FBI Chief Rebuked for Use of Funds, Resisting Probe

Atty. Gen. William P. Barr has disciplined FBI Director William S. Sessions for misuse of government funds and refusing to cooperate in a Justice Department investigation into his personal finances, sources familiar with the extraordinary action said Saturday.

Acting on his last formal day in office Friday, Barr ordered Sessions to pay back taxes in connection with his use of an FBI limousine for travel to and from home and to reimburse the government for other expenditures judged to benefit him personally.

Barr took the action by adopting a report from the Office of Professional Responsibility, the Justice Department’s internal watchdog unit, concerning its lengthy investigation of Sessions. The findings are administrative in nature and carry no criminal penalties.

Sessions, in a statement released late Saturday afternoon, termed the report and subsequent action by Barr “political shenanigans in an attempt to taint my reputation and leadership of the bureau.”

While saying he would wait until he had seen the report to respond to the specific findings, he said: “I am confident that my responses will demonstrate that I have acted properly and honorably in all matters during my tenure at the FBI. . . . I am proud of my public service, which includes 13 years as a federal judge and five years as director of the FBI.”

It is unclear what action Sessions will take. His options are to comply with the fines and taxes and any other actions that may be required by the findings, or to take the case to the Clinton Administration, hoping to have the disciplinary actions overturned and the black mark erased from his record.

While the attorney general stopped short of recommending that Sessions be removed from office, he sent a copy of what one source described as a “searing” memo on the investigation to C. Boyden Gray, counsel to President Bush.

Only the President can fire Sessions, who has five years remaining in his term. But Bush is not expected to act on the matter, leaving it instead to President-elect Bill Clinton.

Sources in Clinton’s transition offices said earlier that Clinton aides involved in their review of the Justice Department had recommended no action against Sessions, and some had privately expressed the belief that Sessions, 62, would voluntarily step down in the next year or so.

However, on the night of the November election, Sessions sent a message to FBI offices saying he hoped to serve out the remainder of his term.

Atty. Gen.-designate Zoe Baird and Barr were believed to have discussed the Sessions report Friday. Baird canceled a meeting scheduled with Sessions for later that day, but a Clinton aide said the move was unrelated to the Sessions inquiry. Instead, the aide said, Baird felt it would be inappropriate to meet while the FBI was continuing its investigation of matters involving her confirmation.

Michael E. Shaheen Jr., counsel for the Office of Professional Responsibility, declined comment and would not say whether the report will be issued publicly, a decision that the departing Barr delegated to him Friday.

In the past, Shaheen has made public reports on improprieties involving former President Jimmy Carter’s late brother, Billy, and various attorneys general, including Edwin Meese III and the late William French Smith.

Rep. Don Edwards (D-San Jose), chairman of the House Judiciary subcommittee on civil and constitutional rights, which oversees the FBI, criticized Barr for taking the action on his last formal day in office.

“It certainly is an undignified and inappropriate way to go after somebody--to hit and run on the last day of your job,” Edwards said in an interview. Praising Sessions as “a very good director,” Edwards contended that “Barr had the knife out for him from the beginning.”

Edwards ridiculed any finding that Sessions must pay taxes on benefits he received in his job. “I’m sure (any failure to do so) was an oversight.”

Noting that Sessions gave up a lifetime salary as a federal judge in Texas to take the FBI post, Edwards said: “Nobody dreamed that he came here to make any money.”

Details of the findings against Sessions could not be learned. The alleged misuse of government funds is believed to involve the use of an FBI jet by Sessions and his wife, Alice, for what investigators determined was obviously personal travel, as well as other matters.

The refusal to cooperate, a non-government source indicated, involved documents that Sessions refused to turn over involving the financing of the northwest Washington home he purchased in 1989 for about $435,000.

Following up a tip contained in an anonymous letter, OPR investigators sought to determine whether the $375,000 mortgage on Sessions’ home carried a “sweetheart” interest rate--one lower than those offered to the general public--from a Washington bank, the source said. It is unclear what conclusion they reached.

The refusal to cooperate by the director of the nation’s top federal investigative agency was said to have particularly dismayed Barr. But a source close to Sessions said his lawyers, James R. Phelps and Thomas M. Susman, clashed repeatedly with OPR lawyers and that Sessions followed their advice on refusing to submit documents.

Susman declined comment, and Phelps did not return calls left on his answering machine.

The OPR lawyers, for example, are understood to have taken the position that following the usual practice for FBI employees under administrative investigation, Sessions’ should not have been permitted to have legal counsel present during questioning.

The Justice Department’s public integrity section closed a criminal inquiry of Sessions last November, finding that he broke no laws.

That investigation dealt with whether Sessions had given different answers to sworn questions in an attempt to avoid paying local taxes here and on the use of FBI phones for personal long-distance calls--neither of which was part of the OPR inquiry.

Sessions’ executive assistant, Sarah Munford, was fired by the Justice Department last week on grounds that she made improper use of her office and position.

Munford’s lawyers contended that she had become “an unfortunate pawn in what appears to be a high-stakes battle over the future direction and leadership of the FBI.” Munford had been accused of using her FBI credentials in an attempt to avoid a traffic ticket for her son, of lying about her car registration to avoid higher insurance rates here and of making personal long-distance calls on FBI telephones.

When the existence of the OPR investigation became public last October, Sessions said he welcomed the inquiry and was confident about its outcome. He noted that he had “in place procedures to ensure prior staff review and subsequent auditing of the types of my activities being reported in the media.”