All in the "Family." Global Drug Trade Fueled by Capitalist Elites

When investigative journalist Daniel Hopsicker broke the story four years ago that a DC-9 (N900SA) "registered to a company which once used as its address the hangar of Huffman Aviation, the flight school at the Venice, Florida Airport which trained both terrorist pilots who crashed planes into the World Trade Center, was caught in Campeche by the Mexican military ... carrying 5.5 tons of cocaine destined for the U.S.," it elicited a collective yawn from corporate media.

And when authorities searched the plane and found its cargo consisted solely of 128 identical black suitcases marked "private," packed with cocaine valued at more than $100 million, the silence was deafening.

But now a Bloomberg Markets magazine report, "Wachovia's Drug Habit," reveals that drug traffickers bought that plane, and perhaps fifty others, "with laundered funds they transferred through two of the biggest banks in the U.S.," Wachovia and Bank of America.

The Justice Department charge sheet against the bank tells us that between 2003 and 2008, Wachovia handled $378.4 billion for Mexican currency exchanges, "the largest violation of the Bank Secrecy Act, an anti-money-laundering law, in U.S. history."

"A sum" Bloomberg averred, equal to one-third of Mexico's current gross domestic product."

Since 2006, some 22,000 people have been killed in drug-related violence. Thousands more have been wounded, countless others "disappeared," torture and illegal imprisonment is rampant.

In a frightening echo of the Reagan administration's anti-communist jihad in Central America during the 1980s, the Bush and now, Obama administration has poured fuel on the fire with some $1.4 billion in "War on Drugs" funding under Plan Mérida. Much of that "aid" is destined to purchase military equipment for repressive police, specialized paramilitary units and the Mexican Army.

There is also evidence of direct U.S. military involvement. In June, The Narco News Bulletin reported that "a special operations task force under the command of the Pentagon is currently in place south of the border providing advice and training to the Mexican Army in gathering intelligence, infiltrating and, as needed, taking direct action against narco-trafficking organizations."

One former U.S. government official told investigative journalist Bill Conroy, "'Black operations have been going on forever. The recent [mainstream] media reports about those operations under the Obama administration make it sound like it's a big scoop, but it's nothing new for those who understand how things really work'."

But, as numerous investigations by American and Mexican journalists have revealed, there is strong evidence of collusion between the Mexican Army and the Juarez and Sinaloa drug cartels. A former Juarez police commander told NPR in May that "the intention of the army is to try and get rid of the Juarez cartel, so that [Joaquin "El Chapo" Guzman] Chapo's [Sinaloa] cartel is the strongest."

The cosy relations among the world's biggest banks, drug trafficking organizations and the U.S. military-intelligence apparatus is not however, a new phenomenon. What is different today is the scale and sheer scope of the corruption involved. As Michel Chossudovsky points out,

This trade can only prosper if the main actors involved in narcotics have "political friends in high places." As legal and illegal undertakings are increasingly intertwined, the dividing line between "businesspeople" and criminals is blurred. In turn, the relationship among criminals, politicians and members of the intelligence establishment has tainted the structures of the state and the role of its institutions, including the military. (The Global Economic Crisis: The Great Depression of the XXI Century, Montreal: Global Research, 2010, pp. 195-196)

While the Bloomberg story should cast new light on highly-profitable links amongst major financial institutions and narcotrafficking organizations in what may be protected drug rackets green-lighted by corrupt officials, media silence, particularly by outlets such as The Wall Street Journal and the Financial Times, threaten to propel what should be an international scandal into a one-off news item scheduled for a trip down the memory hole.

"Cocaine One"

If, as New York Times columnist Thomas Friedman claims "the hidden hand of the market will never work without a hidden fist," then perhaps too, drug cartels work their "market magic" with their own "hidden fist" or, as the Russians like to say a krysha, a web of protectors--and facilitators--drawn from business, finance, organized crime and the secret world of intelligence.

Dubbed "Cocaine One" by Hopsicker, the DC-9 was curious for a number of reasons, not least of which was the fact that "one of the chief shareholders" of a dodgy outfit called SkyWay Aircraft "is a private investment bank in Dallas which also raised funds for a Mexican industrialist with reported ties to a Cali and Juarez Cartel narcotics trafficker."

More curious still, the airline kitted-out its fleet with distinctive colors and a seal "designed to impersonate planes from the U.S. Dept. of Homeland Security." And when he learned that "SkyWay's genesis can be traced to In-Q-Tel Inc., a secretive, Arlington, Va., investment group owned, operated, and financed out of the black box budget of the Central Intelligence Agency," well you can bet corporate media ran themselves ragged investigating that!

To top it off, when another drug plane crash landed in the Yucatan Peninsula eighteen months later and broke apart, a Gulfstream II business jet (N987SA) that spilled "4 tons of cocaine across a muddy field," Hopsicker reported that it had originated from the same network and used the same source for its financing, the "Casa de Cambio Puebla SA, a country-wide network of currency exchanges."

And to make matters even more intriguing from a parapolitical perspective, after searching through FAA records Hopsicker discovered that the Gulfstream II business jet "was owned by a secretive Midwestern media baron and Republican fund-raiser, who had a business partner who, incredibly, owned the other American drug plane, the DC-9, recently busted in Mexico."

In fact, as Bloomberg investigative journalist Michael Smith learned years later, these were the same planes and same currency exchange which Hopsicker reported back in 2007 traffickers had used to purchase drug jets with funds laundered through Wachovia.

"One customer that Wachovia took on in 2004 was Casa de Cambio Puebla SA," Smith wrote. The Puebla, Mexico currency exchange was the brainchild of Pedro Alatorre, a "businessman" who "had created front companies for cartels."

Alatorre, and 70 others connected to his network, were seized in 2007 by Mexican law enforcement officials. Authorities discovered that the accused drug money launderer and airline broker for the cartels controlled 23 accounts at the Wachovia Bank branch in Miami and that it held some $11 million, subsequently frozen by U.S. investigators.

In 2008, a Miami federal grand jury indicted Alatorre, now awaiting trial in Mexico along with three other executives, charging them with drug trafficking and money laundering, accusing the company of using "shell firms to launder $720 million through U.S. banks." The Justice Department is currently seeking Alatorre's extradition from Mexico.

