Saturday, January 15, 2005

Congressman Conyers Asks Justice Department to Appoint Special Counsel to Investigate Ohio

January 14, 2005
Congressman Conyers Asks Justice Department to Appoint Special Counsel to Investigate Ohio

Congressman Conyers Has Asked the Justice Department to Appoint a
Special Counsel to Investigate Possible Criminal Conduct in Connection with
the Ohio 2004 Election by J. Kenneth Blackwell.

In this detailed letter, Conyers stated that through the House
Judiciary Democrats' investigation, they had learned of "numerous instances of
voter intimidation and misinformation,improper purging, caging of
minority voters, misuse of Help America Vote Act (HAVA) funds, voting
machine tampering, perjury, and most recently, potential misuse of the
federal seal in a campaign solicitation by Ohio Secretary of State Blackwell.
Since this and other apparent violations by the Secretary of State
presents such an obvious conflict for your office, we would ask that you
appoint a special counsel to investigate this matter."

Full text of the letter:


The Sky's the Limit

The Natio

The Sky's the Limit

Ari Berman

Talk about under the radar: Just before the New Year, the Washington Post disclosed a $16 million contract renewal from the Pentagon to defense company CACI. The piece neglected to note CACI's role as one of the two main civilian contractors implicated in the prisoner abuse at Iraq's Abu Ghraib prison. And just yesterday, the other major contractor, the Titan Corporation, won a new $164 million deal from the Defense Department.

Though Spc. Charles Graner and his girlfriend, Private Lynndie England, became the Bush Administration's hand-picked scapegoats--with Graner currently on trial facing seventeen years in jail--CACI and Titan were intimately involved in the prison's torture tactics. As part of CACI's $66 million contract for "tasks" in Iraq, it employed nearly half of the interrogators and analysts at Abu Ghraib. Roughly a third never received formal military interrogation training, and at least one civilian interrogator was hired without a resume, follow-up interview, fingerprints or a criminal records check, according to Titan had a much larger $657 million contract for Iraq and Afghanistan, supplying all the translators for Abu Ghraib.

The Army's official Taguba Report on the Abu Ghraib scandal implicated three civilian contractors in the abuses: Steven Stefanowicz from CACI and John Israel and Adel Nakhla from Titan. Stefanowicz was charged with giving orders that "equated to physical abuse," Israel of lying under oath and Naklha of raping an Iraqi boy. The Justice Department, on referral from DoD, opened a criminal investigation into an unnamed civilian contractor, but no criminal charges have since been filed. In June the Center for Constitutional Rights asked the US government to bar CACI and Titan from any future contacts.

Instead the Pentagon turned agony into ecstasy, awarding CACI over $500 million and Titan at least $1.5 billion in new or renewed contracts if all options are exercised. CACI recently reported $388 million in revenue for the first quarter of this year, a 65 percent jump from last year. Titan has yet to announce.

"We are very close to this client," CACI's acting COO Bill Fairl told the Post after winning December's contract to improve supply operation and fleet readiness for the Navy and Marine Corps. "We stay so close we are on board ship with them."

So close that not even the serious possibility of institutionalized torture can stop CACI and Titan from raking it in.

Originaly published Jan 13, 2005


Friday, January 14, 2005

2008 - Early Rumors

New York Post
Jauary 14, 2005
Page SIX

WE HEAR . . .

THAT it could get crowded for the Democrats in 2008. John Kerry has said he won't rule out running again, and now comes word Tipper Gore is telling friends that Al is eyeing another race himself.


For President and Close Friend, Forget the Politics

The New York Times
January 14, 2005
For President and Close Friend, Forget the Politics

When people ask Roland Betts how a New York Democrat can be such a good friend of President Bush, he whips out a ready answer. "Which would you prefer: my being close to him, or some right-wing zealot being close to him?" Mr. Betts said in a recent interview. "Who do you want to have his ear? So it's not a bad thing. Maybe I give him a little balance."

It was Mr. Betts, after all, who persuaded Mr. Bush to hold the Republican National Convention last summer in the heart of Democratic America, the West Side of Manhattan, and it was Mr. Betts who stuck to that decision under incoming fire from the president.

"I had an anxious year, to tell you the truth," said Mr. Betts, recalling that as the threat of protests grew, Mr. Bush took to tormenting him with comments like: "You're ruining me politically. Why did you make me come to New York?"

Mr. Betts chuckled. "It was all good-natured," he said, "but I was thinking, 'Oh my God, there's probably a grain of truth in there. Should he have gone to Tampa?' "

Roland W. Betts and George W. Bush have been needling each other for more than 40 years, ever since the day they met as remarkably similar freshmen at Yale. Mr. Bush was the eldest child of a blue-blooded Republican transplanted in Texas and Mr. Betts the son of a man who managed money for Vincent Astor. Both came from families that stretched generations back into the aristocratic precincts of the East Coast, both had sharp senses of humor, both loved sports and jocks. Most important, both were rebels in their own fashion.

Today Mr. Betts - a founder of the Chelsea Piers sports and entertainment complex in Manhattan, a force behind the rebuilding of ground zero, a former public school teacher in Harlem and the financier of films like "Beauty and the Beast" and "Gandhi" - is one of the president's closest and most unusual confidants.

To no one's surprise, he will be seated near the Bush family when the president takes the oath of office next week.

Mr. Betts's relationship with the president is a window into Mr. Bush, who for the past four years has relied more than ever on his old Yale classmate as a safe harbor, a sounding board and an adviser. Friends say the two are like brothers, but without the familial complications. Over long weekends at Camp David, at the president's Texas ranch or at Mr. Betts's vacation homes in Santa Fe, N.M., and Jackson Hole, Wyo., Mr. Betts and Mr. Bush talk about cabinet appointments, the war in Iraq, Social Security, tax cuts, politics, architecture, sports and family.

"Roland is a guy with a big appetite for life, and the president likes all that," said Tom A. Bernstein, Mr. Betts's business partner at Chelsea Piers and a friend of Mr. Bush. "They talk about absolutely everything."

New Yorkers who work with Mr. Betts note that his friendship with the president has benefited him by raising his profile and making him a bigger force in the city. Mr. Bush made Mr. Betts his personal representative in negotiations between Major League Baseball and the players' union to institute a drug-testing policy, and city officials know that he operates as the president's eyes and ears in the development of ground zero.

Friends say Mr. Betts does not boast about his relationship with the president, although the friendship is hard to miss in his office, which is filled with photographs of himself and Mr. Bush spanning four decades.

But Mr. Betts, who claims no political ambitions of his own, insisted that the friendship cuts both ways. "Living in New York, it's an irritant to some people and it helps me with other people," he said. "It's a mixed bag."

Mr. Bush declined to comment for this article, as did his aides. As in other first-friend presidential relationships - Jimmy Carter and Charles H. Kirbo, George H. W. Bush and James A. Baker III, Bill Clinton and Vernon E. Jordan Jr. - Mr. Betts operates outside the range of White House advisers, and the extent of his influence is difficult to gauge. But there is no question that Mr. Bush depends on him to bring stability and some perspective to his life.

"The president said to me when he was elected something to the effect that, 'Laura and I are smart enough to know that when you're president of the United States, you don't make new friends,' meaning anybody who purports to be a new friend wants something," Mr. Betts said in a long conversation in his Chelsea Piers office overlooking the Hudson River. "And therefore, his comfort level with people who have known him his whole life is higher. He can truly relax, and not worry about people positioning him on something."

Not that Mr. Betts doesn't try. In early 2003, he called Mr. Bush and asked him not to denounce outright the University of Michigan's race-conscious admissions policies, a position the president was considering for a brief the administration was to file in an affirmative action case before the Supreme Court. "I said, 'Look, I can't sit still for this,' " said Mr. Betts, whose wife of 32 years, Lois, is African-American.

"And he said, 'Well, actually your timing's perfect, because there's a big debate about that within the office,' " Mr. Betts recalled that Mr. Bush said.

The administration's brief ended up denouncing the specifics of Michigan's system, but left open the prospect that race could be considered under narrow circumstances in college admissions.

"I don't know if I persuade him on anything," Mr. Betts said. "I'm not looking for credit. I just like to get my 2 cents in."

Mr. Betts is circumspect about many of his conversations with Mr. Bush, so it is hard to know how much he debates the president politically. He will say that he has disagreed with the president's position limiting stem cell research to a handful of existing colonies- "he listens," he said - but Mr. Betts refuses to answer questions about any conversations he has had with Mr. Bush about a proposed constitutional amendment to ban same-sex marriage, legislation the president supported during the campaign.

"I don't think he's as conservative a person as the media generally characterizes him as," Mr. Betts said.

What is indisputable is that Mr. Betts, a burly former Yale hockey player who goes to work in golf clothes, has helped Mr. Bush at important moments in the president's life. In 1989, he was the single-largest investor in a group that bought the Texas Rangers baseball team and set up Mr. Bush as a general partner, a deal that eventually made Mr. Bush a multimillionaire and kicked off his political career. Mr. Betts also put Mr. Bush on the board of Silver Screen Management, which financed more than 75 Disney movies, including "The Little Mermaid" and "Pretty Woman."

"Our business was fundamentally a marriage of Wall Street and Hollywood, so you would say to yourself, 'Well, Bush didn't come from either of those worlds, why would he be valuable?' " Mr. Betts said. His friend, he said, had a common sense that he brought to board debates about the company's relationship with Disney.

"His advice was sort of 'don't stretch the rubber band too thin,' " Mr. Betts said, recalling that Mr. Bush used to counsel him that "when you compare the $10 million you're fighting over against the hundreds of thousands of millions of dollars you're involved with, they're not material."

