New Presidential Memorandum Permits Intelligence Director To Authorize Telcos To Lie Without Violating Securities Law
In recent days, AT&T, Bell South and Verizon have all issued statements denying that they've handed over phone records to the NSA, as reported by USA today.
There are three possibilities:
1) The USA Today story is inaccurate;
2) The telcos left enough wiggle room in the statements that both the USA Today story and their statements are accurate; or
3) The statements from the telcos are inaccurate.
Ordinarily, a company that conceals their transactions and activities from the public would violate securities law. But an presidential memorandum signed by the President on May 5 allows the Director of National Intelligence, John Negroponte, to authorize a company to conceal activities related to national security. (See 15 U.S.C. 78m(b)(3)(A))
There is no evidence that this executive order has been used by John Negroponte with respect to the telcos. Of course, if it was used, we wouldn't know about it.
UPDATE: An earlier version of this post incorrectly referred to the May 5 document as an "executive order." It is a presidential memorandum.
UPDATE II: Greg Sargent unpacks the Verizon and Bell South denials.
found at http://thinkprogress.org/2006/05/17/new-executive-order/
WHY DID VERIZON AND BELLSOUTH ISSUE DENIALS AFTER THE STORY BROKE? Here's another thing about the denials that doesn't quite add up. As we've seen, both Verizon and Bellsouth have more or less denied the USA Today story saying that the NSA has been secretly collecting their phone records. USA Today appears to be sticking to the story, though the paper's statement seems to carefully avoid a total commitment to it, instead saying that the paper's "confident" in its reporting.
But something doesn't quite make sense. Why are Verizon and Bellsouth only denying these allegations after the story broke? The USA Today reporters who did the initial story contacted the companies before publishing it. We know this because it contains statements from both companies, each of which declined to comment.
So why didn't the companies deny the story then? I can already hear your answer: "classification" issues. Classification issues do come into play -- though not how you'd expect. And they don't account for this initial failure to deny the story.
Take a close look at the post-story denials. Verizon said that since "the NSA program" is "highly-classified," the company "cannot and will not confirm or deny whether it has any relationship to it." But it also says the assertion that Verizon "entered into an arrangement to provide the NSA with data" is "false." Those seem to contradict each other, don't they?
Either Verizon has some sort of arrangement with the NSA or it doesn't. Did the company get approached by the NSA and decide not to participate, but wanted to keep what they'd learned secret? They seem to say they weren't approached. The statement says "Verizon was not asked by NSA to provide" the records from "any" of its businesses. So if Verizon doesn't have any relationship to the NSA or the program, there would have been nothing about itself that it would need to keep classified. They would have been perfectly free to deny the story before publication. They could have said, "Verizon has no relationship to such a program, should one exist." But they didn't. Why? More to the point, why isn't Verizon now perfectly free to fully deny its own non-relationship to the program, rather than refuse to confirm or deny any relationship, as it has done?
Verizon has done neither of these. From that I think we can infer that the company does have some sort of relationship to the program. What about Bellsouth?
The Bellsouth post-story denials are a bit more troubling for defenders of the NSA/phone records story. Its company spokesman said, "From the review we conducted, we cannot establish any link between BellSouth and the NSA." He also said, "We are not providing any information to the NSA, period." That's a flat statement that there's no relationship whatsoever. So again, there was nothing about itself to keep classified. So why didn't the company deny it initially?
One possibility: Buried in the USA Today story about Bellsouth's denial is this: "The night before the story was published, USA TODAY described the story in detail to Bellsouth, and the company did not challenge the newspaper's account." I have to say that "the night before" seems to be awfully short notice for a story of this magnitude. It's possible the company simply didn't have enough time to do the requisite internal check, though it's also quite possible that a few calls to the company's top execs would have sufficed, and there would have been enough time for that.
Bottom line: The Bellsouth denial remains somewhat troubling, but nonetheless inconclusive. Meanwhile, we can reasonably assume -- based on Verizon's own statements -- that Verizon has some sort of relationship with the NSA. Otherwise, as I said, they'd have nothing to keep secret.
Posted by Greg Sargent on May 17, 2006 12:43 PM
found at http://www.prospect.org/weblog/2006/05/post_393.html#002393