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A history of Groundbreaker

Nacchio’s trial, defense and conviction

It can be pretty hard to hear with the word “terrorism” crammed into your ears.

At least that appears to be true for many Americans these days, as evidenced by recent poll results regarding Edward Snowden and his revelations about secret government spy programs.

The polls show that most of us think that Snowden — the 29-year-old former National Security Agency (NSA) contractor who leaked documents to the Guardian newspaper, exposing the agency’s surveillance programs that monitor our phone records and email — is guilty of espionage or even treason, and should be sentenced to prison accordingly.

These same polls also reveal that the majority of U.S. citizens believe that it’s acceptable for the government to collect such data on hundreds of millions of us without warrants or probable cause as long as it uses the information only to fight terrorism.

But what if that wasn’t the whole story? What if fighting terrorism were only an afterthought in the government’s motives behind the creation of the secret spy programs exposed by Snowden? What would we do if it were discovered that this massive government intrusion into our private lives had been going on long before the first plane hit the first Trade Center tower? These are the questions we should be asking.

Edward Snowden was employed by Booze Allen Hamilton, a defense contractor that bills itself as a strategy and technology consulting firm. The company has very close ties to, and often works on projects for, the NSA. At the time of his decision to expose the NSA surveillance programs and other highly classified information, Snowden was serving as a contract systems administrator at the agency.

What Snowden has revealed so far is that at least one telecom company, Verizon, is allowing the NSA to collect its metadata to create a bank of information containing every telephone call on Verizon’s system. The NSA claims that it collects all the calls but can only use the information once it has probable cause and a court-approved warrant to do so. Based on past media reporting from 2006 that exposed similar relationships between the NSA and other phone companies, it is currently being assumed in most news reports that all or nearly all of the major telecommunication companies have similar relationships with the NSA.

Edward Snowden

Snowden also revealed the existence of an NSA program known as Prism, which allows the NSA to monitor the email of most Americans. The NSA claims that it is not violating the privacy of any U.S. citizen and that it is conducting these surveillance operations legally under the authority of the USA Patriot Act.

But there appears to be a timeline problem with the NSA’s claim.

The USA Patriot Act was signed into law by President George Bush on Oct. 26, 2001, just six weeks after the Sept. 11 terrorist attacks. The NSA now claims that it is the Patriot Act, which authorized warrantless surveillance and other previously illegal spying techniques, that allowed the agency to launch the mass surveillance dragnets that are currently scooping up the phone and email data of hundreds of millions of Americans. But if that is the justification, then why was the NSA already creating such intrusive domestic spy programs in early 2001, months before the 9/11 attacks or the creation of the Patriot Act?

One of the best sources proving the existence of this pre-9/11 NSA domestic spying can be found in the court proceedings of Joseph Nacchio, the former CEO of Denver-based Qwest Communications, now CenturyLink. You may recall that Nacchio was tried and convicted for insider trading in 2007. He is currently in prison, but has a chance of being released later this year.

The government’s case against Nacchio, including the Security and Exchange Commission’s investigation of Qwest’s accounting practices, was quite strong (see “Nacchio’s trial, defense and conviction,” page 14). The government contends that Qwest, under Nacchio’s leadership, was improperly accounting for one-time sales of its assets to artificially prop up its stock value. This practice was occurring between 2000 and 2002. At the same time that the Qwest stock price was reportedly being fraudulently inflated, Nacchio sold his own shares in the company in 2001, reaping more than $100 million. Eventually the truth about the company’s accounting practices became public and the stock price fell from $55 a share to $1.11 per share.

While the government’s case against Nacchio was quite strong, the same can’t be said for the CEO’s defense. That’s because the court never allowed Nacchio and his attorneys to mount the defense they wanted to present because the court determined it would be a threat to national security.

Nacchio and his attorneys wanted to explain to jurors that Qwest’s financial woes were the result of the federal government’s, particularly the NSA’s, withholding of promised, lucrative contracts worth hundreds of millions of dollars. Nacchio wanted to present evidence to show that this pull-back of promised contracts was in retaliation for Qwest’s refusal to allow the NSA to collect its customers’ phone data on a massive scale, without court approval. And most importantly to this story, redacted documents that were only unsealed after Nacchio’s trial and conviction show that the NSA’s demand to collect Qwest’s customers’ phone information came at a meeting at the NSA’s Fort Meade, Md., headquarters on Feb. 27, 2001, more than half a year before the 9/11 attacks or the creation of the Patriot Act.

