Author Topic: NSA threatened Qwest CEO with repercussions if he didn’t cut a surveillance deal  (Read 2525 times)

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Offline Letsbereal

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NSA threatened Qwest CEO with repercussions if he didn’t cut a surveillance deal
2 March 2010
, by Wayne Madsen (Counter Punch)

(WMR) -- WMR has learned from sources who worked in senior positions for the telecommunications company Qwest that its former chairman and CEO, Joseph Nacchio, was threatened with retaliation after he refused to participate in an unconstitutional and illegal National Security Agency (NSA) wiretapping program after he met with NSA officials on February 27, 2001, some six months before the 9/11 attacks. Nacchio refused to turn over customer records without a court order -- something NSA did not possess at the time it made its request.

After Nacchio refused NSA’s request on the grounds that it was illegal, sources close to Nacchio reported his legal problems with the Department of Justice and the Securities and Exchange Commission began in earnest. First, Qwest lost out on several lucrative federal government contracts and second, Nacchio was indicted and convicted in 2007 of 19 counts of insider stock trading. Nacchio was sentenced to six years in the Schuykill federal prison camp in Minersville, Pennsylvania, where he is now assigned prisoner number 33973-013.

In January, US District Judge Marcia Krieger of the 10th Circuit Court in Denver denied Nacchio’s motion for a new trial. Krieger was nominated for the federal bench by President George W. Bush on September 10, 2001. The September 10 date is significant -- it was then clear that Nacchio was not going to be a player in the NSA and FBI illegal surveillance programs and it was the day before the Bush administration would sweep aside the First and Fourth Amendments to the Constitution in the wake of the 9/11 attacks. Qwest is headquartered in Denver.

The illegal NSA surveillance program, once known by its highly-classified code-name STELLAR WIND, was revealed by AT&T employee Mark Klein, who divulged NSA’s “secret room” on the 6th floor at AT&T’s central office on Folsom Street in San Francisco. The “secret room” was next door to the 4ESS phone switch. According to AT&T documents, NSA had direct wiretaps on key Internet circuits on the floor above. NSA’s operation conducted vacuum-cleaner copying of the data stream of the Internet, which included e-mail, web browsing, VOIP phone calls (e.g., Skype) and all the other common Internet services. There is informed speculation that because of an aggressive AT&T internal campaign to transfer all its old long-distance traffic to fiber lines, traditional phone calls that passed through the 4ESS switch were likely transferred to the Internet circuits, making phone calls also very likely subject to NSA eavesdropping.

AT&T and Verizon agreed to participate in the STELLAR WIND program.

Even though there is ample evidence that the federal government engaged in massive prosecutorial misconduct in retaliation for Nacchio’s refusal to participate in STELLAR WIND and associated FBI surveillance programs, the Supreme Court refused to review the case against the former Qwest chief. The Supreme Court also denied Nacchio bail pending his appeal, a clear attempt by the most corrupt Supreme Court in American history to prevent Nacchio from airing the NSA’s dirty laundry about domestic wiretapping and pressure on telecommunication firms’ senior corporate officials.

Qwest shareholders and retirees blamed Nacchio for their financial losses, however, it is now clear that the NSA and the Bush administration targeted Qwest for retribution after its top boss refused to cooperate in the illegal domestic wiretap programs of the NSA and FBI.

Qwest founder, railroad and oil magnate Philip Anschutz, a conservative Christian who owns The Examiner chain of metro region newspapers and several entertainment firms and professional sports teams, testified on Nacchio’s behalf.

The news of NSA’s threats of retaliation against Nacchio will come as little comfort to those NSA employees, including the jailed ex-NSA analyst Ken Ford, Jr., on similar trumped up charges. If someone as wealthy and powerful as Nacchio could be brought down by the illegal domestic joint targeting operations carried out by the NSA, FBI, and corrupt Justice Department prosecutors, those rank-and-file NSA employees who have blown the whistle on NSA’s illegal operations stand little chance of having their “day in court.”

WMR has been told by NSA insiders that if the full extent of NSA’s illegal operations became public, the American people would go into a “state of shock.”

