Venezuela: US sending planes with guns, ammo and radios for President Maduro’s enemies

The weapons intercepted at Arturo Michelin airport in Venezuela from Miami on February 3, 2019. Photo: Venezuela Ministry of Interior, Justice and Peace.
  • Boeing 767 belonging to US freight company has made dozens of flights between Miami, Colombia and Venezuela since January 11
  • Official said materiel was ‘destined for criminal groups and terrorist actions’ and ‘financed by the fascist extreme right’ and the US government

Venezuelan authorities say a US-owned air freight company delivered a crate of assault weapons earlier this week to the international airport in Valencia to be used in “terrorist actions” against the embattled government of Nicolas Maduro.

An air freight company, 21 Air, based in Greensboro, North Carolina, operates the Boeing 767 aircraft the Venezuelans claim was used in the arms transfer. The flight originated in Miami on Sunday.

The Boeing 767 has made dozens of flights between Miami International Airport and destinations in Colombia and Venezuela since January 11, a flight tracking service shows, often returning to Miami for only a few hours before flying again to South America.

The discovery of the weapons was on Tuesday – two days after the flight landed briefly in Valencia, Venezuela’s third-largest city – as tax authorities and other inspectors conducted a routine inspection of cargo from the flight, according to a statement by the Carabobo state governor’s office.

Bolivarian National Guard General Endes Palencia Ortiz, Venezuela’s vice-minister of citizen security, said authorities found 19 assault weapons, 118 ammunition cartridges, and 90 military-grade radio antennas, among other items.

“This materiel was destined for criminal groups and terrorist actions in the country, financed by the fascist extreme right and the government of the United States,” Palencia Ortiz was quoted as saying.

The freight company, which started five years ago, operates two cargo planes, a Boeing 747 and a Boeing 767, according to the 21 Air website. The Boeing 767, a 32-year-old aircraft once flown by the now-defunct Brazilian carrier Varig, carries the registration N-881-YV and is the aircraft that landed in Valencia on Sunday.

The company did not immediately respond to a request for comment sent through its website. The mobile phone of the company’s chief executive, Michael Mendez, had a recording on Thursday afternoon that said it could not accept calls.

An Ottawa, Canada-based analyst of unusual ship and plane movements, Steffan Watkins, drew attention to the frequent flights of the 21 Air cargo plane in a series of tweets on Thursday.

“All year, they were flying between Philadelphia and Miami and all over the place, but all continental US,” Watkins said in a telephone interview. “Then all of a sudden in January, things changed.”

That is when the cargo plane began flying daily to destinations in Colombia and Venezuela and sometimes several times a day, Watkins said. The plane has made nearly 40 round-trip flights from Miami International Airport to Caracas and Valencia in Venezuela, and Bogota and Medellin in Colombia since January 11.

The most recent tracking of the aircraft showed it arrived from Medellin into Miami airport after midnight on Thursday.

The air cargo company’s website says the Boeing 767 has a payload capacity of 42 tons.

The aircraft in question has passed through many hands since Varig took delivery of it in 1987. In 2004, it was passed to GE Capital Aviation Services, a leasing company that is part of the General Electric conglomerate, according to an operator history on the planespotters.net website. Tampa Cargo, Avianca Cargo and Dynamic Airways later controlled the aircraft until 21 Air received it in 2014.

The provenance of the alleged weaponry was not apparent. And questions about who the arms shipment was destined for, if the Venezuelan version of events is true, only mounted. Delivery at a commercial airport would indicate somebody with authority there would have had a hand.

The weapons intercepted at Arturo Michelin airport in Venezuela from Miami on February 3, 2019. Photo: Venezuela Ministry of Interior, Justice and Peace.
The weapons intercepted at Arturo Michelin airport in Venezuela from Miami on February 3, 2019. Photo: Venezuela Ministry of Interior, Justice and Peace.

Venezuelan authorities displayed the weaponry they said was delivered by the 21 Air cargo plane on open-air tables draped in red cloth. Some of the rifles included stands for long-range targeting. The shipment included 15 AR-15 assault weapons, a Micro Draco semi-automatic pistol with a jumbo magazine, a Colt 7.62 rifle and two telescopic sights, the governor’s statement said.

The weapons intercepted at Arturo Michelin airport in Venezuela from Miami on February 3, 2019. Photo: Venezuela Ministry of Interior, Justice and Peace.
The weapons intercepted at Arturo Michelin airport in Venezuela from Miami on February 3, 2019. Photo: Venezuela Ministry of Interior, Justice and Peace.

Valencia was a former manufacturing and economic hub before the collapse of the nation’s economy.

Flight records from the tracking site flightradar24.com, monitored by Watkins, indicate the 21 Air cargo plane flew at least four times to Valencia from Miami and another four times to Caracas from Miami since January 11. In many cases, the flights would head on to Bogota or Medellin before returning to Miami.

If a US entity was trying to provide arms to a Venezuelan resistance movement, it would be taking a familiar page from the history books.

The CIA operated a dummy airline, known as Air America, from the early 1950s until the mid 1970s for air operations in Southeast Asia, including airdropping weapons to friendly forces.

More than a decade later, Sandinista soldiers shot down a cargo plane taking weapons to the US-backed Contra rebels fighting the Nicaraguan government. A US Marine veteran, Eugene Hasenfus, survived the 1986 crash and told reporters he was working for the CIA, paving the way for his release and return to the United States.

Curiously, one of the figures in the Ronald Reagan administration instrumental in delivering support to the contras, former assistant secretary of state Elliott Abrams, was named by President Donald Trump late last month as his special envoy overseeing policy towards Venezuela.

This article appeared in the South China Morning Post print edition as: Plane from Miami brought arms for ‘terrorist action’

How Israel spies meddle in elections and hack activists with impunity

Hackers for sale AP_17033705484928_edited

Need an Election Meddled With or an Activist Doxxed? Call on These Israeli Spies

Israel’s special relationship with the United States has given it a free pass for atrocities in Gaza. But, beyond this, in an era of legal gray zones in the area of online disinformation operations, the country’s private spy community has been given carte blanche to covertly meddle in a host of nations.

By Alexander Rubinstein Mint Press News

Private Israeli spy companies have been meddling in other countries, including their elections, at previously unknown levels. The private intelligence firm Psy-Group went to great lengths to pitch the Trump presidential campaign on its services and nakedly meddled in a small-town California election, according to a new report published in the latest issue of The New Yorker. Meanwhile, a number of people associated with lawsuits against NSO Group, infamous for its Pegasus spyware, have become targets of another spying group, according to an AP exclusive.

Hacking and meddling: those are two of the terms underpinning allegations against Russia that have captivated American audiences and lawmakers alike for the past two years. But while Russian hacking has not been conclusively linked to the leak of emails from the Democratic National Committee (DNC) servers, nor is there any evidence, or indictments, that the “Russian troll farm” operated by the private Internet Research Agency is secretly run by the Kremlin, there is ample evidence that bands of self-styled spies for hire have used such tactics to undermine American institutions.

Israel’s special relationship with the United States has given it a free pass for atrocities in Gaza. But, beyond this, in an era of legal gray zones in the area of online disinformation operations, the country’s private spy community — which is comprised mostly of former Mossad and former military intelligence officers — has also been given carte blanche to covertly meddle and engage in black-ops missions in a host of nations.

Psy-Group, which is legally based in Cyprus, was stacked with former Israeli intelligence agents. The company expanded on the tactics pioneered by Terrogence, the first major private Israeli spying company, which disrupted alleged terrorist networks with fake online personas.
But Terrogence’s success inspired new companies, staffed similarly with former Mossad agents, that were “less risk-averse,” according to The New Yorker. Such companies include Black Cube, a firm that boasts about its ties to Mossad and Israeli military intelligence and recently worked on behalf of serial sexual abuser and movie mogul Harvey Weinstein to spy on his accusers. Black Cube also compiled dossiers of “dirt” on Obama officials who had worked on the Joint Comprehensive Plan of Action (JCPOA, or Iran Nuclear Deal) and their spouses, on behalf of President Donald Trump’s aides in order to undermine the agreement.
Terrogence’s Vice President for Business and Development, Royi Burstien, wanted to use the fake online personas, or avatars, in situations beyond counter-terrorism, including on behalf of commercial clients. But after less than a year at the company, with it refusing to budge on taking on such clients, Burstien went back to join Israel’s military intelligence. Come 2014, he founded Psy-Group alongside owner Joel Zamel, an Australian native whose father made a fortune in mining.
Before it closed, Psy-Group used oppositional research, doxxing, sockpuppet accounts, fake companies and think tanks, and “honey traps” to secure its objectives. Honey traps refer to the use of sexually attractive agents to butter up sources so they release information.

Pitching the Trump Team

In early 2016, Rick Gates, a deputy to former Trump campaign manager Paul Manafort, was put in touch with Psy-Group, prompting Burstien to draft a plan for a covert influence campaign to promote Trump’s candidacy, counter other Republican challengers, and furnish opposition research on Hillary Clinton.

In May 2016, Zamel emailed GOP heavyweight Newt Gingrich, telling him that he could provide the Trump campaign with powerful social media tools. Gingrich forwarded the email to Jared Kushner. The Trump campaign says it did not hire the company then, either. But Zamel was resolute, and wound up getting a meeting with Donald Trump Jr. and Blackwater founder Erik Prince at Trump Tower. That pitch also failed, according to the parties involved.