According to an unsealed document titled “Renewed objection by Joseph P. Nacchio to exclusion of classified testimony as violative of his constitutional right to mount a defense,” Nacchio and James Payne, who was in charge of garnering government business for Qwest at the time, traveled to NSA headquarters at Fort Meade to discuss Qwest getting a contract as part of an NSA program called “Groundbreaker” (see “A history of Groundbreaker,” page 13). The document also states that the court has “prohibited Mr. Nacchio from eliciting testimony as to what also occurred at the meeting.” The description of what else occurred at the meeting is redacted. The document then says, “The court has also refused to allow Mr. Nacchio to demonstrate that the agency retaliated for this refusal by denying the Groundbreaker and perhaps other work to Qwest.”

The redacted area of the unsealed documents was filled in by The New York Times on Dec. 16, 2007, when it reported that “executives at a Denver phone carrier, Qwest, refused in early 2001 to give the agency [NSA] access to their most localized communications switches, which primarily carry domestic calls, according to people aware of the request, which has not been previously reported. They say the arrangement could have permitted neighborhood-by-neighborhood surveillance of phone traffic without a court order.”

The NSA’s Groundbreaker project was no ordinary government program. It was, in fact, at the time, the largest federal outsourcing of work in history, with an overall budget estimated at between $4 billion and $5 billion. The purpose of Groundbreaker was to completely reinvent and update the NSA’s IT systems to more effectively interact with the changing digital systems that were in use at the major telecommunications companies, among other things. More than 40 companies would eventually get massive contracts from the Groundbreaker project, including Verizon. Qwest never got one dollar.

Nacchio’s defense wanted to paint the picture that at the time Nacchio sold his Qwest stock for a personal gain of more than $50 million, he was not aware that the company’s stock price was inflated and about to crash. Nacchio wanted to tell jurors that he thought the company was about to get hundreds of millions of dollars from the NSA’s Groundbreaker program, which had not been accounted for in the company’s revenue projections. In other words, according to Nacchio, at the time he sold his stock, he was actually expecting Qwest’s stock price to soon rise, on the announcement of the NSA Groundbreaker contract, not collapse, as it eventually did.

Joe Nacchio

At one point, the documents show that the court seems to agree about the significance of Nacchio’s desired defense argument. The unsealed documents state, “And the court believes that this is still relevant. If there was such a contract to be awarded during the relevant time, and as a matter of fact, that contract was not awarded because of Mr. Nacchio’s reactions [refusing to allow NSA to gather Qwest customer information without warrants], then the fact that it was not awarded and he did not learn of the reasons until after May 29, is something that certainly comes out in front of the jury and can be evaluated by the jury.”

Would this defense argument have helped Nacchio in the end? We’ll never know, because, despite its acknowledgement of the argument’s merits, the court mysteriously reversed itself and never allowed Nacchio’s attorneys to fully present the NSA retaliation argument because of the classified nature of the information.

But what the unsealed documents did do was to show that the NSA was actively engaged in gathering massive amounts of domestic phone data prior to 9/11 and the creation of the Patriot Act.

The documents also confirm that interviews conducted with James Payne collaborated Nacchio’s claims regarding what happened at the Feb. 27, 2001 meeting with the NSA, including the agency’s request to gather Qwest’s customer call data. Payne also stated that the NSA continued to request access to Qwest’s customer call data for several years, and that the agency basically suggested that if it didn’t get the access it wanted, Qwest could be jeopardizing its future contracts with all departments of the government, not just the NSA.

The documents also refer to inter views conducted with NSA counsel. A summary memorandum of those interviews was given to the Nacchio defense team. According to the unsealed documents, the summary memorandum confirmed that one reason that Nacchio and Payne were brought to the Feb. 27 meeting at NSA headquarters was to try to gain access to the company’s phone call data. The memorandum also says that “Qwest was denied any agency work as a result of Mr. Nacchio’s refusal.” The document goes on to say that when Nacchio’s attorneys “brought this admission to the court’s attention, the statement was then disavowed.”

Such is the difficulty of trying to get classified information into the public realm.

As important as the Nacchio/Qwest documents are in establishing that the NSA was actively working on gathering massive amounts of phone data without warrants in early 2001, well before the 9/11 attacks or the authorization for such covert activity through the Patriot Act, they are hardly the only evidence of such surveillance activity on the part of the NSA. There are other credible examples as well.

