US probes possible moonlighting by FBI agents in China

"Any time there is a request by an inspector general, the FBI fully cooperates," said a statement released by the FBI.

The investigation is focusing on the same Arizona FBI office that produced the now-famous warning that went unheeded before the terrorist attacks of Sept. 11, 2001, that Arab pilots were suspiciously training at US flight schools. The FBI's Phoenix office was a hotbed of investigations into terrorists and espionage during the 1990s.

The Justice Department inspector general's office, which investigates allegations of wrongdoing by federal law enforcers, has interviewed several times a Phoenix businessman named Harry Ellen, who worked undercover for US intelligence and the FBI for three decades in the Middle East, Mexico, and China.

"I was interviewed about events concerning various companies and corporations with whom I came in contact and/or had financial dealings with while I was assisting the FBI," Ellen said in an interview. "One or more of the companies were operated by FBI agents."

FBI agents generally are prohibited from moonlighting in second jobs without special permission, and they are subjected to regular background checks for irregularities. One question the inspector general is examining is whether private companies originally were fronts used by the FBI in undercover investigations and then were taken over by agents as they neared retirement, officials said.

While working on sensitive Chinese and Palestinian cases, Ellen had a falling-out with the FBI in 1999 after he had an affair with a Chinese woman named Joanna Xie. The bureau had asked Ellen to monitor the woman as a possible Chinese intelligence agent.

Ellen alleges that FBI agents intentionally divulged his identity, jeopardizing his life. The FBI denies blowing his cover and says he was severed for violating rules for paid assets.

"We decided to break off this relationship," said an FBI statement. The FBI has been aware of Ellen's allegations for several years, but has concluded there is no wrongdoing, officials said.