A New Front in War on WikiLeaks

By Danny Schechter, Consortium News

02 June 13

With Private Bradley Manning’s leak trial about to start and with Wikileaks founder Julian Assange still holed up in the Ecuador Embassy in London, “We Steal Secrets,” a new big-budget documentary purports to explain the controversy but has more the look of a hit job, says Danny Schechter.

very documentary filmmaker begins with deciding on the story to be told, and, then, how to sustain audience interest. If your goal is to inform the public or take a stand on an important issue by explaining its origins and exposing wrongdoers then you go one way. If your goal is to entertain and shroud your motives by exploring murky personality contradictions, you go another.

"We Steal Secrets," Alex Gibney's latest documentary (or is it a docudrama?), skillfully made with the backing of a major media company tries to do both. Ironically, that company, Comcast-Universal, owners of NBC, is at the same time having a major success with another movie, "Fast and Furious6," glamorizing a criminal gang that relies on speedy cars.

You could say that Wikileaks, the subject of "We Steal Secrets" also began with a fury - a fury against war and secrecy, and was moving as fast as it could to challenge media complacency in the digital realm. Now, it is being ganged up on by a media that invariably builds you up before tearing you down.

The docu-tract uses slick graphics to creatively report on the origins and impact of Wikileaks, the online whistleblower collective, but then, for "balance" and perhaps to pre-empt any criticisms of any bias, especially too much ideological sympathy, opened the tap on endless criticisms by Wiki-dissidents who have turned on founder Julian Assange, as well as the pathetic patriot hacker turned informant who ratted out Bradley Manning.

The movie revels in all the negatives that surround Assange and his chief and gutsy leaker, Private First Class Manning who is on the eve of a trial that could land him behind bars for life under the 1917 Espionage Act. On June 1, Manning supporters are rallying at Fort Meade, the Maryland military base where he is being held. His trial begins June 3.

Says Michael Ratner of the Center for Constitutional Rights: "The Manning trial is occurring in the context of perhaps the most repressive atmosphere for free press in recent memory. It was bad enough that the Obama administration prosecuted twice the number of whistleblowers than all prior administrations combined. Then it went after logs and records of journalists and publishers."

Manning's recent and widely unreported statement in Court explaining his reasons for making the secret documents public is not in the film. The film mentions, but does not explore, Manning's claim that he offered his data first to mainstream newspapers, including the Washington Post, which showed no interest. Their failure to publish the story was one of the reasons the soldier turned to Wikileaks.

And, also, one of the reasons that validates Wikileaks claim of having a journalistic mission. So, the stakes are high, and it's surprising that the film's very title, "We Steal Secrets," a statement that many might take as a Wiki-boast, was really an admission by former CIA and NSA director Michael Hayden about what the U.S. government, not Wikileaks, is all about.

It is very rare for an indy filmmaker to land interviews with top intelligence honchos. Who had the juice to get this "get" as major interviews are called in the news world? Supporters of Assange like civil libertarians, media freedom groups, Pentagon Papers leaker Daniel Ellsberg and Noam Chomsky are conspicuously absent. As a result, "We Are Secrets" seems more like a case for the prosecution than the defense, at least in the court of public opinion.

The film has had a big promotional push and is already playing in three theaters in New York, a success that masks some of its editorial failings including its in-your-face attempt at "fairness and balance," the pretext the one-siders at FOX use as their claim to credibility. The promotional hype for the film initially made it seem like an endorsement of Assange until you read it closely.

"Filmed with the startling immediacy of unfolding history, Academy Award®-winning director Alex Gibney's 'We Steal Secrets: The Story of WikiLeaks' details the creation of Julian Assange's controversial website, which facilitated the largest security breach in U.S. history. Hailed by some as a free-speech hero and others as a traitor and terrorist..."

So, there you are: the movie's real question: Is Assange a good guy or not? And what about Manning? Why did he do what he did? So, at the outset, Gibney leaves the political plane for a psychological, or even, a psychiatric one. He is out to personalize and in the process depoliticize a very political issue for what's known in the news-biz as "character-based story telling."

