have gone back 20 or 30 or 
40 years and provided fingerprint matches to State and local 
law enforcement entities that have enabled them to solve 
homicides in ways they had not been able to solve them in the 
past.
    There were two officers who were killed out in Los Angeles, 
something like 30 years ago. And with our enhanced 
capabilities, fingerprint capability--they still have not 
forgotten about that case in that police department out there. 
They sent the fingerprints in from the crime scene, and it was 
matched with an individual who lived down in--it may have been 
South Carolina, but one of the Carolinas. I do not know which 
one, or Georgia. And it turned out he had been living there for 
a number of years, married, had a family, but he was 
responsible for killing these two police officers 30 years ago, 
and they brought him back and he pled guilty last week. That is 
the kind of work that is done out at CJIS.
    Now as we grow as an organization, what we have to do is 
enhance our information technology capabilities there and 
better integrate it in to what we do in the Bureau overall.
    [The information follows:]

                Clarification: IAFIS Case in Los Angeles

    More than 45 years ago, two California police officers were 
shot and killed. A latent fingerprint was developed from a 
vehicle involved in the case, but searches of that print met 
with negative results. Last year, detectives in the Los Angeles 
County Sheriff's Office initiated a search of the latent 
fingerprint against the database of the Integrated Automated 
Fingerprint Identification System (IAFIS). The search resulted 
in the identification and arrest of Mr. Gerald Mason, who was 
in the database because of a 1956 burglary arrest. The FBI 
notified the Los Angeles County Sheriff's Office. Mr. Mason was 
located and arrested at his residence in South Carolina on 
January 29, 2003.

    Mr. Mueller. I do not mean to get on my hobbyhorse on that, 
but----

                       DRUGS/TERRORISM FINANCING

    Senator Hollings. Oh, no, it is better to know that you 
have a grasp of it, and that was really the question. And you 
really know more about it than I do.
    But I am a little concerned--of course, I am--sometimes I 
get our chairman and so forth and we find out what we are going 
to do on drugs. I started 30-some years ago right at this table 
and we were burning the poppy fields in Turkey, and then we 
went to Marseilles and broke up the factories, went down into 
Paraguay and up to Colombia and over to the triangle at Chiang 
Mai, up in Laos, and I met with the Japanese and the 
Australians and everybody else. I said, ``Let us go into Burma 
now and look.'' But they said, ``Oh, no, they have armies over 
there. You would get killed.'' They were shipping in 50,000 
pounds of heroine out through Bangkok every week, that kind of 
thing.
    And now, I pick up the morning paper, and the drug war in 
Colombia has spilled over into Venezuela. However, the--you 
keep telling us, you folks in law enforcement, that this 
terrorism is financed by drug money. And I looked and see where 
you moved 567 agents from drugs to counterterrorism. Can we not 
ask for just more and get them--have them keep going, not 
necessarily on the ordinary drugs and everything, but at least 
the money part? Because that is what finances the terrorism.
    Mr. Mueller. Well, we are--whenever we have--as I said, 
terrorism is our first priority.
    Senator Hollings. Yes.
    Mr. Mueller. If it relates in some way to----
    Senator Hollings. And the money part----
    Mr. Mueller [continuing]. Financing by narcotics----
    Senator Hollings [continuing]. Is the first priority of the 
first priority.
    Mr. Mueller. First is--we take that as a priority. We 
recently did a case in New York where we found that heroin from 
Afghanistan was being sold in the United States, distributed in 
the United States, and the monies were going back to 
Afghanistan to the Taliban and Al-Qaeda. And so we address 
cases like that, and we have done a number of cases involving 
the FARC out of Colombia, where it looks like cocaine monies 
were being used to purchase weapons and the like.
    I took 400 initially, 400 positions from the drug programs 
in a reorganization and reprogramming because I believe that we 
had to reorient ourselves, first of all, as an agency before I 
came back to either the administration, the Justice Department 
or the Congress for additional resources. And in looking at it, 
it seemed to me that, first of all, I needed to put our house 
in order, focus on our priorities, be absolutely clear on what 
our priorities are up and down the line, and then have not only 
the FSL, funded staffing level, the manpower directed towards 
the priorities, but also the financing.
    The process I went through in making those decisions was to 
go to the Special Agents in Charge and say, ``What do you need 
to do in each of your territory's divisions to address either 
perceived counterterrorism, mission or threat in that 
division?'' And they came back with various numbers of agents 
that they believed they needed, depending on the division.
    Now, quite probably, one or more of them came back and 
said, ``Well, the Director is going to give us new resources,'' 
and maybe gave me more numbers than they really actually 
needed. So we cut them down and looked at it across the 
country, and came up with approximately 500 that the Special 
Agents in Charge said, ``We need these numbers in our divisions 
to address counterterrorism.''
    And I went back to them and said, ``In your divisions, what 
are your priorities? What programs would you take these agents 
from?'' And coming back, it was 400 that came from the drug 
program. And I looked at that and I said, ``Okay. Why are we 
taking them from the drug programs?'' And we looked at areas 
where we overlapped with the DEA in terms of addressing the 
cartels, and we looked at areas where we do standalone drug 
cases that increasingly can be done by State and local law 
enforcement, standalone methamphetamine case, standalone 
marijuana cases.
    And what I wished us to remain focused on, are the 
organized crime drug enforcement task force cases, the high 
intensity drug trafficking areas cases, and those areas where 
we bring something special to the table and where we do not 
overlap with other Federal agencies or State and local 
agencies.
    Now, as we go down the path and I hear from State and local 
law enforcement, many of them are saying, ``We miss you in the 
drug area. We want you back more than you were before,'' and 
that is something that I will have to address down the road.

