The FBI’s former top agent in Panama carried on an affair with a confidential informant that left him open to blackmail by “a hostile foreign intelligence agency,” according to his former deputy, who has filed a discrimination suit against the bureau.

Cecilia Woods, a veteran agent herself, was deputy to the FBI’s legal attaché in the U.S. Embassy in Panama during 1999-2000, when she discovered that her boss was having a sexual relationship with the woman, a former Panamanian government official.

Her boss admitted to that affair, as well as others, during a Nov. 4, 2003, deposition taken as part of Woods’ suit and seen by CQ Homeland Security.

Woods said that the affairs left her boss, legal attaché Gil Torrez, open to blackmail by hostile foreign intelligence agents in Panama, a money-laundering hub for drug kingpins and other top criminals in Latin America.

“It generated some counterintelligence issues,” Woods said in a brief telephone interview. “Another [U.S.] agency learned he was being targeted for his behavior.”

In 2000, Woods confided in a friend about Torrez, who was married with three children. When word got back to him, she was suspended.

In June 2000, she made her first official, documented complaint to an FBI inspection team.

For years, she said, FBI headquarters officials ignored her warnings about Torrez’s behavior.

“Nobody bothered to listen to me. I was just a female complaining about a male. It was shoved under the rug.”

Eventually, Woods was suspended a second time, for 24 days, in December 2004.

In 2005, she filed an official discrimination complaint against the FBI, which was rejected. She is in the process of appealing that decision.

Woods retired in February 2005 as a GS-14 after 23 years with the FBI, which, she said, included 10 years in counterintelligence work in or relating to Panama.

Torrez was given a 14-day suspension but allowed to transfer to his posting of choice in the FBI’s Dallas field office, according to two sources with firsthand knowledge of the case.

Woods’ case has drawn the attention of Sen. Charles E. Grassley, R-Iowa, a senior member of the Judiciary Committee, who plans to ask FBI Director Robert S. Mueller III whether the bureau conducted an inquiry to see “if [Torrez’s] actions resulted in the compromise of national security or sensitive FBI matters.”

CQ Homeland Security was unable to locate Torrez for comment.

The FBI has dramatically expanded the number of its offices in U.S. embassies abroad over the past decade, calling them the first line of homeland defense.

• CQ Top Docs: Letter from Sen. Grassley to FBI Director Mueller (pdf)

Jeff Stein can be reached at jstein@cq.com.