According to Bloomberg, "Puebla executives used the stolen identities of 74 people to launder money through Wachovia accounts." Jose Luis Marmolejo, the former head of the Mexican attorney general's financial crimes unit told Smith, "Wachovia handled all the transfers, and they never reported any as suspicious."

Some $300,000 was transferred by Wachovia to a Bank of America branch in Oklahoma City. With cash in hand Bloomberg reports, traffickers "used the funds to buy the DC-9 through Oklahoma City aircraft broker U.S. Aircraft Titles Inc." When queried by Smith about the sale, "U.S. Aircraft Titles President Sue White declined to comment."

Jeffrey Sloman, the federal prosecutor who handled the Wachovia case said in a press release that "Wachovia's blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations."

Yet, as Hopsicker wrote nearly three years ago, "the politically-explosive implications of the scandal may explain why American officials have been reluctant to move against, or even name, the true owners of the planes and basically 'turned a blind eye' to the American involvement exposed by the drug trafficking seizures."

As of this writing, no Americans have been criminally charged in the cash-for drug planes banking conspiracy.

"Troubled Assets" or Something More Sinister?

When Wells Fargo bought Wachovia, once America's fourth largest bank in 2008 at the fire-sale price of $12.8 billion, the bank and its former CEO, Kennedy "Ken" Thompson, who "retired at the request of the board" before the full-extent of the financial meltdown hit home, were in deep trouble.

Before the Wells takeover, Wachovia had been on a veritable shopping spree. After the firm's 2001 merger with First Union Bank, Wachovia merged with the Prudential Securities division of Prudential Financial, Inc., with Wachovia controlling the lion's share of the firm's $532.1 billion in assets. This was followed by the bank's purchase of Metropolitan West Securities, adding a $50 billion portfolio of securities and loans to the bank's Lending division. In 2004, Wachovia followed-up with the $14.3 billion acquisition of SouthTrust Corporation.

Apparently flush with cash and new market clout, Wachovia set it sights on acquiring California-based Golden West Financial. Golden West operated branches under the name World Savings Bank and was the nation's second largest savings and loan. At the time of the buy-out, Golden West had over $125 billion in assets. For Wachovia however, it was a deal too far.

With an enormous housing bubble fully inflated, and a new speculative merger-mania in full swing, one can only surmise that the need for liquidity at any price, had driven banking giants such as Wachovia to play dumb when shadier, yet highly-profitable transactions, such as the "arrangement" with Casa de Cambio Puebla SA, were involved.

Bleeding cash faster than you can say "mortgage backed securities," Wachovia was on the hook for their 2006 $26 billion buy-out of Golden West Financial at the peak of the housing bubble, a move that BusinessWeek reported generated "resistance from his own management team" but ignored by Thompson.

Why? "Because no one outside of Thompson and Golden West CEO Herb Sandler seemed to like the deal from the moment it was announced," a company insider told BusinessWeek.

While the buy-out may have given Thompson "the beachhead in California he had long desired ... the ink was barely dry on the Golden West deal in late 2006 when the housing bubble in markets including California and Florida began to deflate."

Hammered by the housing bust, Wachovia's share price, which had risen to $70.51 per share when the Golden West deal was announced had slid to $5.71 per share by October 2008. In other words, Wachovia, along with the world's economy, began circling the proverbial drain.

However you slice it, although it was clear that the Golden West deal had gone south quicker than you can say "credit default swaps," this didn't seem to stop Wachovia from paying "smartest guy in the room" Thompson $15.6 million in total compensation in 2007, a year after the fatal Golden West transaction. Nor did these losses stop the bank from showering Thompson with a severance package worth nearly $8 million.

But was something else going on here?

Wells Fargo bank admitted in a signed Deferred Prosecution Agreement with the federal government that they would not contest charges brought by the Justice Department in its indictment of the bank.

The banking giant was forced to admit charges by prosecutors that "On numerous occasions, monies were deposited into a CDC [Casa de Cambio] by a drug trafficking organization. Using false identities, the CDC then wired that money through its Wachovia correspondent bank accounts for the purchase of airplanes for drug trafficking organizations. On various dates between 2004 and 2007, at least four of those airplanes were seized by foreign law enforcement agencies cooperating with the United States and were found to contain large quantities of cocaine."

Bloomberg reported that Wells Fargo, in the wake of the settlement "declined to answer specific questions, including how much it made by handling $378.4 billion--including $4 billion of cash--from Mexican exchange companies."

There was however, more than "troubled assets" and charges of money laundering to the story. In fact, the purchase of these drug planes have been tied to some of the Bush administration's most secretive "War On Terror" programs.

Drug Flights, CIA Renditions. Just Another Day at the Office!

Replicating a pattern used by the Central Intelligence Agency during the Iran-Contra scandal of the 1980s, the secret state used a network of cut-outs and legitimate businesses to transport prisoners to Agency black sites for "special handling."

During Iran-Contra it was "guns in, drugs out." Today one might say its "drugs in, tortured prisoners out." The results however, were the same; egregious crimes and lawbreaking on a staggering scale.

Subsequent investigations by Narco News revealed that "this particular Gulfstream II (tail number N987SA), was used between 2003 and 2005 by the CIA for at least three trips between the U.S. east coast and Guantanamo Bay, home to the infamous 'terrorist' prison camp," Bill Conroy reported.

"In addition," Conroy wrote, "the two SkyWay companies are associated with individuals who have done highly sensitive work for the Department of Defense or U.S. intelligence agencies, public records show and Narco News sources confirm."

According to AFP, the Mexican daily El Universal said "it had obtained documents from the United States and the European Parliament which 'show that that plane flew several times to Guantanamo, Cuba, presumably to transfer terrorism suspects,'" the French newswire reported.

The plane was carrying "Colombian drugs" bound for the U.S. for the "fugitive leader of Mexico's Sinaloa cartel, Joaquin 'Chapo' Guzman," when it crashed in the Yucatan.

According to El Universal, the Federal Aviation Administration's "logbook registered that the plane had traveled between US territory and the US military base in Guantanamo," and that its last registered owner was "Clyde O'Connor in Pompano Beach, Florida."