The mantra: stick with people, not their passions, individuals not ideas.

Yes, there's lots of information about the goals and methods of Wikileaks, but that becomes in this movie a subtext to a more Shakespearean tragedy: the rise and fall of idealists who turn into their opposites, or are using politics to work out their twisted personal issues. Out goes more film time devoted to war crimes and information concealment; and, in comes juicy stories about sex without condoms, cross-dressing and gender conflicts to soften the brew.

The "worthy" appearance of investigation quickly turns into the nasty reality of exploitation with the focus on their subject's flaws, not their bravery, a theme I am sure played well in the conservative board room at Comcast.

-The Village Voice asks in its review, "is a strong point of view really such a bad thing? The movie leaves you feeling lost and confused. Fix. Please."

-The Washington Post seemed to celebrate its exposé not of government secrets - but of secret-hunter Assange, writing, "At best, Assange comes across as something of a noble jerk, a man who doesn't care about embarrassing public figures who have done wrong.

"At worst, he comes across as a callous sociopath, someone who wouldn't hesitate to publish unredacted details of military operations that might actually get people killed, only to lie about it after the fact by claiming that WikiLeaks had 'systems' in place to prevent potentially harmful disclosures. There weren't, according to several seemingly knowledgeable individuals, including Assange's former WikiLeaks colleagues." (Doesn't this reality show how bogus the oft-repeated fears of many in the media and government were?)

-The New York Times was also a bit perturbed - not too much, given the paper's frequent trashing of Assange, (after milking the secrets he gave them) - describing the film as a "tale of absolutist ideals that seemed somehow to curdle and of private torment in search of an outlet with drastic results." Again, the theme is the personal more than the political, the message: You can't trust anyone, much less anyone challenging power.

No wonder that Assange - who was not interviewed for this movie, perhaps sensing a hit job - has turned against the movie. Wikileaks even got its hands on a script before the film's release and annotated it to challenge its veracity. You can read it on their website at Wikileaks.org.

Wikileaks says, "The film portrays Manning's alleged acts as failure of character rather than a triumph of conscience. The portrayal of Manning's alleged relationship to WikiLeaks and to Assange is grossly irresponsible and suggests - erroneously and when evidence is to the contrary - that Assange may be guilty of conspiring with Bradley Manning to commit espionage or similar offences. The film buys into the current US government position that journalists and publishers can be prosecuted as co-conspirators alongside their alleged sources.

"This is a dangerous proposition for all journalists and media organizations - not just WikiLeaks. In the context of the US government's attempts to prosecute journalists who communicate with confidential sources, Gibney's film could have been an important and timely project. The film barely touches on the US investigation against WikiLeaks, never mentions the words 'grand jury', and trivializes the larger issues, perhaps because the film-maker could not secure an interview with Julian Assange?"

The film reports that Assange demanded millions of dollars for an interview - his way, no doubt, of mocking the big bucks behind the production. He knew they wanted the big confrontational Q&A and wouldn't give it them! He says there are two more Wikleaks films on the way that he has cooperated with.

I have been impressed with Alex Gibney's work. He is a talented pro, and this film is worth seeing (and dissecting). I also admire the daring of Manning and Assange who are faulted for being paranoid, but, given the propaganda and legal broadsides launched against them, you can understand why.

Remember when the U.S. government sent thugs to break into Vietnam whistleblower Daniel Ellsberg's psychiatrist's office looking for ways to discredit him? Making your whistleblowers appear weird and crazy is an old technique used by the powerful against those who question power.

Kafka couldn't have come up with a more byzantine legal process than the one that Manning faces. (Military justice is said be for justice what military bands are for music.) There are, for example, no official transcripts of the legal proceedings available. Prominent journalists are calling for more access and transparency. And while having Assange taking refuge in the Ecuador Embassy in London seems absurd, it is also a sign that there are people worldwide who respect and admire the work that Wikileaks does!

