UNDER THE MICROSCOPE

By NANCY GIBBS

It was the idea of a guy named Bonaparte to invent the FBI in 1908 (Charles Joseph, the Emperor's descendant who served as Teddy Roosevelt's Attorney General), and once initial suspicions were allayed that it would turn into some big, secretive, czarist police force, it did precisely that. The bureau quickly built its empire of white men in white shirts, chasing anarchists and Bolsheviks in the '20s, gangsters and bootleggers in the '30s, fascists in the '40s, communists in the '50s and civil-rights leaders and antiwar protesters in the '60s. The enemies, always changing, are changing still, and the agency that confronts them now faces problems that would bedevil any FBI director trying to drag the agency into the modern age--which helps explain why Louis Freeh is having a very bad spring break.

For the better part of a generation, both political parties have thrown money and laurels at the FBI for one reason: to stop crime. Under Clinton, while agency after agency saw its budget dwindle, the FBI's jumped 25%, to $2.9 billion. Congress paid for 3,600 new employees, new computers, new field offices. Law-and-order Republicans were there first, but Clinton and the Democrats joined in until there was simply no constituency that didn't see the FBI as the all-purpose answer to voters who routinely listed crime among their top concerns. For a nation whose greatest enemy is suddenly within, the FBI has become the Pentagon of the post-cold war world.

This means, like the well-protected Pentagon of 20 years ago, virtually no congressional oversight. Any lawmaker who raised concerns risked being flayed as soft on crime. But without accountability, several things happen, all of them bad. Money gets wasted. Officials get sloppy. Innocent people go to jail. And cases that should be won are lost. The specifics have become a martyrs' lament: Waco. Ruby Ridge. Filegate. Richard Jewell. By last Saturday, the embattled Freeh was ready to break his trademark silence in an interview with TIME. "They very regularly report the bumpy landings at National Airport. You rarely hear about the safe landings," he argues. "We do many, many good things every day. Children are saved, explosive devices are defused, pedophiles are arrested, gangs are taken off the streets. I'm not saying we shouldn't be criticized for the mistakes we make, but I do know that the successes of the men and women of the FBI are taking place every day."

Such a season of blame is taking its toll on an agency ill equipped to handle it. The 25,000 or so employees who wrestle with heavy caseloads, bad technology, long hours and growing threats to their safety, who find purpose in the bureau motto of "Fidelity, Bravery, Integrity," can handle just about anything--anything but walking down the street and having a pal from the local police department slide up in his cruiser and ask mocking questions about all the cases the FBI has screwed up and all the headlines it's made and "Hey, what's the deal with this Whitehurst guy?"

This Whitehurst guy is Frederic Whitehurst, the FBI chemist who originally blew the whistle on the FBI lab in 1989 and helped launch an inquiry that finally resulted last week in a blistering report from the Justice Department's inspector general. Michael Bromwich released a 600-page doorstop charging that some FBI forensic operations had been sloppy and biased. But even before the verdict was reached, Whitehurst's treatment as a whistle-blower raised questions about the FBI's ability to manage dissent. At first, lab managers dismissed his complaints about colleagues' work as prickly perfectionism. They suspended him for a week after he notified defense lawyers of lab errors in a case. It was not until 1994 that Whitehurst's claims were taken seriously enough to reach the inspector general's office. Freeh has promised to address the lab problem by hiring a distinguished scientist from academia to run the lab, seeking accreditation from an outside professional society and investing $30 million in a new facility. "We're embarrassed by it," acknowledged Bill Esposito, the bureau's new deputy director. The accusations could compromise the prosecution of some major cases, including the Oklahoma City bombing, and reopen hundreds more (see following stories).

Next week the bureau will be blasted again by the inspector general for dragging its feet in pursuing CIA traitor Aldrich Ames, who worked for the Russians in Washington (and under the FBI's and CIA's nose) for nine years before he was finally captured. Such failures tend to crowd out the agency's successes--the imprisonment of Mob boss John Gotti, the conviction of the World Trade Center bombers, the capture of the alleged Unabomber, the solution of the Montana Freemen standoff--and leave morale at an all-time low.