The Independent confirmed separately in January of this year that "Evidence points to aircraft--familiarly known as 'torture taxis'--used by the CIA to move captives seized in its kidnapping or 'extraordinary rendition' operations through Gatwick and other airports in the EU being simultaneously used for drug distribution in the Western hemisphere."

Hugh O'Shaughnessy, confirming earlier reporting by Bill Conroy and Daniel Hopsicker said that "a Gulfstream II jet aircraft N9875A identified by the British Government and the European Parliament as being involved in this traffic crashed in Mexico in September 2008 while en route from Colombia to the US with a load of more than three tons of cocaine."

While O'Shaughnessy got the tail-number and date wrong, he's correct when he states that U.S. intelligence assets "continue the drug dealing they indulged in during the Iran-Contra affair of the Reagan years."

Narco News, citing DEA sources, learned that the crashed Gulfstream loaded with four tons of cocaine "was part of an operation being carried out by a Department of Homeland Security agency."

However in a later report, Mark Conrad, a former supervisory special agent with ICE's predecessor agency, U.S. Customs, told Narco News that the crashed Gulfstream used to transport drugs and prisoners was controlled by the CIA and "that the CIA, not ICE ... [was] actually the U.S. agency controlling the ... operation. If this were the case, then "any individuals or companies involved in a CIA-backed operation, even ones that are complicit in drug trafficking, would be off limits to U.S. law enforcers due to the cloak of national security the CIA can invoke."

In other words, a jet purchased by drug traffickers with funds laundered through an American bank and used in the CIA's "extraordinary rendition" program may have been part of a protected drug operation by U.S. intelligence agencies. An operation furthermore, whose purpose is still unknown.

This report tracks closely with evidence uncovered by Peter Dale Scott. In a recent piece in Japan Focus Scott wrote that "it is not surprising that the U.S. Government, following the lead of the CIA, has over the years become a protector of drug traffickers against criminal prosecution in this country."

"A recent spectacular example" Scott tells us, drawing on research from his forthcoming book, is the curious case of CIA Venezuelan asset, General Ramon Guillén Davila.

General Ramon Guillén Davila, chief of a CIA-created anti-drug unit in Venezuela, was indicted in Miami for smuggling a ton of cocaine into the United States. According to the New York Times, "The CIA, over the objections of the Drug Enforcement Administration, approved the shipment of at least one ton of pure cocaine to Miami International Airport as a way of gathering information about the Colombian drug cartels." Time magazine reported that a single shipment amounted to 998 pounds, following earlier ones "totaling nearly 2,000 pounds." Mike Wallace confirmed that "the CIA-national guard undercover operation quickly accumulated this cocaine, over a ton and a half that was smuggled from Colombia into Venezuela." According to the Wall Street Journal, the total amount of drugs smuggled by Gen. Guillén may have been more than 22 tons. (Fueling America's War Machine: Deep Politics and the CIA's Global Drug Connection (in press, due Fall 2010 from Rowman & Littlefield).

Scott adds that "the United States never asked for Guillén's extradition from Venezuela to stand trial; and in 2007, when he was arrested in Venezuela for plotting to assassinate President Hugo Chavez, his indictment was still sealed in Miami. Meanwhile, CIA officer Mark McFarlin, whom DEA Chief Bonner had also wished to indict, was never indicted at all; he merely resigned."

But the stench of Iran-Contra, like that of the CIA's torture program, as with earlier secret state machinations with drug cartels never went away; in fact, like a cancer, one managed drug operation seamlessly metastasized into another.

Greasing the Wheels

The United Nations Office on Drugs and Crime (UNODOC) state in their 2010 Annual Report that "money-laundering is the method by which criminals disguise the illegal origins of their wealth and protect their asset bases in order to avoid suspicion of law enforcement and to prevent leaving a trail of incriminating evidence," and that financial institutions, particularly U.S. and European banks are key to efforts to choke-off illicit profits from the grisly trade.

The trouble is these institutions, along with U.S. intelligence agencies, are the problem.

UNODOC estimate that profits derived from narcotics rackets amount to some $600 billion annually and that up to $1.5 trillion dollars in drug money is laundered through seemingly legitimate enterprises.

Part of the fallout from capitalism's economic meltdown has been that "drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis," The Observer disclosed late last year.

Antonio Maria Costa, UNODOC's director, told the British newspaper he saw evidence that proceeds from the illicit trade were "the only liquid investment capital" available to some banks on the brink of collapse last year and that "a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result."

The UN drugs chief said that in "many instances, the money from drugs was the only liquid investment capital." And with markets tanking and major bank failures nearly a daily occurrence, "liquidity was the banking system's main problem and hence liquid capital became an important factor."

According to Costa, "Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities... There were signs that some banks were rescued that way."

Web of Corruption

Although the UN's top anti-narcotics official declined to identify either the countries or banks that have benefited from the murderous trade, a web of corruption envelops the entire financial sector of the capitalist economy as the quest for "liquid assets" trumps everything.

Martin Woods, once director of Wachovia's anti-money-laundering unit in London told Bloomberg, "It's the banks laundering money for the cartels that finances the tragedy." Woods told the magazine he "quit the bank in disgust" after executives "ignored his documentation that drug dealers were funneling money through Wachovia's branch network."

Despite warnings from the Treasury Department since 1996 that Mexican currency exchanges were laundering drug money through U.S. banks, "Wachovia ignored warnings by regulators and police, according to the deferred-prosecution agreement," Bloomberg reported.

"As early as 2004, Wachovia understood the risk," the bank admitted in court. "Despite these warnings, Wachovia remained in the business."

At the bank's anti-money laundering unit in London, Woods and his counterpart Jim DeFazio in Charlotte, NC told Smith "they suspected that drug dealers were using the bank to move funds."

Former Scotland Yard investigator Woods, said he "spotted illegible signatures and other suspicious markings on traveler's checks from Mexican exchange companies," and that he sent copies of his report to the U.K.'s Financial Services Authority, the DEA and U.S. Treasury Department.

But rather than being rewarded for his diligence, Woods told Smith "his bosses instructed him to keep quiet and tried to have him fired." In one meeting, "a bank official insisted Woods shouldn't have filed suspicious activity reports to the government, as both U.S. and U.K. laws require."

According to a whistleblower suit filed with an employment tribunal in London, Barrons reported last year before the Wachovia scandal broke, that Woods claimed "his bosses bullied and demoted him, then withdrew his reports of other suspicious activities in Eastern Europe."

