Privacy

Glenn Greenwald says NSA bugs tech hardware en route to global customers

Routers and servers implanted with beacons by NSA, says journalist who broke Edward Snowden story

CBC: May 13, 2014

American journalist Glenn Greenwald is accusing the U.S. National Security Agency of breaking into tech hardware to install surveillance bugs before the products are shipped to unsuspecting global customers, in a new book about the NSA’s mass surveillance practices.

Greenwald, who broke the story of intelligence whistleblower Edward Snowden, sat down with CBC’s chief correspondent Peter Mansbridge to discuss previously unseen documents in an interview airing Tuesday night on The National.

Greenwald’s new book, No Place to Hide: Edward Snowden, the NSA and the U.S. Surveillance State, comes out on Tuesday.

The NSA practice is called supply-chain interdiction, in which the agency intercepts U.S.-made products such as routers and servers manufactured by companies such as Cisco. The hardware is physically implanted with beacons before being factory repackaged and shipped to unaware consumers around the world.

The U.S. has warned companies about the dangers of buying Chinese products for this very reason, Greenwald says in No Place to Hide.

“While American companies were being warned away from supposedly untrustworthy Chinese routers, foreign organizations would have been well advised to beware of American-made ones,” Greenwald says. “A June 2010 report from the head of the NSA’s Access and Target Development department is shockingly explicit. The document gleefully observes that some ‘SIGINT [signals intelligence] tradecraft … is very hands-on (literally!).”

Other revelations include a collect-it-all doctrine and extending surveillance to include airplane communications.

“If the quantity of collection revealed was already stupefying, the NSA’s mission to collect all the signals all the time has driven the agency to expand and conquer more and more ground,” Greenwald writes. “The amount of data it captures is so vast, in fact, that the principal challenge the agency complains about is storing the heaps of information accumulated from around the globe.”

(read the full article at CBC)

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Health/Environment

Nutritionists Learning GMOs & McDonalds Are Healthy; Gain Education Credits For Listening To Corporate Brainwashing

Our national nutrition experts are in bed with Big Food. And we wonder why we’re fat.

I Went to the Nutritionists’ Annual Confab. It Was Catered by McDonald’s.

Kiera Butler
Mother Jones: May 12, 2014

One recent Friday afternoon, in a Mariott Hotel ballroom in Pomona, California, I watched two women skeptically evaluate their McDonald’s lunches. One peered into a plastic bowl containing a salad of lettuce, bacon, chicken, cheese, and ranch dressing. The other arranged two chocolate chip cookies and a yogurt parfait on a napkin. “Eww,” she said, gingerly stirring the layers of yogurt and pink strawberry goop. The woman with the salad nodded in agreement, poking at a wan chicken strip with her plastic fork.

When I asked how they were liking their lunches, both women grimaced and assured me that they “never” go to McDonald’s. So why were they eating it today? Well, they didn’t really have a choice. The women were registered dietitians halfway through day two of the annual conference of the California Dietetic Association (CDA). They were hoping to rack up some of the continuing education credits they needed to maintain their certification. McDonald’s, the conference’s featured sponsor, was the sole provider of lunch. “I guess it’s good to know that they have healthier options now,” said the woman with the salad.

As I wandered the exhibition hall, I saw that McDonald’s wasn’t the only food company giving away freebies. Cheerful reps at the Hershey’s booth passed out miniature cartons of chocolate and strawberry milk. Butter Buds offered packets of fake butter crystals. The California Beef Council guy gave me a pamphlet on how to lose weight by eating steak. Amy’s Naturals had microwave brownies. The night before, Sizzler, California Pizza Kitchen, Boston Market, and other chain restaurants had hosted a free evening buffet for conference-goers: “Local Restaurant Samplings for Your Pleasure.”

And that wasn’t all. The sessions—the real meat and potatoes of the conference—had food industry sponsors as well. The Wheat Council hosted a presentation about how gluten intolerance was just a fad, not a real medical problem. The International Food Information Council—whose supporters include Coca-Cola, Hershey, Yum Brands, Kraft, and McDonald’s—presented a discussion in which the panelists assured audience members that genetically modified foods were safe and environmentally sustainable. In “Bringing Affordable Healthier Food to Communities,” Walmart spokespeople sang the praises of (what else?) Walmart.

After lunch, I attended “Sweeteners in Schools: Keeping Science First in a Controversial Discussion.” Sponsored by the Corn Refiners Association, whose members produce and sell high-fructose corn syrup, it included a panel composed of three of the trade group’s representatives. The panelists bemoaned some schools’ decision to remove chocolate milk from their cafeteria menus. Later, one panelist said that she’d been dismayed to learn that some schools had banned sugary treats from classroom Valentine’s Day parties, which “could be a teachable moment for kids about moderation.” The moderator nodded in agreement, and added, “The bottom line is that all sugars contain the same calories, so you can’t say that there is one ingredient causing the obesity crisis.” The claim was presented as fact, despite mounting scientific evidence that high-fructose corn syrup prompts more weight gain than other sugars.

The School Nutrition Association has asked Congress to lift the rule that students must take fruits and vegetables on the lunch line.

Later, I asked conference spokeswoman Pat Smith whether she thought it was fair to present such a one-sided discussion. She claimed that the sponsors did not influence any of the content in the program. “We like to think that our dietitians have a thought process and that we are presenting them with what is out there,” she said. “They need to make their own decisions on what they have listened to and apply that to their client base.”