Clearly, Mr. Betts is not the person to go to for an unvarnished view of the president, and he invariably describes a more thoughtful and curious chief executive than Mr. Bush's public image suggests.

"He asks me a lot of questions," Mr. Betts said. "As we're going for walks, he wants to know, 'Well, who do you think would be good here, and what should I do here?' "

Before the war with Iraq, Mr. Betts said Mr. Bush frequently asked him, "As a citizen, what do you think here? Do you think the case is adequately made?"

Mr. Betts said that he often responded no, but that by the eve of the invasion he had said yes.

At the same time, Mr. Betts describes a president more concerned than he lets on about the perception among some critics that Vice President Dick Cheney is running the country. When Mr. Bush spoke to the commission investigating the attacks of Sept. 11, Mr. Betts said that the president took along Mr. Cheney not to present a consistent story but to show the panel that Mr. Bush was in charge. "What he told me was that he wanted people to see how deeply he understood all this," Mr. Betts said, "and how he was calling all the shots."

Mr. Betts was born six weeks before Mr. Bush, on May 25, 1946, and grew up in the hamlet of Laurel Hollow near Cold Spring Harbor, N.Y., an upper-crust enclave on the North Shore of Long Island. Like the president, he was dispatched in due course to boarding school, St. Paul's. At Yale he joined Mr. Bush in Delta Kappa Epsilon, or Deke, the jock house, where Mr. Bush was the fraternity's president and Mr. Betts was his rush chairman. Both Mr. Betts and Mr. Bush were known as enthusiastic partiers, but some classmates noticed that Mr. Betts worked hard on the sly. (He is now the senior fellow of the Yale Corporation, the university's title for chairman of the board.)

Once out of Yale, Mr. Betts became a math and history teacher in Harlem at what was then Intermediate School 201, and spent the next decade as an instructor, substitute and administrator in the New York and New Jersey public schools. He said he was drawn to teaching through a thesis he wrote about the community-school movement, but also as a way to avoid the draft during Vietnam.

In 1972, he married a fellow teacher, the former Lois Phifer, who had passed muster with Mr. Bush. "I wanted her to meet George; I wanted George to meet her," Mr. Betts said. "An interracial marriage in 1972 was a very uncommon thing." Mr. Bush approved, and by the time Mrs. Betts was in the hospital after the birth of the first of the couple's two children, in 1975, the still-single Mr. Bush came to keep his old fraternity brother company at Mr. Betts's town house on West 102nd Street, where the Bettses still live.

Next week, Mr. Betts will be in Washington to celebrate Mr. Bush's inauguration, but he is cagey about where he will stay and what he will do. It is a safe bet, however, that at some point he will be needled by the president of the United States. "I'm going to be happy for my friend," Mr. Betts said.


Social Security Push to Tap the GOP Faithful
Social Security Push to Tap the GOP Faithful
Campaign's Tactics Will Drive Appeal

By Mike Allen and Jim VandeHei
Washington Post Staff Writers
Friday, January 14, 2005; Page A06

President Bush plans to reactivate his reelection campaign's network of donors and activists to build pressure on lawmakers to allow workers to invest part of their Social Security taxes in the stock market, according to Republican strategists.

White House allies are launching a market-research project to figure out how to sell the plan in the most comprehensible and appealing way, and Republican marketing and public-relations gurus are building teams of consultants to promote it, the strategists said.

The campaign will use Bush's campaign-honed techniques of mass repetition, never deviating from the script and using the politics of fear to build support -- contending that a Social Security financial crisis is imminent when even Republican figures show it is decades away.

Bush aides said that in addition to mobilizing the Republican faithful and tapping the power of business, they plan to target minority voters who have not been able to afford to save and might be open to the argument that the president's plan would turn them into investors. The campaign will also court younger voters, including many Democrats, who would potentially benefit the most from the change.

The president plans to ask Congress to allow younger Americans to put at least one-third of the 6.2 percent payroll tax into private accounts, which will offer a set number of investment options similar to the thrift savings plans provided to federal workers. The administration has also signaled that it will propose changing the formula that sets initial Social Security benefit levels, cutting promised benefits by nearly a third in the coming decades.

With resistance hardening among congressional Republicans, the White House is escalating efforts to get Social Security restructured this year. There will be campaign-style events to win support and precision targeting of districts where lawmakers could face reelection difficulties. As Republicans signaled earlier, they have begun hard-hitting television ads to discredit opponents and prop up the Bush plan.

The same architects of Bush's political victories will be masterminding the new campaign, led by political strategists Karl Rove at the White House and Ken Mehlman at the Republican National Committee.

Bush set the tone for campaign-style lobbying earlier this week with a speech promoting his plan. Yesterday, during an appearance at Catholic University, Vice President Cheney sought to counter opponents' arguments about the risks of the plan, saying that limiting investment options should keep the accounts safe, while harnessing the power of the stock market should provide a far higher rate of return than Social Security reserves now receive.

"Young workers who elect personal accounts can expect to receive a far higher rate of return on their money than the current system could ever afford to pay them," Cheney told an audience of college students and administrators.

This morning, White House budget director Joshua B. Bolten will begin courting business on the issue with a speech at the U.S. Chamber of Commerce. And that is all before Bush takes the oath of office for a second term on Thursday and delivers his State of the Union address on Feb. 2.

Mehlman, who was the Bush-Cheney campaign manager and is the RNC's incoming chairman, said the campaign apparatus -- from a national database of 7.5 million e-mail activists, 1.6 million volunteers and hundreds of thousands of neighborhood precinct captains -- will be used to build congressional support for Bush's plans, starting with Social Security.

"There are a lot of tools we used in the '04 campaign, from regional media to research to rapid response to having surrogates on television," he said. "That whole effort will be focused on the legislative agenda."

Democrats, scrambling to organize in the face of a multimillion-dollar juggernaut, have yet to settle on any particular counterargument but said they believe Bush's rollout of the idea has been rocky and new details will give them more ammunition.

"When they put their plan on paper, the numbers will not add up," said Rep. Robert C. "Bobby" Scott (D-Va.). "All these plans will cost more than just coming up with the money to fix the present system. They can spin them and spin them, but that will not change."

Mehlman called the struggle over Social Security "a tremendous opportunity to reach out to African Americans, Latino Americans and others who don't yet have full access to the American dream."

"People who can't save can actually earn some compound interest," he said. "Having the debate helps you build the party."

In addition to their own efforts, White House and RNC officials are working closely with the same outside groups that helped Bush win reelection in 2004, especially Progress for America, a political organization with close ties to Rove. RNC officials have privately told top congressional aides they will work with Progress for America and others to provide political cover through television ads supporting the Bush position and condemning those who oppose it. To coincide with Bush's new drive, Progress for America is running a television ad on Fox and CNN that compares Bush to Franklin Roosevelt, the father of Social Security.

The group also phoned or e-mailed Republicans, culled from its list of more than 1 million supporters, to enlist their help in selling the Bush plan, either by donating money or talking up the plan to neighbors. Brian McCabe, a spokesman for the group, said it is applying the lessons it learned electing a president to selling a public policy.

One lesson was "realizing the importance of getting information in front of a lot of people," he said. "When it comes to Social Security, for instance, few know even the basic facts."

Once the debate intensifies, Progress for America and other pro-Bush groups such as the National Association of Manufacturers plan to target individual congressional members with the precision of an election campaign.

"We have through CNN and Fox painted with broad brushes," McCabe said. "Over time, we will take our messages inside states and communicate with individual members."

Staff writer Michael A. Fletcher contributed to this report.


The F.B.I.'s Virtual Nonstarter

The New York Times
January 14, 2005

The F.B.I.'s Virtual Nonstarter

One of the most alarming vulnerabilities to emerge after the Sept. 11 terrorist attacks has been the Federal Bureau of Investigation's continuing inability to come up with a computer system that enables field agents to act quickly in sharing information and suspicions about where the next threats may emerge. In Senate hearings soon after the attacks, the bureau admitted that its 1980's computer technology could not search its files for cross-references to two words, like "flight" and "schools" - a lethal shortcoming in light of where some of the terrorists prepared for their suicide mission. But a more effective system was in the works, the bureau promised lawmakers. They poured hundreds of millions of dollars into the effort, expecting the F.B.I. to meet its goal of having the antiterrorist centerpiece - the Virtual Case File - finally up and running by December 2003, a date already a year behind the original goal.

Well, not only has Virtual Case File slipped another year behind, but it also appears close to a virtual death.

Buyer's remorse is widely reported at the bureau, with some specialists estimating that the Virtual Case File's software effort, running at $170 million and counting, may have to be scrapped in favor of fresh starts in research and design by outside contractors. A prototype is undergoing a limited field test, but apparently only with the goal of measuring how short of the mark the F.B.I. has fallen. For four years, the bureau has been enmeshed in a $580 million project called Trilogy, which is aimed at modernizing all its computer systems for its 28,000 officers and other workers. But the crucial investigative piece to speed ground-level information-sharing remains as elusive as it is urgently needed.

There are suggested root causes, based on whether the F.B.I. was starved for funds in the past, technophobic in its shoe-leather police culture or hobbled by a merry-go-round of five technology chiefs in two years. But they do not really matter in the face of the increasing wiliness of terrorists. While the bureau ponders the ESC button, the new Congress should grill the F.B.I.'s hierarchy about the mysteries and disappointments of Virtual Case File and when the nation can expect something real.


Letting Judges Pass Judgment

The New York Times
January 14, 2005

Letting Judges Pass Judgment

The Supreme Court sent a jolt through the criminal justice system this week by ruling that judges are not required to follow the federal sentencing guidelines. The ruling, which makes the guidelines merely advisory, strikes a judicious balance between two conflicting interests: the goal of making sentences for similar crimes equivalent, and the desire to allow judges flexibility to take into account the circumstances of particular crimes and criminals.

