Grassley accuses FBI of botched terror investigation, coverup

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The FBI sought to cover up a "botched" investigation into a terrorist financing scheme by classifying a probe into the case as secret and misleading Congress about how the inquiry was handled, said a senior member of the Senate Judiciary Committee.

Sen. Charles E. Grassley said the FBI blocked the full release of an investigative report he sought last year from the Department of Homeland Security and the Justice Department of what he called a "turf fight" between the FBI and U.S. Immigration and Customs Enforcement (ICE) in a terrorism investigation.

The Iowa Republican, a frequent FBI critic who also serves as chairman of the Senate Finance Committee, said the FBI classified as "secret" sections of the report originally marked as "unclassified" during a review process.

Mr. Grassley said an unexplained delay by the FBI in processing a request by ICE investigators for a wiretap in the terrorist probe prevented the interception of communications between a criminal suspect and a person designated as a global terrorist by the Treasury Department.

"The FBI has a leadership role on terrorism financing cases by virtue of a May 2003 memorandum of agreement (MOA) between the Homeland Security and Justice departments, not by any statute or congressional mandate," Mr. Grassley said in a letter to FBI Director Robert S. Mueller III.

"The facts established in the [Office of Inspector General] report do not instill confidence in the FBI's ability to lead under the process established by the MOA," he said, adding that it was "a clear conflict of interest" for FBI officials to edit criticisms of their actions.

Mr. Grassley also targeted Mr. Mueller, saying that during a Senate Judiciary Committee hearing in May, the director painted "a distorted picture" of findings in the report from the inspectors general at Homeland Security and Justice, reading "selectively" from unclassified portions.

FBI spokesman Richard Kolko said the bureau received Mr. Grassley's letter but that "it would not be appropriate to discuss this letter or the response in the press."

The senator said the FBI initially blamed the delay on the bureau's Houston field office, which failed to transfer the case to the Joint Terrorism Task Force, but Mr. Grassley said evidence showed FBI headquarters raised a number of issues to slow the approval process, none of which related to whether the case had been transferred.

"This raises questions about whether the true motivation for delaying the case may have been to prevent a rival agency from infringing on FBI turf," said Mr. Grassley, adding that several federal agencies agreed there was probable cause for a wiretap.

Mr. Grassley said the MOA giving the FBI's Terrorism Financing Operations Section the lead role in cases involving terrorist financing operations had created "a strong disincentive for those outside the FBI to investigate suspected terrorist financing."