It gets worse. Woods' complaint alleges "that Wachovia staff may have even tipped off Mexican-exchange clients about his laundering suspicions," and the veteran investigator told Wachovia officials "he feared for his safety."

In response, bank spokesperson Mary Eshet said at the time, "Wachovia believes that it has acted appropriately in its business dealings, and Mr. Woods' claims to the contrary are without merit."

Meanwhile, on the American side of the pond, 21-year FBI veteran DeFazio said "he told bank executives in 2005 that the DEA was probing the transfers through Wachovia to buy the planes." The bank ignored his warnings and continued along on their merry way until their indictment.

The law enforcement veteran told Bloomberg, "I think they looked at the money and said, 'The hell with it. We're going to bring it in, and look at all the money we'll make'."

The former Scotland yard investigator added, "If you don't see the correlation between the money laundering by banks and the 22,000 people killed in Mexico, you're missing the point."

But Wachovia wasn't the only large financial institution "missing the point." Bloomberg also revealed that Bank of America and the London-based "HSBC Holdings Plc, Europe's biggest bank by assets," American Express Bank, Banco Santander SA, Citigroup Inc., as well as "the world's largest money transfer firm," Western Union were also up to their eyeballs in dubious transactions.

In 1994 for example, American Express paid $14 million to settle with the federal government after "two employees were convicted in a criminal case involving drug trafficker Juan Garcia Abrego."

Yet between 1999-2004, Bloomberg reported "the bank failed to stop clients from laundering $55 million of narcotics funds, the bank admitted in a deferred-prosecution agreement in August 2007 ... and paid $65 million to the U.S. and promised not to break the law again." Charges were dismissed a year later under terms of the agreement.

And back in 2004, The Independent disclosed that "HSBC, the UK's largest bank, have been slammed for lax money-laundering procedures in a report by a US Senate subcommittee."

Journalists Hugh O'Shaughnessy and Paul Lashmar revealed that "the UK-based multinational stands accused of laxity in the fight against money laundering, drug trafficking, corruption and terrorism, notably in the oil-rich African state of Equatorial Guinea."

"In one of the few cases" when the scandal-plagued and now-shuttered Riggs Bank "seems to have properly followed US anti-money-laundering legislation," Riggs formally asked HSBC and a Spanish bank, Banco Santander, "to divulge the identities of the owners of two companies that kept accounts with them and that were receiving suspicious wire transfers totalling in excess of $35m (£20m). The banks refused to say who the owners were."

Bloomberg disclosed that "federal agents caught people who work for Mexican cartels depositing illicit funds in Bank of America accounts in Atlanta, Chicago and Brownsville, Texas, from 2002 to 2009." Authorities contend that "Mexican drug dealers used shell companies to open accounts at London-based HSBC."

Nevertheless, neither bank were accused of wrongdoing by the federal government and both firms denied any involvement in money laundering schemes.

Bank of America spokeswoman Shirley Norton told Smith that they "strictly follow the government rules." Norton said, "Bank of America takes its anti-money-laundering responsibilities very seriously," a fact not readily apparent from Bloomberg Markets investigation.

Both Norton and HSBC spokesman Roy Caple told Smith that "[privacy] laws bar them from discussing specific clients."

And so it goes.

Fallout? What Fallout!

In the wake of Wachovia's admission to federal prosecutors, Wells Fargo will pay "$160 million in fines and penalties, less than 2 percent of its $12.3 billion profit in 2009."

"If Wells Fargo keeps its pledge," Bloomberg reports, then "according to the agreement [the federal government will] drop all charges against the bank in March 2011."

Why might that be? Large banks are immune from vigorous prosecution for violating the Bank Secrecy Act "by a variant of the too-big-to-fail theory."

Veteran Senate investigator Jack Blum, who led probes into the Iran-Contra drug connection and the CIA's favorite shadow bank during the 1980s, the Bank of Credit and Commerce (BCCI) told Bloomberg, "the theory is like a get-out-of-jail-free card for big banks."

"There's no capacity to regulate or punish them because they're too big to be threatened with failure," Blum says. "They seem to be willing to do anything that improves their bottom line, until they're caught."

Meanwhile as the bodies pile up, there's no jail time for executives and the assets of firms that could charitably be described as part of a "continuing criminal enterprise" haven't been seized; only a slap on the wrist and a promise to "do better next time."

Are You a "Perfect Citizen"? NSA Will Deploy Snooping Sensors on Private Networks

Rather than addressing an impending social catastrophe, Western governments, which serve the interests of the economic elites, have installed a "Big Brother" police state with a mandate to confront and repress all forms of opposition and social dissent. -- Michel Chossudovsky and Andrew Gavin Marshall, Preface, The Global Economic Crisis: The Great Depression of the XXI Century, Montreal: Global Research, 2010, p. xx.

In a sign that illegal surveillance programs launched by the Bush administration are accelerating under President Obama, The Wall Street Journal revealed last week that a National Security Agency (NSA) program, PERFECT CITIZEN, is under development.

With a cover story that this is merely a "research" effort meant to "detect cyber assaults on private companies and government agencies running such critical infrastructure as the electricity grid and nuclear-power plants," it is also clear that the next phase in pervasive government spying is underway.

With "cybersecurity" morphing into a new "public-private" iteration of the "War On Terror," WSJ reporter Siobhan Gorman disclosed that giant defense contractor Raytheon "recently won a classified contract for the initial phase of the surveillance effort valued at up to $100 million."

This wouldn't be the first time that Raytheon had positioned itself, and profited from, a media-driven panic. As investigative journalist Tim Shorrock documented for CorpWatch, "as the primary spying unit of defense industry giant Raytheon," the firm's Intelligence and Information Services division (Raytheon IIS) is the premier provider of command and control systems "capable of transforming data into actionable intelligence."

According to Shorrock, the unit's "most important clients ... are the NSA, NGA, and NRO, for which it provides signals and imaging processing, as well as information security software and tools;" in other words, agencies that are at the heart of America's electronic warfare complex.

The program, Gorman writes, "would rely on a set of sensors deployed in computer networks for critical infrastructure that would be triggered by unusual activity suggesting an impending cyber attack." While Journal sources claim the program "wouldn't persistently monitor the whole system," a leaked Raytheon email paints a different picture, in line with other NSA intrusions into domestic affairs.