There is already talk in Congress about trying to undo the Supreme Court's decision. That would be a serious mistake.

Congress passed the sentencing guidelines in the mid-1980's, with bipartisan support, in an attempt to make criminal sentences in federal cases more uniform. While the guidelines have been praised for doing just that, they have also been criticized for contributing to the nation's prison overpopulation. Justice Anthony Kennedy, who is hardly a liberal on criminal justice issues, told the American Bar Association in 2003 that the sentencing guidelines were too harsh and inflexible. Some trial judges have complained that the guidelines have unduly tied their hands, compelling them to impose sentences that they believe did not fit the crimes before them.

The guidelines became legally vulnerable last June when the Supreme Court struck down Washington State's sentencing guidelines. The court ruled that they violated the Sixth Amendment because they required judges to take factors into account in sentencing, like the harm caused by the crime, that were never submitted to a jury. Not unexpectedly, the court has now extended the logic of that decision to the federal guidelines.

What is most notable about this week's decision is that, rather than tossing out the federal guidelines completely, the court ruled that judges must still "consult" them in making sentencing decisions. To ensure that this is not an empty formality, appeals courts will then review the sentencing decisions - and the use of the guidelines - for "reasonableness." It remains to be seen how this will work in practice, but the general idea of trying to impose uniformity but not rigidity is a good one.

In recent years, conservatives in Congress have complained about judges' failing to follow the guidelines, and Congress has taken steps to monitor individual judges' sentencing practices. One leader of that effort criticized this week's ruling as an "egregious overreach." Rather than racing to try to limit or reverse the decision, its opponents should wait to see how it works in practice. Otherwise, Congress could rush through ill-considered legislation that once again unduly tied judges' hands.

If the new procedures outlined by the court turn out to undermine substantially the goals of the sentencing guidelines and make federal punishments widely disparate and unfair, there will always be time later for Congress to consider enacting new legislation. For now, everyone should step back and give federal trial judges - as they consult the sentencing guidelines and are reviewed by appellate courts - a chance to show that they can exercise their discretion wisely.


Foreign-Profit Tax Break Is Outlined

The New York Times
January 14, 2005
Foreign-Profit Tax Break Is Outlined

WASHINGTON, Jan. 13 - The Bush administration outlined rules on Thursday for a huge one-time tax break for companies that reinvest their overseas profits back into the United States.

The tax break, which was part of last year's corporate tax bill, would allow companies to pay a fraction of the normal tax rate on hundreds of billions of dollars in foreign profits if they pledge to invest the funds in activities that may create jobs at home.

In a setback for many of the biggest potential beneficiaries, the Treasury Department said companies could not use their windfalls for repurchases of stock or increases in shareholder dividends.

Investors reacted with disappointment to the new rules. Stocks of companies that pushed hard for the tax break - Eli Lilly, Hewlett-Packard, Merck, Oracle and Pfizer - all declined slightly after the rules were announced.

The rules would help companies finance some activities that do little to directly increase employment, and a few - like corporate acquisitions - that might lead to job cuts.

The Treasury Department said that the tax break could be used to finance advertising and marketing, even if a company did not plan to increase its advertising.

The administration said companies could also use their foreign profits to pay for corporate acquisitions, redeem old debt and spend on the general purpose of "financial stabilization."

As adopted by Congress last year, the new law would give companies a one-time opportunity this year to bring a total of as much as $500 billion in foreign profits into the United States and pay a tax rate of 5.25 percent, instead of the standard corporate tax rate of 35 percent.

Globe-spanning companies like Hewlett-Packard and Eli Lilly have for years deferred their United States taxes on foreign earnings.

Under traditional tax law, the companies would be required to pay the full tax rate as soon as they brought the money back into the country.

The one-time tax break would let companies take advantage of the lower rate if they put forward a plan to reinvest their profits in ways that enhance employment in the United States.

The law itself was quite broad, explicitly allowing companies to allocate their money for "financial stabilization," corporate acquisitions and research and development.

The Treasury Department, which opposed the provision during the debate in Congress, gave companies even more latitude.

Under the "guidance" published by the Internal Revenue Service on Thursday, companies do not face a specific deadline for actually reinvesting the money and merely have to do so within "a reasonable time."

Nor do companies have to invest more money on hiring or new equipment, or even advertising, than they did the year before. Companies would be able to apply the tax break to investments that they had already planned before their new "domestic reinvestment plan," and even to investments that they had already budgeted and planned to finance with other sources of money.

"The Treasury Department and the I.R.S. do not intend to provide a template for a domestic reinvestment plan," the administration said in its set of guidelines, which totals 39 pages.

Despite the unenthusiastic response from investors to the new rules, the tax break could provide a huge windfall to many technology and pharmaceutical companies that have earned billions of dollars in low-tax countries like Ireland.

Oracle, the business-software company, has estimated that its tax break on foreign profits could be as much as $650 million.

Oracle is hoping to use much of that money to shore up its balance sheet after buying PeopleSoft last year for $10.4 billion.

Many American multinational corporations have deferred taxes on foreign profits. Hewlett-Packard, which wants to strengthen its balance sheet after buying Compaq, has more than $14 billion in untaxed foreign profits. Merck, the pharmaceutical giant, had $15 billion as of 2003. Johnson & Johnson had $12.3 billion.

Wall Street analysts are divided about whether the tax break will actually achieve its intended purpose of attracting a rush of new investment in the United States.

Anne Swope, a tax and foreign exchange analyst at J. P. Morgan, estimated that American companies had stockpiled more than $500 billion in overseas profits.

"We feel confident that $300 billion of that will be repatriated," Ms. Swope said. "The changes in tax law in 1986 made it extremely difficult for companies to repatriate earnings. This is an opportunity to provide temporary relief."

But Jan Hatzius, a senior economist at Goldman Sachs, predicted that the economic impact would be modest because companies have many ways to use their foreign profits without technically bringing them back into the country.

"If companies want to access their foreign assets, it's easy to do," said Mr. Hatzius. "All they have to do is borrow against them."


9 Executives Face Charges of Sales Fraud

The New York Times
January 14, 2005
9 Executives Face Charges of Sales Fraud

Nine current and former sales executives from an assortment of food companies were charged yesterday with participating in a scheme that created a huge accounting fraud at U.S. Foodservice, which has been under investigation in the United States and in the Netherlands for the last two years.

The executives were arraigned in Federal District Court in Manhattan on conspiracy charges and released. They worked for companies that sold products like sugar, eggs, seafood and cake mix to U.S. Foodservice, which in turn supplied restaurants, corporate dining rooms and other institutions.

All the executives are accused of approving documents that claimed U.S. Foodservice, a unit of Royal Ahold, was owed millions of dollars more in promotional allowances - a type of rebate offered by manufacturers to stores and distributors - than was actually the case.

The scheme had the effect of inflating U.S. Foodservice's profits, prosecutors say.

The letters were issued by a former U.S. Foodservice chief marketing officer, Mark P. Kaiser, according to court documents. Mr. Kaiser is awaiting trial on conspiracy and fraud charges, along with Michael J. Resnick, the former chief financial officer. Two other former U.S. Foodservice executives, Timothy J. Lee and William F. Carter, pleaded guilty to similar charges last summer.

All the defendants charged yesterday signed audit letters containing false information at the request of Mr. Kaiser, the documents state.

"Their motivation was to maintain a very important business relationship," the acting United States attorney for Manhattan, David N. Kelley, said.

Most of the executives are expected to plead guilty, he said at a news conference, adding that none of the companies they worked for have been charged with wrongdoing. The investigation is continuing, "upstream and downstream," he said.

All of the executives have also been named in a civil case brought by the Securities and Exchange Commission, which accuses them of aiding and abetting a financial fraud.

Promotional allowances are intended to be used to help sell a manufacturer's goods to consumers, through discounts, displays or advertising, and they often add up to large amounts of money. U.S. Foodservice would pay the price of goods up front, as part of its costs, then book promotional allowances as assets in its records, according to court documents. Exaggerating the promotional allowances, sometimes by a factor of 30 or more, not only made U.S. Foodservice look like a better business than it was, but also improved the financial appearance of its parent, Royal Ahold.

Royal Ahold, a publicly traded company based in the Netherlands, revealed in February 2003 that it had overstated earnings by at least $500 million over the previous two years. The figure was later revised to $880 million.

Royal Ahold said much of the overstatement came from promotional allowances recorded by U.S. Foodservice. A host of executives, including the top management of Royal Ahold, resigned.

In a case involving John Nettle, a 45-year-old former vice president at General Mills, a letter prepared by U.S. Foodservice's auditor stated that General Mills owed the company $13.44 million at the end of 2001.

"In truth and in fact, General Mills owed U.S.F. less than $2.5 million," the government charged in court documents. Mr. Nettle is accused of signing the letter despite the false information.

For 2002, he signed a letter stating that General Mills owed U.S. Foodservice $36.64 million, although the amount was actually less than $1 million, according to the documents.

"As Nettle well knew, the $36.64 million figure was grossly overstated and General Mills did not owe that amount," the documents state.

A lawyer for Mr. Nettle, William Michael, said his client "was pressured into signing these letters and he is very sorry for what this has caused his former employer as well as his family." He said that Mr. Nettle planned to plead guilty.

Two of the defendants have been charged with securities fraud and obstruction of a federal investigation. Mark Bailin, who was president of Rymer International Seafood, and Peter Marion, president of Maritime Seafood Processors, are accused of buying U.S. Foodservice stock in 2000, ahead of the company's announcement that it was being acquired by Royal Ahold.