                                 LEGATS

    Senator Hollings. Well, as I understand it, Judge Freeh was 
putting these Legats out into the different countries as drug 
agents, and now I see you have them in Sarajevo, Bosnia, 
Kuwait, Uzbekistan, Kabul, Afghanistan, Belgrade, Serbia, that 
they have really moved from drugs to counterterrorism. You have 
been putting them down in the West Bank. You have put them 
somewhere in Beirut. You have put them in Syria. You have put 
them in Cairo. You have put them down in Riyadh. When you have 
them in Bosnia and Sarajevo, you are still chasing drugs. 
Afghanistan, you still--well, I mean, you might find some Al-
Qaeda left there. But look at that, because what we have got to 
do is get both, to tell you the truth----
    Mr. Mueller. The list----
    Senator Hollings [continuing]. Of where the real money is 
coming from.
    Mr. Mueller. The list that you have read off----
    Senator Hollings. Yes.
    Mr. Mueller [continuing]. Are those that we are 
requesting----
    Senator Hollings. Yes.
    Mr. Mueller [continuing]. Expansion on in those particular 
cities. We do have a Legat in Cairo. We have Legats in Riyadh. 
We are expanding the Legat in Riyadh and minimizing--or I 
should not say minimizing, but cutting back the territory that 
was--or for which Riyadh was responsible. So we are adjusting 
our Legat distribution to reflect the new challenges of 
addressing counterterrorism. Even in South America, where there 
may well be enhanced activity from those who are affiliated 
with either Al-Qaeda, Hezbollah, or Hamas, our Legats down 
there are now finding that they are handling that type of 
activity rather than narcotics activity.
    And lastly, we do want to put a Legat in Beirut. We have 
been discussing that with the State Department for some time. 
The State Department has the embassy there, but because of the 
threat level, you need to have the personnel working the 
embassy in secure compound grounds. They simply do not have 
room now. They are anticipating building a new embassy to be 
completed in, I think, 2006, and then they will have space for 
us. And in the meantime, we are going to be exploring having a 
greater presence in Beirut than we currently do.
    Senator Hollings. Yes, you have to get to them and tell 
them to move somebody out. You cannot wait until 2006.
    One final question--Mr. Chairman, you have been very good 
to me.

