David Johnston, New York Times Sunday, August 19, 2001

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Washington -- The FBI has begun an internal investigation into one of its most senior counterterrorism officials, who lost track of a briefcase containing highly classified information last year. The briefcase contained a number of sensitive documents, including a report outlining virtually every national security operation in New York, government officials said.

The official, John O'Neill, 49, is the special agent in charge of national security in the FBI's New York office. The job is among the most powerful in the FBI, and, although O'Neill is not widely known, he has overseen cases like the terrorist bombing of the Navy destroyer Cole in Yemen last year and the bombings of American Embassies in East Africa in 1998.

The briefcase incident was seen as potentially so serious that the Justice Department conducted a criminal investigation. The inquiry ended in recent weeks with a decision by the department's internal security section not to prosecute, law enforcement officials said.

O'Neill left his briefcase in a hotel conference room while he attended an FBI meeting in Tampa, Fla., last summer. The briefcase was stolen, but the local authorities recovered it and returned it to him within hours with the contents.

Jill Stillman, a spokeswoman for the Justice Department, said department officials would not comment on the matter. Requests to discuss the matter with O'Neill were made to bureau officials in New York and Washington. In both cases, they said he declined to comment on the case.

After the criminal inquiry, the bureau's internal affairs unit began its own investigation to determine whether O'Neill had violated FBI rules against mishandling classified information.

Officials identified one document in the briefcase as a draft of the annual field office report for national security operations in New York. The closely guarded report contained a description of every counterespionage and counterterrorism program in New York and detailed the manpower for each operation.

FBI agents are prohibited from removing classified documents from their offices without authorization. Violations are punishable by censure, suspension or even dismissal, depending on their seriousness.

Even if the inquiry finds that O'Neill violated regulations, he is unlikely to be sanctioned. He has been planning to retire and told associates in recent days that he would step down this week. He is expected to take a job as a private security consultant.

Several officials said O'Neill became the subject of intense scrutiny partly because law enforcement officials did not want to treat the matter lightly after the cases of John M. Deutch, the former director of central intelligence, and Wen Ho Lee, the nuclear weapons scientist in the federal laboratory in Los Alamos, N.M.

Deutch lost his security clearances and was the subject of a Justice Department investigation for mishandling classified material after he placed classified documents on computers in his home. Deutch was pardoned by President Bill Clinton in January.

Lee pleaded guilty in September 2000 to one count of mishandling classified material just as the rest of the government's case against him collapsed.

In O'Neill's case, FBI officials were alarmed, in part, because of the sensitivity of the documents involved, including details about the bureau's counterterrorism and counterintelligence operations.

O'Neill immediately reported the incident to his superiors. But after the Tampa authorities recovered the briefcase, it was taken from him and the documents inside it were fingerprinted to determine whether anyone had touched the briefcase and whether the documents were handled by a foreign intelligence service.

The investigation concluded that the documents in the briefcase had not been touched and that it had probably been stolen by thieves who were thought to be responsible for several robberies in the Tampa area at the time.

O'Neill started as an entry-level clerk at the bureau and has been an agent for more than 25 years. Throughout his career, associates said, O'Neill has been regarded as a dedicated, relentless and hard-charging investigator who was one of the FBI's brightest stars. But associates said he sometimes chafed at the restrictive rules at the bureau, and his single-mindedness had sometimes irritated colleagues in the bureau, at the CIA and at the State Department. O'Neill's aggressiveness has led to serious frictions in the Cole bombing case, for example.

This year, the U.S. ambassador to Yemen, Barbara Bodine, blocked O'Neill from returning to Yemen to oversee the FBI investigation of the bombing of the Cole. O'Neill had led the initial team of agents in Yemen after the bombing last fall, but ran afoul of Bodine over what she considered his heavy-handed style, State Department officials said. She considered the FBI contingent too large and objected to the agents' insistence on carrying heavy weapons, they said.

But O'Neill has many admirers. Barry W. Mawn, assistant director of the FBI in charge of the New York office, said O'Neill was a tireless worker and had had his "complete confidence" since Mawn took over the office last year.

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