They made about $1.5 million in illegal profits, according to court documents.


Reform Effort at Businesses Feels Pressure

The New York Times
January 14, 2005
Reform Effort at Businesses Feels Pressure

Martha Stewart is in prison. Richard M. Scrushy, former chief executive of HealthSouth, is sitting through jury selection at his fraud trial. Next week, Bernard J. Ebbers, the former head of WorldCom, will do the same in a court in Manhattan, as will L. Dennis Kozlowski, the former Tyco chief being retried on grand larceny charges. And if all goes according to plan, later this year Enron's top managers, including Kenneth L. Lay, its former chairman, will be on trial in Houston, charged with a raft of crimes related to that company's demise.

It must seem, at least to courthouse watchers, that the sweeping effort to clean up corporate America begun over three years ago in the aftermath of the Enron collapse is still going strong, perhaps even picking up steam. But in the boardroom and executive suites, away from the gavels and juries, a different tale has begun to emerge.

The white-hot movement to overhaul corporate governance has cooled in recent months in Washington and beyond, according to lawyers, institutional shareholders, executives, directors and other experts. On that there is much agreement. But the interpretations of this sudden, little-discussed shift vary widely.

Some experts complain that reform is slowing just as it is reaching what they say is a critical stage, while others argue that the change is the natural consequence of an effort that went too far in the first place.

"The pendulum has begun to swing back," said John C. Coffee Jr., a securities law professor at Columbia University Law School. "We are now seeing the counterreaction to the reform movement of the last few years."

What has emerged, experts from many sides of the issue said, is an intensifying battle over future efforts to revamp corporate governance further. It is one that pits influential members of the business community, including giant organizations like the United States Chamber of Commerce and the Business Roundtable, against institutional investors pushing for greater power over the direction of troubled companies. And it is an effort to handcuff regulators who, from the time of Enron until just the last few months, have been able to issue new directives with little fear of confrontation.

The result, these experts said, is that 2005 could prove to be critical in determining which rules truly become embedded as part of the legal framework governing the future of how American business does its job.

"With the level of the pushback and the momentum that the business community has," said Ann Yerger, executive director of the Council of Institutional Investors, "this is a very important year in terms of holding on to what we have and protecting what we have achieved in corporate reforms."

Executives and other representatives of the business world agree that a change of attitude has taken hold, although they say that the shift is merely curbing the excesses of regulation. They bemoan a combination of heightened action by agencies like the Securities and Exchange Commission, aggressive enforcement efforts by state attorneys general like Eliot Spitzer in New York, and intensified litigation by plaintiffs' lawyers, who recently have begun to see new success with settlements that held directors of WorldCom and Enron personally liable.

"The pendulum has gone too far," said David Hirschmann, a senior vice president who serves as point man at the Chamber of Commerce in Washington on the top issues facing American businesses. "There have been some unintended consequences that are having significant negative impacts on our economy, and we need to fix those aspects that weren't done right."

Mr. Hirschmann said that the unintended consequences have included unnecessary expenditures by companies to meet the bureaucratic demands of new rules, decisions by companies to postpone certain technology purchases to avoid running afoul of new compliance requirements, and a decline in the number of foreign companies willing to list on American stock exchanges. Indeed, the New York Stock Exchange has reported a drop-off in new foreign listings in recent years, including the loss of one giant initial public offering for Air China, whose executives were reported to chafe under the rigorous new demands in the American market.

None of this means that corporate America will be returning to the complacency of the pre-Enron days. And indeed, the criminal and civil pursuit of corporate wrongdoers continues at a breakneck pace.

The Justice Department's Corporate Fraud Task Force, formed by executive order of the president in the immediate aftermath of the WorldCom debacle, has racked up an impressive series of victories. By June 2004, the latest period for which full statistics are available, the task force had obtained more than 500 corporate fraud convictions or guilty pleas, and charged more than 900 defendants, including more than 60 top corporate officers, with various types of fraud. During that period, the S.E.C. filed almost 600 separate civil enforcement actions involving financial fraud or reporting.

As the big fraud trials unfold over the coming months, public anger may build as the excesses of the bubble years - some of which have reached almost mythic status - are again trotted out. Juries will hear about the multibillion-dollar accounting scams at WorldCom and HealthSouth, with executives at both companies purportedly scrambling to disguise numbers revealing the failure of their business plans.

In the trial of Mr. Kozlowski, the $6,000 shower curtain will again be raised, along with other indulgences he obtained with money that prosecutors will contend was stolen from Tyco. And the Enron trials will examine that company's byzantine off-books partnerships, which were used to disguise its deteriorating business and enrich some executives.

No matter the public mood, however, certain aspects of the changes adopted in recent years are here to stay, experts said - in particular the themes from the sweeping Sarbanes-Oxley Act, passed in the summer of 2002 in hopes of cleaning up corporate America.

That law rewrote the rules for corporate governance and financial reporting, requiring greater power for independent directors, fewer conflicts for outside auditors and greater transparency in reporting. Those concepts are now so ingrained in the corporate mind-set that they are unlikely to be reversed, and may well already be showing some benefits to the economy, particularly in the return of investor confidence and the recent growth of mergers and acquisitions activity, experts said.

"Part of the resurgence in the mergers and acquisition market is due to greater confidence among buyers that they can now trust public financials more than they were willing to right after the scandals," said R. Franklin Balotti, director in the corporate department at Richards, Layton & Finger, a law firm in Wilmington, Del. "If part of the result of Sarbanes-Oxley and the rest of the rules is to give the market more confidence in the public statements about the value of companies, then perhaps it has all been worthwhile."

Signs of the growing battle over corporate reform and its ultimate politicization are everywhere, although many are hidden from public view. Soon after the presidential election, a group of senior financial executives from an array of firms and companies visited the White House for a private meeting with President Bush. According to people briefed on the meeting, the executives voiced their frustration with the intensity of the regulatory and legal efforts that their companies had faced since the corporate scandals broke three years ago.

The regulatory battle has turned to the courts. The Chamber of Commerce has sued the S.E.C. over rules it adopted related to governance of mutual funds. The group also threatened to sue if the agency approved rules to give corporate shareholders the ability to nominate board members directly; the proposal is now widely viewed as dead.

At the same time, corporate lawyers expressed dismay that the S.E.C. commissioners had recently elected to reject the recommendation of the enforcement staff to levy a fine against Gary Winnick, the founder and former chairman of Global Crossing, the onetime fiber optic giant that collapsed into bankruptcy.

"It was absolutely amazing, because the commission rarely turns away from a staff recommendation like that," said one corporate lawyer involved in the case, who spoke on condition of anonymity.

There is even growing criticism about the costs and demands of Sarbanes-Oxley, particularly in relation to the demands of Section 404 of the act, which imposes numerous requirements and disclosure demands to ensure that internal controls against fraud are effective. Already, while there is widespread support for the principles of Sarbanes-Oxley, corporate directors and other experts said that there was a quiet effort under way to trim back the demands of the law.

"It's clear to me that we are heading into some very uncertain waters, and that the Bush administration is willing to cut big business a lot of slack when it comes to corporate governance, which I think is a big mistake," said James W. Harris, president and chief executive of Seneca Financial, a merchant banking firm. Mr. Harris also serves on two other corporate boards.

In recent months, Mr. Harris said, he has heard numerous directors complaining about the demands they now face for serving on boards, an attitude he says he has little patience with.

"I was at a meeting of a group of directors back in the fall, and there was a lot of grumbling and groaning about all the extra work required now," he said. "My response was, 'Why don't you give back the check and get off the board?' Of course, none of them wanted to do that."

The signs of a changing attitude in Washington and beyond are being read with some level of dismay by experts in corporate governance. They believe that establishing rules for board independence was just an important first step but one that will have little serious impact unless shareholders are given greater power to remove ineffective directors.

"Board independence, while beneficial, is insufficient to provide directors with affirmative incentives to focus on the interest of shareholders," said Lucian Bebchuk, director of the Program on Corporate Governance at Harvard Law School and an author of "Pay Without Performance."

The problem, according to Professor Bebchuk and others, is that shareholders - the true owners of a corporation - are virtually powerless to effect change in a board unless they begin expensive and hard-to-win proxy battles. Shareholders are not given the right to vote for an alternative candidate for director, or to vote against one advanced by the company. They can either vote yes, or not vote at all.

Responding to such concerns, the S.E.C. proposed rules essentially allowing shareholders to propose their own candidates for director in companies with proven weaknesses in their procedures for electing directors. At the time it was introduced, William H. Donaldson, the S.E.C. chairman, heralded the proposal as a "significant step."

Quickly, the proposal brought widespread opposition from the business community, which argued that the effort was intended to allow unions with huge stakes in corporations through their pension funds to force social policy issues to the forefront on corporate boards.

"We think introducing a special-interest agenda into the boardroom isn't good governance or good for shareholders," said Mr. Hirschmann of the Chamber of Commerce.

But some managers of public pension funds say their desire for a greater voice is simply about giving the real owners of a company a say. Now, about the only option available is to sue the company and its directors.

"We should have some alternative to just being forced to sue ourselves," said Gary Findlay, executive director of the Missouri State Employees Retirement System, a pension fund. "If we are simply taking proceeds from the corporation that we already own to pay ourselves, that doesn't effect meaningful change."


Justice Dept. Opens Inquiry Into Abuse of U.S. Detainees

The New York Times
January 14, 2005
Justice Dept. Opens Inquiry Into Abuse of U.S. Detainees

WASHINGTON, Jan. 13 - The Justice Department has opened a wide-ranging investigation into reports from the Federal Bureau of Investigation about the military's use of coercive and abusive tactics against prisoners held in American custody at Guantánamo Bay and in Iraq, officials said on Thursday.