                             REORGANIZATION

    How do you coordinate our--just looking at the breakdown 
now that you have in the reorganization of the Bureau itself, 
and you have all of this Trilogy and you have all of these 
different officers and responsibilities. But where is the 
coordination? And how is that working so that you are informed? 
We cannot have another Minnesota situation where they kept 
calling the Headquarters but somehow it did not get through.
    Mr. Mueller. Well, there are actually three ways. The first 
way is--every time I speak to groups at the FBI, I say, ``I 
want to know the bad news.'' Inevitably, the good news has a 
way of reaching the top. It is the bad news that does not.
    Senator Hollings. Yes.
    Mr. Mueller. When I find that I do not get the news of 
those things that are wrong and substantial, I am not happy and 
that word has gone out. And so I have tried to change and make 
people understand that I would be twice as mad about not 
hearing about a mistake than hearing that a mistake was made. 
We are going to have to take risks. I want people to be 
aggressive investigators.
    And people will take risks, and I want them to take risks, 
and I do not want them to feel that they will be disciplined 
for taking the risk. We all make mistakes; I will make more 
than most people in the organization. But I want to hear about 
the issues such as what happened in Los Angeles, such as what 
happened in Minneapolis.
    The second way is by changing the accountability and 
responsibility for the national programs. And by that I mean 
counterterrorism, counterintelligence and cyber. Whereas in the 
past it would be the field office that was responsible for any 
particular case, in those national programs it is the Assistant 
Director in charge of counterterrorism that is responsible for 
the success or failure of a case. That means that individual 
has to know what is going on around the country. The Assistant 
Director does not do the investigation but must know about the 
investigations. And when it is in counterterrorism, there has 
to be direction from the center. There has to be accumulation 
of intelligence, analysis of that intelligence, dissemination 
of that intelligence, and undertaking operational 
responsibilities for that intelligence.
    So centralizing responsibility and accountability in those 
programs, I think, is going to make a substantial difference 
from the way we operated prior to September, prior to September 
11th.
    And the third way is that I have expanded--thanks to the 
approval of my initial reorganization, I have now four 
Executive Assistant Directors who have a much smaller span of 
control than before. Before September 11th, there were I think 
12 Assistant Directors, all reporting to the Deputy Director 
and then to me. Now I have a Deputy Director and there are four 
Executive Assistant Directors who report to the Director and 
the Deputy Director. So the span of control in these various 
areas is much more narrow than it was prior to September 11th.
    Senator Hollings. Thank you, Mr. Chairman.
    Senator Gregg. Senator Kohl.

