A disturbing pattern

I’ve been surprised at the lack of uproar over the discovery that the CIA has been data mining SWIFT transfer archives. I suppose it’s because this is far from the first troubling secret breech of the right to privacy by the Bush administration, and most people – the ones that don’t have large sums of money – generally don’t have any banking privacy anyway. But this new secret program touches a core Bush constituency: white-collar criminals. If Bush is able to secretly monitor transactions in the name of anti-terrorism, a future Democratic government might be able to use it against money laundering and accounting fraud. That’s surely something the Republican Party could never stand for.

SWIFT is headquartered in Belgium, but operates computer centres both in the US and the EU, so the company probably was not in a position to refuse the government’s request. According to page 4 of the original NY Times article: “Intelligence officials were so eager to use the Swift data that they discussed having the C.I.A. covertly gain access to the system, several officials involved in the talks said.” If they were prepared to break in to get the data, there was little to be gained by the firm taking a stand.

But I note in today’s Le Monde something about this affair that I find troubling.

Le conseil d’administration de Swift a été mis au courant de l’accord secret, précise le New York Times, ainsi que les banques centrales du G10 (Canada, Allemagne, France, Italie, Japon, Pays-Bas, Suède, Suisse, Angleterre, Etats-Unis, ainsi que la Banque centrale européenne).

Interrogée vendredi après-midi par Le Monde.fr, la Banque nationale de Belgique confirme qu’elle a été mise au courant de l’accord passé par les services américains avec Swift. Cependant, une position officielle n’a pas été arrêtée. La BNB dirige la supervision des activités de Swift par les banques centrales du G10. Elle justifie le fait de n’avoir pas signalé le programme secret aux autorités, estimant qu’il n’y avait pas de risque légal en Belgique. […] La BNB pense que son image ne devrait pas être mise en cause dans cette affaire, car sa mission de supervision se borne à vérifier la stabilité des marchés, pas à “s’immiscer” dans les accords passés par la direction de Swift.

SWIFT’s board of directors was informed of this secret agreement [with American authorities to grant access to transaction databases], according to the New York Times, as were the central banks of the G10 (Canada, Germany, France, Italy, Japan, the Netherlands, Sweden, Switzerland, the UK, the US, and the European Central Bank).

Asked for comment Friday afternoon by LeMonde.fr, the Belgian National Bank confirmed that it had been informed of the agreement between SWIFT and American intelligence services. However, no official position had been taken on it. The BNB is in charge of the G10’s central banks’ oversight of SWIFT’s activities. It has defended its decision not to inform authorities on the grounds that it did not believe the program had any legal consequences in Belgium. […] The BNB does not believe its reputation should be tarnished in this affair because its responsibility is limited to ensuring market stability, not “interfering” in agreements made by SWIFT’s board.

As with rendition and secret prisons, it looks like the US has once again undertaken an action in the so-called “war on terrorism” that undermines rule of law and has an international scope, and in doing so has informed European authorities at some level. But for some reason, those same European authorities agree to keep the secret, and we only find out when the NY Times or the Washington Post finally breaks the story.

That is unacceptable. The rights of Europeans are being violated by the American government with at least the partial consent of elements of their own governments. “Not my legal responsibility” is not a shield against complicity. We’re used to allegations of secrecy and poor accountability in the EU government, but it seems that EU national governments are not a whole lot better.

31 thoughts on “A disturbing pattern

  1. “a core Bush constituency: white-collar criminals.”

    It might be true that most white-collar criminals voted for Bush.
    But your claim is exactly the reverse. Namely that a signigficant percentage of Bush-voters (that’s what the term “core constituency” implies) are criminals.

    This surely raises Bush-bashing to new dimensions.
    Don’t you agree this claim is rather rich?

    Anyway:
    One reason why there wasn’t a public outcry might be that authorities spying on private bank accounts is so common in Europe.
    For instance, Germany now has a law allowing the police to get information on every German bank account without a search warrant (or for that matter: without any suspicion of an actual crime).

  2. No, Florian, “core constituency ” means “important constituency”, not “largest constituency”. I was slagging Bush’s financial backers.

  3. Silence should not be confused with consent. For the same reason that all 20 sources for the New York Times article opted for anonymity, all other bankers in international markets did the same or chose “no comment” when approached by the media today (including this one).