For instance, it’s been widely reported that the Drug Enforcement Administration has received assistance from the NSA since the 1990s in tracking records of phone calls, using mass amounts of telecommunications metadata generated by calls between the United States and Latin America, as well as other regions involved in the drug trade. The drug program collects data on all phone calls between the U.S. and other countries, and then uses computers to analyze the call data for patterns that might expose drug trafficking communications.

Also, according to a federal lawsuit filed on June 23, 2006, in New Jersey, the NSA, AT&T and IBM were working together as early as February 2001 to construct a network operations center identical to the AT&T facility in Bedminster, N.J., so that the NSA could monitor all calls and Internet traffic on the company’s network.

“The NSA program was initially conceived at least one year prior to 2001 but had been called off; it was reinstated within 11 days of the entry into office of defendant George W. Bush,” the suit claimed.

The same lawsuit also alleges that in 2003, Verizon allowed the installation of a high-speed transmission line connecting a Verizon data center to Quantico, Va., the site of a major U.S. intelligence and military base. The suit claimed that the line had no firewall, giving a government agency “unlimited, unrestricted and unfettered access to all wireless call data, information and contents” on the Verizon network.

In yet another example, a 22-year AT&T employee named Mark Klein alleged in a class-action lawsuit that in the early 2000s, he became aware of a secret room in AT&T’s San Francisco facility, used by the NSA, that received signals thanks to a “splitter cabinet” that had been installed to divert information from the company’s fiber-optic cables. Klein claimed that the pieces of equipment in the secret room included a “semantic traffic analyzer,” and that “splitter cabinets” were being installed at AT&T facilities in several other cities, including Seattle, San Jose, Los Angeles and San Diego.

Mark Klein

Finally, there are the accounts of whistleblowers William Binney, Thomas Drake, Edward Loomis and J. Kirk Wiebe, former NSA employees who have been highly critical of the agency and its mass surveillance program — both before and since 9/11 — and who have backed the Electronic Frontier Foundation in its efforts to combat NSA monitoring efforts.

According to the Government Accountability Project (GAP), the NSA could not keep up with the information and communication explosion associated with the rise of the Internet in the 1990s, so a team that included Loomis, Binney and Wiebe developed a program to analyze, streamline and isolate the growing amount of data available. That system, called ThinThread, could filter out irrelevant data, removing the need to send and store large amounts of information for later analysis. The program even had an “anonymizing” feature to protect the privacy rights of U.S. citizens, according to the GAP. The system was ready to roll in January 2001, but Binney and Wiebe say the NSA opted for a more expensive and undeveloped program, Trailblazer, whose bloated budget would benefit private contractors more than the in-house system they had developed. (Trailblazer was retired in 2006 after costing more than $1 billion and is considered by some to be one of the worst failures in U.S. intelligence history.)

Binney and Wiebe retired in October 2001, saying that they could no longer work for the agency in good conscience after the NSA used a component of their ThinThread system to spy on the private communications of U.S. citizens. They also claim that if their system had been in use, the movements of al Qaeda in the days leading up to 9/11 would have been detected.

Binney estimates that the NSA has intercepted between 15 trillion and 20 trillion information transmissions since 9/11, relying on a system called Stellar Wind, a system based on a component of ThinThread — but without the builtin privacy protections, according to the GAP.

The whistleblowers felt the repercussions of their complaints about the NSA. They were subjected to armed FBI raids on their homes and investigation as possible sources behind a New York Times story about the NSA’s domestic spying program in December 2005. In April 2010, Drake was indicted on charges related to national security, but all except one — a misdemeanor charge of misusing an NSA computer — were dropped in June 2011. Drake joins the likes of Daniel Ellsberg as being among only four individuals in the history of the U.S. who have been charged with the “willful retention” of “national defense” under the Espionage Act.

All of this documented mass surveillance activity by the NSA in 2001, prior to 9/11 and the signing of the Patriot Act, would seem to fly in the face of what we have been told — and are still being told — about such spying even today, as NSA officials testify before Congressional hearings regarding the recent NSA leaks at the hands of Edward Snowden. The NSA claims that all of its spying started as a result of the terrorist attacks on Sept. 11, 2001, and has always been done legally — either approved by the executive branch by way of the Patriot Act or authorized by Congress — and all the while overseen and condoned by the courts.