However, George Nader — a Lebanese American, consultant to Erik Prince, and adviser to United Arab Emirates Prince Mohammed bin Zayed Al Nahyan — sings a different tune. Nader was at the Trump Tower meeting with Prince, Zamel and Trump Jr. A spokesperson for Nader told The New Yorker “that [Zamel] had conducted a secret campaign that had been influential in Trump’s victory.”

“Here’s the work that we did to help get Trump elected,” Zamel allegedly told Nader.

Nader is a major negotiator for Washington and Israel on Middle East affairs. He is also convicted of sexually abusing 10 boys in the Czech Republic and on child pornography charges in Virginia — charges that were put under seal “due to the extremely sensitive nature of Mr. Nader’s work in the Middle East.”

Black Cube | Israel Hackers

A Psy-Group presentation, which some employees called the “If we had done it” slide deck, “appeared similar” to the document Nader saw that allegedly detailed Psy-Group’s meddling in the 2016 presidential election.

After Nader and Zamel fell into the crosshairs of Special Counsel Robert Mueller, who is investigating allegations of collusion between members of the Trump campaign and officials of the Russian Federation, the FBI came knocking at Psy-Group’s door. “The FBI seemed genuinely surprised that this shit [we were doing] wasn’t illegal,” a former Psy-Group employee told The New Yorker.

Before all that, Psy-Group also reportedly pitched the U.S. State Department and had a partnership with the Trump campaign’s main social media advisor — Cambridge Analytica, the company that rocked Facebook with one of its biggest scandals to date after it harvested 50 million Facebook users’ private information without permission to improve its political ad targeting.

Currently, Psy-Group’s only verifiable success with the administration is through Elliot Abrams, who is listed on Psy-Group’s board of directors and was recently appointed by the Trump administration as Special Envoy for Venezuela to oversee its coup policy. Abrams is also on the Advisory Council of Wikistrat, another company owned by Zamel that is in Mueller’s crosshairs.

Small-Town Election Meddling

While it is in question whether Psy-Group meddled in the 2016 presidential elections, it certainly did in a small town’s hospital board election, giving the corrupt doctor in charge of a local hospital in Tulare enough covert influence tools to conduct a regime-change operation in a small- to medium-sized nation.

In 2014, the doctor, Yorai Benzeevi, bragged that the hospital could generate $9 million a year in revenue on top of his $225,000 a month of income from it. When Benzeevi was eventually ousted, it was discovered that he had run the facility into more than $36 million in debt, according to The New Yorker.

Benzevi maintained his hold on the hospital through a sympathetic board, but only one member needed to be unseated to turn the tide. A young activist, Alex Gutiérrez, asked his mother, Senovia, to run against Benzeevi’s main backer. When she did, shady websites started popping up: TulareLeaks.com, TulareSpeaks.com, DrainTulareSwamp.com. The websites “directed visitors to articles that smeared Senovia Gutiérrez,” a Mexican immigrant who had been working full-time since she was 16 but eventually earned a bachelor’s degree and became a social worker.

While Senovia and her son were seeking small contributions from their neighbors, Benzeevi was in Israel meeting with Psy-Group to listen to proposals on how to take them down. Quickly, fake online personas, or “sock puppet” accounts posing as residents, smeared Senovia on social media, questioned whether she was an American citizen, and accused her of taking bribes.

On one occasion, a blond woman knocked on Senovia’s door. Her other son, Richard, answered it and was then given an envelope. Across the street, a man was standing around and taking photographs. Later, he returned taking more photographs. Those pictures started appearing on DrainTulareSwamp.com in a post that asked ““Who Is Pulling Senovia’s Strings?”

Insinuating that she had taken a bribe, the post said “the public should be watching … Senovia closely. This past week a very expensive black car was seen parked in front of the home of Mrs. Senovia [sic] in addition to several other unidentified cars.” Then flyers directing people to visit TulareSpeaks.com started popping up on door handles in the town.

PsyGroup paid a small businessman who distributes fliers in cash under a pseudonym.

And on the eve of the election, Senovia’s son Alex saw his house burn down. While he thought it was related to the election, the local fire department found no evidence of arson and a former Psy-Group official told The New Yorker he “never initiated any physical fire on any project whatsoever.”

Ultimately, the campaign backfired, as residents believed Senovia was being harassed, leading her to a landslide victory. Psy-Group reportedly billed Benzeevi a mere $230,000 for these services.

Covert on Campus

While Psy-Group’s meddling in small-town politics may have backfired, its interference with university politics was likely more effective. Psy-Group worked on behalf of wealthy Jewish American donors in New York, conducting a campaign called Project Butterfly to “destabilize and disrupt anti-Israel movements from within.”

They were referring to pro-Boycott, DIvestment and Sanction (BDS) groups on 10 college campuses. The BDS movement seeks to economically pressure Israel into ending its apartheid policies and respecting Palestinian human rights.

Psy-Group would compile dossiers on activists and lecturers, scouring the dark web, social media, and other resources for dirt. Then, they would “dox” their targets — releasing personally identifiable information about them to the world. Psy-Group was given research on BDS targets by the neoconservative Foundation for Defense of Democracies think tank. Meanwhile, a former deputy director of Mossad was recruited to help with the project, and a former national security advisor to Prime Minister Benjamin Netanyahu was made an advisor.

Project Butterfly seems to operate similarly to the more widely known Canary Mission, which compiles blacklists of BDS activists and doxxes them online. In late 2018, the Canary Mission was revealed to be bankrolled by at least two Jewish-American charities.

Hacking Away

Psy-Group closed shop in 2018 after it fell into Mueller’s crosshairs. But, another shady Israeli company — similarly based out of Cyprus and with a similar name — continues to conduct its business. The outfit, called NSO Group, manufactures a hacking tool called Pegasus, which gives hackers the ability to look at text messages, detect calls, collect passwords, pinpoint GPS locations, and suck up information from applications like Gmail, Facebook, Skype, WhatsApp and more.

NSO Group hawks its product to governments supposedly for counter-terrorism purposes, but more often than not the victims of Pegasus spyware turn out to be journalists and human rights workers.

Alaa Mahajna | NSO Group

NSO lets its clients hack 10 Android phones for $650,000 in addition to a $500,000 installation fee. The company also cuts deals with governments, allowing them to hack 100 phones for just $800,000, according to internal documents viewed by The New York Times. Commercial proposals for Pegasus tout its ability to gain “unlimited access to a target’s mobile devices” and that it “leaves no traces whatsoever.”

NSO Group’s spyware is suspected to have been used in Israel, Turkey, Thailand, Qatar, Kenya, Uzbekistan, Mozambique, Morocco, Yemen, Hungary, Saudi Arabia, Nigeria and Bahrain. NSO also sold Pegasus to Panama in 2015.

Pegasus | Israel hackers

The following year, it was revealed that Pegasus was used to target a Saudi national and employee of Amnesty International. It was also used to spy on a human-rights activist in the UAE named Ahmed Mansoor, who was the target of a spear phishing campaign promising him details on torture committed in the country. Emirati officials sought to spy on the Saudi prince in charge of the monarchy’s National Guard and Lebanese Prime Minister Saad Hariri, as well as the Qataris — and did so.

At one point, when they were offered a more expensive deal, the Emiratis wanted proof of product. So NSO Group hacked the editor of a London-based Arab newspaper, Abdulaziz Alkhamis, whose cell phone call recordings were forwarded to the UAE officials.

Because the Israeli government considers Pegasus a weapon, the NSO Group needed the approval of the Israeli Defense Ministry in order to sell it to the Emirates, a lawsuit against NSO Group notes.

Pegasus spyware was also used by the Saudis to spy on slain columnist Jamal Khashoggi.

And another journalist in Mexico, as well as human-rights activists, have also become targets of NSO Group’s surveillance technology. In 2017, when a coalition formed to investigate the 2014 disappearance of 43 students in Ayotzinapa, Mexico, its members started receiving spear phishing messages that, if clicked, would install Pegasus on their phones.

Hiring a spy team to smear hacker detractors

These revelations have spawned a number of lawsuits against NSO Group. But since then, six people associated with the litigation have found themselves the target of spies who appear to be with Black Cube, despite previous denials by Black Cube. The only identified individual who participated in the campaign has previous ties to the company. He was, however, “one of many.”

Black Cube has been described by people familiar with its work as the “almost privatized wing of Mossad,” and it is staffed, like NSO Group and Psy-Group, with ex-agents.

Earlier this year, two cybersecurity researchers were lured by agents into meetings at luxury hotels in an effort to discredit their research on NSO Group. Then, on Monday, AP revealed the existence of four other victims, three of whom were lawyers working on lawsuits against NSO, in addition to a journalist based in London who has been writing about the cases.

AP Exclusive: Spy exposed in NYC is one of many

“The targets told the AP that the covert agents tried to goad them into making racist and anti-Israel remarks or revealing sensitive information about their work in connection with the lawsuits,” the outlet reports.

