FBI wiretap cut off for unpaid bill

The J. Edgar Hoover FBI building in Washington is seen in an undated file photo. A telephone company cut off an FBI international wiretap after the agency failed to pay its bill on time, according to a government audit released on Thursday.

WASHINGTON (Reuters) - A telephone company cut off an FBI international wiretap after the agency failed to pay its bill on time, according to a U.S. government audit released on Thursday.

The Justice Department's inspector general faulted the FBI for poor handling of money used in undercover investigations, which it said made the agency vulnerable to theft and mishandled invoices.

It cited the case in which a wiretap under the Foreign Intelligence Surveillance Act, which governs electronic spying in terrorism and intelligence cases, was disrupted due to an overdue bill.

"Late payments have resulted in telecommunications carriers actually disconnecting phone lines established to deliver surveillance results to the FBI, resulting in lost evidence, including an instance where delivery of intercept information required by a ... FISA order was halted due to untimely payment," the audit said.

Inspector general spokeswoman Cynthia Schnedar said she could provide no additional details on the disrupted wiretap. Much of the report contained sensitive law-enforcement information and was not released, she said.

The FISA program, denounced by critics as overly intrusive and unconstitutional, is up for renewal in Congress. But lawmakers are bogged down over the scope of the program and liability protections for telephone companies that took part in a domestic eavesdropping program launched by President George W. Bush after the September 11 attacks.

The audit followed a 2006 case in which an FBI employee pleaded guilty to stealing more than $25,000 in confidential case funds intended for undercover telecoms services.

The FBI acknowledged "widespread agreement" that its 1980s era accounting system was inadequate and said it was working to improve it.

"The FBI will not tolerate financial mismanagement," it said.

(Editing by David Alexander and Chris Wilson)