“But it’s hard to make a decision if you’re only hearing one side of the story,” I countered.

She told me that she hadn’t known beforehand that the Corn Refiners panel would be composed entirely of its own representatives. And yet, when I asked her how the panel was chosen, she explained that it was approved by a committee. She also confirmed that the Corn Refiners had paid for the panel, but she declined to say how much. (She had previously declined me press credentials for the conference, explaining that the CDA would have its own journalists covering the event.)

With 75,000 members, the CDA’s parent organization, the national Academy of Nutrition and Dietetics (AND), is the world’s largest professional association for nutritionists and dietitians. It accredits undergraduate and graduate programs in nutrition science and awards credentials to dietitian degree candidates who pass its exam. In Washington, its lobbying arm is active on issues including childhood obesity, Medicare, and the farm bill.

It also has strong ties to the food industry. In 2013, Michele Simon, a public health lawyer and food politics blogger, launched an investigation (PDF) into the academy’s sponsorship policies. Simon found that its corporate support has increased dramatically over the past decade: In 2001, the academy listed just 10 sponsors. By 2011, there were 38, including Coca-Cola, PepsiCo, Nestlé, National Cattlemen’s Beef Association, Mars, and many others. Corporate contributions are its largest source of income, generating nearly 40 percent of its total revenue.

Simon also learned that in 2012, Nestlé paid $47,200 for its 2,500-square-foot display in the exhibition hall at the annual AND conference, and PepsiCo paid $38,000 for 1,600 square feet. The academy’s position papers, she noted, state that its sponsors do not influence its positions on controversial issues. And yet it often takes a pro-industry stance. When New York City was considering a ban on sales of oversized sodas, for example, the academy opposed it.

“No wonder Americans are overweight and diabetic. The gatekeepers for our information about food are getting their information from junk-food companies.”

AND is not the only powerful nutritionists’ group with strong corporate ties. The sponsors of the School Nutrition Association‘s 2013 annual conference included PepsiCo, Domino’s Pizza, and Sara Lee. SNA made headlines recently when it asked Congress to lift the rule that students must take fruits and vegetables on the lunch line, and to ease the rules around sodium and whole grains.

Marion Nestle, a New York University nutritionist, wrote about nutritionists and corporate sponsorships in her 2007 book, Food Politics: How the Food Industry Influences Nutrition and Health. “I worry a lot about food industry co-optation of my profession,” she wrote to me in an email. “Food companies are smart. They know that if they can make friends and help inform dietitians and nutritionists that the people they are supporting or helping will be reluctant to suggest eating less of their products.”

Andy Bellatti, a dietitian and member of AND, recalls his shock the first time he attended the organization’s national conference, in 2008. “I could get continuing education credits for literally sitting in a room and listening to Frito-Lay tell me that Sun Chips are a good way to meet my fiber needs,” he says. “I thought, ‘No wonder Americans are overweight and diabetic. The gatekeepers for our information about food are getting their information from junk-food companies.'”

(Read the full article at Mother Jones)

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Privacy, Tyranny

‘We Kill People Based on Metadata’

Michael Hayden, former director of the NSA and the CIA admits, “We kill people based on metadata.”

By David Cole
New York Review Of Books: May 10, 2014

Supporters of the National Security Agency inevitably defend its sweeping collection of phone and Internet records on the ground that it is only collecting so-called “metadata”—who you call, when you call, how long you talk. Since this does not include the actual content of the communications, the threat to privacy is said to be negligible. That argument is profoundly misleading.

Of course knowing the content of a call can be crucial to establishing a particular threat. But metadata alone can provide an extremely detailed picture of a person’s most intimate associations and interests, and it’s actually much easier as a technological matter to search huge amounts of metadata than to listen to millions of phone calls. As NSA General Counsel Stewart Baker has said, “metadata absolutely tells you everything about somebody’s life. If you have enough metadata, you don’t really need content.” When I quoted Baker at a recent debate at Johns Hopkins University, my opponent, General Michael Hayden, former director of the NSA and the CIA, called Baker’s comment “absolutely correct,” and raised him one, asserting, “We kill people based on metadata.”

It is precisely this power to collect our metadata that has prompted one of Congress’s most bipartisan initiatives in recent years. On May 7, the House Judiciary Committee voted 32-0 to adopt an amended form of the USA Freedom Act, a bill to rein in NSA spying on Americans, initially proposed by Democratic Senator Patrick Leahy and Republican Congressman James Sensenbrenner. On May 8, the House Intelligence Committee, which has until now opposed any real reform of the NSA, also unanimously approved the same bill. And the Obama administration has welcomed the development.

For some, no doubt, the very fact that this bill has attracted such broad bipartisan approval will be grounds for suspicion. After all, this is the same Congress that repeatedly reauthorized the 2001 USA Patriot Act, a law that was also proposed by Sensenbrenner and on which the bulk collection of metadata was said to rest—even if many members of Congress were not aware of how the NSA was using (or abusing) it. And this is the same administration that retained the NSA’s data collection program, inherited from its predecessor, as long as it was a secret, and only called for reform when the American people learned from the disclosures of NSA contractor Edward Snowden that the government was routinely collecting phone and Internet records on all of us. So, one might well ask, if Congress and the White House, Republicans and Democrats, liberals and conservatives, all now agree on reform, how meaningful can the reform be?