The assault on the bureau's competence could not come at a worse time. The Capitol is a stew of scandals and suspicion; the Attorney General is under fire for protecting the White House; the entire top rank of the Justice Department has been hollowed out by transfers and resignations; White House counsels come and go like munchkins. At the same time, the enemy is smarter and more slippery. New technology makes white-collar crime easier to commit and harder to prosecute. Organized crime is a much more complicated threat than in the days when the FBI battled Al Capone or even Gotti; while agents could penetrate the Italian Mob and recruit informants, it is far more difficult to infiltrate the new Vietnamese, Russian or Pakistani rings, with their distinct dialects and reliance on blood ties.

It is not entirely fair that so much of the fury has descended upon the haloed head of Louis Freeh. Appointed in 1993, the former hotshot field agent, prosecutor and federal judge was lauded as one of Clinton's best appointments; the President called him a legend in law enforcement. From the start, Freeh demonstrated a willingness to turn the agency inside out. He set out to cut red tape, transfer 600 desk warmers back onto the streets, embrace new technology, diversify the ranks --he named the second black and first female and Latino assistant directors. After years of intramural feuding among law-enforcement agencies, he insisted on cooperation and shared resources with the Drug Enforcement Administration and the CIA--an effort, critics charge, to expand his turf, but an essential reform at a time when these bureaucracies were falling all over one another.

Freeh's critics resent him not so much for what he did but for the way he did it. They charge him with obsessive secrecy, bullheadedness and micromanagement, and cite a pattern of stifling dissent, protecting cronies and killing messengers. Some field agents are mutinously calling the director Dr. Kevorkian and the Queen of Hearts for his penchant for lopping heads first and asking questions later. All such decisions emanate from Freeh and his inner circle of nonagents, who hunker in the seventh-floor suite that agents have nicknamed "The Bunker." Members of Congress love Freeh's almost self-hating approach to the agency--frequently admitting what it has done wrong--but experts believe that by too readily accepting blame, Freeh has opened the door for more of it.

Freeh's sense of rectitude is also what has complicated his relationship with Clinton's White House and, in some cases, undermined his effectiveness. When Freeh took the job, he made only one demand of the President: Don't interfere with how I do it. So independent was Freeh that he refused to attend the Rose Garden photo-op signing of the crime bill. The bureau has regularly released good crime statistics without telling the White House in advance, depriving Clinton of a chance to crow. By mid-1994, relations between Freeh and the White House had become "icy," according to a senior official. When Freeh headed off to Jordan and Saudi Arabia to pursue counterterrorism investigations, Clinton's foreign policy aides bristled at his interference on their turf without prior consultation. In February, Freeh refused to provide a report about Chinese influence peddling for Madeleine Albright before her trip to China. White House officials were stunned. Who was Freeh working for?

But at times he, or his bureau, has been less independent than he pretended, which has got him into trouble with Republicans on the Hill as well. First there were charges that the FBI went along with White House requests to investigate employees of its travel office. Then there was the matter of the 900 or so private FBI files on former Republican staff members that turned up in the White House. Critics say any number of FBI officials could have blocked the request for their transfer and didn't. Instead Freeh declared that he felt "victimized" by the White House's actions. "Freeh has a tremendous talent for self-preservation," says a senior White House official. "He figured the waters were rising and decided to get himself to dry land." The bureau also slipped the White House an advance copy of former agent Gary Aldrich's salacious memoir of his tenure at the Clinton White House. "The hallmark of the FBI has been that it's free of politics," says Kentucky Representative Hal Rogers. "With Filegate and other possibilities of political interference, the bubble has burst."

The complaint that the FBI can be politically manipulated is as old as the agency itself, of course. What is new and alarming, however, is the accumulation of problems that reflect a combination of arrogance and negligence. Besides the crime lab's problems, the most damaging are:

ALDRICH AMES CIA officers point out angrily that while the bureau has done well catching spies, it has a poor record of detecting them in the first place. In the Ames case, it was the CIA that eventually identified Ames as the mole and turned him over to the FBI to build the case for his arrest. Ames began his career as a mole literally under the watch of the FBI. In April 1985 he began visiting the Soviet embassy in Washington to pass secrets. FBI cameras that are constantly trained on the Russian embassy from a nearby building recorded Ames' visits. Though he initially filed the paperwork explaining his forays, he eventually stopped doing so and kept going back. But the bureau never thought to wonder why.