The investigation, initiated recently by the inspector general at the Justice Department, will examine not only how reports of abuse witnessed by F.B.I. agents at the American base at Guantánamo Bay, Cuba, and in Iraq were handled, but also whether bureau agents themselves took part in any improper methods of interrogation at the prisons, which are run by the military.

Investigators "want to look at what happened to these complaints, and also did F.B.I. agents participate in the abuse?" said a senior law enforcement official who spoke on condition of anonymity. "Were they more than simply witnesses?"

The Justice Department inquiry parallels a separate investigation by the military into the tactics used by its interrogators at Guantánamo.

A raft of documents, released to the American Civil Liberties Union under the Freedom of Information Act, has diclosed concerns by F.B.I. agents stationed at the Guantánamo prison who said in e-mail messages and memorandums that they had seen military interrogators using "coercive tactics," beating prisoners and grabbing their genitals.

Bureau personnel also told of detainees' being chained for up to 24 hours and left on the cold floor to urinate and defecate on themselves. In one case, an agent said, a detainee who was nearly unconscious had pulled out much of his hair during the night.

Some bureau personnel reported their deep concerns about the tactics to senior agency personnel, including the director, Robert S. Mueller III. One focus of the inspector general's inquiry will be to determine how those internal concerns were handled within the agency and whether they were relayed to proper authorities in the military and elsewhere in the administration.

The documents obtained by the A.C.L.U. suggest the possibility that some F.B.I. agents may have acquiesced in or ignored abusive military tactics at Guantánamo at times, but they do not appear to offer evidence of specific abuses carried out by anyone at the bureau.

A senior official at the bureau said Thursday that he was unaware of any complaints of abuses carried out by its agents at Guantánamo and pledged the bureau's full cooperation in the inspector general's investigation.

"This is a healthy process," the official said of the review. "We'll bend over backwards to help and do whatever needs to be done."

In a letter to the Justice Department inspector general on Dec. 21, after the first batches of documents from the A.C.L.U. became public, Representative John Conyers Jr. of Michigan, the ranking Democrat on the House Judiciary Committee, and five other lawmakers, all Democrats, made an "urgent request" for the office to investigate the reports of torture and to determine how presidential or military directives played into such tactics.

Glenn A. Fine, the inspector general at the Justice Department, responded on Jan. 4, saying that his office had already begun "examining the involvement of Federal Bureau of Investigation staff in either observing or participating in the alleged abuse of detainees at the Guantánamo facility and at Abu Ghraib," according to a copy of the letter provided by a member of Congress to The New York Times.

The inspector general's office began investigating the treatment of prisoners before the A.C.L.U. documents became public, officials said. It was not clear whether an internal complaint or separate concerns had led the inspector general's office to open its investigation.

Mr. Fine's office, which has jurisdiction over the F.B.I., is known for its aggressive oversight of the Justice Department. It has produced several critical reports of the department's treatment of illegal immigrant detained in the United States after the Sept. 11 attacks, the bureau's difficulties in translating terrorism material, and on other national security issues.

The office is expected to release another critical report on Friday regarding a former F.B.I. linguist who said she had been retaliated against for complaining of ineptitude in the bureau's translation programs.

Mr. Fine's latest investigation takes him into perhaps his most sensitive terrain yet, centering on the Bush administration's tactics and legal rationales for how it elicits information from terrorism suspects held at Guantánamo and in Iraq.

The documents obtained by the A.C.L.U. showed that the bureau's concerns at Guantánamo dated back as far as December 2002, some 10 months before abusive tactics at Abu Ghraib started. Critics of the Bush administration have argued that a series of legal decisions in Washington by senior administration officials condoned a permissive attitude toward abuse and opened the way for the mistreatment of prisoners in Iraq, Afghanistan and Guantánamo.

But Alberto R. Gonzales, the White House counsel who has been nominated as attorney general, denounced the use of torture against terrorism suspects at his confirmation hearing last week and said the administration did not condone torture of prisoners in American custody. Mr. Gonzales said that the F.B.I.'s reports of abuses at Guantánamo "surprised and shocked me, because it's certainly inconsistent with what I've seen when I've traveled down there." He said that if confirmed, he would personally sit down with bureau officials to "ascertain the facts."

Mr. Gonzales expressed skepticism about some details in the bureau's internal reports, pointing to one e-mail message from an agent in Iraq that cited a supposed executive order from President Bush authorizing abusive techniques.

The agent's reference to such an order was "just plain false," Mr. Gonzales said. He said: "That never occurred. And so, if something like that is wrong in these e-mails, there may be other facts that are wrong in the e-mails."

Mark Corallo, a Justice Department spokesman, said he was unaware of any criminal investigations the department had initiated in response to the F.B.I. concerns.

"Judge Gonzales said he would look into it, and I'm sure he will," Mr. Corallo said. "Beyond that, there's no reason for us to open an investigation. It's not a criminal matter."


U.S. Panel Sees Iraq as Terror Training Area

The New York Times
January 14, 2005
U.S. Panel Sees Iraq as Terror Training Area

WASHINGTON, Jan. 13 - The war in Iraq could provide an important training ground for terrorists, according to a government forecast that also says the key factors behind terrorism show no signs of abating over the next 15 years.

The forecast, issued Thursday by the National Intelligence Council, describes a world in 2020 in which the United States remains the world's foremost power and political Islam remains a potent force. It describes the prospect of a terrorist attack using biological agents or, less likely, a nuclear device, as the greatest danger facing the United States.

"A counterterrorism strategy that approaches the problem on multiple fronts offers the greatest chance of containing - and ultimately reducing - the terrorist threat," the report says. Beyond military force, the report advocates the promotion of education and political and economic development across the Muslim world.

The report, a consensus of American intelligence agencies, says that the rise of China and India will transform the geopolitical landscape and that forces including globalization will increase economic, political and cultural insecurity.

In the former Soviet Union and in Southeast Asia, the report says, democratization may be partly reversed, but democracy could gain ground in the Middle East.

The report also sketches alternative outcomes, including the prospect that a new Islamic religious leader could emerge in the Middle East with broad, transnational political authority, and the prospect that security measures intended to combat terrorism and weapons proliferation could lead to an assault on civil liberties, possibly introducing an Orwellian world.

The discussion of the war in Iraq is limited to two paragraphs in the 119-page report, and its potential impact on terrorism is described only in general terms. But the report says that the war, as well as other possible conflicts, "could provide recruitment, training grounds, technical skills and language proficiency for a new class of terrorists who are 'professionalized' and for whom political violence becomes an end in itself."

"Even in the best of scenarios, there is a likelihood that jihadists not killed in Iraq will dissipate to various countries or sanctuaries," David Low, the National Intelligence Office for Transnational Threats, said in response to a question during a briefing on Thursday at Central Intelligence Agency headquarters.

President Bush has described the war in Iraq as the central front in the campaign against terrorism, and he has said its role in attracting foreign fighters has had the beneficial effect of luring Islamic militants who might otherwise have plotted attacks against the United States.

The report says "experienced survivors of the war in Iraq" may supersede current leaders of Al Qaeda to become major players in international terrorism, a possibility neither Mr. Bush nor his top advisers have given prominence to.

More broadly, the report says, "we expect that by 2020 Al Qaeda will have been superseded by similarly inspired but more diffuse Islamic extremist groups, all of which will oppose the spread of many aspects of globalization into traditional Islamic societies."

The report says the danger of a conflict between great powers that could develop into total war is now less likely than at any time since 1900.

The United States "will retain enormous advantages, playing a pivotal role across the broad range of issues - economic, technological, political, and military - that no other state will match by 2020."

But it says the likelihood that Iran, North Korea and possibly others may possess chemical, biological or nuclear weapons increased the threats to the United States.


Thursday, January 13, 2005

New FBI Software May Be Unusable

New FBI Software May Be Unusable

A central feature of the agency's $581-million computer overhaul aimed at coordinating anti-terrorism efforts is reportedly inadequate.

By Richard B. Schmitt
Times Staff Writer

January 13, 2005

WASHINGTON — A new FBI computer program designed to help agents share information to ward off terrorist attacks may have to be scrapped, the agency has concluded, forcing a further delay in a four-year, half-billion-dollar overhaul of its antiquated computer system.

The bureau is so convinced that the software, known as Virtual Case File, will not work as planned that it has taken steps to begin soliciting proposals from outside contractors for new software, officials said.

The overhaul of the decrepit computer system was identified as a priority both by the independent commission that investigated the Sept. 11 attacks and by members of Congress, who found that the FBI's old system prevented agents from sharing information that could have headed off the attacks.

Since the attacks, Congress has given the FBI a blank check, allocating billions of dollars in additional funding. So far the overhaul has cost $581 million, and the software problems are expected to set off a debate over how well the bureau has been spending those dollars.

The bureau recently commissioned a series of independent studies to determine whether any part of the Virtual Case File software could be salvaged. Any decision to proceed with new software would add tens of millions of dollars to the development costs and render worthless much of a current $170-million contract.

Requests for proposals for new software could be sought this spring, the officials said. The bureau is no longer saying when the project, originally scheduled for completion by the end of 2003, might be finished.

FBI officials have scheduled a briefing today to discuss what a spokesman said was the "current status of FBI information technology upgrades."

A prototype of the Virtual Case File was delivered to the FBI last month by Science Applications International Corp. of San Diego. But bureau officials consider it inadequate and already outdated, and are using it mainly on a trial basis to glean information from users that will be incorporated in a new design.

Science Applications has received about $170 million from the FBI for its work on the project. Sources said about $100 million of that would be essentially lost if the FBI were to scrap the software.