As AP was “preparing to publish” its story, doctored and de-contextualized footage of two of the targets — the journalist and one of the lawyers — meeting with undercover agents was broadcast on Israeli television. Almost comically, if not so tragically, that report claimed the lawsuits against NSO Group were part of a “smear campaign” against the private spy shop.

Top Photo | An Israeli student attending a class how to investigate a computer network that has been hacked in Beit Shemesh, Israel. In its quest to become a world leader in cybersecurity and technology, Israel invests heavily in tech education. Daniel Estrin | AP

Alexander Rubinstein is a staff writer for MintPress News based in Washington, DC. He reports on police, prisons and protests in the United States and the United States’ policing of the world. He previously reported for RT and Sputnik News

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How a NeoCon-Backed “Fact Checker” Plans to Wage War on Independent Media

Newsguard Exposed

As Newsguard’s project advances, it will soon become almost impossible to avoid this neocon-approved news site’s ranking systems on any technological device sold in the United States.

Soon after the social media “purge” of independent media sites and pages this past October, a top neoconservative insider — Jamie Fly — was caught stating that the mass deletion of anti-establishment and anti-war pages on Facebook and Twitter was “just the beginning” of a concerted effort by the U.S. government and powerful corporations to silence online dissent within the United States and beyond.

While a few, relatively uneventful months in the online news sphere have come and gone since Fly made this ominous warning, it appears that the neoconservatives and other standard bearers of the military-industrial complex and the U.S. oligarchy are now poised to let loose their latest digital offensive against independent media outlets that seek to expose wrongdoing in both the private and public sectors.

As MintPress News Editor-in-Chief Mnar Muhawesh recently wrote, MintPress was informed that it was under review by an organization called Newsguard Technologies, which described itself to MintPress as simply a “news rating agency” and asked Muhawesh to comment on a series of allegations, several of which were blatantly untrue. However, further examination of this organization reveals that it is funded by and deeply connected to the U.S. government, neo-conservatives, and powerful monied interests, all of whom have been working overtime since the 2016 election to silence dissent to American forever-wars and corporate-led oligarchy.

More troubling still, Newsguard — by virtue of its deep connections to government and Silicon Valley — is lobbying to have its rankings of news sites installed by default on computers in U.S. public libraries, schools, and universities as well as on all smartphones and computers sold in the United States.

In other words, as Newsguard’s project advances, it will soon become almost impossible to avoid this neocon-approved news site’s ranking systems on any technological device sold in the United States. Worse still, if its efforts to quash dissenting voices in the U.S. are successful, Newsguard promises that its next move will be to take its system global.

Red light, green light . . .

Newsguard has received considerable attention in the mainstream media of late, having been the subject of a slew of articles in the Washington Post, the Hill, the Boston Globe, Politico, Bloomberg, Wired, and many others just over the past few months. Those articles portray Newsguard as using “old-school journalism” to fight “fake news” through its reliance on nine criteria allegedly intended to separate the wheat from the chaff when it comes to online news.

Newsguard separates sites it deems worthy and sites it considers unreliable by using a color-coded rating — green, yellow, or red — and more detailed “nutrition labels” regarding a site’s credibility or lack thereof. Rankings are created by Newsguard’s team of “trained analysts.” The color-coding system may remind some readers of the color-coded terror threat-level warning system that was created after 9/11, making it worth noting that Tom Ridge, the former secretary of Homeland Security who oversaw the implementation of that system under George W. Bush, is on Newsguard’s advisory board.

newsguard-foxnews_editedNewsguard gives Fox News high marks for accuracy.

As Newsguard releases a new rating of a site, that rating automatically spreads to all computers that have installed its news ranking browser plug-in. That plug-in is currently available for free for the most commonly used internet browsers. NewsGuard directly markets the browser plug-in to libraries, schools and internet users in general.

According to its website, Newsguard has rated more than 2,000 news and information sites. However, it plans to take its ranking efforts much farther by eventually reviewing “the 7,500 most-read news and information websites in the U.S.—about 98 percent of news and information people read and share online” in the United States in English.

A recent Gallup study, which was supported and funded by Newsguard as well as the Knight Foundation (itself a major investor in Newsguard), stated that a green rating increased users likelihood to share and read content while a red rating decreased that likelihood. Specifically, it found 63 percent would be less likely to share news stories from red-rated websites, and 56 percent would be more likely to share news from green-rated websites, though the fact that Newsguard and one of its top investors funded the poll makes it necessary to take these findings with a grain of salt.

However, some of the rankings Newsguard itself has publicized show that it is manifestly uninterested in fighting “misinformation.” How else to explain the fact that the Washington Post and CNN both received high scores even though both have written stories or made statements that later proved to be entirely false? For example, CNN falsely claimed in 2016 that it was illegal for Americans to read WikiLeaks releases and unethically colluded with the DNC to craft presidential debate questions to favor Hillary Clinton’s campaign that same year.

In addition, in 2017, CNN published a fake story that a Russian bank linked to a close ally of President Donald Trump was under Senate investigation. That same year, CNN was forced to retract a report that the Trump campaign had been tipped off early about WikiLeaks documents damaging to Hillary Clinton when it later learned the alert was about material already publicly available.

The Washington Post, whose $600 million conflict of interest with the CIA goes unnoted by Newsguard, has also published false stories since the 2016 election, including one article that falsely claimed that “Russian hackers” had tapped into Vermont’s electrical grid. It was later found that the grid itself was never breached and the “hack” was only an isolated laptop with a minor malware problem. Yet, such acts of journalistic malpractice are apparently of little concern to Newsguard when those committing such acts are big-name corporate media outlets.

Furthermore, Newsguard gives a high rating to Voice of America, the U.S. state-funded media outlet, even though its former acting associate director said that the outlet produces “fluff journalism” and despite the fact that it was recently reformed to “provide news that supports our [U.S.] national security objectives.” However, RT receives a low “red” rating for being funded by the Russian government and for “raising doubts about other countries and their institutions” (i.e., including reporting critical of the institutions and governments of the U.S. and its allies).

Keeping the conversation safe for the corporatocracy

Newsguard describes itself as an organization dedicated to “restoring trust and accountability” and using “journalism to fight false news, misinformation and disinformation.” While it repeatedly claims on its website that its employees “have no political axes to grind” and “care deeply about reliable journalism’s pivotal role in democracy,” a quick look at its co-founders, top funders and advisory board make it clear that Newsguard is aimed at curbing voices that hold the powerful — in both government and the private sector — to account.

Newsguard is the latest venture to result from the partnership between Steven Brill and Louis Gordon Crovitz, who currently serve as co-CEOs of the group. Brill is a long-time journalist —  published in TIME and The New Yorker, among others — who most recently founded the Yale Journalism Initiative, which aims to encourage Yale students who “aspire to contribute to democracy in the United States and around the world” to become journalists at top U.S. and international media organizations. He first teamed up with Crovitz in 2009 to create Journalism Online, which sought to make the online presence of top American newspapers and other publishers profitable, and was also the CEO of the company that partnered up with the TSA to offer “registered” travelers the ability to move more quickly through airport security — for a price, of course.

While Brill’s past does not in itself raise red flags, Crovitz — his partner in founding Journalism Online, then Press+, and now Newsguard — is the last person one would expect to find promoting any legitimate effort to “restore trust and accountability” in journalism. In the early 1980s. Crovitz held a number of positions at Dow Jones and at the Wall Street Journal, eventually becoming executive vice president of the former and the publisher of the latter before both were sold to Rupert Murdoch’s News Corp in 2007. He is also a board member of Business Insider, which has received over $30 million from Washington Post owner Jeff Bezos in recent years.

Gordon CrovitzGordon Crovitz, then-publisher of The Wall Street Journal, introduces the redesign of the newspaper, Dec. 4, 2006 in New York. Mark Lennihan | AP

In addition to being a member of the Council on Foreign Relations, Crovitz proudly notes in his bio, available on Newsguard’s website, that he has been an “editor or contributor to books published by the American Enterprise Institute and Heritage Foundation.” Though many MintPress readers are likely familiar with these two institutions, for those who are not, it is worth pointing out that the American Enterprise Institute (AEI) is one of the most influential neoconservative think tanks in the country and its “scholars,” directors and fellows have included neoconservative figures like Paul Wolfowitz, Richard Perle, John Bolton and Frederick Kagan.

During the George W. Bush administration, AEI was instrumental in promoting the invasion and subsequent occupation of Iraq and has since advocated for militaristic solutions to U.S. foreign policy objectives and the expansion of the U.S.’ military empire as well as the “War on Terror.” During the Bush years, AEI was also closely associated with the now defunct and controversial neoconservative organization known as the Project for a New American Century (PNAC), which presciently called, four years before 9/11, for a “new Pearl Harbor” as needed to rally support behind American military adventurism.

The Heritage Foundation, like AEI, was also supportive of the war in Iraq and has pushed for the expansion of the War on Terror and U.S. missile defense and military empire. Its corporate donors over the years have included Procter & Gamble, Chase Manhattan Bank, Dow Chemical, and Exxon Mobil, among others.

