Two agents are accused of involvement in unauthorised business ventures in China and the Middle East while working on espionage and terrorism cases linked to the regions, an FBI official said on Wednesday night.

The conflict-of-interest probe conducted by the Justice Department's inspector general, Glenn Fine, is focusing on the two individuals at the Federal Bureau of Investigation's office in Phoenix, Arizona.

The probe is said to be focused on suspicions that the agents may have used companies set up by the FBI as part of its investigations of Chinese attempts to acquire sensitive US technology and Palestinian links to "terrorism" for personal gain.

US federal employees are usually barred from engaging in any side business ventures while performing their official duties.

Federal bungling

The investigation could result in another black eye for the leading US counterespionage and counterterrorism agency, which is already under a cloud over missed telltale signs in the lead-up to the 11 September attacks and a scandal in Los Angeles involving an FBI operative having an affair with a suspected Chinese double agent.

Sex for secrets: Katrina Leung

The operative, James Smith, who is retired from the bureau, faces up to 40 years in jail if found guilty of gross negligence in handling classified documents while working with Katrina Leung, a wealthy Chinese-American socialite, accused of being a double agent for Beijing.

Prosecutors allege the two became lovers and Leung acquired sensitive information for China through the "improper sexual relationship".