"It would be a stunning reversal of progress," Sen. Judd Gregg (R-N.H.), the chairman of the Senate appropriations subcommittee that oversees funding for the FBI, said in an interview with the Los Angeles Times this week. "If the software has failed … that sets us back a long way.

"This has been a fits-and-starts exercise, and a very expensive one for a very long time," he added. "There are very serious questions about whether the FBI is able to keep up with the expanding responsibility and the amount of new dollars that are flowing into it. We have fully funded it at its requested levels."

A spokesman for Science Applications, Ron Zollars, said via e-mail that the company had "successfully completed" delivery of the initial version of the Virtual Case File software last month. He declined to comment further.

The stripped-down prototype will be running for three months. The bureau plans to then "shut it down, take all the lessons learned and incorporate them in a future case management system," a person familiar with the bureau's plans said.

Science Applications will apparently be no part of that future: Its contract expires at the end of March, and there were no plans to renew it, sources said.

That the software may have outlived its usefulness even before it has been fully implemented did not surprise some computer experts.

An outside computer analyst who has studied the FBI's technology efforts said the agency's problem is that its officials thought they could get it right the first time. "That never happens with anybody," he said.

Some sources sympathetic to the FBI defended the process, and said that what has been learned in designing the software has given the bureau valuable design and user information.

The replacement software may even be called the Virtual Case File, although it is unlikely to bear much resemblance to the product that is being rolled out to about 300 users testing the prototype in New Orleans and Washington. The prototype's main feature allows users to prepare documents and forward them in a usable form.

Eventually, the FBI expects to have software with added features for managing records, evidence and other documents, along with the ability for users to collaborate on documents and share information online.

The move is being engineered by Zalmai Azmi, who has been the FBI's chief information officer for the last year. People familiar with his work say Azmi recognizes that the change in direction is likely to generate political heat but that it will serve the bureau better in the long run.

The development illustrates the problems in keeping up with rapidly changing technology that confront any business, as well as the changing mission of the FBI since the Sept. 11 attacks, among other issues.

Since the attacks, the FBI has rolled out thousands of new computers and set up new secure electronic networks to exchange information, both inside the bureau and with a small number of intelligence agencies. The bureau has also created a database covering millions of documents in the agency's files that are more easily retrievable than before the attacks, and established new systems for managing the overall architecture and budgeting for its computer programs.

The overhaul of the computer system was conceived before the Sept. 11 attacks, when the FBI's main job was catching drug dealers and corrupt politicians, rather than weeding out terrorists before they could strike. At least until recently, the bureau's shoe-leather culture never fully embraced cutting-edge technology, leading to rapid turnover in its management ranks.

A Government Accountability Office report last year noted that the FBI had gone through five chief information officers in the preceding 24 months. The chief manager of the technology upgrade known as Trilogy quit last year for personal reasons after being lured from private industry two years ago.

The effort has also been the subject of a number of critical reports. Last spring, technology experts for the National Research Council found that the Trilogy project failed to reflect the FBI's new emphasis on terrorism prevention and was "not on a path to success."

A trade publication, Government Computer News, reported late last month that the Justice Department's inspector general had concluded in a draft report that Virtual Case File would also fail to meet the bureau's needs, and that officials had "no clear timetable or prospect for completing" it.

A spokesman for the inspector general's office declined to comment on the draft, as a matter of policy.

The FBI has had preliminary discussions with a number of vendors about the possible design of new software. One approach that the bureau is considering is a case-management system that could be used by other agencies, including the departments of Justice and Homeland Security.

It is also looking into using off-the-shelf technology as a way to save money.

The FBI has retained Aerospace Corp., a nonprofit, federally funded research firm in El Segundo, to conduct an independent evaluation of Virtual Case File.

It has also hired BAE Systems, a British defense contractor, to identify and evaluate the specific needs and requirements for any permanent system.

The companies' reports are due later this month.


White House Fought New Curbs on Interrogations, Officials Say

The New York Times
January 13, 2005
White House Fought New Curbs on Interrogations, Officials Say

WASHINGTON, Jan. 12 - At the urging of the White House, Congressional leaders scrapped a legislative measure last month that would have imposed new restrictions on the use of extreme interrogation measures by American intelligence officers, Congressional officials say.

The defeat of the proposal affects one of the most obscure arenas of the war on terrorism, involving the Central Intelligence Agency's secret detention and interrogation of top terror leaders like Khalid Sheikh Mohammed, the mastermind of the Sept. 11 attacks, and about three dozen other senior members of Al Qaeda and its offshoots.

The Senate had approved the new restrictions, by a 96-to-2 vote, as part of the intelligence reform legislation. They would have explicitly extended to intelligence officers a prohibition against torture or inhumane treatment, and would have required the C.I.A. as well as the Pentagon to report to Congress about the methods they were using.

But in intense closed-door negotiations, Congressional officials said, four senior members from the House and Senate deleted the restrictions from the final bill after the White House expressed opposition.

In a letter to members of Congress, sent in October and made available by the White House on Wednesday in response to inquiries, Condoleezza Rice, the national security adviser, expressed opposition to the measure on the grounds that it "provides legal protections to foreign prisoners to which they are not now entitled under applicable law and policy."

Earlier, in objecting to a similar measure in a Senate version of the military authorization bill, the Defense Department sent a letter to Congress saying that the department "strongly urges the Senate against passing new legislation concerning detention and interrogation in the war on terrorism" because it is unnecessary.

The Senate restrictions had not been in House versions of the military or intelligence bills.

In interviews on Wednesday, both Senator Susan Collins of Maine, a Republican negotiator, and Representative Jane Harman of California, a Democratic negotiator, said the lawmakers had ultimately decided that the question of whether to extend the restrictions to intelligence officers was too complex to be included in the legislation.

"The conferees agreed that they would drop the language but with the caveat that the intelligence committees would take up the issue this year," Ms. Collins said.

Ms. Harman said, "If there are special circumstances around some intelligence interrogations, we should understand that before we legislate."

Some Democratic Congressional officials said they believed that the Bush administration was trying to maintain some legal latitude for the C.I.A. to use interrogation practices more extreme than those permitted by the military.

In its report last summer, the independent commission on the Sept. 11 attacks recommended that the United States develop policies to guarantee that captured terrorists were treated humanely.

Martin Lederman, a former Justice Department lawyer who left the department in 2002, said in an interview on Wednesday that he believed that the administration had "always wanted to leave a loophole where the C.I.A. could engage in actions just up to the line of torture."

The administration has said almost nothing about the C.I.A. operation to imprison and question terror suspects designated as high-value detainees, even as it has expressed disgust about abuses at the Abu Ghraib prison in Iraq. Senior officials have sought in recent public statements to emphasize that the government will continue to abide by federal laws that prohibit torture.

At his confirmation hearing last week on his nomination to be attorney general, Alberto R. Gonzales said he found torture abhorrent.

The issue of the C.I.A.'s treatment of detainees first arose after agency officials sought legal guidance on how far its employees and contractors could go in interrogating terror suspects and whether the law barred the C.I.A. from using extreme methods, including feigned drowning, in the interrogation of Abu Zubaydah, the first of the Qaeda leaders captured by the United States. He was apprehended in Pakistan in early 2002.

An August 2002 legal opinion by the Justice Department said that interrogation methods just short of those that might cause pain comparable to "organ failure, impairment of bodily function or even death" could be allowable without being considered torture. The administration disavowed that opinion last summer after the classified legal opinion was publicly disclosed.

A new opinion made public late last month, signed by James B. Comey, the deputy attorney general, explicitly rejected torture and adopted more restrictive standards to define it.

But a cryptic footnote to the new document about the "treatment of detainees" referred to what the officials said were other still-classified opinions. The footnote meant, the officials said, that coercive techniques approved by the Justice Department under the looser interpretation of the torture statutes were still lawful even under the new, more restrictive interpretation.

Current and former government officials said specific interrogation methods were addressed in a series of still-secret documents, including an August 2002 one by the Justice Department that authorized the C.I.A.'s use of some 20 interrogation practices. The legal opinion was sent to the C.I.A. via the National Security Council at the White House.

Among the procedures approved by the document was waterboarding, in which a subject is made to believe he might be drowned.

The document was intended to guide the C.I.A. in its interrogation of Mr. Zubaydah and a handful of other high-level detainees. Instead, it led to a series of exchanges between the Justice Department and the intelligence agency as they debated exact procedures to be employed against individual detainees.

At times, their discussion included an assessment of whether specific measures, on a detainee by detainee basis, would cause such pain as to be considered torture.

In addition to Ms. Collins and Ms. Harman, the lawmakers in the conference committee negotiations were Senator Joseph I. Lieberman, Democrat of Connecticut, and Representative Peter Hoekstra, Republican of Michigan.

The Senate measure to impose new restrictions on the use of extreme interrogation measures, drafted by Senator Richard J. Durbin, Democrat of Illinois, was in an amendment introduced by Mr. Lieberman and Senator John McCain, Republican of Arizona. And in little-noticed comments on the Senate floor in December, Mr. Durbin complained that the decision by conferees to delete the measure had been "troublesome."

"I think the intelligence community should be held to the same standards as the Department of Defense," Mr. Durbin said in those remarks, "and taking this language out of the bill will make that very difficult to monitor, as I hoped we would be able to do."

A Congressional Democrat said the White House stance had left the impression "that the administration wanted an escape hatch to preserve the option of using torture" against prisoners held by the C.I.A.

The only public statement from the Bush administration about the kinds of restrictions proposed by Mr. Durbin came last June, when the Defense Department expressed strong opposition to a measure in the military authorization bill. That measure, adopted by the Senate, also imposed restrictions prohibiting torture as well as cruel, inhuman and other degrading treatment but it applied only to Defense Department personnel.