Crovitz’s associations with AEI and the Heritage Foundation, as well as his ties to Wall Street and the upper echelons of corporate media, are enough to make any thinking person question his commitment to being a fair watchdog of “legitimate journalism.” Yet, beyond his innumerable connections to neoconservatives and powerful monied interest, Crovitz has repeatedly been accused of inserting misinformation into his Wall Street Journal columns, with groups like the Electronic Frontier Foundation accusing him of “repeatedly getting his facts wrong” on NSA surveillance and other issues. Some of the blatant falsehoods that have appeared in Crovitz’s work have never been corrected, even when his own sources called him out for misinformation.

For example, in a WSJ opinion piece that was written by Crovitz in 2012, Crovitz was accused of making “fantastically false claims” about the history of the internet by the very people he had cited to support those claims.

As TechDirt wrote at the time:

“Almost everyone he [Crovitz] sourced or credited to support his argument that the internet was invented entirely privately at Xerox PARC and when Vint Cerf helped create TCP/IP, has spoken out to say he’s wrong. And that list includes both Vint Cerf, himself, and Xerox. Other sources, including Robert Taylor (who was there when the internet was invented) and Michael Hiltzik, have rejected Crovitz’s spinning of their own stories.”

The oligarch team’s deep bench

While Brill and Crovitz’s connections alone should be enough cause for alarm, a cursory examination of Newsguard’s advisory board makes it clear that Newsguard was created to serve the interests of American oligarchy. Chief among Newsguard’s advisors are Tom Ridge, the first Secretary of Homeland Security under George W. Bush and Ret. General Michael Hayden, a former CIA director, a former NSA director and principal at the Chertoff Group, a security consultancy seeking to “advise corporate clients and governments, including foreign governments” on security matters that was co-founded by former Homeland Security Secretary Michael Chertoff, who also currently serves as the board chairman of major weapons manufacturer BAE systems.

FireShot-Capture-025-Our-Advisory-Board-–-New_-https___www.newsguardtech.com_our-advisory-board_Another Newsguard advisor of note is Richard Stengel, former editor of Time magazine, a “distinguished fellow” at the Atlantic Council and Undersecretary of State for Public Diplomacy under President Barack Obama. At a panel discussion hosted last May by the Council on Foreign Relations, Stengel described his past position at the State Department as “chief propagandist” and also stated that he is “not against propaganda. Every country does it and they have to do it to their own population and I don’t necessarily think it’s that awful.”

Other Newsguard advisors include Don Baer, former White House communications director and advisor to Bill Clinton and current chairman of both PBS and the influential PR firm Burson Cohn & Wolfe as well as Elise Jordan, former communications director for the National Security Council and former speech-writer for Condoleezza Rice, as well as the widow of slain journalist Michael Hastings — who was writing an exposé on former CIA director John Brennan at the time of his suspicious death.

A look at Newguard’s investors further illustrates the multifarious connections between this organization and the American political and corporate elite. While Brill and Crovitz themselves are the company’s top investors, one of Newsguard’s most important investors is the Publicis Groupe. Publicis is the third largest global communications company in the world, with more than 80,000 employees in over 100 countries and an annual revenue of over €9.6 billion ($10.98 billion) in 2017. It is no stranger to controversy, as one of its subsidiaries, Qorvis, recently came under fire for exploiting U.S. veterans at the behest of the Saudi government and also helped the Saudi government to “whitewash” its human rights record and its genocidal war in Yemen after receiving $6 million from the Gulf Kingdom in 2017.

Furthermore, given its size and influence, it is unsurprising that the Publicis Groupe counts many powerful corporations and governments among its clientele. Some of its top clients in 2018 included pharmaceutical giants Eli Lilly, Merck, Pfizer and Bayer/Monsanto as well as Starbucks, Procter & Gamble, McDonalds, Kraft Heinz, Burger King, and the governments of Australia and Saudi Arabia. Given its influential role in funding Newsguard, it is reasonable to point out the potential conflict of interest posed by the fact that sites that accurately report on Publicis’ powerful clients — but generate bad publicity — could be targeted for such reports in Newsguard’s ranking.

Publicis GroupMaurice Lévy (center), the Chairman of the Supervisory Board of Publicis Groupe, appears with a cadre of high-level politicians and corporate executives at an event for Rabbi Arthur Schneier’s “Appeal of Conscience Foundation,” Sept. 26, 2018. Brian Ach | AP Images for Appeal of Conscience Foundation

In addition to the Publicis Groupe, another major investor in Newsguard is the Blue Haven Initiative, which is the venture capital “impact investment” fund of the wealthy Pritzker family — one of the top 10 wealthiest families in the U.S., best known as the owners of the Hyatt Hotel chain and for being the second largest financial contributors to Hillary Clinton’s 2016 presidential campaign.

Other top investors include John McCarter, a long-time executive at U.S. government contractor Booz Allen Hamilton, as well as Thomas Glocer, former CEO of Reuters and a member of the boards of pharmaceutical giant Merck & Co., financial behemoth Morgan Stanley, and the Council on Foreign Relations, as well as a member of the Atlantic Council’s International Advisory Board.

Through these investors, Newsguard managed to raise $6 million to begin its ranking efforts in March of 2018. Newsguard’s actual revenues and financing, however, have not been disclosed despite the fact that it requires the sites it ranks to disclose their funding. In a display of pure hypocrisy, Newsguard’s United States Securities and Exchange Commission Form D — which was filed March 5, 2018 — states that the company “declined to disclose” the size of its total revenue.

Why give folks a choice?

While even a quick glance at its advisory board alone would be enough for many Americans to decline to install Newsguard’s browser extension on their devices, the danger of Newsguard is the fact that it is diligently working to make the adoption of its app involuntary. Indeed, if voluntary adoption of Newsguard’s app were the case, there would likely be little cause for concern, given that its website attracts barely more than 300 visits per month and its social-media following is relatively small, with just over 2,000 Twitter followers and barely 500 Facebook likes at the time of this article’s publication.

To illustrate its slip-it-under-the-radar strategy, Newsguard has gone directly to state governments to push its browser extension onto entire state public library systems, even though its website suggests that individual public libraries are welcome to install the extension if they so choose. The first state to install Newsguard on all of its public library computers across its 51 branches was the state of Hawaii — which was the first to partner with Newsguard’s “news literacy initiative,” just last month.

According to local media, Newsguard “now works with library systems representing public libraries across the country, and is also partnering with middle schools, high schools, universities, and educational organizations to support their news literacy efforts,” suggesting that these Newsguard services targeting libraries and schools are soon to become a compulsory component of the American library and education system, despite Newsguard’s glaring conflicts of interest with massive multinational corporations and powerful government power-brokers.

Notably, Newsguard has a powerful partner that has allowed it to start finding its way into public library and school computers throughout the country. As part of its new “Defending Democracy” initiative, Microsoft announced last August that it would be partnering with Newsguard to actively market the company’s ranking app and other services to libraries and schools throughout the country. Microsoft’s press release regarding the partnership states that Newsguard “will empower voters by providing them with high-quality information about the integrity and transparency of online news sites.”

Since then, Microsoft has now added the Newsguard app as a built-in feature of Microsoft Edge, its browser for iOS and Android mobile devices, and is unlikely to stop there. Indeed, as a recent report in favor of Microsoft’s partnership with Newsguard noted, “we could hope that this new partnership will allow Microsoft to add NewsGuard to Edge on Windows 10 [operating system for computers] as well.”

Newsguard, for its part, seems confident that its app will soon be added by default to all mobile devices. On its website, the organization notes that “NewsGuard will be available on mobile devices when the digital platforms such as social media sites and search engines or mobile operating systems add our ratings and Nutrition Labels directly.” This shows that Newsguard isn’t expecting its rating systems to be offered as a downloadable application for mobile devices but something that social media sites like Facebook, search engines like Google, and mobile device operating systems that are dominated by Apple and Google will “directly” integrate into nearly every smartphone and tablet sold in the United States.

A Boston Globe article on Newsguard from this past October makes this plan even more clear. The Globe wrote at the time:

“Microsoft has already agreed to make NewsGuard a built-in feature in future products, and [Newsguard co-CEO] Brill said he’s in talks with other online titans. The goal is to have NewsGuard running by default on our computers and phones whenever we scan the Web for news.”

This eventuality is made all the more likely given the fact that, in addition to Microsoft, Newsguard is also closely connected to Google, as Google has been a partner of the Publicis Groupe since 2014, when the two massive companies joined Condé Nast to create a new marketing service called La Maison that is “focused on producing engaging content for marketers in the luxury space.” Given Google’s power in the digital sphere as the dominant search engine, the creator of the Android mobile operating system, and the owner of YouTube, its partnership with Publicis means that Newsguard’s rating system will soon see itself being promoted by yet another of Silicon Valley’s most powerful companies.

Furthermore, there is an effort underway to integrate Newsguard into social media sites like Facebook and Twitter. Indeed, as Newsguard was launched, co-CEO Brill stated that he planned to sell the company’s ratings of news sites to Facebook and Twitter. Last March, Brill told CNN that “We’re asking them [Facebook, Twitter, Microsoft and Google] to pay a fraction of what they pay their P.R. people and their lobbyists to talk about the problem.”

On Wednesday, Gallup released a poll that will likely be used as a major selling point to social media giants. The poll — funded by Newsguard and the Knight Foundation, which is a top investor in Newsguard and has recently funded a series of Gallup polls relating to online news — seems to have been created with the intention of manufacturing consent for the integration of Newsguard with top social media sites.

