THE FBI IS A TOUGH OUTFIT TO RUN Should the biggest push be against drug lords or white-collar criminals? Or glasnost-era spies? With a rising caseload, director William Sessions faces difficult choices.
By Lee Smith REPORTER ASSOCIATE Jennifer Reese

(FORTUNE Magazine) – THINK OF the Federal Bureau of Investigation as a service company with 260 lines of business -- the number of laws Congress tells it to enforce -- competing for resources and management attention. True, no one at the moment is calling for a crackdown on the interstate transportation of faulty refrigerators or a crusade against vandals who shoot holes in Smokey the Bear signs. But demand is booming in the major lines of business. Control of illicit drugs, a field the FBI wasn't even in until 1982, would command all of the bureau's attention if managers let it. Perhaps surprisingly, counterespionage is bound to increase as a result of warmer relations with Moscow: More Soviet scholars, soldiers, scientists, and others will surge into the U.S., and some of them will be spies. The bureau's overall caseload has gone up over the past three years, but its budget, at $1.4 billion for fiscal 1989, has shrunk in real dollars. This shows. The FBI's celebrated library of fingerprints, for instance, is only partly automated and is in danger of becoming a paper tiger in a computer jungle. On top of all this, the bureau is about to experience the greatest turnover in personnel in its 81-year history. Half its 9,600 agents, veterans of a big expansion in the early 1970s, will retire between now and the mid-1990s. That will strip away a majority of today's managers, along with the most experienced so-called brick agents -- those who pound the pavement doing investigations. Guiding the bureau across this stretch is director William S. Sessions, 59, about to finish the second year of a term limited by law to ten years. The jury is still out on whether he is the right boss for a tough transition. His considerable virtues are soft-spoken rectitude, courage, and fairness. He is not likely to harbor any eccentric hatreds, such as J. Edgar Hoover's for Martin Luther King Jr. But Sessions is not an inspiring leader. As a federal judge in San Antonio, his previous job, he did not thunder from the bench. And he doesn't bounce lightning bolts off the walls of FBI headquarters in Washington either. Some electricity might help beam to both Congress and agents the messages he considers important. Among them: In the heat of the war on drugs, do not ignore other battles, like white-collar crime. Sessions got off to a wobbly start as director. In Hoover's day no detail escaped the head man's scrutiny -- and intervention. He even wrote press releases. Sessions, by contrast, spends much time on the road, meeting police chiefs and visiting the bureau's 57 offices. For the first 18 months he left three deputies back in Washington with no one of them in clear command. That seemed to worry Sessions's boss, Attorney General Dick Thornburgh. Says Michael Uhlmann, a Justice Department official in the Ford Administration: ''Every Attorney General wonders what the hell's going on over there that can hurt him.'' In July, Sessions finally promoted Floyd I. Clarke, 47, to executive assistant director. One of the three deputies, Clarke apparently was Thornburgh's choice for the job. THE OPPORTUNITIES for the FBI to stumble and bruise both itself and an Administration are vast. The bureau deals with the most notorious and sensitive cases of the day, from congressional corruption to Pete Rose's gambling. In the Rose case the bureau's fingerprint experts came across as professional and dispassionate in presenting evidence against the baseball superstar. The bureau seemed less competent in its investigation of Felix Bloch, former deputy chief of mission in the U.S. embassy in Vienna, who is suspected of having passed secrets to the KGB. So far the FBI hasn't been able to complete its case against Bloch. Instead, half a dozen or more agents trail him through Washington, the pursuers looking ridiculous at times, as when an agent follows Bloch into a men's room. Overall, though, the FBI is probably as good as any police force in the world