RICHARD JEWELL FBI agents in Atlanta were under tremendous pressure from headquarters to make progress in solving the Olympic Park bombing. So they came up with a scheme to trick Jewell into being interviewed by saying it was part of a training tape. Freeh was monitoring the investigation closely and called to insist that the agents inform Jewell of his Miranda rights. At that point Jewell smelled something funny, stopped talking and asked to see his lawyer. When the case against him collapsed, veterans blasted Freeh for botching their scheme to trick him into talking. Never mind that they were trying to trick the wrong guy.

MANAGEMENT FAILURES In 1986 the FBI launched an ambitious program to upgrade its computer systems, including computerized fingerprint scanners installed in police cars across the country. If that goal is ever realized, it will be four years late and double the cost projected. The upgrade effort is already such a mess, plagued by contractor and design lapses, that Congress refuses to fund it anymore. But Freeh maintains an ambitious vision: to build a whole new technological infrastructure to track global crime. "We have people with laptop computers in Russia moving money out of Citibank accounts in New York City, and people with laptops in Sweden shutting down our 911 system in northern Florida," he told TIME. "We are very far behind."

RUBY RIDGE The year before Freeh arrived, tax resisters in Idaho wound up in a standoff against federal agents. Vicki Weaver and her teenage son were shot to death; her husband Randy Weaver collected $3 million in a wrongful-death suit and became a martyr in the militants' crusade against encroaching law-enforcement agencies. Six officials connected with the showdown were disciplined for "inadequate performance, improper judgment, neglect of duty," even though investigators found no actual misconduct. That might not have gone down so badly had Freeh not promoted as his No. 2 the supervisor of the whole operation, Larry Potts. Only when Justice Department officials intervened with news that Potts and his headquarters aides were under criminal investigation for their roles did Freeh acknowledge his "blind spot" and suspend his friend.

His defenders are quick to note that Freeh has been far more willing than past directors to change the agency culture. "We rebuilt our credibility by full cooperation with the investigations, admitting our mistakes, and more importantly making sure we have structures in place that will prevent those mistakes from recurring," says Freeh. After Waco and Ruby Ridge, he created a new, less paramilitary "crisis-management unit" and completely overhauled the way the bureau handles hostage situations. In the spring of 1996, when the Montana Freemen holed up in their compound near Billings, FBI agents were under far stricter rules of engagement. They could use deadly force only if they or hostages faced "imminent death or serious physical injury." At Billings the FBI also deployed a new unit called the Critical Incident Response Group of behavioral scientists and hostage negotiators. FBI officials insist the CIRG is as skilled in talking as it is in breaking down doors. In the Freemen's case, they seemed to have proved it when the confrontation ended without bloodshed after 81 days.

For all the firestorms, Freeh can take comfort in the fact that his agency retains a special cachet; he can thank The X-Files and The Silence of the Lambs for helping inspire 65,000 people to apply for a few hundred upcoming agent slots (starting salary for an FBI agent: $42,000). He can also take some solace from the fact that while a cozy office in a big law firm may look pretty appealing to him right now, he can depart in his own time; Clinton is in no position to fire him, given the ongoing investigations into campaign contributions. Does the White House dream of getting rid of him? "On the list of things we chat about over here, it's not on the Top 10," says an official. "And we never get below the Top 10."

Even congressional critics like Grassley say they think Freeh can "rehabilitate" himself and the agency. His colleague in the House, archconservative Republican Bob Barr of Georgia, has already given the FBI a lesson in that. Last year the agency asked for the authority to apply multiphone roving wiretaps so it could track suspects switching from cell phone to cell phone. But Barr, with heavy backing from both the National Rifle Association and the American Civil Liberties Union, now had ammunition to block the legislation. "My view is that we are not interested in giving the FBI more power until it gets its house in order and proves that it can live in the boundary of existing laws." That's a long way from the days when the FBI drafted the bills it wanted passed and delivered them to the Hill in plain Manila envelopes.

--Reported by John F. Dickerson, Tamala M. Edwards, J.F.O. McAllister and Elaine Shannon/Washington

With reporting by JOHN F. DICKERSON, TAMALA M. EDWARDS, J.F.O. MCALLISTER AND ELAINE SHANNON/WASHINGTON