This is because the promoted findings from the study are as follows:“89% of users of social media sites and 83% overall want social media sites and search engines to integrate NewsGuard ratings and reviews into their news feeds and search results” and “69% would trust social media and search companies more if they took the simple step of including NewsGuard in their products.” However, a disclaimer at the end of the poll states that the results, which were based on the responses of 706 people each of whom received $2 to participate, “may not be reflective of attitudes of the broader U.S adult population.”

With trust at Facebook nose-diving and Facebook’s censorship of independent media already well underway, the findings of this poll could well be used to justify its integration into Facebook’s platform. The connections of both Newsguard and Facebook to the Atlantic Council make this seem a given.

Financial censorship

Another Newsguard service shows that this organization is also seeking to harm independent media financially by targeting online revenue. Through a service called “Brandguard,” which it describes as a “brand safety tool aimed at helping advertisers keep their brands off of unreliable news and information sites while giving them the assurance they need to support thousands of Green-rated [i.e., Newsguard-approved] news and information sites, big and small.”

At the time the service was announced last November, Newsguard co-CEO Brill stated that the company was “in discussions with the ad tech firms, leading agencies, and major advertisers” eager to adopt a blacklist of news sites deemed “unreliable” by Newsguard. This is unsurprising given the leading role of the Publicis Groupe, one of the world’s largest advertising and PR firms, has in funding Newsguard. As a consequence, it seems likely that many, if not all, of Publicis’ client companies will choose to adopt this blacklist to help crush many of the news sites that are unafraid to hold them accountable.

It is also important to note here that Google’s connection to Publicis and thus Newsguard could spell trouble for independent news pages that rely on Google Adsense for some or all of their ad-based revenue. Google Adsense has long been targeting sites like MintPress by demonetizing articles for information or photographs it deemed controversial, including demonetizing one article for including a photo showing U.S. soldiers involved in torturing Iraqi detainees at the infamous Abu Ghraib prison.

Since then, Google — a U.S. military contractor — has repeatedly tried to shutter ad access to MintPress articles that involve reporting that is critical of U.S. empire and military expansion. One article that has been repeatedly flagged by Google details how many African-Americans have questioned whether the Women’s March has aided or harmed the advancement of African-Americans in the United States. Google has repeatedly claimed that the article, which was written by African-American author and former Washington Post bureau chief Jon Jeter, contains “dangerous content.”

Given Google’s already established practice of targeting factual reporting it deemed controversial through Adsense, Brandguard will likely offer the tech giant just the excuse it needs to cut off sites like MintPress, and other pages equally critical of empire, altogether.

An action plan for the genuine protection of journalism

Though it is just getting started, Newsguard’s plan to insert its app into every device and major social-media network is a threat to any news site that regularly publishes information that rubs any of Newsguard’s investors, partners or advisors the wrong way. Given its plan to rank the English-language U.S. news sites that account for 98 percent of U.S. digital news consumption, Newsguard’s agenda is of the utmost concern to every independent media page active in the United States and beyond — given Newsguard’s promise to take its project global.

By linking up with former CIA and NSA directors, Silicon Valley Giants, and massive PR firms working for some of the most controversial governments and corporations in the world, Newsguard has betrayed the fact that it is not actually seeking to “restore trust and accountability” in journalism, but to “restore trust and accountability” in news outlets that protect the existing power structure and help shield the corporate-led oligarchy and military-industrial complex from criticism.

Not only is it trying to tank the reputations of independent media through its biased ranking system, Newsguard is also seeking to attack these alternative voices financially and by slipping its ranking system by default onto all computers and phones sold in the U.S.

However, Newsguard and it agenda of guarding the establishment from criticism can be stopped. By supporting independent media and unplugging from social media sites committed to censorship, like Facebook and Twitter, we can strengthen the independent media community and keep it afloat despite the unprecedented nature of these attacks on free speech and watchdog journalism.

Beyond that, a key way to keep Newsguard and those behind it on their toes is to hold them to account by pointing out their clear conflicts of interest and hypocrisy and by derailing the narrative they are carefully crafting that Newsguard is “non-partisan,” “trustworthy,” and true guardians against the scourge of “fake news.”

While this report has sought to be a starting point for such work, anyone concerned about Newsguard and its connections to the war machine and corrupt corporations should feel encouraged to point out the organization’s own conflicts of interests and shady connections via its Twitter and Facebook pages and the feedback section on Newsguard’s website. The best way to defeat this new tool of the neocons is to put them on notice and to continue to expose Newsguard as a guardian of empire, not a guardian of journalism.

Correction | An earlier version of this story wrote that CNN’s collusion with the Clinton campaign was illegal. However, upon further investigation, MintPress News could not corroborate that such a move was, in fact, illegal, though it is clearly in breach of journalistic ethics. As a consequence, the sentence in question was changed to say that CNN “unethically colluded” with the Clinton campaign. MintPress apologizes for the error and thanks its readers for bringing this oversight to our attention.

Whitney Webb is a staff writer for MintPress News and a contributor to Ben Swann’s Truth in Media. Her work has appeared on Global Research, the Ron Paul Institute and 21st Century Wire, among others. She has also made radio and TV appearances on RT and Sputnik. She currently lives with her family in southern Chile.

Republish! MintPress News is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 International License.

© 2019 Copyright Mint Press, LLC

Fake news front group “NewsGuard” exposed as a massive protection racket to promote fake narratives from official sources while censoring indy media

newsguard-microsoft-reporting-hoaxes-fake-news-credible-epic-fail-jennie-kamin-john-gregory-933x445

Image credit: Nowtheendbegins

Vicki Batts

NewsGuard Technologies promotes itself as a company bent on fighting “fake news” and allowing truth to prevail. The website claims the company will restore “trust and accountability” through its human-driven rating system. But as many critics have suspected, the onslaught of pro-NewsGuard propaganda is a ploy to deceive the public and normalize censorship. NewsGuard doesn’t care about the truthfulness of reporting; it is a shell company with the explicit purpose of silencing the independent media and securing the establishment’s place at the top of the journalism food chain.

In a new partnership with Microsoft, NewsGuard will be installed automatically with Microsoft’s web browser, Edge. And according to reports, NewsGuard wants to see its “technology” applied to every device sold in the United States. Mass censorship is on our doorsteps, and virtually every major news outlet in the U.S. is promoting it.

NewsGuard or NewsGoon?

NewsGuard is promoted as using “old school” journalism to fight fake news. The trained “analysts” who are also “experienced journalists” use a red light-green light rating system to flag news sites as “bad” or”good,” depending on the content. The “analysts” don’t just peruse web sites; NewsGuard, has reportedly contacted many sites for deeper conversation.

Steven Brill, NewsGuard co-founder, recently stated the U.K.’s Daily Mail, a well-known publication, received a “red” rating because an associate didn’t want to answer questions. This has prompted substantial concerns about NewsGuard’s integrity as a company.

NewsGuard can use all kinds of strong-arm tactics to attempt to silence their opposition. If a company tries to take a stand against censorship and refuses to cooperate with NewsGuard, they’ll simply be blacklisted themselves.

While NewsGuard has removed Daily Mail from the blacklist after much controversy, the company has made their position clear: Play ball, or kick rocks.

The NewsGuard system is patently flawed, being susceptible to both bias and corruption. For example, it was recently reported that a tee shirt sold by the Breitbart News Store was flagged as “fake news.”

Rating merchandise should be outside the scope of an organization that purportedly only targets news. But, perhaps that’s not really what NewsGuard is after.

News-Guard-Censorship
Image credit: 21stcenturywire.com

Suppress truth, promote propaganda

Writing for Breitbart, senior correspondent Allum Bokhari reports that NewsGuard has given all the major news agencies a “green rating,” — even in light of the reprehensible Covington Catholic incident, which saw dozens of innocent high school students victimized by the corrupt and deeply biased mainstream media.

In contrast, most of the independent media has received “red” ratings.

The “criteria” that NewsGuard reportedly uses to issue its rating are inherently weighed at the analyst’s discretion. For example, any one of the mainstream media’s headlines on the Covington Catholic case could be seen as “misleading,” — but if that headline conforms to your bias as an individual, you are probably less likely to perceive it as such.

This theory can be applied to the rating system across the board. Beauty may be in the eye of the beholder, but perception is in the mind of the reader. And under NewsGuard, the perceptions of the few will rule the many.

As Mint Press News reports, NewsGuard is already campaigning to ” have its rankings of news sites installed by default on computers in U.S. public libraries, schools, and universities as well as on all smartphones and computers sold in the United States.”

NewsGuard is not designed to protect the public from fake news, but rather, to instill obedience to the mainstream media propaganda machine and begin the normalization of censorship. This isn’t just a war on free speech, it is a war on your right to think for yourself.

See more coverage of the latest acts of censorship at Censored.news.

Sources for this article include:

Breitbart.com

MintPressNews.com

Researchers find that Facebook is actually run by the Deep State

A new report from The Free Thought Project exposes the truth about what many independent media outlets have been saying for years: The world’s most popular social media platform, Facebook, is a hotbed of deep state corruption and public manipulation.

While the baby of Mark Zuckerberg is often described as a “private company,” the fact of the matter is that Facebook is actually a massive government psy-op run by various deep state swamp creatures – many of whom previously worked within the Obama administration.

