Legal Commentary

Swift Justice?

By Stewart Baker

Gabriel Schoenfeld points out in the Weekly Standard that the administration?s nominee to be general counsel of the Army, Solomon B. Watson IV, was general counsel of the New York Times when it broke the story of the Treasury?s program to uncover terrorist financing.

Watson has drawn fire for his role in allowing the disclosure of that program. Certainly the Times deserves a black eye for that disclosure, which even its own public editor ended up condemning ? admitting, ?I haven?t found any evidence in the intervening months that the surveillance program was illegal.?

Maybe Watson was not involved in the Times?s decision to publish the story, although given the extraordinary Treasury effort to persuade the Times not to publish, it would be a surprise if it didn?t ask its general counsel whether it could legally disclose the program ? and whether the program it was disclosing was itself legal.  If they had a client that made decisions like that without consulting them, most lawyers wouldn?t stick around as general counsel very long.

Most Americans haven?t focused on this breach of security because it was deservedly treated as a nonstory in this country.  The inattention is a mistake on our part.  In fact this may be one of the most damaging national security breaches the Times has ever committed, since the European overreaction to the story has crippled a valuable program. For context, I?ve pasted below as an explanation of the matter a longish excerpt from Skating on Stilts, my book on technology and terrorism, due out in June:

It worked. Treasury later credited the program with allowing it to track and capture the mastermind behind the Bali bombings that killed two hundred people. The program was also said to have allowed Treasury to identify and convict a Brooklyn man who had laundered $200,000 for al Qaeda.

Alas, the program was soon to lose much of its value. In June 2006, The New York Times evidently decided that the program must be scandalous; over the vehement objections of the Treasury, it published a lengthy expose about it. The Public Editor of The New York Times would later conclude that the paper had been wrong to compromise the secret program.... But by then it was too late. The New York Times had managed to create a storm over the program in Europe.
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SWIFT?s American CEO, who had defended the program as necessary to combat terrorism, retired in 2007. He was replaced by a Spaniard. Shortly thereafter, SWIFT announced that it would restructure its data systems to store data on European transactions only in Switzerland.

European privacy bureaucrats crowed that they had crippled the American program, at least as far as European terror finance was concerned: ?the creation of a new operation centre in Switzerland ? means personal data in intra-European transactions will no longer be processed in the US.? The Belgian data protection authority also cited the new Swiss center favorably when it announced in early 2008 that SWIFT actually hadn?t broken Belgian law.

Coincidence? Nope. SWIFT admitted that pressure from the privacy bureaucrats was one of the reasons it adopted the new architecture: ?Distributed architecture will improve resilience, add capacity, control long-term average message costs, and alleviate European data protection concerns.?  In short, it?s pretty clear that SWIFT was forced to withhold European terrorist financing information from Treasury by European government officials.

?Having made a mess of an effective U.S. terrorism program without substantially serving privacy, some in Brussels tried to minimize the damage. The European Commission negotiated an agreement to give the United States access to intra-European bank transfer data even after the Swiss operations center is set up?but only if Treasury continued to live up to European standards.

Remarkably, even this was too much for the privacy campaigners of Europe. In the first exercise of new authorities granted to it by the Lisbon treaty, the European Parliament rejected the agreement, essentially creating a European safe haven for terrorist finance.

Full post as published by The Volokh Conspiracy on March 25, 2010 (boomark / email).