Fortune’s investigative reporter, the only journalist to see confidential document, reveals its true name and nature.

By Richard Behar

FORTUNE — What happens when bosses ignore memos from subordinates? The country is now learning the answer to that question in a most painful way.

On July 10, 2001, an FBI agent in Phoenix wrote a memo raising serious concerns about Middle Eastern men attending U.S. flight schools.  The memo never made its way up the chain of command, and no action was taken.  It wasn’t seen by FBI Director Robert Mueller until after Sept. 11, and President Bush wasn’t made aware of its contents until a few weeks ago.  The confidential document still hasn’t been released, and yesterday it was the subject of a closed-door Senate Intelligence Committee session.

Recently, I had the chance to read the memo – apparently the first journalist to have done so.  It was shown to me by a reliable government source, who permitted me to take notes but wouldn’t let me copy it.  What I learned – and what FORTUNE aired yesterday on CNN – is chilling.  The memo raises questions about what federal law enforcement officers knew and what they did or didn’t do to protect the U.S. from terror attacks in the months before Sept. 11.   After reviewing the memo, one cannot help but conclude that the FBI dropped the ball – perhaps ignoring the alert altogether.

The memo was written by Phoenix FBI Special Agent Kenneth J. Williams, described as a member of “Squad 16,” and it was approved by a man named William A. Kurtz.  The title reads: “Zakaria Mustapha Soubra; IT-OTHER (Islamic Army of the Caucasus).”  The “synopsis” says: “Usama bin Laden and Al-Muhjiroun supporters attending civil aviation universities/colleges in Arizona.”  And the memo bears the FBI codes: “Derived from G-3” and “Declassify on X1.”

Soubra, the memo said, was a student at Embry-Riddle Aeronautical University in Prescott, Ariz.  (According to the Los Angeles Times, he was questioned by FBI agents in 2000, after he was observed at a shooting range with another Muslim, who was a veteran of Islamic jihads in the Balkans and the Middle East.   No charges were brought against him, and he is currently a senior at Embry-Riddle.)  The organization named in the memo’s title, the Islamic Army of the Caucasus, is based in Chechnya and was at one time headed by a man named Amir Khattab, who, according to news reports, is suspected of having ties to Osama bin laden.

The FBI’s probe of Soubra, according to the Williams memo, was instituted on April 17, 2000, nearly 17 months before last year’s terror attacks.  Williams warns in his July 10 memo of a possible “effort by Usama bin Laden to send students to the U.S. to attend civil aviation universities and colleges.”  He also refers to a “fatwa by Al-Muhjiroun, spiritual leader Sheik Omar Bakri Mohammed Fostok.”  (Fostok, according to news reports, once ran a London-based radical group called the Islamic Liberation Party, dedicated to overthrowing Western society.  He was arrested for suggesting that it was permissible to kill then British Prime Minister John Major, which he denied and was released without any charges being filed.)

The Williams memo included the names of several Middle Eastern students, one identified as a “Saudi national,” who were apparently students at Embry-Riddle at the time.  One reason FBI officials have given for not releasing the memo is that several of these individuals are still under investigation.   So, although those names are now in my notebook, they will not be published here.

FBI officials apparently didn’t do much with the Phoenix Memo.  It was sent to roughly a dozen FBI officials, none of whom apparently sent it to the agency’s acting director.   FBI Director Mueller, who took over in early September, before the attacks, concedes that the agency didn’t act aggressively on the memo.   Among other lapses, it never shared the memo with the CIA, which only learned of its existence a few weeks ago.

So the question is:  Had senior FBI officials, the CIA, and the Bush Administration seen the Phoenix memo, could they have stitched together enough clues to prevent the terror attacks?  That’s something that may take months of hearings and investigation to answer.  But the first step is clear:  The memo should be released immediately, names blacked-out if necessary, so we can all learn what Agent Williams knew.

Editor’s note: This article originally appeared on Fortune.com on May 22, 2002