For instance, Facebook’s censorship head, also known as “Head of Cybersecurity Policy,” is a man named Nathaniel Gleicher who previously prosecuted cybercrimes at the U.S. Department of Justice (DOJ). Gleicher also worked as Director for Cybersecurity Policy at the National Security Council under Obama.

Joel Benenson, a former top adviser to Obama and chief strategist for failed presidential candidate Hillary Clinton, also now works at Facebook – as does Aneesh Raman, Obama’s former speechwriter who’s now in charge of Facebook’s “economic impact programming.”

There are many others as well, including:

• Joel Kaplan, Facebook’s Vice President of Public Policy, who worked for George W. Bush as the White House Deputy Chief of Staff for Policy

• Sheryl Sandberg, Facebook’s Chief Operations Officer, who used to work in the United States Treasury Department under Bill Clinton

• Kate Patchen, Facebook’s Litigation Counsel, who previously worked in the Department of Justice

• Meredith Carden, head of Facebook’s “News Integrity Team,” who worked in the Office of the First Lady under Obama

• Sarah Feinberg, head of Facebook’s Communication Team, who was Special Assistant to the President under Obama

• Joe Lockhart, Vice President of Global Communications at Facebook, who worked as Press Secretary under Bill Clinton

In essence, Facebook has become a who’s-who of government swamp creatures, most of whom were Obama’s cronies previously – and these are the people deciding what constitutes “real” versus “fake” news.

“It appears the government is using Facebook – the world’s largest social media company – to sway public opinion,” writes Jeff Charles for Liberty Nation.

“The company has employed a significant number of former officials in positions that grant them influence over what content is allowed on the platform.”

Facebook is also now run by “neocon” war hawks pushing a globalist agenda

In case you didn’t know, Facebook also recently formed a partnership with a neoconservative “think tank” known as the Atlantic Council, which is tied to the pharmaceutical industry, the military-industrial complex, and to the federal government itself.

The Atlantic Council, The Free Thought Project discovered, plays a major role in deciding what content is allowed to be published and shared on Facebook, and what content isn’t. And the Atlantic Council is funded in large part by the United States government, it’s important to note.

“It is a telltale sign of a corrupt industry or company when they create a revolving door between themselves and the state,” writes Matt Agorist for The Free Thought Project.

“Just like Monsanto has former employees on the Supreme Court and Pharmaceutical industry insiders move back and fourth from the FDA to their companies, we found that Facebook is doing the same thing.”

David Recordon has similarly reported on the revolving door between the federal government and Facebook, emphasizing the incredible amount of political influence that’s wrapped up into the day-to-day functionality of Facebook.

“… there are dozens of former Obama staffers, advisers, and campaign associates who quite literally fill Facebook’s ranks,” Agorist adds. “It is no wonder the platform has taken such a political shift over the past few years.”

For more news about deep state influence over social media, be sure to check out Corruption.news and MarkZuckerberg.news.

Sources for this article include:

TheFreeThoughtProject.com

LibertyNation.com

NaturalNews.com

Brazilian government sees Catholic Church as potential opposition

Heleno-BolsonaroLeft: Augusto Heleno, and right: President Bolsonaro

Estado de São Paulo Tânia Monteiro

The Planalto Palace wants to contain what it considers the advance of the Catholic Church in the leadership of the opposition to the Jair Bolsonaro government in the vacuum of the defeat and loss of space of the left-wing political parties. In the evaluation of the President’s team, the Catholic Church is a traditional ally of the PT (Worker’s Party) and is being articulated to influence debates previously carried out by the party in the interior of the country and in the urban peripheries. The alert to the government came from reports from the Brazilian Intelligence Agency (ABIN) and from the military high command. The reports tell of recent meetings of Brazilian cardinals with Pope Francisco in the Vatican to discuss the holding of the Synod on the Amazon, to be held in Rome in October, bringing together bishops from all the continents.

During the 23 day event, the Vatican will discuss the situation of the Amazon and cover topics considered by the Brazilian government as an “agenda of the left”. The debate will deal with the situation of indigenous peoples, climate change caused by deforestation and quilombolas (lands for ex-slave communities). “We are concerned and want to neutralize this”, said the chief minister of the Office for Institutional Security (GSI), Augusto Heleno, who is leading the counter-offensive.

On the basis of documents circulating in the Planalto, GSI officers have evaluated that sectors of the Catholic Church allied to social movements and parties of the left, members of the so-called “progressive clergy”, intend to take advantage of the Synod to criticise the Bolsonaro government and to have an international impact. “We think this is interference in the internal affairs of Brazil”, said Heleno. ABIN offices in Manaus, Belém, Maraba, in the south-east of Pará (the epicentre of land conflicts), and Boa Vista (which monitor the presence of foreigners in indigenous Yanomami lands and Raposa Serra do Sol) are being mobilized to accompany preparatory meetings for the Synod in parishes and dioceses. The GSI also obtained information from the Military Command in Amazonas, based in Manaus, and from the Northern Military Command in Belém. On the basis of intelligence reports, the Federal government will seek out state governors, mayors and even ecclesiastical authorities who have good relations with the military, especially in border regions, to strengthen their attempt to neutralize the Synod.

The Estado de São Paulo newspaper found that the GSI plans to involve the Itamaraty Foreign Office to monitor discussions abroad, and the Ministry of the Environment to detect any participation of NGOs and environmentalists. Asking to remain anonymous, another military officer from the Bolsonaro team said that the Synod is against “all” policies of the government for the Amazon; which seeks to defend the “sovereignty” of the region. “The meeting will serve to inflame the ideological discourse of the left”, he said.

As soon as the first reports from ABIN arrived at the Planalto Palace, the generals soon made a connection with the criticisms of the National Bishops Conference of Brazil (CNBB) towards Bolsonaro during the electoral campaign. Bodies linked to the CNBB, such as the Missionary Indigenous Council (CIMI) and the Pastoral Lands Commission (CPT), were not kind in their attacks, and continued after the election and swearing in of Bolsonaro to the Presidency. All of them are historical allies of the PT Worker’s Party. The Prisoner’s Pastoral, for example, issued a press release last week criticising the anti-crime package of the Minister of Justice, Sérgio Moro, who as a judge sentenced ex-President Luiz Inacio Lula da Silva in Lava Jato.

In the campaign, the Land Pastoral published a report from Bishop André de Witte of Bahia that indicated Bolsonaro as a “real danger”. The networks supporting Bolsonaro counter-attacked spreading word on the internet that Pope Francisco was a “communist”. As a result, Bolsonaro gave up on the CNBB and invested incessant support for the evangelical churches. At first, he wanted the ex-Senator and gospel singer Magno Malta (PR-ES) to run as his Vice-President. Once elected, he nominated the pastor Damares Alves, assistant to Malta for the Ministry of Women, Family and Human Rights.

History. The tense relationship between the military and the Catholic Church began back in 1964 and has remained even in the “de-tension” governments of Generals Ernesto Geisel and João Figueiredo, the last President of the military dictatorship. The CNBB maintained friendly relations with the democratic governments, but was classified as an arm of the PT Worker’s Party by Fernando Henrique Cardoso. The body criticised the agrarian policy of the FHC government and the decision of his PSDB party to end religious education in public schools.

The government of ex-President Lula, who was close to Don Claudio Hummes, ex-Cardinal of São Paulo, was surprised in 2005 by the hunger strike of the Bishop of Barra in Bahia, Don Luiz Cappio, who opposed the transposition of the São Francisco River.

With the arrival of Dilma Rousseff, the relationship between the CNBB and the PT Worker’s Party was damaged. The body held a series of events to criticise the President, especially on questions such as abortion and agrarian reform. However, the CNBB was opposed to the impeachment process, alleging that it “weakened” the institutions.

‘Let’s get right into this’, said Heleno

The Minister of the Office for Institutional Security (GSI), Augusto Heleno Ribeiro, said there was a “concern” in the Planalto about the meetings and preparatory meetings of the Synod on the Amazon, which were held in the Brazilian States. ”There has been influence from the Catholic Church and NGOs on the forest”, he said.

The closest adviser of President Jair Bolsonaro, Heleno criticised the activity of the Catholic Church, but said their capacity for causing problems for the government was not high. ”It will not be a problem. The work of the government of neutralizing impacts of the meeting will only strengthen Brazilian sovereignty and impede that foreign interests are able to prevail in the Amazon”, he said. “The question will be studied carefully by the GSI. Let’s get right into this.”

Both the Minister Augusto Heleno and the ex-commander of the Army, Eduardo Villas Boas, now assistant to the GSI and in charge of the monitoring of the Synod, were military commanders in Manaus. The Vice-President Hamilton Mourão also worked in the region, leading the 2nd Jungle Infantry Brigade in São Gabriel da Cachoeira.

What is the Synod? It is the global meeting of Vatican bishops to discuss the situation of indigenous tribes, riverside populations and other peoples of the Amazon, the development policies of governments of the region, climate change and land conflicts.

Participants 250 bishops.