But as the evidence points out, such a claim simply isn’t true. The NSA was clearly working hard to create systems that would collect massive amounts of phone and Internet data in 2001, prior to the attacks. For a plausible explanation for this behavior, we have to look at one of the most important underreported stories of our time. Literally underreported.

In 1996, New Zealand based journalist Nicky Hager shocked the world with his exposé on a global surveillance system known as ECHELON. Hager wrote a book about his findings, which were controversial enough that elements within the British government wanted to ban the book from being sold in the U.K. In the U.S., a summary of Hager’s ECHELON revelations was published in the award-winning Covert Action Quarterly in its winter 1996/1997 edition. That same story went on to be named as one of Project Censored’s 25 most important underreported stories of the year in 1998.

Nicky Hager

Hager’s investigation took him years to complete and ultimately allowed him to interview more than 50 people who had worked in the intelligence community under a secret program known as the UKUSA agreement. According to Hager, the UKUSA agreement was created in 1948 and was a secret Cold Warera intelligence alliance between the United States, Great Britain, Canada, Australia and New Zealand. The organization spied on every country around the world that it considered a threat.

The main players in the organization were the NSA; the UK’s spy agency equivalent, the British Government Communications Headquarters (GCHQ); New Zealand’s Government Communications Security Bureau (GCSB); and the intelligence services of Canada and Australia.

In the 1980s, the NSA introduced a new program to the UKUSA agreement that had amazing capabilities. The program was called ECHELON.

In Covert Action Quarterly, Hager described the ECHELON system as being ripe for abuse because it operated virtually without any restraints, a sobering assessment, considering Hager’s description of the system’s capabilities.

“The system works by indiscriminately intercepting very large quantities of communications and using computers to identify and extract messages of interest from the mass of unwanted ones. Computers at each secret station in the ECHELON network automatically search millions of messages for pre-programmed key words. For each message containing one of those key words, the computer automatically notes time and place of origin and interception, and gives the message a four-digit code for future reference. Computers that can automatically search through traffic for key words have existed since at least the 1970s, but the ECHELON system was designed by NSA to interconnect all these computers and allow the stations to function as components of an integrated whole. Using the ECHELON system, an agency in one country may automatically pick up information gathered elsewhere in the system. Thus, the stations of the junior UKUSA allies function for the NSA no differently than if they were overtly NSA-run bases located on their soil.”

Hager discovered that ECHELON was intercepting email, faxes, telex messages and telephone calls. In a later update to his article he noted that the NSA had achieved an “ominous capability for large-scale automated telephone monitoring.”

What made ECHELON so effective at gathering mass amounts of indiscriminate data was its ability to pull in virtually every form of communication that moved through the world’s global network of communications satellites and microwave towers.

ECHELON had the perfect system — until technology once again changed. By 2000, fewer and fewer of the world’s messages the NSA wanted to collect and store (much as it claims to be doing today in the programs leaked by Snowden) were moving through the air via satellites. By early 2000, it was estimated that only about 5 percent of Europe’s phone and email messages were being carried by satellite, and much of the developed world used the old technology even less than that. And the problem for the NSA’s ECHELON program would only get worse. By 2006, 98 percent of all international messages — phone, email or others — were traveling underground by fiber optics. This was true of nearly all of the phone and email messages in the U.S. as well.

The NSA needed a new system if it was going to continue to eavesdrop and collect data. The following concept, while admittedly speculative, may well explain what was happening in 2001 before the 9/11 attacks.

Technology dictated that as the year 2000 arrived, ECHELON needed a major makeover if it was going to continue to be capable of monitoring most of the world’s communications as it had been doing. In light of this fact, and the timing, it could be that the largest outsourcing project in U.S. history, the 2001 NSA Groundbreaker program, which was launched prior to 9/11, was the agency’s answer to continuing ECHELON surveillance into the new century.

This would explain the justification of the $5 billion Groundbreaker budget, as well as why the NSA wanted, and needed, to bring all of the major telecommunications companies on board — by way of offering them a carrot, in the form of lucrative contracts worth, in some cases, hundreds of millions of dollars. Groundbreaker also required that the companies getting the contracts had to hire NSA staffers as their own employees. This makes sense, if ECHELON was going to be tapping directly into the global telecommunications apparatus, because that system was more geared to “underground” fiber optics than satellites. This fact even makes sense of the program’s “Groundbreaker” moniker.