This is a reasonable question. This compromise bill addresses only one part of the NSA’s surveillance activities, and does not do nearly enough to address the many other privacy-invasive practices that we now know the NSA has undertaken. But it’s nonetheless an important first step, and would introduce several crucial reforms affecting all Americans.

First, and most importantly, it would significantly limit the collection of phone metadata and other “business records.” Until now, the NSA and the Foreign Intelligence Surveillance Court have aggressively interpreted a USA Patriot Act provision that authorized collection of business records “relevant” to a counterterrorism investigation. The NSA convinced the court that because it might be useful in the future to search through anyone’s calling history to see if that person had been in contact with a suspected terrorist, the agency should be able to collect everyone’s records and store them for five years.

The NSA has said it only searched its vast database of our calling records when it had reasonable suspicion that a phone number was connected to terrorism. But it did not have to demonstrate the basis for this suspicion to a judge. Moreover, it was authorized to collect data on all callers one, two, or three steps removed from the suspect number—an authority that can quickly generate more than one million phone numbers of innocent Americans from a single suspect source number. The fact that you may have called someone (say, your aunt) who in turn called someone (say, the Pizza Hut delivery guy) who was in turn once called by a suspected terrorist says nothing about whether you’ve engaged in wrongdoing. But it will land you in the NSA’s database of suspected terrorist contacts.

Under the USA Freedom Act, the NSA would be prohibited from collecting phone and Internet data en masse. Instead, such records would remain with the telephone and Internet companies, and the NSA would only be authorized to approach those companies on an individual, case-by-case basis, and only when it could first satisfy the Foreign Intelligence Surveillance Court that there is reasonable suspicion that a particular person, entity, or account is linked to an international terrorist or a representative of a foreign government or political organization. This is much closer to the specific kind of suspicion that the Fourth Amendment generally requires for intrusions on privacy. At that point, the court could order phone companies to produce phone calling records of all numbers that communicated with the suspect number (the first “hop”), as well as all numbers with which those numbers in turn communicated (the second “hop”).

Further restrictions are necessary. Through these authorized searches the NSA would still be able to collect large amounts of metadata on persons whose only “sin” was that they called or were called by someone who called or was called by a suspected terrorist or foreign agent. At a minimum, “back-end” limits on how the NSA searches its storehouse of phone numbers are still needed. But the bill would at least end the practice of collecting everyone’s calling records.

Second, the new House bill imposes similar limits on other USA Patriot Act provisions that were susceptible to being used, or had been used, to authorize collection of data in bulk. These include a provision empowering the government to obtain information by “national security letters,” a kind of administrative subpoena issued without judicial oversight, and “pen registers,” which intercept Internet and phone trafficking data. All of these powers would now be limited by the same requirement that the government seek case-by-case warrants based on suspicion about a particular person or group. The point is to end bulk collection of data across the board, and return the agency to the more targeted searches and inquiries that US laws have historically deemed reasonable.

Third, the bill would establish a panel of legal experts, appointed by the presiding judges of the Foreign Intelligence Surveillance Court, who would participate in proceedings before the court when it addresses “a novel or significant interpretation of law,” and in any other proceedings at the court’s discretion. They would appear as amicus curiae, or “friends of the court,” but their purpose would be to add an independent assessment of the legal issues involved, ensuring that the court is not hearing only from the government. Such a panel would increase the likelihood that difficult legal issues get a full and fair consideration, and would likely shore up the public legitimacy of the secret court, which as of now is dismissed by many, rightly or wrongly, as a “rubber stamp.”

Finally, the bill contains a number of measures designed to increase transparency and oversight. It would require the attorney general to request the declassification of opinions of the FISA court, permit private Internet and telephone companies to report semiannually on the volume of records they were required to produce, and require the Inspectors General of the Justice Department and the Intelligence Community to report on the numbers of records requested and the effectiveness of the program. Had Verizon been permitted to report, for example, that it was being compelled to turn over hundreds of millions of phone records on its customers to the NSA, and had the Inspector General informed us that the program had stopped not a single terrorist act, it is likely that bulk collection would have been cut short long ago.

Even with all these reforms, however, the USA Freedom Act only skims the surface. It does not address, for example, the NSA’s guerilla-like tactics of inserting vulnerabilities into computer software and drivers, to be exploited later to surreptitiously intercept private communications. It also focuses exclusively on reining in the NSA’s direct spying on Americans. As Snowden’s disclosures have shown, the NSA collects far more private information on foreigners—including the content as well as the metadata of e-mails, online chats, social media, and phone calls—than on US citizens.

The FISA Amendments Act of 2008 permits the NSA to intercept the content of communications when it can demonstrate nothing more than reason to believe that its targets are foreign nationals living abroad, and that the information might relate to “foreign intelligence.” “Foreign intelligence” is in turn defined to include any information that might inform our foreign affairs, which is no restriction at all. Under this authority, the NSA established the PRISM program, which collects both content and metadata from e-mail, Internet, and phone communications by millions of users worldwide. It is probably under this authority that, according to The Washington Post, the NSA is recording “every single” phone call from a particular, unnamed country. Documents leaked by Snowden demonstrate that the NSA also collects, again by the millions and billions, foreign nationals’ e-mail contact lists, cell phone location data, and texts. This is the very definition of dragnet surveillance.