                        HYDROGEN CYANIDE WEAPONS

    Senator Kohl. Thank you, Mr. Chairman, Senator Hollings, 
Director Mueller.
    Within the past month, the FBI has warned law enforcement 
agencies nationwide that terrorists could build a simple but 
deadly chemical weapon out of readily available materials. 
Specifically, the FBI cited hydrogen cyanide or chlorine gas as 
easy-to-make chemical weapons. What is so disturbing is how 
easy it is to obtain cyanide. As you know, it is readily 
available at chemical supply warehouses, from mail-order 
catalogs, and even via the internet.
    As you probably know much better than I do, terrorists may 
well use cyanide in a future attack. Attorney General Ashcroft 
told this subcommittee last week that he would work with us to 
prevent terrorists from acquiring this simple chemistry to 
launch an attack. We also hope that you can pledge to work with 
us to address this concern.
    How serious of a threat does the widespread availability of 
toxic industrial chemicals like cyanide pose? And what do you 
suggest we do? Are you prepared to work with us on some 
legislative improvement to the problem?
    Mr. Mueller. Well, we sent out a bulletin several weeks ago 
relating to a relatively simple explosive device, the schematic 
for which we had picked up in one of our searches overseas. It 
was to alert State and local law enforcement to be aware of 
this potential threat out there.
    We have over a period of time received threats about the 
possible, the potential use of cyanide in an attack. We have 
received threats internationally. Working closely with the CIA, 
the FBI has focused on addressing and identifying the expertise 
for use of this compound, amongst other types of poisons. We 
have also focused on the individuals in Al-Qaeda who may have 
that expertise and understanding, and those individuals in Al-
Qaeda that may be participating in a network that would 
undertake such an attack utilizing cyanide.
    And when we receive the threats relating to use of the 
cyanide, we also may see in the same genre threats relating to 
the use of ricin, sarin, or other such compounds.
    With specific regard to cyanide and its ease of use in the 
United States, whenever we have an indication in a case that 
there is a potential for the use of cyanide, we utilize every 
arrow in our quiver, whether it be Foreign Intelligence 
Surveillance Act (FISA) intercepts or aerial or individual 
surveillance to make certain that we address that threat 
immediately.
    We also have reached out to the chemical companies, and the 
groups that represent chemical companies, to develop a liaison 
so we can do a better job in trying to identify misuses of 
cyanide compounds within the United States. As you know, it is 
very easy to get. It is prevalent--well, I should not say it is 
prevalent. But it is not hard to get. You can get it off of the 
internet, and we were exploring ways to curtail it, curtail 
that.
    We actually recently had a prosecution up in--I guess it 
was in Chicago, an individual who was--he had not--he was 
storing sodium cyanide and potassium cyanide and other toxic 
chemicals in passageways under the streets of Chicago. And we 
were onto that, we identified it and successfully prosecuted 
that individual. So where we find an indication of the use of 
cyanide, we investigate it, and we prosecute.
    We are working with the chemical industries within the 
United States to do more on that. We are certainly willing to 
cooperate and work with you in terms of additional legislation 
to address that threat.
    Lastly, we are working with the CIA and other agencies both 
within the United States and outside of the United States, to 
address any threats relating to the use of cyanide or any such 
compounds that comes from overseas.

                CIGARETTE SMUGGLING/TERRORISM FINANCING

    Senator Kohl. Within the past month, the FBI has warned--I 
am sorry. Recent ATF investigations reveal that tobacco 
smugglers are using the profits they make from illegal 
operations in the United States to fund terrorist organizations 
like Hezbollah among others.
    I raised this issue with the Attorney General last week, 
and he seemed genuinely interested in helping to tackle this 
issue. This is a serious problem that is not getting the 
attention I believe that it deserves. It is a funding source 
for terrorism. Should the FBI play a role in investigating the 
terrorism-related aspect of this problem? Do you agree that 
this is a serious terrorism-related concern? And can you pledge 
to work with us on finding some remedy for terrorist 
organizations which use the legal profits from the tobacco 
industry?
    Mr. Mueller. Yes, I--we have had several recent cases, 
principally Hezbollah, where cigarette smuggling has been one 
of the illegal activities engaged in by individuals affiliated 
with Hezbollah, to gather monies, of which have been siphoned 
off to terrorist organizations overseas.
    We had a successful prosecution most recently in North 
Carolina in which a number of Hezbollah-associated individuals 
were convicted for their actions in cigarette smuggling. We 
recently had a case up in, I believe it was Detroit, that we 
indicted where there were a number of illegal activities by a 
group of individuals again associated with Hezbollah, and the 
charges there are racketeering charges.
    So we have a number of areas where we have seen this as one 
of the illegal activities engaged in principally by those 
associated with Hezbollah to gather funds. We are looking at it 
individually and through our Joint Terrorism Task Forces, by 
addressing the terrorist groups engaged in all types of illegal 
activities, including cigarette smuggling, extortion and other 
traditional racketeering crimes.
    We also have a terrorism financing section that was 
established after September 11th in the Counterterrorism 
Division, that has been working hard on all means and 
mechanisms of the financing of terrorists--not just profits 
that come from cigarette smuggling but also from narcotic 
trafficking, from extortion, and as well as from non-
governmental organizations (NGOs), charitable organizations. So 
that section was established with experts in finance to focus 
on the sourcing and the funding of terrorists.
    And lastly, I would say we are working hand in glove with 
the CIA because most of the terrorism financing does not stop 
at our borders. It is integrated with other pockets of 
financing overseas, whether it be in the Middle East or in 
Europe. And so we are working very closely with our 
counterparts and with the CIA to focus on financing, to have a 
comprehensive strategy to address terrorism financing around 
the globe, of which the financing in the United States is but a 
part of it.
    Senator Kohl. Thank you for that answer.
    Thank you, Mr. Chairman.

