Financial Cryptography

SWIFT breach - canonically novel theories in law revealed

In the breach that keeps on breaching, I suggested that the reason the Bush administration was nervous of the program was that the Europeans might be embarrassed via public opinion to put in place real governance. I was close (dead link to "Piling On the New York Times With a Scoop," Howard Kurtz, WaPo):

Keller said he spent more than an hour in late May listening to Treasury Secretary John Snow argue against publication of the story. He said that he also got a call from Negroponte, the national intelligence czar, and that three former officials also made the case to Times editors: Tom Kean and Lee Hamilton, chairmen of the 9/11 commission, and Democratic Rep. John Murtha of Pennsylvania -- an outspoken critic of the war in Iraq.

"The main argument they made to me, extensively and at length, besides that the program is valuable and legitimate, was that there are a lot of banks that are very sensitive to public opinion, and if this sees the light of day, they may stop cooperating," Keller said.

What useful reason could they have for keeping it secret? If it was legal, the banks will cooperate. I think we can clearly state that banks will generally operate within the law, and will always side with the government over the interests of their customers.

As far as the banks are concerned, their interests are covered as long as a) it is legal, and b) all banks equally have to comply. So, keeping it secret was either directed at covering up potential illegality or a lack of legality, or some particular discrimination that was going on. As there has been no real hint of any discrimination here (SWIFT by definition serving all banks), it would be the former. (And, what does he mean by "a lot of banks?")

He acknowledged, as did the Times article, that there was no clear evidence that the banking program was illegal. But, he said, "there were officials who talked to us who were uncomfortable with the legality of this program, and others who were uncomfortable with the sense that what started as a temporary program had acquired a kind of permanence.

So what we have here is a programme of dubious legality, where insiders know they have transgressed, and would like the law to be clarified and updated. So they themselves are not at risk, and evidently the banks feel the same way.

"It's a tough call; it was not a decision made lightly," said Doyle McManus, the Los Angeles Times' Washington bureau chief. "The key issue here is whether the government has shown that there are adequate safeguards in these programs to give American citizens confidence that information that should remain private is being protected." ... McManus said the other factor that tipped the paper's decision to publish was the novel approach government was using to gather data in another realm without warrant or subpoena.

"Police agencies and prosecutors get warrants all the time to search suspects' houses, and we don't write stories about that," he said. "This is different. This is new. And this is a process that has been developed that does not involve getting a specific warrant. It's a new and unfamiliar process."

That's raising an interesting question. The question of the maybe-subpoena is addressed here:

The Administration says the program is legal because every month the Treasury Department issues an administrative subpoena, basically a subpoena you write yourself without seeing a judge.

Ryan Single also offered a theory on how the newspapers wrote their own administrative subpoenas. More odd remarks from the McManus of the LATimes:

"I always start with the premise that the question is, why should we not publish? Publishing information is our job. What you really need is a reason to withhold information."

It's a point. As we dig further we discover the old black helicopter theories surging up:

The scandal here is not government over-reach, [Blum] tells me. The scandal is the pitiful reluctance of this administration (and others before it) to get serious about the problem. Bankers, Blum explained, "have fended off every conceivable rule that would really be effective. Why are we pandering to them if we say we are in such a desperate situation?" ... The monitoring system described by the Times seems unexceptional to Blum. Indeed, his complaint is that it's so narrowly focused that it mostly harvests empty information. "Meanwhile, the biggest purveyor of terrorist money, as everyone knows, are accounts in Saudi Arabia," Blum observes. "Nobody will deal with it because the Saudis own half of America." An exaggeration, but you get his point.

Blum knows the offshore outposts where US corporations and wealthy Americans dodge taxes or US regulatory laws. Congress could shut them tomorrow if it chose. Instead, it keeps elaborating new loopholes that enable the invention of exotic new tax shelters for tainted fortunes. The latest to flourish, he says, are shell corporations-- freely chartered by states.

"The GAO says this device is being used for money laundering by everyone else in the world," Blum says. "Congress ought to start there." He is not holding his breath.

Which would be the house of cards defence. Here's another card that is showing signs of bending:

The U.S. National Security Agency asked AT&T Inc. to help it set up a domestic call monitoring site seven months before the Sept. 11, 2001 attacks, lawyers claimed June 23 in court papers filed in New York federal court.

The allegation is part of a court filing adding AT&T, the nation's largest telephone company, as a defendant in a breach of privacy case filed earlier this month on behalf of Verizon Communications Inc. and BellSouth Corp. customers. The suit alleges that the three carriers, the NSA and President George W. Bush violated the Telecommunications Act of 1934 and the U.S. Constitution, and seeks money damages.

``The Bush Administration asserted this became necessary after 9/11,'' plaintiff's lawyer Carl Mayer said in a telephone interview. ``This undermines that assertion.''

People all around the world bent over backwards to help the USA deal with 9/11. And let's not forget a substantial number of people killed were foreigners -- expatriate workers in the towers at the time.

If it is true that the spying programmes were begun before 9/11, that might shake the faith a bit. For the unshakebly faithful, see the relevant complaint and some skepticism here (tip to Adam and 27BStroke6):

Within eleven (11) days of the onset of the Bush administration, and at least seven (7) months prior to the attacks of September 11, 2001, defendant ATT began development of a center for monitoring long distance calls and internet transmissions and other digital information for the exclusive use of the NSA.

Why are we doing all this? Eavesdropping. We know it is a present danger, but the clarity lacks. We need to figure out what capabilities the agencies have and how far it spreads, in order to inform future designs.

Posted by iang at July 7, 2006 01:57 AM | TrackBack