Congress is far less motivated to do anything about the NSA’s abuse of the rights of foreign nationals. They are “them,” not “us.” They don’t vote. But they have human rights, too; the right to privacy, recognized in the International Covenant on Civil and Political Rights, which the US has signed and ratified, does not limit protections to Americans. Snowden’s revelations have justifiably led to protests from many of our closest allies; they don’t want their privacy invaded by the NSA any more than we do, and they have more to complain about than we do, as they have suffered far greater intrusions.

In the Internet era, it is increasingly common that everyone’s communications cross national boundaries. That makes all of us vulnerable, for when the government collects data in bulk from people it believes are foreign nationals, it is almost certain to sweep up lots of communications in which Americans are involved. The initial version of the USA Freedom Act accordingly sought to limit the NSA’s ability to conduct so-called “back door” searches of content collected from foreigners for communications with Americans citizens. But that provision was stripped in committee, leaving the back door wide open.

(Read the full article at New York Review Of Books)

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Drugs

There is no “war on drugs” in Mexico, the government is part of the cartels

Award winning investigative journalist Anabel Hernández explains that you can’t say that there’s a “war on drugs” in Mexico, since the government is part of the drug cartels. The cartels control many areas of the government, and many areas of the country, and the government just pretends to fight them.

As Drug Cartels Threaten Her Life, Mexico’s Most Dangerous Journalist Uncovers More Dark Truths

Nick Alexandrov
Substance: May 12, 2014

The Mexican investigative journalist Anabel Hernández is recognized worldwide as one of the most important reporters on the War on Drugs. Over two decades, she has received numerous awards for her work, including the 2012 Golden Pen of Freedom Award from the World Association of Newspapers and News Publishers. And just over a week ago, Reporters Without Borders placed Hernández on its list of “100 Information Heroes,” created to pay tribute to “the courage of the journalists and bloggers who constantly sacrifice their safety and sometimes their lives to their vocation.”

Hernández’s life has been at risk since she published Los Señores del Narco in 2010. The book—released in English last fall as Narcoland—breaks with conventional narratives of the “drug war,” which pit the Mexican government against drug traffickers. With unprecedented access to sources and tireless study of documents, Hernández instead makes the ironclad case that the war is a sham, its aims “limited to protecting the Sinaloa cartel.” The book exposes the intricate ties between Mexico’s leading drug traffickers and the leadership of the Mexican state. Published in 2010 to explosive effect, Narcoland remains one of the most widely read books in Mexico.

Since 2011, Hernández and her family have been the target of an escalating series of violent assaults. She has found decapitated animals on her doorstep. Gunmen attacked a family gathering. Last December about a dozen unidentified men armed with AK-47s invaded her house in Mexico City, terrorizing neighbors and injuring one of her bodyguards. She was lucky not to be home then, but the threats against Mexican journalists are deadly serious: Scores have been killed with impunity since 2000. Hernández’s courage, and her deep understanding—the product of years of relentless reporting—of the “drug war,” make hers an essential voice, one we ignore at our peril.

Nick Alexandrov: How did you begin covering the drug cartels?

Anabel Hernández: I’ve been a journalist since 1993, when the newspaper Reforma was founded in Mexico. Back then, Reforma didn’t hire experienced journalists, but journalism students, who were trained to become the kind of reporters Reforma needed. In 2000, when my father was kidnapped and killed [and the police refused to investigate unless the family paid them], my views on everything changed, and I started to investigate corruption in Mexico. The first case I discovered is known as “towelgate” [involving illegal use of funds for redecorating Fox’s houses], which occurred when Vicente Fox was president. Investigating that kind of common corruption eventually led me to the drug cartels.

For example, in 2005, a woman who’d worked for UNICEF told me that in an area called the “Golden Triangle,” between Sinaloa, Chihuahua and Durango, children were being forced to work in marijuana and poppy fields. So I went there. I was in Guadalupe y Calvo—a little town in the middle of the “Golden Triangle”—and that was the moment when I started to investigate drug trafficking. When I saw the fields, and how these people live—this little part of the biggest chain—I wanted to find out, What is happening here?

In 2000, when my father was kidnapped and killed [and the police refused to investigate unless the family paid them], my views on everything changed, and I started to investigate common corruption in Mexico. That led me to the drug cartels.

The conflict is often described as a battle between the Mexican government and the drug cartels. How do you understand that relationship? Is there a “drug war” in Mexico?

There is no “drug war.” I have been investigating the drug cartels for almost 10 years. I have access to a great deal of information—documents, court files, testimonies of members of the Mexican and US governments—and I can tell you that in Mexico there has never, never been a “war on drugs.” The government, from the mid-1970s until today, has been involved with the drug cartels.

First, the federal government tried to control the drug business, and was successful in doing so for several years. In Mexico, the early drug gangs were small, and given the freedom to operate. For many farmers, that was their job for generations. The gangs had to pay government officials, who would grant the smugglers permission to continue operating. And the federal police protected these gangs, and even helped them traffic drugs, to be sure the drugs would get to the US and not stay in Mexico. Meanwhile, the government tried to impose conditions on the traffickers, insisting that they not resort to violence.