"We Steal Secrets" is now a high-profile part of the media war that Wikileaks is fighting, a war that has often put whistleblower group at odds with the press whose freedom it champions. That press insists their way is the only way and is in the business of marginalizing dissidents.

So, first, there were the newspapers which initially rejected the secrets of government abuse and then used Wikileaks, before repudiating Assange as not a "real journalist," as they apparently believe themselves to be. Then, they collectively and arrogantly turned on him en masse. Now, documentaries have become part of this contested terrain.

Madoff and the "Aggressively Clueless" SEC

By Matt Taibbi, Rolling Stone

02 June 13

ore and more embarrassing stories of keep leaking out of the SEC, which is beginning to look somehow worse than corrupt - it's hard to find the right language exactly, but "aggressively clueless" comes pretty close to summing up the atmosphere that seems to be ruling the country's top financial gendarmes.

The most recent contribution to the broadening canvas of dysfunction and incompetence surrounding the SEC is a whistleblower complaint filed by 56-year-old Kathleen Furey, a senior lawyer who worked in the New York Regional Office (NYRO), the agency outpost with direct jurisdiction over Wall Street.

Furey's complaint is full of startling revelations about the SEC, but the most amazing of them is that Furey and the other 20-odd lawyers who worked in her unit at the NYRO were actually barred by a superior from bringing cases under two of the four main securities laws governing Wall Street, the Investment Advisors Act of 1940 and the Investment Company Act of 1940.

According to Furey, her group at the SEC's New York office, from a period stretching for over half a decade through December, 2008, did not as a matter of policy pursue cases against investment managers like Bernie Madoff. Furey says she was told flatly by her boss, Assistant Regional Director George Stepaniuk, that "We do not do IM cases."

Some background is necessary to explain the significance of this tale.

There are four main laws that the SEC uses to regulate the financial sector. At least as far as numbers go, the agency has a fairly extensive record of enforcement actions with the first two, which are aimed at the securities markets.

The first of those is the Securities Act of 1933, also commonly known as the "Blue Sky laws," which among other things set down the rules mandating public disclosure of pertinent information to investors in securities. The second is the Securities Exchange Act of 1934, which governs securities already issued, and includes the laws barring insider trading. Both of these laws are primarily intended to prevent fraud in the securities markets.

But the agency's record is a little spottier when it comes to the other two key pieces of legislation, the Investment Advisers Act of 1940 and the Investment Company Act of 1940. These are the agency's main tools for prosecuting fraud and malfeasance involving people who manage other people's money - mutual funds, hedge funds, investment managers. Somebody like Bernie Madoff, who took billions from investors and simply stole the money instead of investing, would largely be regulated under the latter two acts.

Kathleen Furey joined the SEC in September of 2004, starting as a law clerk in the Enforcement Division. She steadily rose within the agency and was promoted three times over the next three years.

Then in 2007, Furey started work on a case that involved Value Line, a high-profile family of mutual funds that was being accused of charging tens of millions of dollars in bogus commissions. The company had appeared on the SEC's radar via a referral in 2004, but the agency's higher-ups had not yet approved a formal investigation, which is necessary for the issuance of subpoenas.

When she tried to take that next step in the Value Line case, Furey says she was denied. This is when she says Stepaniuk filled her in on his "We don't do IM cases" policy. Upset, and convinced that the Assistant Director of the New York office did not have the authority to unilaterally non-enforce two major portions of the SEC's regulatory mandate, Furey appealed to Stepaniuk's superior in the NYRO.

According to Furey's complaint, this official, instead of helping her and paving the way for the investigation to proceed, gave Furey two options. He said she could either recant her statement about being told not to pursue "IM cases," or she could go to the SEC Inspector General.