these days. Agents carry sidearms, and sometimes use them. (The bureau reports about 30 gun battles a year. Still, in 81 years only 39 agents have been killed in the line of duty.) Mostly, agents talk, and they do it well. Outside analysts rate them superior at persuading mobsters to become informers. Defectors from Eastern bloc embassies regard them as more considerate than their counterparts from the CIA. That's not an inconsequential matter. Happy defectors encourage others to follow. The FBI has a special talent for the broad, complicated investigation that brings a range of resources into play: accountants to follow an intricate paper trail, technicians to rig wiretaps and other eavesdropping devices, and surveillance crews that can use such tools as the bureau's 85 airplanes. Says Steven L. Pomerantz, special agent in charge of the Seattle office: ''Give us a nationwide conspiracy and watch us shine.'' Some outsiders charge, however, that the bureau is selective to a fault about what it looks into. A federal prosecutor in a Northeastern city complains that some FBI supervisors grumble about what they consider frivolous civil rights cases, such as housing discrimination. This isn't for want of first-class manpower. Newer agents arrive more mature (average starting age: 29) and with broader backgrounds than their predecessors. All must have at least a bachelor's degree, a requirement from the bureau's beginning. Having used cocaine or heroin even once disqualifies a candidate, although a few marijuana cigarettes smoked as an undergraduate are sometimes forgiven. Lawyers and accountants, who predominated a few decades ago, are still well represented -- each profession contributes 13% of the current force -- but the ranks also include a large contingent of former military officers and smaller batches of erstwhile teachers, journalists, salesmen, nuns, linguists, and even ex-fast-food franchisees. To spend five minutes with an agent is to be lectured on some of the bureau's grimmest statistics: The starting pay of $32,800 a year is lower than that of rookie policemen in Los Angeles, who do not need college degrees. A brick agent's wage tops out at about $60,000. Agents dread the financial burden of being sent to New York City, even with the 25% bonus that comes with the territory. But as in other businesses, New York offers the ambitious agent opportunity for advancement. The city is where the work is, especially chasing spies and Mafiosi. The bureau stations 1,000 agents -- more than 10% of the entire force -- in the Big Apple. In recent years the organized-crime beat has been the bureau's most glamorous, and the agent who performs well might win a posting as assistant special agent in charge of a small office, a first step on the management ladder. < The best job in the FBI, many believe, is the bureau's version of the district manager: special agent in charge -- SAC in shorthand -- of one of the 57 field offices. The pay is still modest, a maximum of $78,600. (The way for an agent to cash in is to retire after 20 years and become head of security for a major company at perhaps twice the salary.) WHAT MAKES the SAC's job attractive is considerable prestige in his locale, together with a measure of autonomy from Washington. To lure a major cocaine dealer, for example, a SAC can spend $50,000 from his contingency fund before he needs approval: Up to $30,000 to buy the drugs and $20,000 for informers and the rest of the setup. Sessions is encouraging SACs to initiate even more projects on their own. Headquarters sets priorities, sorting out demands from Congress and the White House that accumulate over the years: drugs, white-collar crime, terrorism, counterintelligence, organized crime, and a new concern added by Sessions a few months ago -- violent crime. But within that framework the SAC has some freedom to choose the problems to attack in his bailiwick. The No. 1 objective in Pomerantz's 75-agent Seattle office, for example, is nailing Boeing suppliers for defense-contract fraud. In Portland, Oregon, 50 agents spend much of their time chasing bank robbers, a traditional pursuit many overworked big-city FBI offices don't bother with much anymore.