But what I found after reviewing US congressional documents is that, starting in the late 1970s—and particularly by the time of the Iran-Contra scandal—the CIA helped connect Mexico’s small gangs with the big Colombian cartels. Mexico started to be a huge hub for trafficking between Colombia and the US. The Colombians arrived in Mexico, and used the Mexican gangs’ routes, which had previously been used for marijuana and poppies, to traffic cocaine.

When these Mexican gangs started trafficking cocaine, they became powerful, and their relationship with the Mexican government started to change. That was when the drug cartels formed, and these cartels were soon bribing mayors of little cities, governors, members of Congress.

So you can’t say that there’s a “war on drugs” in Mexico, since the government is part of the drug cartels. The cartels control many areas of the government, and many areas of the country, and the government just pretends to fight them.

Consider the case of El Chapo Guzmán [the head of the Sinaloa Cartel who was reportedly captured in the city of Mazatlán by Mexican marines in February]. I have documents showing that the authorities always knew where he was, all his different addresses, and they protected him—always! So it’s impossible for me to believe the official version of how El Chapo was captured. The government claimed, “Oh, Chapo was hiding at such-and-such an address,” but really the authorities, since 2007, had information about his properties.

There has never, never been a “war on drugs” in Mexico. The cartels control many areas of the government, and many areas of the country, and the government just pretends to fight them.

In Narcoland, you explain how a number of prominent drug traffickers in the past seem to have faked their own death in order to retire from organized crime. You also write that El Chapo “will quit when he feels like it, not when the authorities choose.” What’s your understanding of El Chapo’s alleged capture?

I’ve read many of the articles about that event, and mainly they give the official version, based on information provided by the Mexican and US governments–the DEA, for example. Meanwhile, in Chicago there are documents that prove connections between the Sinaloa Cartel and the DEA. So for me, it’s difficult to believe the official story, since I’ve been investigating these issues for years.

For example, on February 22, 2013, Mexican TV news networks, as well as the Guatemalan government, claimed that El Chapo had been killed in Guatemala. I immediately thought, “It cannot be possible!” But I decided to call one of my sources to check. When I asked him what he thought, he just started laughing, and asked me if I thought the cartel boss could be in Mexico and Guatemala at the same time.

It’s also impossible to believe that El Chapo was alone in Mazatlán. He could not even have been in Mazatlán, because Mazatlán is not a territory of the Sinaloa Cartel. It is a territory of the enemies of El Chapo Guzmán.

I also know that he was supposed to have three circles of security guards—circles of security guards. So there’s just one way in which the official story could be true, and that’s if El Chapo were betrayed by El Mayo Zambada [a fellow Sinaloa leader]. That would mean there’s a war going on within the Sinaloa Cartel—but right now there isn’t such a war. El Chapo wasn’t an insect. He was a really, really powerful man. Sinaloa is still the most important cartel. But even if El Chapo Guzmán has been captured and put in jail in the way the official version claims, it doesn’t mean anything, because the ties between the government and the Sinaloa Cartel are still there.

It’s impossible to believe that El Chapo was alone in Mazatlán. He could not even have been in Mazatlán, because Mazatlán is not a territory of the Sinaloa Cartel. It is a territory of the enemies of El Chapo Guzmán.

What is the situation like for reporters in Mexico? And what has your life been like since you started covering the cartels?

What’s happening to journalists in Mexico is terrible. More than 80 journalists have been murdered in the last 10 years. And no one is in jail for that—no one. The impunity is the main reason why journalists are still being killed. At the end of the day the government is essentially granting criminals permission to kill the journalists, which leaves us in a very insecure situation.

Since Vicente Fox was president, the federal government has started to create institutions that pretend—pretend—to take care of journalists. But these institutions don’t work. They have money, they have people, but they don’t work because the government doesn’t want them to work.

The president wouldn’t care if 100 journalists were killed tomorrow. Mexico is often thought of as a democracy, but really the government is very authoritarian. It doesn’t want transparency, it doesn’t want to be held accountable, and it doesn’t like uncomfortable questions. And that’s why the government wants to let these murders continue. And many things the government is saying to the international community—that it’s working to protect journalists and so on—are not true.

But the biggest problem isn’t that journalists are being attacked. The biggest problem is that people cannot get information. So right now you see many areas in Mexico where the media doesn’t want to inform people what is happening, and where the public doesn’t have the information necessary to make important decisions—like which politicians are corrupt and involved with the drug cartels, and which congressman or candidate is not. Without information, the public cannot make decisions. And now, in Mexico, we have black times.

President Vicente Fox wouldn’t care if 100 journalists were killed tomorrow. The Mexican government doesn’t want transparency, it doesn’t want to be held accountable, and it doesn’t like uncomfortable questions.

(Read the full interview at Substance)

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Banksters, Corporate Welfare

SEC Official Claims Over 50% Of Private Equity Audits Reveal Criminal Behavior

Mike Krieger
Liberty Blitzkrieg: May 12, 2014

Last week, Yves Smith of Naked Capitalism penned a fantastic piece leveraging a talk by SEC official Drew Bowden. Mr. Bowden heads the SEC’s examinations unit, and at a private equity conference he explained that “more than 50 percent of private equity firms it has audited have engaged in serious infractions of securities laws.” What is so incredible about the talk, is that while Bowden goes into details of shady practice after shady practice, he ultimately admits that the SEC isn’t being particularly aggressive with the private equity industry because “we believe that most people in the industry are trying to do the right thing, to help their clients, to grow their business, and to provide for their owners and employees.”