"The overall purpose of the [program] is our Government...feel[s] that they need to insure the Public Sector is doing all they can to secure Infrastructure critical to our National Security," the whistleblower writes. "Perfect Citizen is Big Brother."

These revelations have triggered concerns that projects like PERFECT CITIZEN, and others that remain classified, signal a new round of secret state surveillance and privacy-killing programs under the catch-all euphemism "cybersecurity."

The Journal reports that information captured by PERFECT CITIZEN "could also have applications beyond the critical infrastructure sector, officials said, serving as a data bank that would also help companies and agencies who call upon NSA for help with investigations of cyber attacks, as Google did when it sustained a major attack late last year."

In other words, the program will have major implications "beyond the critical infrastructure sector" and could adversely affect the privacy rights of all Americans. In fact, it wouldn't be much of a stretch to hypothesize that PERFECT CITIZEN may very well be related to other "intrusion detection programs" such as Einstein 3's deep-packet inspection capabilities that can read, and catalogue, the content of email messages flowing across private telecommunications networks.

One unnamed military source told the Journal, "you've got to instrument the network to know what's going on, so you have situational awareness to take action."

However, as the UK publication The Register noted, "many of the networks that the NSA would wish to place Perfect Citizen equipment on are privately owned, however, and some could also potentially carry information offering scope for 'mission creep' outside an infrastructure-security context."

The Register's Lewis Page, a former Royal Navy Commander and frequent critic of the surveillance state, writes that "full access to power company systems might allow the NSA to work out whether anyone was at home at a given address. Transport and telecoms information would also make for a potential bonanza for intrusive monitoring."

When queried whether the program would be yet another snooping tool deployed against the public, NSA spokesperson Judith Emmel told The Register Friday: "PERFECT CITIZEN is purely a vulnerabilities-assessment and capabilities-development contract."

According to NSA, "This is a research and engineering effort. There is no monitoring activity involved, and no sensors are employed in this endeavor. Specifically, it does not involve the monitoring of communications or the placement of sensors on utility company systems."

When specifically asked by Page if NSA is "seeking to spy on US citizens by means of examining their power or phone usage, tracking them through transport systems etc, the NSA would simply never think of such a thing."

"Any suggestions that there are illegal or invasive domestic activities associated with this contracted effort are simply not true. We strictly adhere to both the spirit and the letter of US laws and regulations," insisted Emmel.

Which raises an inevitable question: what would lead a Raytheon insider to compare the project to "Big Brother"? This is strong language from an employee of one of America's largest defense firms, a company in the No. 4 slot on Washington Technology's 2010 Top 100 list of prime federal contractors with some $6.7 billion in total revenue, 88% of which are derived from defense contracts.

At this point we don't know, and Siobhan Gorman hasn't told us since the Journal, as of this writing, hasn't seen fit to enlighten the public with the full text, if one exists, as to why someone obviously familiar with the program would put their job at risk if PERFECT CITIZEN were simply a "vulnerabilities-assessment and capabilities-development contract" and not something far more sinister.

The Pentagon Rules. Any Questions?

The Journal reported that the project began as "a small-scale effort" under the code name APRIL STRAWBERRY. Over time, the classified program was "expanded with funding from the multibillion-dollar Comprehensive National Cybersecurity Initiative, which started at the end of the Bush administration and has been continued by the Obama administration," Gorman wrote. Now, with billions of dollars available "the NSA is now seeking to map out intrusions into critical infrastructure across the country."

As Antifascist Calling reported earlier this year (see: "Obama's National Cybersecurity Initiative Puts NSA in the Driver's Seat"), although the administration has released portions of the Bush regime's National Security Presidential Directive 54 (NSPD-54) in a sanitized version called the Comprehensive National Cybersecurity Initiative (CNCI), the full scope of the program remains shrouded in secrecy.

Indeed, most of NSPD-54 and CNCI have never been released to the public. This led the Senate Armed Services Committee (SASC) to write in a 2008 report that "virtually everything about the initiative is classified, and most of the information that is not classified is categorized as 'For Official Use Only'."

Due to the opacity of the highly-secretive program and stonewalling by the administration, the SASC joined their colleagues on the Senate Select Committee on Intelligence and called for the initiative to be scaled-back "because policy and legal reviews are not complete, and because the technology is not mature."

Hardly beacons of transparency themselves when it comes to overseeing depredations wrought by the secret state, nevertheless SASC questioned the wisdom of a program that "preclude public education, awareness and debate about the policy and legal issues, real or imagined, that the initiative poses in the areas of privacy and civil liberties. ... The Committee strongly urges the [Bush] Administration to reconsider the necessity and wisdom of the blanket, indiscriminate classification levels established for the initiative."

In fact, as the investigative journalism web site ProPublica reported last summer, the White House "has erased all mention of the Privacy and Civil Liberties Oversight Board from its Web site. The removal, which was done with no public notice, has underlined questions about the Obama administration's commitment to the board." As of this writing, it remains an empty shell.

Despite repeated efforts by civil liberties and privacy groups, the Obama administration has been no more forthcoming than the previous regime in answering these critical concerns, particularly when the "policy and legal issues" are cloaked in secrecy under a cover of "national security."

Instead, CNCI's "Initiative #12. Define the Federal role for extending cybersecurity into critical infrastructure domains," offer little more than linguistic sedatives meant to lull the public as to how and through what means the administration plans to build "on the existing and ongoing partnership between the Federal Government and the public and private sector owners and operators of Critical Infrastructure and Key Resources (CIKR)."

While the administration claims that the "Department of Homeland Security and its private-sector partners have developed a plan of shared action with an aggressive series of milestones and activities," as we now know the civilian, though securocratic-minded Homeland Security bureaucracy is being supplanted by the Pentagon's National Security Agency and U.S. Cyber Command as the invisible hands guiding the nation's "cybersecurity" policies.

As I reported last month (see: "Through the Wormhole: The Secret State's Mad Scheme to Control the Internet"), corporate greed and venality aren't the only motives behind hyped-up "cyber threats." Armed with multibillion dollar budgets, most of which are concealed from public view under a black cone of top secret classifications, agencies such as NSA are positioning themselves as gatekeepers over America's electronic communications infrastructure.