As the chart shows, the bureau has hit the target much of the time. Some of its successes, though, had to survive early bungling, and there were a few embarrassing misses: -- ORGANIZED CRIME. Currently the FBI's big winner, it wasn't always. In the 1960s the bureau would arrest middle-level gangsters, mainly for gambling, and put them in jail for a few years. While they were doing time, others would take their places and learn the trade. Quips Clarke: ''We were running a career development program for the mob.'' Then, with the help of the Racketeer Influenced and Corrupt Organizations Act, passed in 1970, the bureau finally came up with a strategy that paid off in the 1980s. By patiently examining the inner machinery of the mob through a network of undercover agents, informants, and wiretaps, the bureau has been able to bring criminal conspiracy charges against a substantial number of Mafia bosses and send them to prison. It also seems to have crippled the mob's grip on the labor movement. Since the beginning of 1989 a federal court in New York has been overseeing the Teamsters Union. Nicholas Pileggi, an investigative journalist who has covered crime in New York City for three decades, says admiringly that the FBI knows more about what is going on in mob families than do individual mobsters. ''The New Yorker's image of FBI agents is that they're naive cowboys from Wyoming,'' says Pileggi. ''The fact is, they've come close to breaking the back of organized crime.'' That may overstate the case a bit. The Mafia is still active in the heroin trade, for example, but its expansionist phase seems over. -- DRUGS. This activity is running out of control. The bureau has assigned 1,100 agents to drug squads, typically a dozen agents in a squad. They concentrate on major distributors of cocaine and heroin within the U.S., a responsibility they share with the Drug Enforcement Administration's 2,800 agents. The DEA infiltrates large drug suppliers overseas as well. Both federal agencies leave most street arrests to local police. Even with so narrow a focus, the FBI is investigating fewer than 200 of the 450 big operators it has identified. Unless President Bush gets some fresh funds for his $7.9 billion expanded war on drugs, which is chancy, the FBI will have to shift more people to its drug squads from other battles. Sessions appreciates the horror of drugs, but it bothers him that the campaign steals resources from elsewhere. ''It is like driving a chariot,'' says the director. ''You have to keep pulling back, or supervisors and agents will leap forward to take on more drug cases.'' Brick agents like narcotics work because while good and evil may sometimes be hard to distinguish in, say, white-collar cases, there is no doubt that drug dealing is bad. Because the FBI does not generally collar street dealers, the work has not been especially dangerous. The greater risk may be contamination. The drug trade generates so much cash that it's difficult for police or anyone standing close by to resist. So far the FBI has been free of drug scandal, and Clarke argues that the bureau has some safeguards that the DEA does not. What tends to corrupt a drug investigator, he says, is staying on the job too long. ''The DEA has no other work but drugs,'' says Clarke. ''We rotate people off the drug squad into something else after a few years. That helps protect us.'' Maybe. -- WHITE-COLLAR CRIME. The FBI details 1,600 agents to the pursuit of public officials on the take, defense contractors who cheat, and other swindlers, more than to any other activity save counterintelligence. Undercover operations have been especially impressive. Such enterprises are expensive and painstaking, partly because the bureau puts undercover candidates through extensive psychological screening. No more than 40 or so agents in the entire bureau are working sub rosa long term, that is, for six months or more. Three or four times that number are undercover for shorter stints. A recent hit: the investigation of commodities trading in Chicago. Agents masqueraded as traders at the Board of Trade and the Mercantile Exchange to check out suspicions of widespread cheating. It was a pricey sting. Not only did the bureau have to provide agents with the trappings of the good life, it had to cover one less-than-astute agent's trading losses. But the agents convinced colleagues in the pits that they were genuine and collected evidence that indicates, among other things, that traders might have been skimming customers' profits. The Justice Department has indicted 46.

Despite this kind of effort, white-collar crime still has an enormous neck size, perhaps more than $2 billion in embezzlement and bank fraud alone last year. The FBI can get a grip on only a small part of it, making crooks in some parts of the country safer from prosecution than others. The bureau might well detect a $300,000 bank swindle in Memphis. But in San Antonio, where agents -- and the courts -- are overwhelmed with potentially lethal crimes such as drug traffic from Mexico, the same felony could easily go unnoticed.