Apparently, should this theory turn out to be accurate, the NSA’s plan for remaking ECHELON by virtually incorporating the telecommunication industry and its technologies into the spy network worked very well. It was reported by USA Today in 2006 that Qwest was the only major U.S. telecommunications company that had not given the NSA access to its phone data. It does make one wonder at what price to Qwest. Any other telecommunications company and its leadership watching the government’s handling of Nacchio and Qwest might certainly have thought twice about not cooperating.

In summary, the existence of ECHELON could explain why so much mass information-gathering by the NSA was occurring before the 9/11 attacks and the Patriot Act. And the technological advances that pulled global communications increasingly away from satellite and microwave tower transmissions, and into fiber optics, could likewise explain the need for the $5 billion Groundbreaker program.

It is clear that the NSA has been collecting massive amounts of indiscriminate information on people, including U.S. citizens, for many years, dating back to before the 9/11 attacks. Does the NSA use its mass collection of data to fight terrorism? No doubt it does. But the question should be, what else does it use its data for, and what was it using it for before terrorism became the perfect rationale or excuse for such activities?

According to Hager’s sources within the system, ECHELON data was used for many purposes, including corporate espionage on the part of the NSA. Hager’s reporting noted that many governments around the world have been frustrated with the U.S. because of what they view as unfair economic use of intelligence data. Hager has cited several specific examples in his writings. In 1995, the Baltimore Sun reported that European aerospace company Airbus lost a multi-billion-dollar contract with the Saudi Arabian government because the NSA leaked information that Airbus had bribed the officials making the decision, so that the U.S. company Boeing would have a better shot at the contract.

Another example of the abuse of such data came out of Britain. According to Hager’s reporting, “With capabilities so secret and so powerful, almost anything goes. For example, in June 1992, a group of current ‘highly placed intelligence operatives’ from the British GCHQ spoke to the London Observer: ‘We feel we can no longer remain silent regarding that which we regard to be gross malpractice and negligence within the establishment in which we operate.’ They gave as examples GCHQ interception of three charitable organizations, including Amnesty International and Christian Aid. As the Observer reported: ‘At any time GCHQ is able to home in on their communications for a routine target request,’ the GCHQ source said. In the case of phone taps, the procedure is known as Mantis. With telexes, it is called Mayfly. By keying in a code relating to Third World aid, the source was able to demonstrate telex ‘fixes’ on the three organizations. ‘It is then possible to key in a trigger word, which enables us to home in on the telex communications whenever that word appears,’ he said. ‘And we can read a pre-determined number of characters on either side of the keyword.’ Without actually naming it, this was a fairly precise description of how the ECHELON Dictionary system works. Again, what was not revealed in the publicity was that this is a UKUSAwide system. The design of ECHELON means that the interception of these organizations could have occurred anywhere in the network, at any station where the GCHQ had requested that the four-digit code covering Third World aid be placed. Britain came forward because they were upset that the ECHELON program was being used to spy on NGOs.”

In 2000 and 2001, a committee of the European Parliament held hearings on ECHELON and its potential political implications. In its report, the committee found that, based on the testimony of many diverse witnesses, the operation was, in fact, capable of intercepting and inspecting telephone calls, emails, faxes and other data. The report voiced concerns that such a program could be abused by those countries with access to its sweeping information-gathering capabilities.

More circumstantial evidence that the programs Snowden is leaking information about today are merely new names for old programs ultimately belonging to ECHELON can be gleaned from his most recent leak that Britain’s GCHQ and the NSA spied on the participants of the 2009 G20 summit in London. Such a revelation should come as no surprise, as both the GCHQ and the NSA are part of the UKUSA agreement and ECHELON. And the spying was not being conducted in association with anything to do with terrorism, but rather to give Britain and the U.S. an advantage in the meetings, which often deal with complex economic and trade relationships.

So why should Americans trust the NSA to never abuse its power with regards to Snowden’s recently leaked mass surveillance programs on U.S. citizens? The answer is anything but clear, considering that the NSA has been collecting such information on many of us for far longer than it is now admitting, and that is has already abused its powers to spy on nongovernmental organizations and to commit corporate espionage, despite the fact that both of these practices are illegal.

Should we now trust the NSA not to illegally monitor environmental activists or Tea Party adherents or labor organizations? How can we trust an agency or a government that is still trying to claim that it didn’t get into the domestic phone call monitoring game until after 9/11, a claim that simply isn’t supported by the evidence?

The answer is we can’t. We need to get rid of that word “terrorism” that is clogging our ears, so we can hear the truth.

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