Yes, go ahead and read that again. The industry regulator is assuming that private equity firms are trying to do the right thing, despite the fact that audits demonstrated to a tune of greater than 50% the opposite to be true.

Private equity managers are some of the savviest people in finance and they know exactly what they are doing. What the SEC is basically admitting, is that private equity firms are also “too big to regulate” and, of course, “too big to jail.” After all, every single person at the SEC is likely angling for a big payday at a PE firm via the revolving door. Of course they aren’t going to regulate.

Meanwhile, if you are just an average citizen, you will be prosecuted to the fullest extent of the law if you commit even the most minor infraction. This sort of behavior led to the death of prodigy Aaron Swartz, the incarceration of political prisoner Barrett Brown, a swat team raid on a young kid in Peroia, Illinois for a parody Twitter account, the firing of a constriction worker for not paying for a $0.89 soda refill. This list goes on and on. Yet private equity crimes, which likely run into the billions collectively, are treated with kid gloves. As I have maintained many times before, this is how the social fabric of a society dies.

From Naked Capitalism:

At a private equity conference this week, Drew Bowden, a senior SEC official, told private equity fund managers and their investors in considerable detail about how the agency had found widespread stealing and other serious infractions in its audits of private equity firms.

In the years that I’ve been reading speeches from regulators, I’ve never seen anything remotely like Bowden’s talk. I’ve embedded it at the end of this post and strongly encourage you to read it in full.

Despite the at times disconcertingly polite tone, the SEC has now announced that more than 50 percent of private equity firms it has audited have engaged in serious infractions of securities laws. These abuses were detected thanks to to Dodd Frank. Private equity general partners had been unregulated until early 2012, when they were required to SEC regulation as investment advisers.

Bowden heads the SEC’s examinations unit, and his rap sheet was based on his two years of experience in auditing private equity firms. As bad as embezzlement and other sharp practices are, at least as troubling is the revelation that the limited partners have been derelict in their duties. They’ve agreed to terms in their relationship with the general partners to make it easy for the general partners to abuse the investors. The general partners can steal from their limited partners because the limited partners are asleep. The LPs have failed to negotiate for contractual protections when they have the most leverage, prior to investing, and they’ve been unwilling or unable to monitor their investments effectively once they’ve handed over their money. Note that the industry was warned about this possible outcome; it corresponds to the worst scenario, ” A Broken Industry,” in a 2011 paper by Harvard Business School professor Josh Lerner.

Bowden pointed out that private equity is unique among the investment advisers the SEC supervises. The general partners’ control of portfolio companies gives them access to their cash flows, which the GPs can divert into their own pockets in numerous ways.

He went on to describe some of the common fee skimming models. For example:

Some of the most common deficiencies we see in private equity in the area of fees and expenses occur in firm’s use of consultants, also known as “Operating Partners,” whom advisers promote as providing their portfolio companies with consulting services or other assistance that the portfolio companies could not independently afford.

Here’s how this scam works. PE firms raise funds by showing prospective investors a strong team of professionals who are going to find attractive companies to buy and manage them. The limited partnership agreement, which is the contract between the private equity firm and the investors, typically says that the private equity firm has to pay for the wages of people working on the fund’s behalf. However, unbeknownst to the investors because it was never disclosed, part of the PE firm “team”, usually the members that work with portfolio companies, are actually being paid as independent contractors. The private equity firm then bills most or all of these sham independent consultants to the portfolio companies with whom they interact.

Most troubling of all is that we have reports from industry insiders that Bowden failed to mention the most egregious forms of stealing, which may cost investors billions of dollars annually. As we understand it, the SEC is on to a couple of large-scale scams perpetrated by some of the biggest firms.

The SEC may be pulling its punches because it may be uncertain about what to do with the rot it has found. Side by side with the the unprecedented, detailed litany of numerous forms of lawbreaking and bad conduct, Bowden was also peculiarly deferential, which gave his speech a schizophrenic feel. For instance:

Some questioned why we would show our hand in this way, to which there’s a simple and sensible answer. We believe that most people in the industry are trying to do the right thing, to help their clients, to grow their business, and to provide for their owners and employees. We therefore believe that we can most effectively fulfill our mission to promote compliance by sharing as much information as we can with the industry, knowing that people will use it to measure their firms and to self-correct where necessary. Put another way, we are not engaged in a game of “gotcha.”

So you see, an average citizen gets locked up for life, yet a private equity partner is given the benefit of the doubt and, at worst, asked politely to change behavior by the SEC.

State legislators need to understand what is going on here. They have granted public pension funds and public endowments across the U.S. the exorbitant privilege of secrecy in private equity investing, even to the point of making these contracts virtually the only ones that are exempt from state-level Freedom of Information Act laws.

(read the full article at Liberty Blitzkrieg, Full article from Naked Capitalism can and should be read here.)

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Privacy

Canada actively spies for NSA

American spy agency gave Ottawa at least $325,000, says journalist linked to whistleblower Edward Snowden.