Incidentally, Furey in her internal arguments over this case specifically warned that the agency needed to begin enforcing section 206 of the Investment Advisers Act, which barred money managers from employing "any device, scheme, or artifice to defraud any client or prospective client." She warned that pursuing cases under that statute "may save the agency from future embarrassment." Section 206 was the exact statute that the SEC ultimately employed both in the Value Line case (many years later), and in the case against Bernie Madoff.

This background is key to understanding the timeline of the SEC's response to both the Madoff story and Investment Management cases in general.

In Furey's complaint, she cites statistics that provide unsettling evidence that there was, in fact, some kind of policy in place that prevented her group from going after investment advisers. During the period from January 1, 2002, through January 20, 2009, Stepaniuk's group did not file a single case under the Investment Advisors Act (IAA) or Investment Company Act (ICA).

During this time frame, Stepaniuk reportedly approached the SEC's Commission 60 times with requests to to file cases or to open formal investigations, which, again, is necessary to file subpoenas. Out of those 60 cases, only one, the Value Line investigation opened on April 18, 2008, was an Investment Management case.

In a not-so-amazing coincidence, April 18, 2008 happened to be the same day that the SEC's Inspector General released a report that in part addressed the office's apparent mishandling of that same Value Line case. In other words, the SEC seemed not to move on Value Line until it became a public issue.

Even more damning, however, was the reaction after the Madoff story broke, toward the tail end of 2008. The scandal was incredibly embarrassing to the SEC, which had failed to investigate Madoff despite being tipped off in extraordinarily detailed fashion by investigator Harry Markopolos over eight years before.

It came out that Madoff had not merely stolen from his clients but not conducted any trades at all, simply bilking money in the most primitive conceivable Ponzi scheme. This meant that the SEC would have been able to uncover the fraud with even the most cursory examination at any time during the fund's existence.

Unsurprisingly, by the start of 2009, the SEC was being hammered by members of Congress in both parties - institutionally a terribly troubling development, given that Congress controls the regulator's budget.

So how did the agency respond? After having conducted no "IM cases" at all for years, that NYRO group's next nine cases from January 2009 on were all IAA or ICA cases.

When I contacted the SEC, I made it clear that if they could produce any evidence that Furey's statistics were off, that Stepaniuk's unit had in fact filed IAA or ICA cases during the relevant time period, then I probably wouldn't write about her complaint.

But when I pressed the agency for specifics on that question, they responded with red herrings.

First, they sent a list of 14 IM cases pursued by the SEC's New York Office between 2006 and 2009. When I asked how many of those were pursued by Stepaniuk's group, it turned out that only one of them was - a case against Henry "Hank" Morris, a top fundraiser for New York City Comptroller Alan Hevesi. But that case was charged in March 2009, right after the Madoff story broke. This was completely consistent with what Furey had claimed, that her group had essentially not pursued IM cases until after Madoff.

When I pointed this out, they sent yet another list of cases, two of which appeared to have been filed by Stepaniuk's group prior to the Madoff case. One of those, SEC vs. Kevin Dunn, involved a stockbroker for MetLife who was accused of swindling the widow of a Port Authority policeman who died in 9/11.

While no doubt a worthy matter to pursue, this, too turned out not to be an "IM case." Dunn was exclusively charged with violations under the old-school '33 and '34 Acts. The only references to the IAA in the entire case were two totally extraneous facts.

One was that MetLife, which was not charged in the case at all and merely happened to be Dunn's employer, was a registered Investment Adviser. Two was that Dunn, as a condition of his punishment, agreed to be barred from any affiliations with any registered broker-dealer or investment adviser in the future. This is a common regulatory/punitive throw-in and had nothing to do with what kind of case it was.

Claiming that this was an IM case was not much different than sending on a case involving a stockbroker who had committed insider trading while flying over a registered Investment Company office in a hot air balloon - and claiming that was an "IM case." It was silly.

The other case I was sent was . . . SEC vs. Value Line!