                         INFORMATION TECHNOLOGY

    Senator Gregg. Thank you, Senator.
    I think it was Mr. Lowery who was reported to say that 
there is going to have to be a number of items in technology 
activity that would not be pursued in order to pay for the 
Trilogy. That was reported in the Federal Register. I think it 
was the Federal Register. Oh, Federal Times.
    What would be the items that you would not be pursuing in 
order to pay for Trilogy?
    Mr. Mueller. That is--he was misquoted.
    Senator Gregg. Oh. We have all experienced that.
    That is a good answer.
    That is a good answer.
    Mr. Mueller. It is also the accurate answer.
    He was misquoted. As I think we--as I have said before, to 
fund $137.7 million, we are taking those funds from a number of 
areas that I think we have let you know of. None of them are 
from other information technology projects. They are from--let 
me see. I know I have it some place here.
    We are taking the monies from unobligated balances from the 
emergency supplemental, as I know you will--we will probably 
discuss at some point; from prior year unobligated balances, as 
well as a reallocation of certain funds available in the 
current year. And they include some funds that we have set 
aside for information technology.
    I am tremendously frustrated, was when I first came and 
still am, at the fact that our information technology is not 
where I want it and need it to be tomorrow and today. I have 
come to learn through trial and error that I have to make 
certain that when we put pieces in place, that they are well 
thought out, that those pieces fit into the overall 
architecture and puzzle of the Bureau so that we do not have 
these same stovepipes. But there is so much more we could do 
with information technology, that every dollar I can get in our 
budget that I can put into advances in information technology, 
I am looking to put in. Now, that is difficult when I am having 
to ramp up the agent strength in our various programs, but 
particularly counterterrorism and counterintelligence, but I am 
loathe to take monies away from information technology for 
anything else.
    [The information follows:]

           Clarification of Sources of Trilogy Reprogramming

    The FBI proposes to fund the $137.9 million needed for 
Trilogy from prior year unobligated balances, current year 
funds, available information technology funding, and $33 
million in excess user fees. The FBI submitted a reprogramming 
request to the Department of Justice and the Office of 
Management and Budget. The detailed request was transmitted to 
Congress on May 21, 2003.

