LOCAL FBI FAULTED FOR PRE-9/11 ERRORS

REPORT: OFFICE TOO FIXED ON DRUG INVESTIGATIONS

The FBI failed to seize at least five opportunities to intercept two
9/11 hijackers before the attacks, including two instances in San
Diego County when the terrorists lived with an FBI informant and were
befriended by a subject of a previous FBI investigation.

According to a report released yesterday by the Justice Department's
Inspector General, the FBI office in San Diego erred by focusing too
much on drug investigations before Sept. 11, 2001.

Nawaf Alhazmi "Despite the fact that FBI headquarters had established
counterterrorism as a top priority of the FBI in 1998, the San Diego
field office was continuing to pursue drug trafficking as its top
priority in 2001," the report stated.

Among the missed opportunities described in the report: The hijackers'
associations with two people known to the FBI - Omar al-Bayoumi, the
friend who helped them find their first apartment in San Diego and who
introduced them to the local Muslim community; and an FBI "asset,"
Abdussattar Shaikh, from whom they rented a room.

Khalid al-Midhar "We found that the San Diego FBI focused little to no
investigative activity on al-Qaeda prior to Sept. 11," the report
said. "San Diego FBI personnel had stated to us that they had believed
there was no significant al-Qaeda activity in San Diego based on
information from their sources and investigative activities."

The two hijackers, Nawaf Alhazmi and Khalid al-Midhar, spent most of
2000 in San Diego County, at one point taking flying lessons at
Montgomery Field. They helped take over the plane that crashed into
the Pentagon.

"The time that (Alhazmi and al-Midhar) spent in San Diego was an
opportunity during which the FBI could have obtained information about
them but did not," the report stated. "In sum, we believe (the
hijackers') presence in San Diego should have drawn some scrutiny."

The San Diego FBI office emphasized pursuit of drug traffickers, white
collar criminals and violent criminals at the expense of pursuing
counterterrorism leads as requested by FBI headquarters in Washington,
D.C., the report said.

Dan Dzwilewski, chief of the San Diego FBI office, was traveling
yesterday and could not be reached for comment.

The report did not name Shaikh but said the "asset" was recruited by
an unnamed FBI agent in 1994 and provided information acquired in his
normal daily routine. The report said he had not been paid until July
2003, when he was given $100,000. It added that he is no longer an FBI
source.

The asset normally was questioned about specific individuals the FBI
were investigating, though he occasionally volunteered information he
thought might be relevant, the report said.

Many of the conversations between the asset and his FBI handler were
about family matters and the asset's health. The asset began renting
out rooms in his home in 1996, the report said, noting that before
Sept. 11, 2001, he had had 14 boarders in his house, including Alhazmi
and al-Midhar.

Shaikh, reached at his Lemon Grove home yesterday, said he recognized
himself in some of the report's descriptions. He did meet FBI agent
Steve Butler during an investigation of a bomb threat at a mosque. He
did develop a relationship with Butler in which they discussed mostly
personal matters such as Shaikh's divorce and his health.

But he insisted he was never an informant and that he was never paid.
He also said he never had 14 boarders, he never asked to testify or
answer written questions for the Joint Intelligence Committee, nor did
he invoke Fifth Amendment rights or ask for immunity.

"What I'm thinking is they're mixing up information with me and
somebody else," Shaikh said.

The most critical breakdown noted in the report was the failure of the
FBI and CIA to communicate and share intelligence that Alhazmi and
al-Midhar were likely in the United States, the report said.

The FBI agent handling the asset may have been able to link the
boarders in Shaikh's house to suspected terrorists the CIA were
seeking. But no FBI policy required him to investigate an asset's
housemates. Some FBI agents in San Diego said they would have pursued
the housemates, but others said they would not have looked into them,
according to the report.

"We believe it would have been a better practice for (Butler) to have
questioned the informational asset about his boarders and obtained
their full identities," the report stated.

According to the report, Bill Gore, head of the San Diego FBI office
at the time of the 9/11 attacks, said he "did not believe anything had
been done wrong in the handling of the asset" and that he did not
fault Butler. Gore, who is now an assistant sheriff, could not be
reached for comment yesterday.

The report also said the San Diego FBI office had inadequate
facilities to handle and process classified information, and did not
have enough access to secure telephones or computer systems in which
classified information is stored. The report noted that such a
facility was under construction at the time the report was written,
but the new facility would be large enough to accommodate only three
or four employees. The CIA employee assigned to the San Diego FBI
could not access systems from the FBI.

"As a result, the San Diego agents were hampered in their ability to
access CIA information."

The report noted that al-Bayoumi's name first surfaced in 1995 at the
FBI in connection with other investigations. It came up again 1998
when his apartment manager contacted the FBI to report he had received
a "suspicious package" from the Middle East that had been broken and
had wires protruding from it. In June 1999, finding no basis to
continue, the FBI closed its investigation of al-Bayoumi.

The report did not find the closure inappropriate and did not fault
the FBI for doing so.

It noted that the hijackers did not draw attention to themselves while
living in San Diego, but they didn't try to hide either. They used the
same names known to the intelligence community for travel documents,
rental agreements, California driver's licenses, bank accounts, credit
cards, vehicle purchases and insurance. Alhazmi's name was published
in the local telephone book.

Another serious FBI breakdown was the agency's mishandling of a
Phoenix FBI agent's memo two months before 9/11 that outlined the
potential for Osama bin Laden to send students to enroll in flight
schools in preparation for attacking civil aviation targets.

Justice Department Inspector General Glenn A. Fine wrote in the report
that the CIA "shares a significant responsibility for the breakdowns"
including failing to alert the FBI that the CIA had surveillance
photos of the pair at al-Qaeda meetings in Malaysia. Also, the CIA did
not inform the FBI that al-Midhar had a multiple-entry visa to get
into the United States and that Alhazmi had traveled inside the United
States.

FBI officials in Washington had no immediate comment on the report.
But FBI Assistant Director Cassandra M. Chandler said in response to
earlier criticism that FBI Director Robert Mueller had "led an
unprecedented transformation of the FBI" since the Sept. 11 attacks.

"By building our intelligence capabilities, improving our technology
and working together, we have and will continue to develop the
capabilities we need to succeed against all threats," Chandler said.