Synod Calendar

19 January 2019: symbolic opening with the visit of Pope Francisco to Puerto Maldonado in the Peruvian jungle;

7 to 9 March: preparatory seminar in the Arch-Diocese of Manaus;

6 to 29 October: final phase in the Vatican, with Mass in the Basilica of Saint Peter celebrated by Pope Francisco.

Theme of the meeting

Amazon: new paths for the Catholic Church and for a whole ecology.

The three directives of the event

“To see” the clamour of the Amazonian peoples;

“To discern” the Gospel in the forest. The cries of the indigenous peoples is like the cries of the people of God in Egypt;

“To act” in the defence of a Church with an “Amazonian face”

Recipe for Disaster: The Formula That Killed Wall Street

robots quants
Image credit: zerohedge.com

Felix Salmon Wired

In the mid-’80s, Wall Street turned to the quants – brainy financial engineers – to invent new ways to boost profits. Their methods for minting money worked brilliantly… until one of them devastated the global economy.

A year ago [this was written in 2009], it was hardly unthinkable that a math wizard like David X. Li might someday earn a Nobel Prize. After all, financial economists—even Wall Street quants—have received the Nobel in economics before, and Li’s work on measuring risk has had more impact, more quickly, than previous Nobel Prize-winning contributions to the field. Today, though, as dazed bankers, politicians, regulators, and investors survey the wreckage of the biggest financial meltdown since the Great Depression, Li is probably thankful he still has a job in finance at all. Not that his achievement should be dismissed. He took a notoriously tough nut—determining correlation, or how seemingly disparate events are related—and cracked it wide open with a simple and elegant mathematical formula, one that would become ubiquitous in finance worldwide.

For five years, Li’s formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels.

His method was adopted by everybody from bond investors and Wall Street banks to ratings agencies and regulators. And it became so deeply entrenched—and was making people so much money—that warnings about its limitations were largely ignored.

Then the model fell apart. Cracks started appearing early on, when financial markets began behaving in ways that users of Li’s formula hadn’t expected. The cracks became full-fledged canyons in 2008—when ruptures in the financial system’s foundation swallowed up trillions of dollars and put the survival of the global banking system in serious peril.

David X. Li, it’s safe to say, won’t be getting that Nobel anytime soon. One result of the collapse has been the end of financial economics as something to be celebrated rather than feared. And Li’s Gaussian copula formula will go down in history as instrumental in causing the unfathomable losses that brought the world financial system to its knees.

How could one formula pack such a devastating punch? The answer lies in the bond market, the multitrillion-dollar system that allows pension funds, insurance companies, and hedge funds to lend trillions of dollars to companies, countries, and home buyers.

A bond, of course, is just an IOU, a promise to pay back money with interest by certain dates. If a company—say, IBM—borrows money by issuing a bond, investors will look very closely over its accounts to make sure it has the wherewithal to repay them. The higher the perceived risk—and there’s always some risk—the higher the interest rate the bond must carry.

Bond investors are very comfortable with the concept of probability. If there’s a 1 percent chance of default but they get an extra two percentage points in interest, they’re ahead of the game overall—like a casino, which is happy to lose big sums every so often in return for profits most of the time.

Bond investors also invest in pools of hundreds or even thousands of mortgages. The potential sums involved are staggering: Americans now owe more than $11 trillion on their homes. But mortgage pools are messier than most bonds. There’s no guaranteed interest rate, since the amount of money homeowners collectively pay back every month is a function of how many have refinanced and how many have defaulted. There’s certainly no fixed maturity date: Money shows up in irregular chunks as people pay down their mortgages at unpredictable times—for instance, when they decide to sell their house. And most problematic, there’s no easy way to assign a single probability to the chance of default.

Wall Street solved many of these problems through a process called tranching, which divides a pool and allows for the creation of safe bonds with a risk-free triple-A credit rating. Investors in the first tranche, or slice, are first in line to be paid off. Those next in line might get only a double-A credit rating on their tranche of bonds but will be able to charge a higher interest rate for bearing the slightly higher chance of default. And so on.

“…correlation is charlatanism”

The reason that ratings agencies and investors felt so safe with the triple-A tranches was that they believed there was no way hundreds of homeowners would all default on their loans at the same time. One person might lose his job, another might fall ill. But those are individual calamities that don’t affect the mortgage pool much as a whole: Everybody else is still making their payments on time.

But not all calamities are individual, and tranching still hadn’t solved all the problems of mortgage-pool risk. Some things, like falling house prices, affect a large number of people at once. If home values in your neighborhood decline and you lose some of your equity, there’s a good chance your neighbors will lose theirs as well. If, as a result, you default on your mortgage, there’s a higher probability they will default, too. That’s called correlation—the degree to which one variable moves in line with another—and measuring it is an important part of determining how risky mortgage bonds are.

Investors like risk, as long as they can price it. What they hate is uncertainty—not knowing how big the risk is. As a result, bond investors and mortgage lenders desperately want to be able to measure, model, and price correlation. Before quantitative models came along, the only time investors were comfortable putting their money in mortgage pools was when there was no risk whatsoever—in other words, when the bonds were guaranteed implicitly by the federal government through Fannie Mae or Freddie Mac.

Yet during the ’90s, as global markets expanded, there were trillions of new dollars waiting to be put to use lending to borrowers around the world—not just mortgage seekers but also corporations and car buyers and anybody running a balance on their credit card—if only investors could put a number on the correlations between them. The problem is excruciatingly hard, especially when you’re talking about thousands of moving parts. Whoever solved it would earn the eternal gratitude of Wall Street and quite possibly the attention of the Nobel committee as well.

To understand the mathematics of correlation better, consider something simple, like a kid in an elementary school: Let’s call her Alice. The probability that her parents will get divorced this year is about 5 percent, the risk of her getting head lice is about 5 percent, the chance of her seeing a teacher slip on a banana peel is about 5 percent, and the likelihood of her winning the class spelling bee is about 5 percent. If investors were trading securities based on the chances of those things happening only to Alice, they would all trade at more or less the same price.

But something important happens when we start looking at two kids rather than one—not just Alice but also the girl she sits next to, Britney. If Britney’s parents get divorced, what are the chances that Alice’s parents will get divorced, too? Still about 5 percent: The correlation there is close to zero. But if Britney gets head lice, the chance that Alice will get head lice is much higher, about 50 percent—which means the correlation is probably up in the 0.5 range. If Britney sees a teacher slip on a banana peel, what is the chance that Alice will see it, too? Very high indeed, since they sit next to each other: It could be as much as 95 percent, which means the correlation is close to 1. And if Britney wins the class spelling bee, the chance of Alice winning it is zero, which means the correlation is negative: -1.

If investors were trading securities based on the chances of these things happening to both Alice and Britney, the prices would be all over the place, because the correlations vary so much.

But it’s a very inexact science. Just measuring those initial 5 percent probabilities involves collecting lots of disparate data points and subjecting them to all manner of statistical and error analysis. Trying to assess the conditional probabilities—the chance that Alice will get head lice if Britney gets head lice—is an order of magnitude harder, since those data points are much rarer. As a result of the scarcity of historical data, the errors there are likely to be much greater.

In the world of mortgages, it’s harder still. What is the chance that any given home will decline in value? You can look at the past history of housing prices to give you an idea, but surely the nation’s macroeconomic situation also plays an important role. And what is the chance that if a home in one state falls in value, a similar home in another state will fall in value as well?

wp_quant4_fHere’s what killed your 401(k) *

David X. Li’s Gaussian copula function as first published in 2000. Investors exploited it as a quick—and fatally flawed—way to assess risk. A shorter version appears on this month’s cover of* Wired.

Probability

Specifically, this is a joint default probability—the likelihood that any two members of the pool (A and B) will both default. It’s what investors are looking for, and the rest of the formula provides the answer.

Survival times

The amount of time between now and when A and B can be expected to default. Li took the idea from a concept in actuarial science that charts what happens to someone’s life expectancy when their spouse dies.

Equality

A dangerously precise concept, since it leaves no room for error. Clean equations help both quants and their managers forget that the real world contains a surprising amount of uncertainty, fuzziness, and precariousness.

Copula

This couples (hence the Latinate term copula) the individual probabilities associated with A and B to come up with a single number. Errors here massively increase the risk of the whole equation blowing up.

Distribution functions

The probabilities of how long A and B are likely to survive. Since these are not certainties, they can be dangerous: Small miscalculations may leave you facing much more risk than the formula indicates.

Gamma

The all-powerful correlation parameter, which reduces correlation to a single constant—something that should be highly improbable, if not impossible. This is the magic number that made Li’s copula function irresistible.

Enter Li, a star mathematician who grew up in rural China in the 1960s. He excelled in school and eventually got a master’s degree in economics from Nankai University before leaving the country to get an MBA from Laval University in Quebec. That was followed by two more degrees: a master’s in actuarial science and a PhD in statistics, both from Ontario’s University of Waterloo. In 1997 he landed at Canadian Imperial Bank of Commerce, where his financial career began in earnest; he later moved to Barclays Capital and by 2004 was charged with rebuilding its quantitative analytics team.

Li’s trajectory is typical of the quant era, which began in the mid-1980s. Academia could never compete with the enormous salaries that banks and hedge funds were offering. At the same time, legions of math and physics PhDs were required to create, price, and arbitrage Wall Street’s ever more complex investment structures.

