Treasury's War Read online

  After several weeks, Lichtblau came back to Fratto. It was clear that the reporters had not found what they were looking for with the program. The Treasury was not stealing the SWIFT data out of the air and misusing the financial information therein. This wasn’t a massive fishing expedition into the world’s financial data. It really was an effort by the US government to target and track terrorist financing as understood by the American public. As long as the methods were legal, there didn’t seem to be much basis for a story. But it seemed as though the New York Times was going to publish it anyway—potentially endangering a crucial source of financial intelligence for Treasury and exposing the SWIFT board to public scrutiny.

  Even though it still was not clear what the story actually was, to Levey, and the rest of us who had worked with the program, the risk was clear. Exposure in the New York Times threatened the very existence of the program and our most effective method of tracking terrorist financing through the banking system. It would also stir up European anger at SWIFT and European central bankers aware of the program. Fratto demanded to know why this was still considered a story, but Lichtblau simply demurred and said it was in the editors’ hands now.

  At the same time, Josh Meyer from the Los Angeles Times, who had been covering Treasury stories for the paper and had taken trips with us abroad, called the Treasury Department asking questions about a relationship with SWIFT. The Los Angeles Times reporters did not have enough to pursue a story on their own, but it was clear that they were searching for whatever the New York Times investigation was stirring up.

  There was little hope of stopping the story, but the administration tried. Bill Keller, the editor of the New York Times, agreed to a meeting with Treasury Secretary Snow. Snow and his team made the case for the legality of the program and its utility, while explaining the damage the revelation could do with our European partners and to SWIFT itself. Snow offered a separate briefing with Treasury’s enforcement lawyer assigned to the program. But Keller listened politely, asked a few perfunctory questions, and ended the meeting. It was apparent that Keller had already made up his mind, and that he was going to publish the story regardless of what was said in that meeting.

  The 9/11 Commission cochairs, Lee Hamilton and Thomas Kean, both appealed to the New York Times not to run the story. Even Senator Russ Feingold, a Wisconsin Democrat known for his defense of privacy and civil liberties and his ardent opposition to the Bush administration, was convinced of the value and legality of the program and was asked to call the New York Times to intervene. Yet all who tried to convince the Times were rejected politely.

  In the end, part of what drove publication was competition between papers, since the New York Times wasn’t the only paper to have uncovered the SWIFT program. Levey was in Italy when he got word that the Los Angeles Times had the story, too. This would accelerate publication and trigger the New York Times to publish. Levey and spokesperson Molly Millerwise Meiners flew back immediately, understanding that they would have to move quickly.

  The call came in to Fratto that the New York Times was going to run the story. Once this was clear, the communications team decided to meet with the reporters from both the New York Times and the Los Angeles Times again before they published their articles. At the same time, the Treasury Department called Glenn Simpson at the Wall Street Journal, a seasoned journalist who understood the banking world and had followed the issues of money laundering, terrorist financing, and organized crime for many years. When Meiners spoke to Simpson, she told him, “Bring your laptop.” The Treasury intended to give him background on the program to allow him to publish a competing story. There had been no promise made to the New York Times not to speak to other reporters if the Times decided to publish the story, though Lichtblau would later complain to Fratto.

  Glenn Simpson’s story in the Wall Street Journal was published the same day as the articles in the Los Angeles Times and the New York Times. Simpson, who had covered Treasury after 9/11, had long been aware of Treasury’s program with SWIFT data but had elected not to publish it. He had lived in Brussels and had even met the SWIFT chairman, Lenny Schrank, once, testing him out and inquiring about any information sharing with the US government. Schrank had played it coy, but Simpson knew that there was an arrangement and a program in place.

  Yet Simpson had not even approached his editors with the story at the time—because he didn’t think there was a story. For Simpson, the program was legal, unobjectionable, and in line with what the administration said it was doing to track terrorist financing. From his years of reporting on international organized crime and money laundering, Simpson knew that the banking world was subject to reporting requirements, suspicious activity reports, and a full regimen of otherwise intrusive regulatory scrutiny that made cross-border transactions fair game under the right circumstances. He felt the SWIFT program was in line with this historically intrusive regulatory system. From his point of view, this program was not infringing on anyone’s civil liberties, and there was no journalistic reason to expose it. When his editors heard that the New York Times story was imminent, it was not difficult for Simpson to put together a story on short notice. He already knew about the banking world, SWIFT, and how Treasury was likely using the data.

  In contrast, the New York Times reporters came to the subject assuming that the SWIFT program was being run just like the NSA surveillance program that the Times had already revealed. Their lack of sophistication in understanding the international financial system and banking laws, and their related unwillingness to listen to experts inside and outside of government, added fuel to their fire. So it was that they decided to put in jeopardy one of the most valuable and legal counterterrorist tools the United States had at its disposal.