    Besides, most senior bankers in bank secrecy jurisdictions will have been busy today, locked up with their lawyers, figuring out whether it is now illegal for them to continue using SWIFT in the knowledge that messages over SWIFT no longer protect client confidentiality as required by domestic laws. They may also have been dusting off telex machines and fax machines as a possible means of circumventing SWIFT as needed.

  4. Oh, I understand why once a story breaks, people respond with “no comment”. What I want to understand is why ten central banks were informed and not one balked enough to tell the elected officials of the governments they’re supposed to be working for, or if one of them did, why did their government take no action?

  5. I note that the SWIFT press release does not say WHEN the Board of Directors and G-10 supervisors were informed of the programme. If Lenny Schrank was doing this off his own bat in his “executive discretion” – matching the “executive supeonas” of the Bush administration for lack of judicial approval or oversight – then the board and supervisors may only have learned of the programme as a damage control measure once the NYT got hold of the story. I’m sure we will be picking up rumours of this in wine bars for weeks to come as the facts are chewed over and digested.

  6. I was slagging Bush’s financial backers.

    Firstly, they are subject to US laws on money laundering anyway. Secondly, getting a court to accept this stuff as admissible evidence might be interesting.
    On the other hand, a repeat of 9/11 would have been very bad for the economy.

    And you are of course right that Europe is letting the US do what it cannot admit to itself to be necessary. Furthermore, before you complain about US practices it would be appropriate to look at the power of eg. French special investigating judges.

  7. Well, I am outraged. As a EU citizen from a country which apparenttly was not even informed, I feel violated and furious. The people who are giving away my banking data to Bush’s goons should be facing a court of law and fined or even imprisoned, as far as I am concerned. All this appeasement has to stop.

  8. All this appeasement has to stop

    An interesting choice of words. What makes you think it needed a threat to make the EU give in? Wouldn’t it have been easy to leak the story?

  9. Inacceptable.

    I’m really furious at my government. The nice idea they could be better, dispelled.

    I need a drink.

  10. Typical liberal tripe. The so-called war on terror is real. The Bush administration should be able to take advantage of all existing technologies to fight this war. Thank God there are still some in Europe who agree with this and are will to assist us.

  11. The real scandal is that they did it for terrorism but said it was used for no other purposes.

    What?!?

    This was a serious infringement into civil rights. One could have legitimate doubts whether this is appropriate even in the interest of national security. On the other hand a lot of people died in Madrid. There is a real threat.

    But any such material sized for national security must never, ever be used for anything else. That would be a blatant abuse of emergency powers. Any politican suggesting that should be impeached.

    Criminal prosecutors must use the ordinary channels.

  12. But any such material sized for national security must never, ever be used for anything else. That would be a blatant abuse of emergency powers. Any politician suggesting that should be impeached.

    The problem isn’t with politicians “suggesting” this in public — that’s an ordinary and legitimate part of legislation: put it before the public, change the law to fit the new perceived circumstances. If the public and its elected officials decide that banking privacy shouldn’t exist, so be it.

    The problem is with governments and governmental agencies that do this stuff in secret without the knowledge of their citizens. That’s part and parcel of the demolition of American democracy that the Bush administration has specialized in in the holy name of security.

  13. Such operations have to be kept secret to be effective.

    And it is not so simple that this just a matter of law. If such laws are said to be needed to combat an emergency but restrictions of civil rights are enacted for other purposes, too, somebody is partially cooperating with the enemy. You are in effect using blackmail against the supporters of civil liberties. This way, in the long run, the will to combat the enemy is compromised.

    Therefore it is much better for civil liberties and to combat an emergency to formally recognise that a real state of emergency exists, which allows civil rights to be curtailed, but for a specific purpose and a limited time only.

  14. It stretches the meaning of the words “state of emergency” when used to describe a conflict that may last as long as the Cold War did.

    Such a “state of emergency” is just another way to give carte blanche to the executive to ignore the legislative for a long as it likes.

  15. If they were prepared to break in to get the data, there was little to be gained by the firm taking a stand … As with rendition and secret prisons, it looks like the US has once again undertaken an action in the so-called “war on terrorism” that undermines rule of law and has an international scope, and in doing so has informed European authorities at some level

    The SWIFT program, according to the NYT own reporters, is perfectly legal. The Times justification for printing this story is the ‘public interest’, so spare me your typical shrill whining about ‘rule of law’. Your not a lawyer.