Previously published in the Wayne Madsen Report:
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Offline Effie Trinket

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October 12, 2007

What Nacchio Tells Us about the NSA

by emptywheel

The documents made available by the RMN yesterday provide more details about what the NSA and other government agencies have been doing with fiber optic networks--but it's still not exactly clear what those documents show. As a preliminary, I'm going to try to put the contents of this CIPA filing into a coherent chronology, to clarify some of the issues. The filing is what Nacchio submitted when the judge said his previous CIPA filing was not detailed enough, and it has a timeline going back to the late 1990s.

From reading the filing, I think (though I think others will disagree) that what Nacchio describes as Groundbreaker is at least the physical tap into switches that we know AT&T to have accomplished. That's important, because Nacchio walked out of his meeting on February 27, 2001 willing to do Groundbreaker (at least the hardware side of it), but unwilling to do something else NSA requested at that meeting. Which means the telecom involvement goes beyond simply tapping into the switches, and the switch-related aspect is not the troubling side of it.

The rest of this chronology just describes how Qwest has built several fiber optics networks for our intelligence agencies--potentially global in scale--that they claim are "impervious to attack." While it's not clear whether these networks are connected up with public networks or not (GovNet, the proposed network for the government that got scotched with 9/11, was supposed to be private), it does raise the question of how much of these global networks are for communicating (that is, secure communication within an intelligence agency) and how much are for eavesdropping.

And boy, if I were the rest of the world, I'd be less than thrilled to know Qwest had build a redundant fiber optics network for US intelligence agencies throughout my country.

Here's the timeline:

Late 1997: Dean Wandry (the govt accounts person) and Nacchio meet with a Lieutenant General, who tells Wandry the government wants to use Qwest's network for government purposes. The General also asked that Nacchio get a security clearance. The Agency gave Qwest the business with just a phone call's notice, but prohibited Qwest from announcing it publicly.

1998: The Agency expands its work with Qwest, having it construct fiber from Qwest's international gateway that eventually linked up with a local vendor's network.

Early 1999: Qwest joins a Computer Sciences Corporation team to bid for NSA business, including Groundbreaker.

Unknown, 1999: Payne and Nacchio in discussions about $500 million business.

August 1999: James Payne replaces Dean Wandry as Qwest's govt accounts person. Qwest remained in its relationship with its first government agency customer, building redundancies into its network. At that point, Qwest had a sole source contract expected to bring in up to $500 million, and had been given a contractor rating of 96 (the average rating was in the 70s). Note that there were "Senatorial maneuverings" that held up the project at this stage.

December 1999: Nacchio attends the first meeting to discuss a business opportunity with govt agency.

Late 1999 to early 2000: Richard Clarke introduces himself to Qwest to begin discussions on GovNet.

He revealed to Mr. Payne his knowledge about the classified work the company had already done for various agencies, and impressing Mr. Payne with his vision for a future private network that would be impervious to cyber-warfare and government-wide, sweeping up both classified and non-classified agencies. This vision became known as GovNet. Mr. Payne arranged for Mr. Clarke to tour Qwest's "CyberCenter" in Sterling, Virginia on June 22, 2000.

January 2000: Second meeting to discuss business opportunity with govt agency.

June 2000: Nacchio meets with DISA about building a private fiber optic network.

July 6, 2000: James Payne attends a security briefing on some of this, and is read into various programs with the agency.

September 2000: Qwest begins to talk about building network in South America, connected to the US.

[The agency] told Qwest it wanted a continental backbone in South America and back to Washington, D.C.

September 2000: Qwest does (or contemplates) work with an "Army customer"--the description remains redacted.

September 2000: Nacchio meets a second time with DISA about building a private fiber optic network, both in the Continental US and in Europe. Payne described the opportunity this way.

My team has been working with the DOD customer and various classified agencies to move quickly to implement a world wide network using existing Qwest contract vehicles.

September 2000 to February 2001: Qwest had meetings to discuss work done outside the continental US--in this case, to extend the contracting Agency's network in Europe and the Middle East, which Qwest had already done for the Agency. This passage from the filing gives some idea of the scope of what we're talking:

Qwest's European network ended at Prague, and Mr. Nacchio concluded that he would  have to go out and get routes from there down through the Red Sea and into India to create a fully global network.