The fact that the SEC would try to discredit Furey and sell its own sterling record of investigating investment management cases by citing the same troubled investigation that had caused Furey to blow the whistle in the first place should tell you a lot about how disorganized the agency now seems to be.

The SEC did note that the Inspector General, years back, could not find corroborating evidence for Furey's claim that Stepaniuk had told her there was a policy against "IM cases." But what was or wasn't said is not of primary relevance to the story.

What is highly relevant is that Furey was unquestionably on record - in emails and other complaints - complaining about the lack of action in this arena even before the Madoff story broke. And there's little doubt that this unit's actual record of pre-Madoff IM cases in the rest of the 2000s is essentially nonexistent.

This being the SEC, the story unfortunately did not end with a key unit of the agency merely failing to regulate an entire sector of the finance world until a $60 billion Ponzi scheme exploded in its face. In this incident they've also continued to show an inability to deal with whistleblowers, a problem that of course has been epidemic in the last two presidential administrations, but has been particularly acute in the SEC.

Noted author William Cohan described Furey's post-whistleblowing struggles within the SEC in great detail in a Bloomberg piece.

As Cohan explains, Furey went through all the usual nonsense after coming forward and complaining about the failure to bring "IM cases": She was shunned by superiors, kept away from sensitive work and taken off the promotion track.

Moreover, when Furey in 2010 asked then-NYRO director George Canellos if her career was being held back by her whistleblowing, he gave an interesting answer. She says he responded by saying that there were people in the New York office who were "not fans" of what she had done.

Canellos today mans one of the SEC's top jobs. Along with Andrew Ceresney, who worked with new chief Mary Jo White as a partner at her old firm Debevoise and Plimpton, he runs the SEC's enforcement division.

Furey contends that for a time, she was being compensated at a level not commensurate with her actual duties - without getting too wonky, Furey believed she was being paid as an "SK-14"-level civil servant while she was in fact handling the duties of an "SK-16." When Canellos and other officials did not respond to her complaints directly, she requested an external "desk audit," a government procedure in which an outside official assesses the duties of an agency employee.

Furey received a perfect score of 1,760 out of 1,760 from the outside auditor, who agreed that she was working at the SK-16 level and recommended that, if she remained in that position, she be promoted.

The SEC and Canellos instead stripped her of her duties, essentially demoting her and not implenting the recommendation of the desk audit, an action rare enough that the agency's human resources department apparently had to do research to see if it was legal (according to Furey's attorney, this checking was done only after the demotion).

The SEC, meanwhile, contends that Furey only temporarily held the higher position, filling a spot vacated by a promoted official, and that the agency had to demote her. "As a general matter, managers are not permitted to indefinitely assign work above an employee's grade level," says SEC spokesman John Nester. "If there is not a higher level position that has been approved for filling, managers are required to remove the higher level duties."

Beyond that, neither Stepaniuk nor Canellos has any comment on Furey's allegations.

While a lot of this will seem like a meaningless intramural squabble to outside readers, it points to a larger pattern within the agency. For years, people who come forward and try to press the SEC to pursue important cases have often been treated very poorly, if not with outright hostility.

This has been true of people outside the SEC, like Harry Markopolos or Leyla Wydler, who came forward with information about the Stanford Ponzi scheme, only to be ignored by the SEC. Both the Madoff and Stanford cases, which incidentally were both "IM cases," snowballed into far bigger disasters than was necessary because the agency identically blew off those two whistleblowers.

The agency also has a poor record with whistleblowers within the SEC, like onetime investigator Gary Aguirre, who famously won a $755,000 wrongful termination settlement against the SEC after he was fired for trying to press an insider trading case against future Morgan Stanley chief John Mack.

Aguirre, ironically, now represents Furey, and it sometimes feels like we're re-living the same stories over and over again with this agency. The same kinds of blindly political creatures keep getting promoted to the top jobs, while hardworking line investigators who are just trying to do the work keep running into the same kinds of ludicrous intra-office difficulties. They have to get a clue eventually - don't they?