    Senator Gregg. Well, I agree with what you say. I think 
there is no question that the Department has had an antiquated 
technology capability for a long time, the agency, the Bureau. 
But the problem that we have seen, especially with the Bureau, 
but with other groups that we oversight in this committee, is 
that we build these, we make a commitment to move down these 
technology roads and then we build them out and we find that we 
have made huge errors, and we spend a lot of money. IAFIS was 
an example. NCIC was an example. Trilogy as it started was a 
classic example. The worst, of course, is the INS, which is in 
a category of its own when it comes to having wasted money on 
technology. It does not even communicate within the Department.
    And so we agree with you, that you need funds for 
technology. But our concern is if we give you too much money 
too fast, you end up buying stuff that does not work simply to 
spend the money and you end up going down roads that lead to 
dead ends or do not produce product, that do not create the 
integration that you need. So that is our reservation on some 
of this.
    I think you have done a good job of getting the technology 
on the Trilogy back together and up and focused, and that is 
great.
    I think, though, the same concept, the same fear, at least 
as far as my feeling, is with the amount of money that we are 
putting into the Bureau. It is coming in very fast, and you are 
shifting gears from a national police force to being a 
counterterrorism and counterintelligence force. And you are 
setting up, as you have to, all sorts of different things very 
quickly.
    The question is: Are we going to, by giving you this much 
money this fast, do you a disservice because you will end up 
going down the road of creating activity that 2 years, 3 years 
from now we will find out was just a waste?
    Mr. Mueller. Well----
    Senator Hollings. If you will yield on that point.
    I thought when you called about Smith, that you were going 
to call about the supplemental and I had the answer that you 
had $123 million unobligated. That is what you are talking 
about, right?
    Mr. Mueller. That is one of the answers.
    Senator Hollings. Yes.
    Mr. Mueller. Well, let me try to address those----
    Senator Gregg. Right, the $320 million is just----
    Mr. Mueller. Well, let me try to address those in some form 
of order. I think 18 months ago we had very little credibility 
in many places up here. And I came to see it because we had not 
put into place in my mind the individuals and the structure to 
address something that you need outside expertise to advise on. 
I think in the world, the FBI Special Agents, I think they are 
the best information gatherers in the world, best 
investigators.
    But when it comes to information technology, when it comes 
to financial posterity or financial planning, when it comes to 
running a 27,000-employee business, that background does not 
easily lend itself to that kind of organizational structure. 
And the biggest change I think we have made in the last 18 
months is bringing in individuals who have expertise in those 
areas. Whether it be Tina Jonas behind me as chief financial 
officer (CFO), who is familiar with this particular area, or 
Wilson Lowery, who came from IBM where he was part of the team 
that was doing re-engineering, or a chief information officer 
(CIO) that came from outside, the individuals we brought in I 
need to advise me and make certain that we are on the right 
track.
    And it is not just one person, as I have explained before. 
It is somebody who understands the finance; somebody who 
understands the technology; somebody who understands the 
project and getting the project done on time. All of these are 
talents that are specific and unique unto themselves, and you 
need all of them to reach the finish line. We have a number of 
those talents. We need some more.
    The other thing is, for my own sake, I mean, I come in from 
having been a prosecutor for a long time. Yes, I ran a criminal 
division at the Department of Justice, but I had not run a 
27,000-person institution where you needed to transform the 
institution and the technology. It has been a learning 
experience.
    And the one thing I have learned is that if I do not 
understand it and do not know and keep track of what is 
happening on the information technology side, it is going to go 
awry. Even though I am not a CIO, even though I am not a 
computer programmer, I do believe in order to transform the 
institution, you have to keep track of it from the very top and 
force yourself to learn it. And I am responsible ultimately for 
the success or failure of that program. I was delighted, as was 
everybody else, when we put in the wide area network and it 
came in on time.
    I will tell you that in October, as I may have mentioned to 
you before, we had what I call the ``graybeards'' come in and 
sit down with us for 2 days and go through our IT plans. And 
these are persons from Sandia Laboratories and elsewhere, and 
both Federal Government and outside computer specialists, to 
look through what we plan to do. And they came up with two 
points.
    One is that they said we would have substantial difficulty 
putting in the wide area network (WAN), because we were 
utilizing switches developed by the intelligence community that 
had never been put into a wide area network that size. And so I 
had some fear and trepidation that we actually would not get to 
the finish line on that, but we did.
    The second thing I learned is that--I had assumed that, for 
instance, you could put all of the information in a database, 
into one database. They came back and said no; for security 
reasons, no, keep separate databases.
    And so it is a combination of learning as we go along, 
having persons responsible for looking at the financial part of 
it, and where we are going. Are we spending our dollars 
correctly? Do we have the right contractors? Do we have the 
right technology? And will this technology put us where we want 
to be 5 years down the road?
    And these are the issues that I spend a substantial amount 
of time on now, because they are so integral to the future of 
the Bureau.
    Senator Gregg. Well, we appreciate that. And we also spend 
a substantial amount of time on that, and do appreciate 
communication in that area.
    Mr. Mueller. I always am open to suggestions, also. If we 
are doing it wrong, I want to know it, and I want to know it 
earlier rather than later. And so I am always open to 
suggestions as to how we can do it better.