In a letter to Congress, Daniel J. Dell'Orto, the Pentagon's principal deputy counsel, criticized the legislation as unnecessary, saying it would "leave the current state of the law exactly where it is." Mr. Dell'Orto also criticized as "onerous" and inappropriate other provisions in the measure that would require the Pentagon to submit annual facility-by-facility reports to Congress on the status of detainees.

Ultimately, the House did not include the measure in its version of that military bill, and the final version of the legislation included only nonbinding language expressing a sense of Congress that American personnel should not engage in torture.


UN nuclear monitors at Iran site

UN nuclear monitors at Iran site

United Nations nuclear inspectors have visited a military site in Iran which the US says may be linked to a secret nuclear weapons programme.

They went to the Parchin base near Tehran, to see whether nuclear material had been tested there.

According to US experts, satellite images of the site suggest that some buildings may be used to test nuclear bomb components.

Tehran denies the claim and insists its nuclear activities are peaceful.

Speaking ahead of the visit by International Atomic Energy Agency (IAEA) officials, Hossein Mousavian of Iran's nuclear negotiations team said the inspectors would only have partial access to the site.

"We are watchful. We have allowed inspections into our military installations but we will not allow any espionage or the theft of information from our military sites," he said, according to the Mehr news agency.

"It is not necessary for the inspectors to enter the installations. They are authorised to take samples outside (the buildings) using their equipment."

The IAEA has not reported any restrictions during the visit. Its spokesman, Mark Gwozdecky, would only say that the team had taken environmental samples.

Trade talks

Iran maintains that its nuclear programme is strictly civilian, and that it is not developing atomic weapons.

But the US suspects Tehran has a covert nuclear weapons programme, and wants the IAEA to take Iran to the UN Security Council for possible sanctions.

US officials increased the pressure after the publication of satellite images of the Parchin site by the Institute for Science and International Security last September.

A senior American delegate at the Vienna-based IAEA said it "clearly shows the intention to develop weapons".

The European Union resumed trade talks with Iran on Wednesday, 18 months after they were halted over Tehran's nuclear programme.

Negotiations restarted after Iran agreed in November to suspend the enrichment of uranium.


U.S. Alert Prompts British Plane to Turn Back
U.S. Alert Prompts British Plane to Turn Back
Passenger Carrying French Passport Is Questioned in London and Released

By Glenn Frankel and Sara Kehaulani Goo
Washington Post Foreign Service
Thursday, January 13, 2005; Page A16

LONDON, Jan. 12 -- A British Airways jet flying from London to New York turned back three hours into its trip Wednesday after U.S. authorities objected to one of its passengers on national security grounds.

Flight 175, a Boeing 747 with 239 passengers aboard, returned to Heathrow Airport, according to Richard Goodfellow, a British Airways spokesman. The passenger, who was carrying a French passport, was questioned by British police and released. British officials did not disclose his name or offer any further description.

British Airways said that the plane, which was given a new crew and refueled, took off again for John F. Kennedy International Airport on Wednesday evening. "We want to emphasize there was no safety threat to the aircraft at any time," Goodfellow said.

An official at the U.S. Department of Homeland Security, who spoke on condition of anonymity, said the passenger was a man of Moroccan origin. Agency officials said they were confident he was a "positive match" with a person on the no-fly list that the U.S. government maintains to keep people deemed terrorism threats off passenger aircraft. The officials declined to provide details about why he was placed on the list.

A U.S. security official said British Airways probably did not have the most up-to-date no-fly list because the Department of Homeland Security recently changed the way it is distributed to airlines.

The name in question was added to the list in December, the official said. Normally, the airline would have realized before the flight departed that the passenger's name was a positive match and stopped him from boarding.

British Airways was given the option of diverting the flight to Bangor, Maine, the landing spot for most inbound transatlantic flights with such problems. Instead, it chose to return the plane to London, according to Yolanda Clark, a spokeswoman for the Transportation Security Administration.

Last January, several British Airways flights to Washington Dulles International Airport were canceled or delayed at Heathrow at the request of U.S. officials following intelligence warnings that they might be carrying terrorists. No one was arrested, nor were the cancellations officially explained.

In September, a United Airlines flight to Washington carrying Yusuf Islam, the British singer formerly known as Cat Stevens, was diverted to Bangor, and he was detained briefly and sent back to London on national security grounds. Islam said he believed he ended up on a no-fly list because of a spelling error and asked his lawyers to pursue the matter. Secretary of State Colin L. Powell said the case would be reviewed.

Goo reported from Washington.


Wednesday, January 12, 2005

Seeking the bin Laden Behind the Myth and the Mystery

The New York Times
January 12, 2005
Seeking the bin Laden Behind the Myth and the Mystery

Osama bin Laden has been an obvious focus of the press for so long that it is strange that his basic biography remains so blurry. Network news programs have depicted an elusive, faraway bogeyman with a deadly reach, but his might seems rather meager, when seen up close.

"Meeting Osama bin Laden," which will be shown on PBS tonight, finds that the al Qaeda leader has schemes that are villainous and grand but a demeanor that is polite and shy. That's the report from several journalists who have followed his decade-long ascent in some Islamic fundamentalist sects. In addition, former allies echo this mild-mannered depiction of the target of what is called history's biggest worldwide manhunt, as if to say, "That guy?"

The program is troubled by a consistent problem in the treatment of big news stories. The largest United States television networks don't devote enough minutes to telling the fullest possible story, even if that would mean explaining the one man we are all supposed to fear most. Meanwhile, PBS gets encyclopedic when telling such a televised tale, but without the verve or tempo that will make millions sit rapt for an hour.

If only the producers of "Meeting Osama bin Laden" approached this subject as a gripping magazine read, then they might have had a tighter conceit to connect details that don't make their way into daily dispatches on the conflict. Here's one this PBS special hints at, but doesn't quite deliver: The man is more adept at cultivating mystery than widespread support.

The program speeds through a digest of Mr. bin Laden's childhood, with the most salient point being his solo status, even in his crowded family. He was the only child of his industrialist father's 10th and final wife. His half-siblings tended to connect only with others of the same mother, leaving Osama on his own. His father was himself a Yemen-born entrepreneur in the exclusive society of Saudi Arabia, and Mr. bin Laden's outsider persona seems stoked by that fact too. Still, he had a privileged boyhood as his father flew him by private jet to prayer services in mosques he helped to build in Mecca, Medina and Jerusalem.

The Soviet invasion of Afghanistan in late 1979 was at first an occasion for Mr. bin Laden, whose father died before his son's teenage years, to finance Islamic rebels with his inheritance. Then Mr. bin Laden put his finger on actual triggers and apparently heard a call to arms. His donations of money and tractors financed construction of the Tora Bora caves, which protected what he came to call "my mujaheddin," or holy warriors, according to a former Saudi intelligence chief who met with the young benefactor when he was first flush with victory over the Soviets.

Sensing he was on a divinely guided roll, Mr. bin Laden drew up larger plans to expel so-called infidels out of "Palestine, Kashmir and Chechnya," according to the show, and eventually the United States itself became his nemesis. He reportedly resented that American troops entered Kuwait to cast out the Iraqi invaders, a cause in which he would have liked to play the hero, and that Saudi royals welcomed American troops on what he considered sacred ground.

And as he undertook these greater goals, Mr. bin Laden continued to impress people as demure. One journalist notes he "opened his heart" to him during an interview. Another recalls him swinging the legs of his lithe 6-foot-4-inch frame over the arms of his office chair during their chat. Someone else describes him as muscular and feline.

He is said to have princely holdings, like a stableful of stallions, but treats his sons like cadets, with Kalashnikov-training for their role in the jihad. A reported kidney disease is said to require that he take constant sips of water and green tea. And then there's a vague consideration of his four wives, which one former houseguest had the nerve to tease him about. "People who have special circumstances need such an arrangement," Mr. bin Laden replied, laughing. No further explanation is offered.

That's just one more detail thrown into this factual compilation that is ultimately too timid in demystifying the bin Laden legend. The show's biggest insight should have been further emphasized: again and again, the glory-seeking avenger is pushed to the margins by those from whom he expects much more gratitude.

Over all, it appears that Mr. bin Laden has benefited from the caution that the American news media use when considering a religious cause, and this program at least tries to present a more complete picture. Televised images of raving radicals often suggest big numbers and resolute intensity, but in this program some rifle-shooting revelers, touting Mr. bin Laden's arrival, are described as having done so only under orders from bin Laden henchmen. For years, this bashful mastermind has issued terrifying edicts, backed with images of spectacular destruction, and Western journalists are still caught between overselling his might and underestimating his determination.

'Meeting Osama bin Laden'

PBS, tonight at 10; check local listings.

Zvi Dor-Ner, producer for WGBH; Brian Lapping and Peter Kessler, producers for Brook Lapping; Lucy Hetherington, producer for BBC; Will Lyman, narrator. A Brook Lapping Production for WGBH Boston in association with BBC and Norddeutscher Rundfunk and RTE.


Jan. 30 Approaching With All the Promises of Doomsday
Wednesday, 12, January, 2005 (01, Dhul Hijjah, 1425)

Jan. 30 Approaching With All the Promises of Doomsday
Robert Fisk, The Independent —

BAGHDAD, 12 January 2005 — Journalism yields a world of clichés but here, for once, the first cliché that comes to mind is true. Baghdad is a city of fear. Fearful Iraqis, fearful militiamen, fearful American soldiers, fearful journalists. Jan. 30, that day upon which the blessings of democracy will shower upon us, is approaching with all the certainty and speed of doomsday. The latest Zarqawi video shows the execution of six Iraqi policemen. Each are shot in the back of the head, one by one. A survivor plays dead. Then a gunman walks confidently up behind him and blows his head apart with bullets.