The Media's Role

With corporate media serving as "message force multipliers" for the flood of alarmist reports emanating from industry-sponsored think tanks such as the Bipartisan Policy Center (BPC) and the Center for Strategic and International Studies (CSIS), or lobby shops like the Armed Forces Communications and Electronics Association (AFCEA) and the Intelligence and National Security Alliance (INSA), it is becoming clear that consensus has been reached amongst Washington power brokers, one that will have a deleterious effect on the free speech and privacy rights of all Americans.

Floated perhaps as a means to test the waters for restricting internet access, The New York Times reported July 4 that "the Internet affords anonymity to its users--a boon to privacy and freedom of speech. But that very anonymity is also behind the explosion of cybercrime that has swept across the Web."

Reporter John Markoff, a conduit for "cyberwar" scaremongering, informs us that "Howard Schmidt, the nation's cyberczar, offered the Obama administration's proposal to make the Web a safer place--a 'voluntary trusted identity' system that would be the high-tech equivalent of a physical key, a fingerprint and a photo ID card, all rolled into one."

"The system" Markoff writes, "might use a smart identity card, or a digital credential linked to a specific computer, and would authenticate users at a range of online services."

Schmidt has described the Obama administration's approach (note the warm and fuzzy phrase hiding the steel fist) as a "voluntary ecosystem" in which "individuals and organizations can complete online transactions with confidence, trusting the identities of each other and the identities of the infrastructure that the transaction runs on."

Markoff's reporting would be humorous if we didn't already know that secret state agencies themselves have already compromised the Secure Socket Layer certification process (SSL, the tiny lock that appears during supposedly "secure" online transactions), as computer security and privacy researchers Christopher Soghoian and Sid Stamm revealed in their paper, Certified Lies: Detecting and Defeating Government Interception Attacks Against SSL.

In March, Soghoian and Stamm introduced the public to "a new attack, the compelled certificate creation attack, in which government agencies compel a certificate authority to issue false SSL certificates that are then used by intelligence agencies to covertly intercept and hijack individuals' secure Web-based communications." They provided "alarming evidence" that suggests "that this attack is in active use," and that a niche security firm, Packet Forensics, is already marketing "extremely small, covert surveillance devices for networks" to government agencies.

Not everyone is thrilled by Schmidt's call to create this allegedly "voluntary" system. Lauren Weinstein, the editor of Privacy Journal, told the Times that "such a scheme is a pre-emptive push toward what would eventually be a mandated Internet 'driver's license' mentality."

The stampede for increased state controls are accelerating. Stewart Baker, the NSA's chief counsel under Bush, told the Times that the "privacy standards the administration wants to adopt will make the system both unwieldy and less effective and not good for security." Baker and his ilk argue that all internet users "should be forced to register and identify themselves, in the same way that drivers must be licensed to drive on public roads."

Considering that police have increasingly turned to license plate readers that are fast becoming "a fixture in local police arsenals," as the Center for Investigative Reporting revealed last month, and that such devices have been deployed for political surveillance here in the heimat and abroad, as both The Guardian and Seattle Weekly disclosed in reports documenting outrageous secret state spying, a licensing scheme for internet users is an ominous analogy indeed!

The Grim Road Ahead

A confidence game only works when "marks," in this case American citizens, allow themselves to be defrauded by a person or group who have gained their trust.

And when trust cannot be won through reason, fear tends to take over as a powerful motivator. This is amply on display when it comes to Washington's ginned-up "cybersecurity" panic.

According to this reading, fraudulent internet schemes, identity theft, even espionage by state- and non-state actors (say corporate spies who benefit from NSA's ECHELON program) have been transformed into a "war," one which Bush's former Director of National Intelligence, Mike McConnell, currently an executive vice president with the spooky Booz Allen Hamilton firm, claims the U.S. is "losing."

But as security technology expert Bruce Schneier wrote last week, "There's a power struggle going on in the U.S. government right now.

"It's about who is in charge of cyber security, and how much control the government will exert over civilian networks. And by beating the drums of war, the military is coming out on top."

Schneier avers that "the entire national debate on cyberwar is plagued with exaggerations and hyperbole." Googling "cyberwar," as well as "'cyber Pearl Harbor,' 'cyber Katrina,' and even 'cyber Armageddon'--gives some idea how pervasive these memes are. Prefix 'cyber' to something scary, and you end up with something really scary."

Hackers, criminals and sociopaths have been around since the birth of the "information superhighway." Schneier writes, "we surely need to improve our cybersecurity. But words have meaning, and metaphors matter. There's a power struggle going on for control of our nation's cybersecurity strategy, and the NSA and DoD are winning. If we frame the debate in terms of war, if we accept the military's expansive cyberspace definition of 'war,' we feed our fears."

This is precisely the intent of our political masters. And if the purpose of "cyberwar" hype is to breed fear, mistrust and helplessness in the face of relentless attacks by shadowy actors only a mouse click away then, as Schneier sagely warns: "We reinforce the notion that we're helpless--what person or organization can defend itself in a war?--and others need to protect us. We invite the military to take over security, and to ignore the limits on power that often get jettisoned during wartime."

Destroy trust, increase fear: create the "Perfect Citizen."

Military Spying and Torture Continues Under Obama: CIFA's Nine (Corrupt) Lives

Despite promises to the contrary, the Obama administration has consolidated, even expanded privacy- and civil liberties killing programs launched by the Bush government.

From warrantless spying and driftnet surveillance to the indefinite detention and torture of foreign suspects held in U.S. gulags, and from the murderous drone wars in Pakistan to threats to assassinate American citizens merely on the suspicion they might be terrorists, 18 months into Obama's new "change" order, facts on the ground paint a grim picture indeed.

As egregious as these central facts are in demolishing the veracity of the President's long-forgotten campaign pledges, when it comes to enlisting the services of defense and security corporations for waging America's bogus "War On Terror 2.0.1," the current regime delivers!

Spawned in Darkness, Nurtured by Corruption: the Counterintelligence Field Activity

Nearly two years ago, Antifascist Calling reported that the Pentagon shuttered its controversial spy shop, the Counterintelligence Field Activity (CIFA), the military office launched in early 2002 in a now infamous Directive from former Deputy Secretary of Defense Paul Wolfowitz and top aide, Undersecretary of Defense for Intelligence, Stephen A. Cambone.