                            COUNTERTERRORISM

    Senator Gregg. As an ancillary issue, you are now setting 
up, it appears to me, and which you have to, a whole series of 
counterterrorism intelligence task forces. You have TTIC. You 
have the foreign terrorism task force. As I understand it, 
every field office is going to have an intelligence officer who 
is the coordinating individual, which may have been set up 
outside without contacting the Congress, which we will need to 
discuss, but probably not here.
    Are we putting up so many of these groups that we are going 
to be back to where we were before 9/11, where there is just 
too many people out there doing the same stuff, or relatively 
related stuff, but they are not communicating with each other? 
Should we put the foreign task force in with the TTIC or----
    Mr. Mueller. Well, now, let me address a number of those 
issues. What I have tried to do in the Counterterrorism 
Division is specialize in certain areas such as finances and 
communications. The Foreign Terrorist Tracking Task Force, 
which is database mining for a particular operational mission, 
all of those are operational in the sense that they gather 
information in a particular area and then will run operations 
by that, further investigations in particular areas to identify 
terrorists, terrorist financing, terrorist communications, etc. 
And I consider those to be operational, and what we need to 
develop within the Counterterrorism Division to support the 
counterterrorism responsibilities nationwide.
    At the same time, I believe we had to enhance the focus on 
intelligence within our organization. I take full 
responsibility and I apologize for not having done the 
reprogramming that should have been done in anticipation of 
announcing the selection of an individual to be Executive 
Assistant Director for Intelligence. I had an Executive 
Assistant Director. It was my naive thought that since I had an 
open Executive Assistant Director position, I could put the 
person in there and call that person the Executive Assistant 
Director for Intelligence, without running it past Congress, 
for which I apologize.
    And with regard to the intelligence units in each of our 
field offices, we have intelligence units scattered around most 
of our field offices. And I wanted to make certain that that 
becomes an established program down the road. That also I 
should have run past you, and we will. But my expectation is 
what we will lend to our field offices is the capability of 
having an entity there that will be charged with gathering that 
intelligence and pushing it up, and as you look at it, I think 
you will find it beneficial.
    The last issue is: Do we have too many task forces? Do we--
are we----

  TERRORIST THREAT INTEGRATION CENTER/FOREIGN TERRORIST TRACKING TASK 
                                 FORCE

    Senator Gregg. Well, specifically, the Foreign Terrorist 
Task Force, why should that not be folded into this TTIC?
    Mr. Mueller. Because I believe it is operational--it is 
looking at identifying individuals who may fit a particular 
match of a terrorist and requires investigation as part of 
that.
    Now, when you look at what the TTIC is going to be--I 
believe in it. I am very supportive of the Terrorist Threat 
Integration Center because I believe we need an analytical 
center that focuses on terrorist threats, an analytical center 
where you have analysts that are pulling the pieces of 
information together from the various separate databases with 
regard to particular threats. But I do not believe that that 
should be operational.
    Senator Gregg. All right. That explains that.
    Well, let me just say on my behalf and I think I speak for 
most of the folks up here: We think you are doing a great job. 
You are trying hard, and you are certainly focused. And you are 
changing a ship that has been going one way for many years, and 
that has got to be done, and it is going fairly well. We are 
very impressed with the work you do.
    We appreciate the fact that your agents out there are 
trying to defend us and make us safe as a country, and we want 
to thank them for their service. We know they are working long 
hours, and they are out there trying to do something to protect 
us. And we appreciate that. Thank you.
    Senator Hollings. I concur.

                         conclusion of hearings

    Mr. Mueller. Thank you.
    Senator Gregg. Thank you very much.
    Senator Hollings. Thank you, Mr. Chairman.
    Senator Gregg. Thank you.
    [Whereupon, at 11:12 a.m., Thursday, April 10, the hearings 
were concluded, and the subcommittee was recessed, to reconvene 
subject to the call of the Chair.]