An email included as an exhibit elaborates.

The [redacted] program was awarded to Qwest on September 15, 2000. This was a joint effort with K/Q that connects [redacted] hub cities in Europe in a private line service.

Also throughout this period, the contracting agency would call Qwest with concerns about its financial viability, whether it had to do with the telecom bust, or a potential buy-out offer from Deutsche Telecom.

[Note, all four of these September 2000 references may be to the same international program, though it appears that there are at least two discrete ones, one extending existing networks in Europe and the Middle East, and one establishing a network in Latin America.]

February 2001: Discussions on Groundbreaker are started. Some descriptions of it include:

Qwest's portion consisted of a $50-$100 million opportunity, planned for implementation in 2001, to construct a CONUS (continential US) private fiber network and provide related network services.


The Groundbreaker project grew out of the aftermath from a fire at Ft. Meade which destroyed a large NSA data center. It was thereafter decided to outsource much of this work to private industry. The project was described in a July 31, 2001 press release issued by CSC as providing "secure and non-secure telephony and network services, distributed computer services, and enterprise and security management of the non-mission information technology infrastructure at NSA headquarters and surrounding offices.

One of the suits against AT&T describes the program for "development of a center for monitoring long distance calls and internet transactions and other digital information for the exclusive use of NSA" as being named Pioneer-Groundbreaker, or Groundbreaker Enterprise System within AT&T. Like the description of the CSC team, the AT&T suit describes discussions about Groundbreaker as having started before Bush was elected, then get put on hold, then resuscitated shortly after Bush came to office.

If the AT&T suit is correct (and Nacchio's filing says they intend to corroborate the accounts of Nacchio, Wandry, and Payne with something from the AT&T suit, perhaps by subpoenaing Mark Klein, it means Qwest was willing to do at least the physical side of the deal, allowing the government to tap into their switches. Which makes sense--if it was supposed to replace a large "data center" at NSA, it would need to be involved in data. Further this seems to match Naccio's description of Qwest's bid to do a "'CyberCenter' solution to the Groundbreaker networking issue."

February 27, 2001: Nacchio's meeting at NSA headquarters. Groundbreaker was discussed, as was the request that Qwest's General Counsel would go on describe as illegal.

It was this pending opportunity that lead [sic] to Mr. Nacchio's first meeting with NSA, which took place on February 27, 2001 at the NSA Headquarters at Ft. Meade, Maryland. Mr. Nacchio expected to discuss the $50-100 million "Groundbreaker" opportunity at this meeting, and he thought great progress was made on the substantive discussions. [At least one sentence redacted.] Mr Nacchio walked out thinking that the NSA $50-100 million opportunity remained viable.

This passage makes two points clear: Qwest was bidding for the Groundbreaker program, and Nacchio remained willing to do that Groundbreaker program after the meeting at which he refused to do something else (note his expectation for the $50-100 million tied to Groundbreaker remained constant). It was not Groundbreaker that he refused.

March 2001: Announcement that "network service" on Groundbreaker delayed until 2002.

March 7, 2001: White House Situation Room meeting with Condi, Richard Clarke, General Raduege, Nacchio, Payne, and representatives from Raytheon and GTE.

At the meeting, Mr. Clarke asked the group if it was possible to create a network, then proceeded to describe [redacted]. Mr. Payne hadn't known that Clarke had the "need to know" that would have allowed him to know the details of this project.

After describing this "hypothetical" network, Mr. Clarke asked the group what kind of company could do this. Everyone said no one could, it couldn't be done. Mr. Nacchio, instead of saying "I already built this network twice, once for [redacted] and once for DISA," instead simply described how it could be done. Later, Paul Kurtz (a NSC staffer) told Mr. Payne that Mr. Clarke did this because he wanted to see Mr. Nacchio's response.


... what Mr.Clarke had in mind for GovNet was an "airgap network," impervious to outside attack.

May 9, 2001: Meeting with Richard Clarke on GovNet at Anschutz Ranch.

June 6, 2001: Meeting with Wolfowitz on GovNet?

July 31, 2001: CSC wins Groundbreaker contract; Qwest is not included among sub-contractors. NSA's press release states the program will be "fully functional" by November 2001.