Canada actively spies for NSA, Glenn Greenwald claims in new book

By Peter Edwards
The Star : May 13, 2014

Canada spies for the U.S. National Security Agency (NSA) and covers up its surveillance with widespread lies and obfuscation, according to a newly released book by American journalist Glenn Greenwald.

Greenwald received leaked highly classified NSA documents from Edward Snowden, a former NSA worker now in exile in Russia.

“Canada is also a very active partner with the NSA and an energetic surveillance force in its own right,” Greenwald writes in No Place to Hide: Edward Snowden, the NSA, and the U.S. Surveillance State.

Greenwald, who has received thousands of leaked NSA documents from Snowden, writes that electronic surveillance began under the presidency of George W. Bush and has accelerated in the Obama regime.

Greenwald writes that Communications Security Establishment Canada boasted of targeting the Brazilian Ministry of Mines and Energy, and accuses the NSA of massive surveillance of its own citizens.

“The hacking practice is quite widespread in its own right: one NSA document indicates that the agency had succeeded in infecting at least fifty thousand individual computers with a type of malware called Quantum insertion,” writes Greenwald, a member of the team from The Guardian which, along with The Washington Post, were awarded the 2014 Pulitzer Prize in public service.

Quoting from a top secret April 2013 NSA information paper, Greenwald writes: “There is evidence of widespread CSEC/NSA co-operation, including Canada’s efforts to set up spying posts for communications surveillance around the world at the behest and for the benefit of the NSA, and spying on trading partners targeted by the U.S. agency.”

Drawing from his access to Snowden and his leaked documents, Greenwald describes Canada on the top tier of co-operation with the NSA, along with Australia, New Zealand and the United Kingdom.

He writes that “the NSA often maintains these partnerships by paying its partner to develop certain technologies and engage in surveillance, and can thus direct how the spying is carried out. The Fiscal Year 2012 ‘Foreign Partner Review’ reveals numerous countries that have received such payment, including Canada, Israel, Japan, Jordan, Pakistan, Taiwan and Thailand.”

In 2012, Canada took at least $325,000 in research money, placing it fourth among co-operating countries, behind Pakistan, Jordan and Ethiopia, Greenwald writes.

(read the full article at The Star)

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Privacy

Police could see tax info without warrant under proposed law

Paul Mcleod
The Chronicle Herald: May 12, 2014

Police would be able to see Canadians’ private tax information without the use of a warrant under a proposed government law.

If it’s passed, the Canada Revenue Agency could voluntarily hand over a taxpayer’s data to police and the citizen would never be notified.

The change is proposed in the Conservatives’ 375-page omnibus budget bill through a clause that amends the Income Tax Act.

Under Bill C-31, police could see such information if there were reasonable grounds to believe a serious crime had been committed. But neither the police nor the revenue agency would have to make a case to a judge.

Instead, revenue agency staff would decide whether they should hand over the information.

It’s a major reversal of the current principle that the agency cannot share tax data with third parties except in very rare exceptions.

“Without telling anybody, any person who works at CRA could on their own decide to share information,” Stephane Eljarrat, partner at Montreal law firm Davies Ward Phillips & Vineberg, said in an interview Monday.

Eljarrat warned the House of Commons finance committee last week that there needs to be judicial oversight of disclosure. Determining reasonable grounds of a crime is not the specialty or the job of a tax agency, he said.

“The CRA’s mandate is to collect taxes, it’s not to investigate crimes,” he said.

“To protect everybody, it should be done through a judge.”

If Canadians suspect their tax returns will be used against them, they may start hiding income, he told the committee.

(read the full article at The Chronicle Herald)

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Health/Environment

Pesticides suspected in spike of illnesses in Washington state

Laura Zuckerman
Reuters: May 12, 2014

Pesticides may be linked to a spike in cases involving breathing difficulties and skin rashes in central Washington state, health officials said on Monday.

Washington health department spokeswoman Kelly Stowe said the illnesses could be tied to 15 separate incidents of spraying pesticides in commercial orchards. Roughly 60 people have been sickened in the agricultural region since March, including agricultural workers, neighbors to orchards and a utility crew working near fruit farms.

At least eight people sought emergency medical treatment for symptoms that included nausea, vomiting and headaches, Stowe said.

The majority of pesticides used by commercial orchards are strictly regulated by state and federal environmental and agricultural agencies, which prohibit applications that cause exposure to humans, either directly or in so-called drift events, when pesticides drift from the intended targets, said Washington State Health Officer Kathy Lofy.

“We’re concerned with this spike in potential drift exposures (and) protecting people from unnecessary exposure to these chemicals is a responsibility that needs to be taken very seriously,” Lofy said in a statement.

(read the full article at Yahoo)

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Tyranny

Robocall probe didn’t contact Winnipeg riding

Stephen Maher
Canada.com: May 12, 2014

Investigators did not speak to the company that placed Conservative get-out-the-vote calls in Winnipeg South Centre, the riding with the second largest number of complaints of deceptive calls in the last election.

Elections Canada issued a report last month after a two-year, $650,000 investigation into reports of dirty political calls across Canada, finding no evidence of “a conspiracy or conspiracies to interfere with the voting process.”

Investigators sorted through complaints from 1,726 voters in 261 ridings. The largest number, 379, were from Guelph, site of the “Pierre Poutine” robocall.