Remember CIFA? Under Cambone's watch, the outsourced "activity" (some 70% of the office's employees were contractors) was caught in flagrante delicto spying on antiwar activists, people who attended peace rallies outside military bases, and dispatched agents provocateurs into groups opposed to military recruitment, including the Quakers.

Before being run to ground after journalists exposed the shady operation, CIFA had compiled a massive database on activists and other suspect heimat citizens considered threats to the military. The Threat and Local Observation Notice database, TALON/CORNERSTONE, became a Pentagon repository for alarmist tittle-tattle and misinformation generated by the office's army of corporate spies.

What was this Rumsfeldian satrapy doing with our hard-earned tax dollars, lovingly doled out to their security partners? Why subverting our rights, of course! TALON/CORNERSTONE reports subsequently published by The National Security Archive are a chilling read and reveal a systematic pattern of profiteering and lawbreaking by both the Pentagon and some of the biggest firms servicing the secret state.

One CIFA-supported project, NBC Nightly News reported in 2005, was run by security giant Northrop Grumman. Designated "Person Search," the initiative included capabilities to search government and commercial databases and was intended to "provide comprehensive information about people of interest." Another program, stood up by Computer Sciences Corporation (a firm now heavily-leveraged in the emerging "cybersecurity" niche market) developed "systems able to detect, mitigate and investigate insider threats," as well as to "identify and document normal and abnormal activities and 'behaviors'."

By late 2005, TALON/CORNERSTONE had evolved into a joint military intelligence and civilian law enforcement system for sharing information held in Pentagon databases on "persons of interest" deemed "national security threats." Project VOYAGER and the related Joint Protection Enterprise Network were TALON subprojects deployed by military counterspies to "enhance" coordination with local, state and federal law enforcement agencies.

As investigative journalist Tim Shorrock revealed in his essential book, Spies For Hire, amongst the upstanding corporate citizens pulling down hundreds of millions of taxpayer dollars were: the scandal-plagued MZM, Inc., convicted fraudster Mitchell Wade's firm that bribed disgraced congressman, Randy "Duke" Cunningham (R-CA) with antiques, cash, a yacht and hookers in return for "earmarks" crafted by Wade, and Cunningham associate, Brent Wilkes, the former CEO of ADCS, Inc. For their labors, Cunningham and Wilkes earned eight year sentences in federal prison, while Wade was rewarded with twelve years in the slammer and a big "thanks" for "keeping us safe."

While MZM garnered the lion's share of publicity in the wake of the Cunningham scandal, other, bigger players in the CIFA debacle escaped media scrutiny, including: Lockheed Martin (America's No. 1 defense corp.) for "CI operations and CI/Antiterrorism investigative support." U.S. Investigations Services, a former subsidiary of the secretive Carlyle Group for "technology protection and force protection missions." Analex Inc., a subsidiary of the British security firm QinetiQ. After being kicked to the curb when Rumsfeld was booted from the Pentagon, Cambone became an executive vice president at QinetiQ and quickly "secured" a $30 million, five year contract to provide "a range of unspecified 'security services'" to CIFA, according to CorpWatch. ManTech International for the firm's work monitoring and searching intelligence and law enforcement databases and providing "line analysis, data extraction and other analytical methods ... for senior DoD and other agency officials." Harris Corp., a Florida based contractor that provided IT and professional engineering services to CIFA to "support the protection of critical research assets and technologies" for DoD. And last but certainly not least, SRA International Inc., provided counterterrorism and counterintelligence "analytical solutions" for CIFA and now, for the Defense Intelligence Agency.

But that's all in the past, the tainted legacy of the discredited Bush/Cheney era, right? Wrong!

Next-Gen Counterspies with a new Mission: Torture

The CIFA brand may have been fatally wounded but its shameful bequest lives on. DIA securocrats claimed that their new spy shop, the Defense Counterintelligence and Human Intelligence Center (DCHC) would "combine CIFA resources and responsibilities with longstanding DIA CI and HUMINT capabilities." DCHC director, Army Maj. Gen. Theodore Nicholas said that "the realignment of CIFA's functions and resources into DIA strengthens the close historical and operational relationship between counterintelligence and HUMINT."

The Washington Post reported at the time, that DCHC would carry out "strategic offensive counterintelligence operations," but that the enterprise would not target American citizens according to a spokesperson for Undersecretary of Defense for Intelligence, James R. Clapper, Jr., Obama's nominee for Director of National Intelligence.

The DoD stressed that "CIFA's designation as a law enforcement activity did not transfer to DIA. The new center will have no law enforcement function." In other words, DCHC supposedly will not spy on Americans. But unlike it's classified budget, talk is cheap and the devil is in the details. In the intervening years since the center's stand-up, a few hard facts have penetrated the penumbral shroud spread like giant bat wings over the Pentagon, and what we've learned is that it's business as usual.

Last month, The Washington Post reported that the DIA "wants to open a new repository for information about individuals and groups in what appears to be a successor to a controversial counterintelligence program that was disbanded in 2008."

According to SpyTalk blogger Jeff Stein, the "new Foreign Intelligence and Counterintelligence Operation Records section will be housed in DIA's Defense Counterintelligence and Human Intelligence Center, or DCHC." Surprise! Stein disclosed that "its records database ... seems to be headed to the new unit."

A June 15 notice posted on The Federal Register informs us that DCHC's Foreign Intelligence and Counterintelligence Operation Records will house information on "individuals involved in, or of interest to, DoD intelligence, counterintelligence, counterterrorism and counternarcotic operations or analytical projects as well as individuals involved in foreign intelligence and/or training activities."

Accordingly, "categories of records may include identifying information such as name, Social Security Number (SSN), address, citizenship documentation, biometric data, passport number, vehicle identification number and vehicle/vessel license data." In other words, under our current "change" regime, the Pentagon's new secretive office will continue to amass personal data on Americans, especially those engaged in legal political activities such as protesting and organizing against the Empire's illegal wars and occupations.