  On June 23, 2006, the New York Times published its above-the-fold front-page story: “Bank Data Is Sifted by U.S. in Secret to Block Terror,” by Eric Lichtblau and James Risen. On the same date, Simpson published his article for the Wall Street Journal, as did Josh Meyer and Greg Miller for the Los Angeles Times. All had raced to publish their stories online ahead of the others. The Washington Post also published a story about the Treasury program on June 23.1

  Members of the administration at all levels blasted the New York Times. President Bush called the story “disgraceful.” John Snow wrote in a June 29, 2006, letter to the editor of the Times: “In choosing to run its June 23 front-page article, the Times undermined a highly successful counterterrorism program and alerted terrorists to the methods and sources used to track their money trails.”2 In a hearing before the House Financial Services Subcommittee on Oversight and Investigations on July 11, Stuart Levey warned, “This disclosure compromised one of our most valuable programs and will only make our efforts to track terrorist financing—and to prevent terrorist attacks—harder. Tracking terrorist money trails is difficult enough without having our sources and methods reported on the front page of newspapers.”3

  Congress was outraged that the program had been compromised. On Capitol Hill, Senator Jim Bunning, a Republican from Kentucky, asked the attorney general to investigate the New York Times for treason. Representative Peter King from New York, the Republican chairman of the House Homeland Security Committee, called for an investigation of whether the paper’s decision to publish the article violated the Espionage Act. Representative J. D. Hayworth, Republican from Arizona, circulated a letter to colleagues asking that the Times’s congressional press credentials be suspended. Nevertheless, the New York Times and the other newspapers all stood by their stories.

  There were many who later rationalized that the existence of the program was obvious and that the story was not really a revelation of anything secret. But if it was so obvious, why was it a front-page story? More importantly, why were there not more media inquiries before 2006, or savvy editorial writers or think tanks offering this as a good idea to use as a tool in countering terrorist financing? If it was so obvious, why then wasn’t this part of a concerted effort prior
to 9/11 to subpoena SWIFT data for legal purposes?

  The reality was that this program had been innovative and legal and had operated well and in secret right under the noses of those who pretended to understand the issues of terrorist financing and terrorism. Before this revelation, terrorist organizations and networks didn’t understand what we were seeing and tracking, although they knew we were tracking money flows. Most nonexpert observers had no idea what SWIFT was or how it functioned in the international financial system. Now they knew exactly what we were seeing—as did rogue regimes and every financial institution around the world.

  In a lunch meeting in New York after the stories hit the press, Times editor Keller met with US intelligence officials, including CIA Director Mike Hayden. Keller was asked why he had decided to publish the SWIFT story when the program was legal and so important to the US government. With surprising candor, Keller said, “It was because the president was weakened by then.” The attendees could not believe their ears as they heard this overt admission that there had been a political calculus to the decision making. When the US officials got back to the airport, still stunned by what Keller had said, Hayden turned to his aides and asked, “Did you just hear what I did?” There was no question that Keller had declared that the decision to publish was ultimately based on a political decision about the state of the Bush presidency.

  To its credit, SWIFT stood ready to defend itself. Schrank and the board members had steeled themselves for years for the eventual revelation of the program. Its leadership felt that it had done everything that was legally required and responsible to limit the Treasury’s access and use of its data. In a public statement, SWIFT explained, “The UST cannot simply browse through the data. They are only allowed to see data that is responsive to targeted searches in the context of a specific terrorism investigation. Data searches must be based only on persons, entities or related information with an identified connection to an ongoing terrorism investigation or other intelligence that the target is connected to terrorism.”4

  SWIFT also noted that its compliance was “legal, limited, targeted, protected, audited and overseen.” In a statement on the matter, it said,

  SWIFT takes its role as a key infrastructure of the international financial system very seriously and cooperates with authorities to prevent illegal uses of the international financial system. . . . SWIFT negotiated with the U.S. Treasury over the scope and oversight of the subpoenas. Through this process, SWIFT received significant protections and assurances as to the purpose, confidentiality, oversight and control of the limited sets of data produced under the subpoenas. Independent audit controls provide additional assurance that these protections are fully complied with.5

  A December 2008 report by French counterterrorism judge Jean-Louis Bruguière agreed, finding that “the U.S. Treasury Department complies with the strict use limitation and stringent privacy safeguards set out in the Terrorist Financing Tracking Report Representations and that TFTP has demonstrated significant value for the fight against terrorism, in particular in the EU.” Although European sources said they were aware of 27,000 requests for data by the US government to SWIFT, they did not identify any violations by the parties involved.

  The New York Times “public editor”—responsible for the journalistic integrity of the paper and journalism ethics—Byron Calame, initially responded to the chorus of criticism by defending Bill Keller’s decision.6 However, several months later, Calame changed his mind, issuing a piece entitled “Banking Data: A Mea Culpa”:

  My July 2 column strongly supported The Times’s decision to publish its June 23 article on a once-secret banking-data surveillance program. After pondering for several months, I have decided I was off base. There were reasons to publish the controversial article, but they were slightly outweighed by two factors to which I gave too little emphasis. While it’s a close call now, as it was then, I don’t think the article should have been published. Those two factors are really what bring me to this corrective commentary: the apparent legality of the program in the United States, and the absence of any evidence that anyone’s private data had actually been misused.7

  The mea culpa received little notice. The damage was already done.

