Terror Watch: How Clarke 'Outsourced' Terror Intel

As White House counterterror czar, Richard Clarke was so frustrated by the FBI's inability to identify Islamic radicals within the United States that he turned for help to a freelance terrorism researcher whose work was deeply resented by top bureau officials.

Clarke's secret work with private researcher Steven Emerson is among a number of revealing disclosures in the ex-White House aide's new book, "Against All Enemies," that has been all but obscured by the furor over the author's politically charged allegations against President George W. Bush.

As recounted by Clarke in his book, and confirmed by documents provided to NEWSWEEK, Emerson and his former associate Rita Katz regularly provided the White House with a stream of information about possible Al Qaeda activity inside the United States that appears to have been largely unknown to the FBI prior to the September 11 terror attacks.

In confidential memos and briefings that were sometimes conducted on a near weekly basis, Emerson and Katz furnished Clarke and his staff with the names of Islamic radical Web sites, the identities of possible terrorist front groups and the phone numbers and addresses of possible terror suspects--data they were unable to get from elsewhere in the government.

This private pipeline of information--which began under President Clinton and continued under Bush even after September 11--irritated top officials at FBI headquarters, especially when much of the private research bore fruit and was later used to help develop a U.S. government list of banned organizations whose assets were frozen by the Treasury Department.

"There was a fatwa against me at the FBI," Emerson joked to NEWSWEEK in an interview. "Al Qaeda would have been more welcome at FBI headquarters than me."

But the role of private researchers like Emerson and Katz is not just embarrassing to the FBI. It raises questions about a fundamental issue that is getting major attention from the independent commission investigating September 11: whether the FBI can ever really transform itself into a domestic intelligence agency that can identify terror threats inside the country before a crime has taken place.

The issue, which the commission is grappling with behind the scenes, may lead to a recommendation that the FBI be split up and a separate domestic spy agency be created along the lines of Great Britain's MI5.

While Clarke never explicitly endorses this idea in "Against All Enemies," the story he tells is instructive and likely to be cited by supporters of the idea inside the commission.

As recounted in his book, Clarke was furious in late 1999--during the height of the crisis over the feared Millennium Plot by Al Qaeda--when the FBI insisted to him that there were no Web sites inside the United States that were recruiting jihadists for training in Afghanistan or soliciting money for terrorist front groups.

Convinced the FBI was wrong, Clarke reached out to Emerson, a former journalist for US News & World Report and CNN who later set up The Investigative Project, a Washington-based group that specializes in exposing the activities of Islamic radical groups inside the United States.

With funding from wealthy donors and foundations, who he has declined to identify, Emerson has employed a number of different tactics--including extensive Web-based research as well as deploying undercover researchers to attend and secretly record meetings of Islamic groups in the United States.

Emerson's research has, in the past, sometimes been controversial. For years, major Arab-American and Muslim organizations would denounce him, accusing him of painting with too broad a brush. "This is a guy who started out riding an anti-Arab hobby horse and then transformed it into an antiterrorism hobby horse," says James Zogby, president of the Arab-American Institute. "His material should be taken with a grain of salt."

But Clarke had no reservations in "outsourcing" to the private researcher and soon became convinced that his work was solid and even prophetic. He writes in "Against All Enemies" that Emerson's own 2002 book, "American Jihad" (Free Press), "told me more than the FBI ever had about radical Islamic groups in the U.S."

"Within days" of his first request in late 1999, Clarke writes, Emerson provided him "with a long list of Web sites sitting on servers in the United States." Clarke then passed along the list to the Justice Department and FBI. But officials there balked at using it and complained at the time about "how difficult it was prosecute 'free speech' cases."

As described by Emerson and Katz, who later split with her former boss and now runs her own privately funded group called the SITE (Search for International Terrorist Entities) Institute, the relationship with Clarke blossomed into a much more extensive one that included regular briefings at both the Clinton and Bush White Houses.

The memos they wrote for Clarke also covered more than Web sites. One, dated Dec. 28, 1999, was especially noteworthy. It traced links between two Saudi dissidents in London, apparent associates in the United States and Osama bin Laden's network. A look at those links "reveals that bin Laden's international terrorist infrastructure operates across the U.S.--not only in New York and Texas, but also Colorado, Washington, D.C., Virginia, Missouri and probably elsewhere," according to a copy of the memo provided to NEWSWEEK by Emerson.

To be sure, Clarke acknowledges in his book, the FBI was handicapped in its ability to develop the same information on its own. Attorney General guidelines imposed during the 1970s barred agents from attending meetings of religious groups or even printing out organizations' Web pages unless they had specific reason to believe a federal crime had been committed. (The bureau also was suffering from an antiquated computer system that left agents unable to conduct a simple Google search.)

FBI spokesman Bill Carter notes that much has changed since then. The FBI guidelines have since been modified by Attorney General John Ashcroft so that agents can now more easily collect public-source information about suspected terror groups and even attend religious meetings in mosques or other houses of worship so long as they have a "reasonable suspicion" that terrorist activity might be taking place. The bureau has also invested hundreds of millions of dollars in a new computer system that, at long last gives street agents the ability to surf the Web.

But whether those and other post-September 11 changes are enough to forestall demands for a new domestic intelligence structure--including a possible MI5--is still unclear. Emerson, for his part, says that the bureau is still hindered by a bureaucratic culture that is overly compartmentalized, resists information-sharing and has an innate distrust of "open source" information that can often be more revealing than that which is provided by informants and cooperating witnesses. "This is why outside groups can do a lot more," he says.