The purpose of such spying is to "document intelligence, counterintelligence, counterterrorism and counternarcotic operations relating to the protection of national security, DoD personnel, facilities and equipment, to include information systems," and this information may be disclosed outside DoD to "Federal, State, local, and tribal agencies for the purpose of law enforcement, counterterrorism, counterintelligence, counter narcotic activities and homeland security as authorized by U.S. Law or Executive Order, or for the purpose of protecting the territory, people and interests of the United States of America against breaches of security related to DoD controlled information or facilities and against terrorist activities."

With enough airspace to fly several squadrons of F-35s through with little in the way of either congressional oversight or privacy protections, FBI whistleblower and current policy counsel for the American Civil Liberties Union, Mike German, told Stein that "it's a little hard to tell what this is exactly, but we do know that DIA took over 'offensive counterintelligence' for the DoD once CIFA was abandoned ... it therefore makes sense that this new DIA data base would be collecting the same types of information that CIFA collected improperly, so Americans should be just as concerned."

German told the Post that DoD has also started collecting so-called Suspicious Activity Reports or SARs "which they share with federal, state and local law enforcement through the FBI eGuardian system." Which is another way of saying, armed with new Pentagon authorization, both TALON and Project VOYAGER have been folded into the Bureau's already extensive domestic surveillance operations.

Federal Computer Week reported in May that "Defense Secretary Robert Gates has ordered the Defense Department to use the FBI's eGuardian suspicious activity reporting system to record and track law-enforcement information about potential threats against the military or military installations."

What type of information would enter the Pentagon's black box data management system was not specified, however, "data will be entered into eGuardian only by authorized personnel trained in the federal guidelines and FBI procedures protecting civil liberties, Gates said, and data will be reviewed to ensure that information based solely on ethnicity, race or religion is not entered into the system."

One can only assume, given the fact that some 30% of DIA personnel and 70% of DCHC's operatives are contractors, that SARs will be handled by many of the same shady corporate outfits that "assisted" CIFA during the Bush years. Indeed, CorpWatch has reported that DIA's principal contractors currently include BAE Systems North America, Booz Allen Hamilton, Computer Sciences Corporation, Lockheed Martin, Northrop Grumman, and Titan Corporation, now a subsidiary of L-3 Communications, firms that designed and ran CIFA's illegal programs.

While DIA spokesman Donald Black told Newsweek that "the new database would not include the highly controversial aspects of TALON," two anonymous "U.S. officials" told reporter Mark Hosenball "that while CIFA had been disbanded on paper, many of its personnel and some of its functions were transferred to DCHC. One of the officials said that DCHC is now in the same office space that CIFA once occupied, in a complex near suburban Washington's Reagan National Airport."

But wait, there's more!

Keeping America's "warfighters" safe from unruly mobs of antiwar "anarchists" and Quakers aren't the only disreputable activities which the Pentagon's new spy shop are busily engaged. While we're at it, let's add torture to the mix!

The Atlantic's Marc Ambinder disclosed in May that the DIA "runs a classified interrogation facility for high-value detainees inside Bagram Air Field in Afghanistan, defense and administration officials said, and prisoners there are sometimes subject to tougher interrogation methods than those used elsewhere."

While the Bagram "black jail" torture facility was previously thought to be run by members of the Pentagon's secretive Joint Special Operations Command (JSOC), Ambinder reports "it is manned by intelligence operatives and interrogators who work for the DIA's Defense Counterintelligence and Human Intelligence Center (DCHC). They perform interrogations for a sub-unit of Task Force 714, an elite counter-terrorism brigade."

Although personnel at the facility are mandated to follow interrogation guidelines listed in the Army Field Manual, The Atlantic revealed that "under secret authorization, the DIA interrogators use methods detailed in an appendix to the Field Manual, Appendix M, which spells out 'restricted' interrogation techniques."

In other words, the same repulsive CIA-perfected techniques first developed by MKULTRA and Project ARTICHOKE and summarized in the Agency's torture manual, KUBARK Counterintelligence Interrogation, including isolation, sleep deprivation and the use of mind-altering drugs are currently being employed today as Obama wages his "right war."

While Ambinder employs the same euphemisms and weasel-words as his colleagues over at The New York Times, The Wall Street Journal and The Washington Post in describing Obama regime torture programs, psychoanalyst and war critic Stephen Soldz is far less circumspect. "For those who think that President Obama banned torture centers like this [Bagram's "black prison"], think again." Writing on the Psyche, Science, and Society blog, Soldz avers that "Obama's Executive Order only banned CIA secret prisons. This administration thus intended from the beginning to maintain its torture facility, only under a Defense Department label. Obama apparently was thinking ahead."

A fierce critic of the American Psychological Association's (APA) tainted record of collaborating with imperialist torture programs, Soldz writes that "over the years" APA "has devoted considerable lobbying resources to maintaining Congressional funding for CIFA. Now that CIFA has been folded into DCHC in the Defense Intelligence Agency, the APA is lobbying Congress for money for 'behavioral science' to support the DIA's military intelligence activities."

Apparently such lobbying efforts have paid off rather handsomely.

As psychologist Jeffrey Kaye and investigative journalist H.P. Albarelli revealed in a recent piece at Truthout, the mind-control legacy of the CIA's Project ARTICHOKE is alive and well at Bagram's "black prison." Kaye and Albarelli write that "interest in the use of drugs and mind control techniques in military research and operations persists to the present day. A November 2006 instruction from the Secretary of the Navy (3900.39D) informs that the Undersecretary for the Navy would heretofore be the 'Approval Authority for research involving: (a) Severe or unusual intrusions, either physical or psychological, on human subjects (such as consciousness-altering drugs or mind-control techniques)'."

"Techniques" that most certainly have been employed at Bagram Air Base under DCHC's baleful watch. Legal scholar and Harper's Magazine columnist, Scott Horton adds that a top APA "research scientist," Susan Brandon, "who worked in the Bush Administration's White House Office of Social and Behavioral Sciences ... had dealings with interrogation policy. She now works for the Defense Intelligence Agency's (DIA), Defense Counterintelligence and Human Intelligence Center (DCHC)."

As America's imperial wars and occupations bog down and the bodies pile up, as unemployment and home foreclosures sky rocket, and as the Gulf of Mexico is transformed into a vast aquatic dead zone courtesy of BP and their friends in Washington, is it intemperate of me to ask Obama fans: "How's that hopey-changey thing working out for ya?"