These images haunt everyone. At the Al-Hurriya intersection Monday morning, four truckloads of Iraqi national guardsmen — the future saviors of Iraq, according to George Bush — are passing my car. Their rifles are porcupine quills, pointing at every motorist, every Iraqi on the pavement — the Iraqi Army pointing their weapons at their own people. And they are all wearing masks — black hoods or ski masks or kuffiyas that leave only slits for frightened eyes. Just before it collapsed finally into the hands of the insurgents last summer, I saw exactly the same scene in the streets of Mahmoudiya, south of Baghdad. Now I am watching them in the capital.

At Kamal Jumblatt Square beside the Tigris, two American Humvees approach the roundabout. Their machine-gunners are shouting at drivers to keep away from them. A big sign in Arabic on the rear of each vehicle says: “Forbidden. Do not overtake this convoy. Stay 50 meters away from it.” The drivers behind obey; they know the meaning of the “deadly force” which the Americans have written onto their checkpoint signs. But the two Humvees drive into a massive traffic jam, the gunners now screaming at us to move back. When a taxi which does not notice the US troops blocks their path, the American in the lead vehicle hurls a full plastic bottle of water onto its roof and the driver mounts the grass traffic circle. A truck receives the same treatment from the lead Humvee. “Go back,” shouts the rear gunner, staring at us through shades. We try desperately to turn into the jam.

Yes, the Russians would probably have chucked hand grenades in Kabul. But here were the terrified “liberators” of Baghdad throwing bottles of water at the Iraqis who are supposed to enjoy an American-imposed democracy on Jan. 30. Lest anyone doubt this extraordinary scene, the rear Humvee has “Specialist Carrol” written on the windscreen. Specialist Carrol, I am sure, regards every one of us as a potential suicide bomber — a killer on wheels — and I can’t blame him. One such bomber had just driven up to the police station in Tikrit north of Baghdad and destroyed himself and the lives of at least six policemen. Round the corner, I discover the reason for the jam: Iraqi cops are fighting off hundreds of motorists desperate for petrol, the drivers refusing to queue any longer for the one thing which Iraq possesses in Croesus-like amounts — petrol.

I drop by the Ramaya restaurant for lunch. Closed. They are building a 20-floor security wall around the premises. So I drive to the Rif for a pizza, occasionally tinkling the restaurant’s piano, Air on a G-string while I watch the entrance for people I don’t want to see. The waiters are nervous. They are happy to bring my pizza in ten minutes. There is no one else in the restaurant, you see, and they watch the road outside like friendly rabbits. They are waiting for The Car.

I call on an old Iraqi friend who used to publish a literary magazine during Saddam’s reign. “They want me to vote, but they can’t protect me,” he says. “Maybe there will be no suicide bomber at the polling station. But I will be watched. And what if I get a hand grenade in my home three days’ later? The Americans will say they did their best, Allawi’s people will say I am a ‘martyr for democracy’. So do you think I’m going to vote?”

At Moustansariya University — one of Iraq’s best — students of English literature are to face their end of term exam. January marks the end of Iraqi semesters. But one of the students tells me that his fellow students had told their teacher that — so fraught are the times — that they were not yet prepared for the examination. Rather than giving them all zeros, the teacher meekly postpones the exam.

I drive back through the Al-Hurriya intersection beside the “Green Zone” and suddenly there is a big black four-by-four, filled with ski-masked gunmen. “Get back!” they scream at every motorist as they try to cut across the median. The rear door of the four-by-four whacks open. A ski-masked Westerner — blond hair, blue eyes — is pointing a Kalashnikov at my car. “Get back!” he shrieks in ghastly Arabic. Then he clears the median, followed by three armored pickups, windows blacked, tires skidding on the road surface, carrying the sacred Westerners inside to the dubious safety of the Green Zone, the hermetically sealed compound from which Iraq is supposedly governed.

I glance at the Iraqi press. Colin Powell is again warning of “civil war” in Iraq. Why do we Westerners keep threatening civil war in a country whose society is tribal rather than sectarian? Of all papers, it is the Kurdish “Al Takhri”, loyal to Mustafa Barzani, which asks the same question. “There has never (italics: never) been a civil war in Iraq,” the editorial thunders. And it is right.

So “full ahead both” for the dreaded Jan. 30 elections and democracy. The American generals — with a unique mixture of mendacity and hope amid the insurgency —- are now saying that only four of Iraq’s eighteen provinces may not be able to “fully” participate in the elections. Good news. Until you sit down with the population statistics and realize — as the generals, of course, all know —- that those four provinces contain more than half the population of Iraq.


Search for Banned Arms In Iraq Ended Last Month
Search for Banned Arms In Iraq Ended Last Month
Critical September Report to Be Final Word

By Dafna Linzer
Washington Post Staff Writer
Wednesday, January 12, 2005; Page A01

The hunt for biological, chemical and nuclear weapons in Iraq has come to an end nearly two years after President Bush ordered U.S. troops to disarm Saddam Hussein. The top CIA weapons hunter is home, and analysts are back at Langley.

In interviews, officials who served with the Iraq Survey Group (ISG) said the violence in Iraq, coupled with a lack of new information, led them to fold up the effort shortly before Christmas.

Four months after Charles A. Duelfer, who led the weapons hunt in 2004, submitted an interim report to Congress that contradicted nearly every prewar assertion about Iraq made by top Bush administration officials, a senior intelligence official said the findings will stand as the ISG's final conclusions and will be published this spring.

President Bush, Vice President Cheney and other top administration officials asserted before the U.S. invasion in March 2003 that Iraq was reconstituting its nuclear weapons program, had chemical and biological weapons, and maintained links to al Qaeda affiliates to whom it might give such weapons to use against the United States.

Bush has expressed disappointment that no weapons or weapons programs were found, but the White House has been reluctant to call off the hunt, holding out the possibility that weapons were moved out of Iraq before the war or are well hidden somewhere inside the country. But the intelligence official said that possibility is very small.

Duelfer is back in Washington, finishing some addenda to his September report before it is reprinted.

"There's no particular news in them, just some odds and ends," the intelligence official said. The Government Printing Office will publish it in book form, the official said.

The CIA declined to authorize any official involved in the weapons search to speak on the record for this story. The intelligence official offered an authoritative account of the status of the hunt on the condition of anonymity. The agency did confirm that Duelfer is wrapping up his work and will not be replaced in Baghdad.

The ISG, established to search for weapons but now enmeshed in counterinsurgency work, remains under Pentagon command and is being led by Marine Corps Brig. Gen. Joseph McMenamin.

Intelligence officials said there is little left for the ISG to investigate because Duelfer's last report answered as many outstanding questions as possible. The ISG has interviewed every person it could find connected to programs that ended more than 10 years ago, and every suspected site within Iraq has been fully searched, or stripped bare by insurgents and thieves, according to several people involved in the weapons hunt.

Satellite photos show that entire facilities have been dismantled, possibly by scrap dealers who sold off parts and equipment to buyers around the world.

"The September 30 report is really pretty much the picture," the intelligence official said.

"We've talked to so many people that someone would have said something. We received nothing that contradicts the picture we've put forward. It's possible there is a supply someplace, but what is much more likely is that [as time goes by] we will find a greater substantiation of the picture that we've already put forward."

Congress allotted hundreds of millions of dollars for the weapons hunt, and there has been no public accounting of the money. A spokesman for the Pentagon's Defense Intelligence Agency said the entire budget and the expenditures would remain classified.

Several hundred military translators and document experts will continue to sift through millions of pages of documents on paper and computer media sitting in a storeroom on a U.S. military base in Qatar.

But their work is focused on material that could support possible war crimes charges or shed light on the fate of Capt. Michael Scott Speicher, a Navy pilot who was shot down in an F/A-18 fighter over central Iraq on Jan. 17, 1991, the opening night of the Persian Gulf War. Although he was initially reported as killed in action, Speicher's status was changed to missing after evidence emerged that he had ejected alive from his aircraft.

The work on documents is not connected to weapons of mass destruction, officials said, and a small group of Iraqi scientists still in U.S. military custody are not being held in connection with weapons investigations, either.

Three people involved with the ISG said the weapons teams made several pleas to the Pentagon to release the scientists, who have been interviewed extensively. All three officials specifically mentioned Gen. Amir Saadi, who was a liaison between Hussein's government and U.N. inspectors; Rihab Taha, a biologist nicknamed "Dr. Germ" years ago by U.N. inspectors; her husband, Amir Rashid, the former oil minister; and Huda Amash, a biologist whose extensive dealings with U.N. inspectors earned her the nickname "Mrs. Anthrax."

None of the scientists has been involved in weapons programs since the 1991 Gulf War, the ISG determined more than a year ago, and all have cooperated with investigators despite nearly two years of jail time without charges. U.S. officials previously said they were being held because their denials of ongoing weapons programs were presumed to be lies; now, they say the scientists are being held in connection with the possible war crimes trials of Iraqis.

It has been more than a year since any Iraqi scientist was arrested in connection with weapons of mass destruction. Many of those questioned and cleared have since left Iraq, one senior official said, acknowledging for the first time that the "brain drain" that has long been feared "is well underway."

"A lot of it is because of the kidnapping industry" in Iraq, the official said. The State Department has been trying to implement programs designed to keep Iraqi scientists from seeking weapons-related work in neighboring countries, such as Syria and Iran.

Since March 2003, nearly a dozen people working for or with the weapons hunt have lost their lives to the insurgency. The most recent deaths came in November, when Duelfer's convoy was attacked during a routine mission around Baghdad and two of his bodyguards were killed.