The riding with the second highest number of complaints, 34, was Winnipeg South Centre, where Conservative Joyce Bateman beat Liberal incumbent Anita Neville by 722 votes.

But investigators have never contacted Fabio Esposito, the owner of Dimark Research Inc., the non-partisan Winnipeg company that did the calling for Bateman.

“We have the list of people that we called so if they had the phone numbers of the complaints we could run the numbers,” he said.

Dimark did not tell people their polling stations had moved, Esposito said.

Neville says many voters told her they received misdirection calls, but investigators did not contact her. “I think there was some effort to divert voters in this riding,” she said. “Whether what they did made any difference in the result, I doubt.”

The report provides no details about Winnipeg South Centre, and Elections Canada has declined to provide more information.

Conservatives have hailed the report as proof they did nothing wrong in the last election, but critics are raising questions about the thoroughness of the investigation:

– The agency found no evidence of law-breaking because there was “no discernible pattern of misdirection,” such as a “constellation of predominant calling numbers.”

Simon Rowland, an expert on telephone systems, and a former NDP candidate, who helped Elections Canada investigate the Guelph robocall, says investigators should have realized dialling companies can punch in different numbers.

“For some reason they … didn’t think it was possible to have a central fraud without this,” he said. “This does not follow logically.”

– The report finds that the number most often reported with suspect calls — with 13 complaints — was a number linked to credit-card “phishing” scams, probably a North Dakota number linked to fake Liberal calls.

Rowland says that “would suggest that the company that sent out the call is the exact kind of criminal who would send out a fraud call.”

– Of the 1,726 complainants, 273 didn’t know their phone service provider, so Elections Canada didn’t seek their phone records although there are websites that allow that information to be looked up.

– Investigators did not look into the partisan affiliation of those who received misdirection calls.

They listened to recordings of 126 calls cited by complainants, of which only 61 included a poll location. Of those, more than half — 34 — directed voters to the wrong place.

Investigators also listened to 1,000 randomly selected recordings of Conservative calls. One per cent — 10 calls — were found to misdirect voters.

Sources say the party made millions of calls during the campaign. If one per cent of those calls sent voters to the wrong polling station, tens of thousands of voters were misdirected.

Pollster Frank Graves, who did a random sample of voters in a related federal court case, says investigators should have checked the Conservatives’ CIMS database to see how the recipients were identified. His survey results, which were attacked by the Conservatives, showed opposition supporters received more misdirection calls.

Without knowing who got the calls, the report is meaningless, he said.

If the Conservatives mistakenly called a small number of incorrectly identified opposition supporters, then the calls could be a mistake. If a significant number of opposition supporters received them, then it would not be a mistake, Graves said.

(read the full article at Canada.com)

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Geopolitics/War

What Does The US Government Want in Ukraine?

Ron Paul : May 11, 2014

In several eastern Ukrainian towns over the past week, the military opened fire on its own citizens. Dozens may have been killed in the violence. Although the US government generally condemns a country’s use of military force against its own population, especially if they are unarmed protesters, this time the US administration blamed the victims. After as many as 20 unarmed protesters were killed on the May 9th holiday in Ukraine, the State Department spokesman said “we condemn the outbreak of violence caused by pro-Russia separatists.”

Why are people protesting in eastern Ukraine? Because they do not believe the government that came to power after the US-backed uprising in February is legitimate. They do not recognize the authority of an unelected president and prime minister. The US sees this as a Russian-sponsored destabilization effort, but is it so hard to understand that the people in Ukraine may be annoyed with the US and EU for their involvement in regime change in their country? Would we be so willing to accept an unelected government in Washington put in place with the backing of the Chinese and Iranians?

The US State Department provided much assistance earlier this year to those involved in the effort to overthrow the Ukrainian government. The US warned the Ukrainian government at the time not to take any action against those in the streets, even as they engaged in violence and occupied government buildings. But now that those former protesters have come to power, the US takes a different view of protest. Now they give full support to the bloody crackdown against protesters in the east. The State Department spokesperson said last week: “We continue to call for groups who have jeopardized public order by taking up arms and seizing public buildings in violation of Ukrainian law to disarm and leave the buildings they have seized.” This is the opposite of what they said in February. Do they think the rest of the world does not see this hypocrisy?

The residents of eastern Ukraine have long been closer to Russia than to the US and EU. In fact, that part of Ukraine had been a part of Russia. After February’s regime change, officials in the east announced that they would hold referendums to see whether the population wanted autonomy from the US-backed government in Kiev. The US demanded that Russian President Putin stop eastern Ukraine from voting on autonomy, and last week the Russian president did just that: he said that the vote should not be held as scheduled. The eastern Ukrainians ignored him and said they would hold the vote anyway. So much for the US claims that Russia controls the opposition in Ukraine.

Even though the Russian president followed US demands and urged the eastern Ukrainians to hold off on the vote, the US State Department announced that the US would apply additional sanctions on Russia if the vote is held! Does this make any sense?

The real question is why the US government is involved in Ukraine in the first place. We are broke. We cannot even afford to fix our own economy. Yet we want to run Ukraine? Does it really matter who Ukrainians elect to represent them? Is it really a national security matter worth risking a nuclear war with Russia whether Ukraine votes for more regional autonomy and a weaker central government? Isn’t that how the United States was originally conceived?

(Read the full article at Ron Paul Institute for Peace & Prosperity )

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