    A better explanation is that the Times will do anything to sell a paper and sink the Bush administration.

  16. The SWIFT program, according to the NYT own reporters, is perfectly legal.

    No, it says that it may be constitutional. The Supreme Court has not upheld strong privacy protections for bank records. Congress, however, passed the Right to Financial Privacy Act in 1978 just to make sure that it was illegal. It also almost certainly violates European privacy laws.

    If it was totally legal, why would SWIFT have gone out of its way to get legal cover for its participation?

  17. carte blanche to the executive to ignore the legislative for a long as it likes

    Europe has no independent executives anyway, so why bother? We should care about state power and state efficiency.
    If we react to a threat by normal legislation, the laws passed so will stay valid long after the threat has passed.

  18. No, it says that it may be constitutional. The Supreme Court has not upheld strong privacy protections for bank records. Congress, however, passed the Right to Financial Privacy Act in 1978 just to make sure that it was illegal. It also almost certainly violates European privacy laws.

    To make sure that what was illegal? Looking at bank records? Nonsense. You need to read the law, not make guesses. It clearly states privacy exceptions, one of which is:

    (A) a Government authority authorized to conduct foreign counter- or foreign positive-intelligence activities for purposes of conducting such activities or;

    As in the case of rendition and domestic ‘spying’, hyberbole rules the day, not a look a the facts or scales of justice. Gee, whatever happened to all that impeachment talk of GW over the domestic spying program? It’s not going to happen, because everything is legal. You and the Times simply like to muddy the waters with (in your case) irrelevant Eurpoean laws and(in the Times case) a seemingly suicicidal urge to sink the President.

    You have every right to bemoan the breaking of European laws, but American’s are not breaking European laws, Europeans are. There’s nothing ‘partial’ about it.

    I realize that you have a rather clownish, absurdly leftist view of the Bush administration, but they are a smart, well schooled bunch. As far as I know, since Bush was elected, the only American laws they’ve broken are in the minds of Europe.

  19. Being secret isn’t enough. It also has to be unpredictable. Everybody who isn’t an idiot knows that bank transfers from the Middle East are screened so i don’t see how this knowlegde helps

  20. “Being secret isn’t enough. It also has to be unpredictable. Everybody who isn’t an idiot knows that bank transfers from the Middle East are screened so i don’t see how this knowlegde helps”

    Thank you. I know very little about how money moves, I know nothing about being a terrorist but I have always sort of assumed that A) Electronic Money Transactions were being monitored by the the powers that be and B) The bad guys were aware of A.

    Why is this news, let along controversial news?

  21. I’ve actually worked with SWIFT in the financial industry, and there are a couple of serious misunderstandings going on here.

    The volume of SWIFT transactions would prevent a “fishing expedition.” You would have to have a very good idea what you were looking for before you asked for it. For example, a taxpayer ID number, a bank account number, or some other unique identifier is all that would keep your database from burying you under unusable mounds of data. Once you have located a record, you can then trace it back to see who is interacting with your target. For example, if you send a wire transfer to a known Al Qaeda account, the message will also show the account it came from. With enough such links, you can get a pretty good idea of the funding of the operation. But again, you need to start with a known and identified account or user.

    Second, I don’t know if you read the whole article, but the information was obtained under a subpoena. US judges do not issue these orders without probably cause to believe a crime has been committed. The prosecutor must convince the judge that the order does not interfere with the constitutional right to be free of unreasonable search and seizure (the evidence being sought is particularly described, known to be in the place to be searched, necessary to the investigation, etc.). Rooting around in someone’s filing cabinet in the hope that something incriminating will turn up is not allowed. The person or company is subject to the subpoena is compelled by law to furnish the documents or testimony required.

    So here we have a program that was legal, effective, narrowly focused, and secret. Why did it have to get into the newspaper?

  22. Mitch, because SWIFT turned all its records over, not just a few, and not on the basis of a court order, but an “administrative subpoena” which is not overseen by a judge. Bank records cannot be turned over in the US without a court order.

  23. “But this new secret program touches a core Bush constituency: white-collar criminals. If Bush is able to secretly monitor transactions in the name of anti-terrorism, a future Democratic government might be able to use it against money laundering and accounting fraud. That’s surely something the Republican Party could never stand for.”