  In his July 11, 2006, statement before the House Financial Services Subcommittee on Oversight and Investigations, Stuart Levey said, in a discussion of SWIFT’s data stream: “For two years, I have been reviewing that output every morning. I cannot remember a day when that briefing did not include at least one terrorism lead from this program. Despite attempts at secrecy, terrorist facilitators have continued to use the international banking system to send money to one another, even after September 11th.”8 That was now about to change. Those who were using the banking system for terrorism purposes were now fully aware of how the US government gathered intelligence about wire transfers. What’s worse, SWIFT itself was thrust into the broader political debates, something it had long sought to avoid. Even if the relationship with SWIFT could survive, Treasury’s ability to collect financial intelligence would never again be what it was.

  A debate about the SWIFT program erupted in Europe, where deep sensibilities about government intrusion into personal data are paramount. The disclosure also began a diplomatic debate driven by a lack of understanding of the program and the privacy safeguards built into the system. As SWIFT was registered in Belgium, it soon came under legal and political scrutiny there for its decision to release information on European citizens. Many in the European Union raised concerns about the legality of the SWIFT disclosures to the US Treasury, although SWIFT responded by noting that it was legally obligated to disclose information because of US subpoenas.

  Soon, SWIFT was facing legal challenges in European courts, and it became a frequent target for political attacks across the continent. In response to the unrelenting legal challenges, SWIFT argued that the solution was for US and European regulators to find a way to conduct counterterrorism operations while respecting European requirements for personal and financial privacy. To resolve some of these challenges, the United States and the European Union agreed to name a “high representative of the EU to the United States of America for the financing of terrorism,” famed French judge Jean-Louis Bruguière, with an office in the US Treasury Department. They also allowed for the appointment of a European observer who could monitor the ongoing process and draw independent conclusions on the adequacy of privacy safeguards.9

  The following summer, the US Treasury sent representatives to the European Union to describe “the controls and safeguards governing the handling, use and dissemination of data” under the TFTP.10 Their description included information on the United States’ legal basis for subpoenas, the limited nature of data sought, the role of an independent audit, and information on the data retention period.

  As the program came under assault, some European officials ran for the hills, while others protested that they had not understood the extent of the program. What most did not appreciate was that the United States had become the global intelligence hub for tracking illicit financial activity, thanks to its ability to tap financial data in conjunction with the best and deepest types of other intelligence. Losing access to the SWIFT data would be deeply damaging to that work.

  Stuart Levey launched an effort to shore up the program, making public statements and meeting with officials throughout Europe. In one meeting, he met with a senior official of a country where the political leaders were critical of the program and had stated that they did not see its value. In preparation for his meetings, Levey had ordered every piece of SWIFT data and analysis that had been passed to that country to be printed out in hard copy. He wanted to have it with him for the meeting. Levey met with the official and talked about the value of the program to both countries. Applying a showman’s sense of timing.” Levey then pulled out the foot-high stack of SWIFT-related reports that had been shared with the government and plopped it onto the table in front of the official. Levey asked
directly, “Do you want us to stop giving you this? If not, you need to be a part of the conversation. Talk to your politicians.”

  In March 2009, the European Parliament called for a more comprehensive EU-US agreement on data protection.11 An EP resolution in September expanded on this call, requesting clear rules on the targeting and use of data, redress opportunities for European citizens, and a limit of twelve months on a cooperative agreement until a permanent one could be settled under the Lisbon Treaty.12 The EU-US agreement was reached that winter and encompassed limitations on data to be used, a prohibition on data mining, a data deletion requirement after five years, and a process of EU review. The Council of the European Union simultaneously declared that a future long-term agreement would be more explicit on principles of redress, data deletion, and third-party information sharing.13

  The task of shoring up support would require constant attention, with the voices in opposition dominating the public space. On February 11, 2010, by a vote of 378 to 196 (with 31 abstentions), the plenary of the European Parliament rejected the 2009 agreement between the European Union and the United States to allow US law-enforcement authorities to have access to SWIFT data. The agreement had been negotiated between the EU Council of Ministers, the European Commission, and the US government to allow continued access to the database, a mirror copy of which had been moved by SWIFT from the United States to Europe. The liberal-minded European parliamentarians—now empowered in a post–Lisbon Treaty European structure—were making a point of asserting their power and their predilection to unwind Bush-era war-on-terror policies and programs. Among the parliament’s concerns was the need for more stringent mechanisms of judicial redress. It also wanted more explicit rules on how data would be obtained, stored, and accessed.14 Unfortunately, the parliamentarians were picking on the wrong program.