In 2000, while working at JPMorgan Chase, Li published a paper in The Journal of Fixed Income titled “On Default Correlation: A Copula Function Approach.” (In statistics, a copula is used to couple the behavior of two or more variables.) Using some relatively simple math—by Wall Street standards, anyway—Li came up with an ingenious way to model default correlation without even looking at historical default data. Instead, he used market data about the prices of instruments known as credit default swaps.

If you’re an investor, you have a choice these days: You can either lend directly to borrowers or sell investors credit default swaps, insurance against those same borrowers defaulting. Either way, you get a regular income stream—interest payments or insurance payments—and either way, if the borrower defaults, you lose a lot of money. The returns on both strategies are nearly identical, but because an unlimited number of credit default swaps can be sold against each borrower, the supply of swaps isn’t constrained the way the supply of bonds is, so the CDS market managed to grow extremely rapidly. Though credit default swaps were relatively new when Li’s paper came out, they soon became a bigger and more liquid market than the bonds on which they were based.

When the price of a credit default swap goes up, that indicates that default risk has risen. Li’s breakthrough was that instead of waiting to assemble enough historical data about actual defaults, which are rare in the real world, he used historical prices from the CDS market. It’s hard to build a historical model to predict Alice’s or Britney’s behavior, but anybody could see whether the price of credit default swaps on Britney tended to move in the same direction as that on Alice. If it did, then there was a strong correlation between Alice’s and Britney’s default risks, as priced by the market. Li wrote a model that used price rather than real-world default data as a shortcut (making an implicit assumption that financial markets in general, and CDS markets in particular, can price default risk correctly).

It was a brilliant simplification of an intractable problem. And Li didn’t just radically dumb down the difficulty of working out correlations; he decided not to even bother trying to map and calculate all the nearly infinite relationships between the various loans that made up a pool. What happens when the number of pool members increases or when you mix negative correlations with positive ones? Never mind all that, he said. The only thing that matters is the final correlation number—one clean, simple, all-sufficient figure that sums up everything.

The effect on the securitization market was electric. Armed with Li’s formula, Wall Street’s quants saw a new world of possibilities. And the first thing they did was start creating a huge number of brand-new triple-A securities. Using Li’s copula approach meant that ratings agencies like Moody’s—or anybody wanting to model the risk of a tranche—no longer needed to puzzle over the underlying securities. All they needed was that correlation number, and out would come a rating telling them how safe or risky the tranche was.

As a result, just about anything could be bundled and turned into a triple-A bond—corporate bonds, bank loans, mortgage-backed securities, whatever you liked. The consequent pools were often known as collateralized debt obligations, or CDOs. You could tranche that pool and create a triple-A security even if none of the components were themselves triple-A. You could even take lower-rated tranches of other CDOs, put them in a pool, and tranche them—an instrument known as a CDO-squared, which at that point was so far removed from any actual underlying bond or loan or mortgage that no one really had a clue what it included. But it didn’t matter. All you needed was Li’s copula function.

The CDS and CDO markets grew together, feeding on each other. At the end of 2001, there was $920 billion in credit default swaps outstanding. By the end of 2007, that number had skyrocketed to more than $62 trillion. The CDO market, which stood at $275 billion in 2000, grew to $4.7 trillion by 2006.

At the heart of it all was Li’s formula. When you talk to market participants, they use words like beautiful, simple, and, most commonly, tractable. It could be applied anywhere, for anything, and was quickly adopted not only by banks packaging new bonds but also by traders and hedge funds dreaming up complex trades between those bonds.

“The corporate CDO world relied almost exclusively on this copula-based correlation model,” says Darrell Duffie, a Stanford University finance professor who served on Moody’s Academic Advisory Research Committee. The Gaussian copula soon became such a universally accepted part of the world’s financial vocabulary that brokers started quoting prices for bond tranches based on their correlations. “Correlation trading has spread through the psyche of the financial markets like a highly infectious thought virus,” wrote derivatives guru Janet Tavakoli in 2006.

The damage was foreseeable and, in fact, foreseen. In 1998, before Li had even invented his copula function, Paul Wilmott wrote that “the correlations between financial quantities are notoriously unstable.” Wilmott, a quantitative-finance consultant and lecturer, argued that no theory should be built on such unpredictable parameters. And he wasn’t alone. During the boom years, everybody could reel off reasons why the Gaussian copula function wasn’t perfect. Li’s approach made no allowance for unpredictability: It assumed that correlation was a constant rather than something mercurial. Investment banks would regularly phone Stanford’s Duffie and ask him to come in and talk to them about exactly what Li’s copula was. Every time, he would warn them that it was not suitable for use in risk management or valuation.

divid li
David X. Li

Illustration: David A. Johnson

In hindsight, ignoring those warnings looks foolhardy. But at the time, it was easy. Banks dismissed them, partly because the managers empowered to apply the brakes didn’t understand the arguments between various arms of the quant universe. Besides, they were making too much money to stop.

In finance, you can never reduce risk outright; you can only try to set up a market in which people who don’t want risk sell it to those who do. But in the CDO market, people used the Gaussian copula model to convince themselves they didn’t have any risk at all, when in fact they just didn’t have any risk 99 percent of the time. The other 1 percent of the time they blew up. Those explosions may have been rare, but they could destroy all previous gains, and then some.

Li’s copula function was used to price hundreds of billions of dollars’ worth of CDOs filled with mortgages. And because the copula function used CDS prices to calculate correlation, it was forced to confine itself to looking at the period of time when those credit default swaps had been in existence: less than a decade, a period when house prices soared. Naturally, default correlations were very low in those years. But when the mortgage boom ended abruptly and home values started falling across the country, correlations soared.

Bankers securitizing mortgages knew that their models were highly sensitive to house-price appreciation. If it ever turned negative on a national scale, a lot of bonds that had been rated triple-A, or risk-free, by copula-powered computer models would blow up. But no one was willing to stop the creation of CDOs, and the big investment banks happily kept on building more, drawing their correlation data from a period when real estate only went up.

“Everyone was pinning their hopes on house prices continuing to rise,” says Kai Gilkes of the credit research firm CreditSights, who spent 10 years working at ratings agencies. “When they stopped rising, pretty much everyone was caught on the wrong side, because the sensitivity to house prices was huge. And there was just no getting around it. Why didn’t rating agencies build in some cushion for this sensitivity to a house-price-depreciation scenario? Because if they had, they would have never rated a single mortgage-backed CDO.”

Bankers should have noted that very small changes in their underlying assumptions could result in very large changes in the correlation number. They also should have noticed that the results they were seeing were much less volatile than they should have been—which implied that the risk was being moved elsewhere. Where had the risk gone?

They didn’t know, or didn’t ask. One reason was that the outputs came from “black box” computer models and were hard to subject to a commonsense smell test. Another was that the quants, who should have been more aware of the copula’s weaknesses, weren’t the ones making the big asset-allocation decisions. Their managers, who made the actual calls, lacked the math skills to understand what the models were doing or how they worked. They could, however, understand something as simple as a single correlation number. That was the problem.

“The relationship between two assets can never be captured by a single scalar quantity,” Wilmott says. For instance, consider the share prices of two sneaker manufacturers: When the market for sneakers is growing, both companies do well and the correlation between them is high. But when one company gets a lot of celebrity endorsements and starts stealing market share from the other, the stock prices diverge and the correlation between them turns negative. And when the nation morphs into a land of flip-flop-wearing couch potatoes, both companies decline and the correlation becomes positive again. It’s impossible to sum up such a history in one correlation number, but CDOs were invariably sold on the premise that correlation was more of a constant than a variable.

No one knew all of this better than David X. Li: “Very few people understand the essence of the model,” he told The Wall Street Journal way back in fall 2005.

“Li can’t be blamed,” says Gilkes of CreditSights. After all, he just invented the model. Instead, we should blame the bankers who misinterpreted it. And even then, the real danger was created not because any given trader adopted it but because every trader did. In financial markets, everybody doing the same thing is the classic recipe for a bubble and inevitable bust.

Nassim Nicholas Taleb, hedge fund manager and author of The Black Swan, is particularly harsh when it comes to the copula. “People got very excited about the Gaussian copula because of its mathematical elegance, but the thing never worked,” he says. “Co-association between securities is not measurable using correlation,” because past history can never prepare you for that one day when everything goes south. “Anything that relies on correlation is charlatanism.”

Li has been notably absent from the current debate over the causes of the crash. In fact, he is no longer even in the US. Last year, he moved to Beijing to head up the risk-management department of China International Capital Corporation. In a recent conversation, he seemed reluctant to discuss his paper and said he couldn’t talk without permission from the PR department. In response to a subsequent request, CICC’s press office sent an email saying that Li was no longer doing the kind of work he did in his previous job and, therefore, would not be speaking to the media.

In the world of finance, too many quants see only the numbers before them and forget about the concrete reality the figures are supposed to represent. They think they can model just a few years’ worth of data and come up with probabilities for things that may happen only once every 10,000 years. Then people invest on the basis of those probabilities, without stopping to wonder whether the numbers make any sense at all.

As Li himself said of his own model: “The most dangerous part is when people believe everything coming out of it.”

Felix Salmon (felix@felixsalmon.com) writes the Market Movers financial blog at Portfolio.com.

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