    The idea that white collar criminals are a “core Bush constituency” and that Republicans have a vested interest in protecting money laundering and accounting fraud is ridiculous. It’s this kind of simplistic, knee-jerk nonsense that causes a lot of Americans to tune out European opinions.

    As for SWIFT, the backlash so far has mainly been against the New York Times for printing a story about a program that even the Times has admitted is probably legal and has been effective. The incredible arrogance of the Times, which is essentially claiming that it should be the sole arbiter of whether classified information remains secret or not, has not gone over well with a lot of people. After 9/11, everyone, including the NY Times, advocated finding and shutting off the flow of money to terrorist groups but it is now undermining a program intended to do just that. The paper is under a lot of heat for this and deservedly so.

  24. The Enron scandal took place under Clinton. It collapsed under Bush but the fraud took place mostly under the Clinton administration. The most obviously illegal transactions took place in the August of 2000. Bush was not elected until after that. Former Clinton Treasury Secretary Robert Rubin (see for example the BBC) tried to intervene on Enron’s behalf: “The Treasury Department says Mr Rubin contacted the Under Secretary for Domestic Finance, Peter Fisher, on 8 November – a month before Enron’s collapse.

    Citigroup is one of Enron’s main creditors, and Mr Rubin is reported to have asked Mr Fisher about the possibility of pressing bond-rating agencies not to downgrade their estimate of Enron bonds to avoid a crisis of confidence in the energy group.” But it is an ancillary point anyway so moving on…

    With respect to the banking investigations, the responses are kind of contradictory. Some express ‘shock’ while also saying that the NYT couldn’t have done any harm because everyone knew the transactions were being tracked. It isn’t clear if you believe one or the other or both. (I certainly hope it isn’t both).

  25. My point with regard to Enron is not the date on which crimes occurred but the well documented financial support Ken Lay gave to Bush as a candidate. I was, however, being somewhat snarky. Bush has gotten a lot of support from people who cannot honestly claim that they have nothing in their financial records to hide.

    My complaint is that all SWIFT’s records were copied to the CIA without an actual court order, undermining the idea that such requests should be subject to judicial oversight and should be limited in scope. This seems to me to violate the 1978 US banking privacy act and European rules on data protection, although Supreme Court cases imply that banking records do not have constitutional protection in the US. Perhaps an American court will rule that Bush’s all-purpose authorization to persue terrorists enables him to override the 1978 law. If, as SWIFT claims, it is impossible to hand over to the CIA only those records relating to the people they suspect of terrorist involvement, and they have to turn all the records over, then I should think it doubly necessary that the government obtain a warrant stating explicity whose records they intend to scrutinize. At present, I don’t see that there is any US law that would forbid the CIA from using SWIFT records in non-terrorist cases or even from using them to perform industrial espionage on foreign firms.

    That is a matter of significant public interest and it should be a scandal.

    If the CIA had obtained a secret court order from a real court with an actual judge, naming the people it was seeking records for, and then the NY Times had reported it, I would agree that the newspaper had behaved very questionably. As it stands, I am not aware of any statute limiting the use of SWIFT’s records, and the number of parties whose interests are affected is large and includes Europeans who enjoy stronger statutory protections than Americans. That’s a legitimate story to break, whether it harms US interests in fighting terrorism or not.

    But what really scandalizes me is that European central bankers kept silent about a program that appears to at least heavily bend European banking privacy laws and was not even under American judicial review. American courts deserve some leeway in persuing terrorists. I agree that banking records should be subject to court-issued subpeonas, just as people’s homes are subject to court ordered searches. But granting American courts some leeway is very different from granting executive agencies leeway, especially considering the record the American executive has of late.

  26. That transactions from the middle East were tracked was common knowledge but it was not known that the payments between Renault and Bosch were tracked. This opens a whole area of industrial espionage by data mining, which is something different from focused espionage. I don’t claim that the US is doing this but if it was France than nobody would doubt it.

    Also about the legality of it. I doubt it is legal from the viewpoint of Iran

  27. “But this new secret program touches a core Bush constituency: white-collar criminals. If Bush is able to secretly monitor transactions in the name of anti-terrorism, a future Democratic government might be able to use it against money laundering and accounting fraud.”No f’ing way. The majority of money laundering is done by the mafia which have always been stalwart Democraps. Round these criminals up and the Democraps only have trial lawyers left making large donations.

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