''My perception is that some conduct has become excusable and acceptable because nobody pursues it,'' says Sessions, once U.S. attorney in San Antonio. Hindsight is easy, to be sure, but it's possible that if FBI agents in Texas had not been so preoccupied with drugs they might have caught on early to some of the local savings and loan swindles. Now, after the fact, with the S&Ls $150 billion or more in the hole, the bureau has asked Congress for money for an additional 236 agents to look into the role fraud played in the industry's collapse. -- TERRORISM. In the 1970s terrorism looked like a swelling wave, with Puerto Rican nationalists and black militants on the left and the Ku Klux Klan and neo-Nazis on the right. In the 1980s, though, terrorist bombings and shootings within the U.S. have subsided, and the FBI deserves much of the credit. Says Robert Kupperman, an authority on terrorism at the Center for Strategic and International Studies: ''The bureau has gone from second or even third rate in this field to extraordinarily good.'' The FBI has amassed information on a range of subversive and dangerous cabals. It aborted a plot by Sikhs to blow up an Air India 747 in 1986, and the year before raided a white supremacist training camp in Arkansas crammed with submachine guns, hand grenades, and a 30-gallon drum of cyanide. Unfortunately, terrorism could become a growth business again. As Colombia extradites drug barons to the U.S., the assassins who have murdered judges, politicians, and journalists might come as well. Kupperman, with an eye on the poison gas plants under construction in the Middle East, warns that terrorists may soon have the means of mass killing in their hands. -- COUNTERINTELLIGENCE. The FBI might need some creative management here. No business is more important to the bureau than deterring espionage within the U.S. (the CIA has similar responsibility overseas). The number of agents assigned to the task is secret, but it could be 1,800 or so. And no business has caused the bureau more embarrassment in the 1980s, including the discovery of the first known turncoat in the bureau's history, an agent in the Los Angeles office who collaborated with a female Soviet spy. The FBI maintains that its top counterintelligence specialists in New York and Washington are as good as any in the game. Says Milt Ahlerich, associate director in charge of public affairs: ''The biggest success in this work is quietly uncovering a spy and getting him to work for you. When that happens, we celebrate internally. We don't call a press conference.'' Fair enough. Still, the FBI is a law enforcement agency that draws to its ranks people who want to make arrests. For the most part, counter-intelligence is something else, tedious months of listening to wiretaps and watching embassy doors. Suppose an agent does catch the Bulgarian air attache buying the maintenance manual for an F-15. The State Department might insist that the bureau let him go because, for some reason, it doesn't want to irritate Sofia at the moment. Compared with the sophisticated operations the FBI has run against the Mafia and others, some of its recent counterintelligence projects look silly. Agents have asked librarians to report visitors with Russian accents asking for high- tech volumes. Others have interviewed schoolchildren who write letters addressed to Mikhail Gorbachev, Moscow, or at least those who put return addresses on the envelopes. Postal law forbids even the FBI from opening the letters. As a career path, counterintelligence has been a dead-end. Almost all of the SACs came up through the criminal investigations division. Agents who choose counterintelligence are regarded by some colleagues as cautious, introverted, and maybe a little lazy. Says a woman agent proud of her slot on a drug squad: ''They don't want to get dirty.''

James Geer, assistant director in charge of counterintelligence, acknowledges low morale was a problem in the 1970s. But it has been solved, he insists. He points out that in the 1980s the bureau became more aggressive about arresting spies, bagging 40 or more. ''Almost all the new agents are enthusiastic about working in counterintelligence,'' says Geer. They will have to be talented as well as eager. In the past five years, the annual number of visitors from the Soviet Union has doubled to 15,000. Most are on innocent missions, but some are KGB agents. When 5,000 or so FBI agents toss in their shields in the next few years their retirement will present the bureau not only with a crisis but also an opportunity: to transform a bureau that is composed overwhelmingly of white men. Only 860 agents, 9% of the total, are women, including 152 who are married to fellow agents; only 446 are Hispanic, and 419 black. Minority recruitment is difficult for several reasons. Donald Rochon, a black agent, has sued white colleagues for crude and vicious racist pranks and the bureau for not disciplining them. Hispanic agents complain the FBI relegates them to Spanish-language wiretaps -- very boring work on a very slow track. But ethnic diversity will become increasingly important for the FBI. Equal opportunity is not so much the point as effectiveness. Even if he does not try to go undercover, the square-jawed male Caucasian cannot easily investigate a drug ring in Newark or a gang of Latin American terrorists in Los Angeles. The witnesses he interviews want to talk to people who resemble themselves. Good though the bureau is, it would be better if it looked more like the rest of America.