FBI Team to Probe China Case

A special team of FBI agents has arrived in Los Angeles to question bureau personnel over management lapses that may have allowed an alleged double agent access to U.S. secrets.

Eight agents from the FBI’s inspections unit will question bureau personnel who worked in the agency’s Chinese counterintelligence unit and in other parts of the office. The probe is to “assess responsibility for the management lapses,” that allowed the scandal to occur, FBI director Robert S. Mueller said.

FBI spokeswoman Cheryl Mimura in Los Angeles said the inspectors would be here “as long as it takes to finish up their inquiries. We’re putting as much manpower into this as we need to. We will help them in any way we can,” she said.

A former FBI agent, who has been following the probe closely, said his understanding is that the inspectors, known inside the FBI as “the goon squad,” will “turn this place upside down.”

“They are going to be asking every agent,” who might have any knowledge of the scandal what they know about the case and why they did not come forward earlier, the former agent said.

The former agent added that he had been informed that one agent in the Los Angeles office already had declined to answer questions from the inspectors. Mimura declined to respond to questions on that subject.

On April 8, Mueller announced that Katrina M. Leung, a Chinese American businesswoman from San Marino, had been arrested and accused of taking classified documents and passing them to the Chinese. She is being held without bail.

A former Los Angeles agent, James J. Smith, who was Leung’s FBI “handler” for two decades, was arrested the same day and charged with gross negligence for allegedly permitting Leung to gain access to the documents. He has been released on $250,000 bail.

Attorneys for Leung and Smith have said that their clients have not broken any law and said they will receive a vigorous defense.

Smith and Leung had a sexual relationship for many years, according to allegations in court documents. FBI sources have said that the investigation began before Smith retired from the bureau’s counterintelligence squad in Los Angeles in November 2000.

During Leung’s 20 years as an FBI “asset,” she was paid about $1.7 million in fees and expenses.

FBI regulations specify that whenever an informant is paid, at least two agents have to be present and verify in writing the payment was made. The former agent said he had been told that, among other matters, the FBI inspectors are investigating whether that rule was followed in Smith’s dealings with Leung. Former assistant FBI director Bill Baker said he expected the probe would be thorough. “I’m sure this is a specially selected team,” including agents with backgrounds in counterintelligence work, Baker said.

“The post mortem on this will be how well did the L.A. office and the FBI [in Washington] look at the long-term relationship” between Smith and Leung, particularly because the bureau received information as long ago as 1991 that Leung was having unauthorized contacts with Chinese intelligence agencies.

The probe here is one of three internal investigations being conducted by the FBI in this case.

Mueller has also ordered a top-to-bottom review of practices and procedures governing how agents handle informants. And he has asked Glenn Fine, the Justice Department’s inspector general, “to conduct a thorough review of the performance and management issues relating to this case.”

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Times staff writer Richard Schmitt in Washington contributed to this report.