Category Archives: Current events

Leak shows Car Wash operation ‘Depends on the Americans’

Dallagnol messages

Car Wash Prosecutor Dallagnol and the message to Judge Moro revealing link to the US

247 12 June 2019

Car Wash prosecutor Deltan Dallagnol told Judge Moro that certain details of the operation would “depend on the articulation with the Americans”, in a further set of messages published this Wednesday (June 12) by the site The Intercept.

In the message published by the The Intercept Brasil, Moro complained that the operation could not be “stopped” too long”, to which Dallagnol responded – in a scandalous promiscuos and partisan relationship between the judge and the Prosecutor – saying they had to await the articulation with the Americans.

Read the excerpt of the messages published:

“Moro – 18:44:08 – Is it not too long without an operation?
Deltan – 20:05:32 – Yes, it is. The problem is that the operations are with the same people who are working on the charge against Lula. We decided to postpone everything until that charge is brought, except for the taccla  op because of the risk of leaking, but it depends on the articulation with the Americans
Deltan – 20:05:45 – (What is being done)
Deltan – 20:05:59 – We are scheduled to charge on the 14th
Moro – 20:53:39 – OK”

Odebrecht plea bargain also makes Federal Prosecution Service into a millionaire fund manager

Odebrecht
2 April 2019

By Pedro Canario

The plea bargain agreement Odebrecht signed with the Federal Prosecution Service in December 2016 is quite similar to agreement with Petrobras. Both provide for the setting up of a judicial account under the tutelage of the 13th Federal Court of Curitiba, with the money being at the disposal of the  FPS to do with it as they wish.

Odebrecht agreement with the FPS also allows Car Wash prosecutors to manage the fine paid by the engineering company.

In the Odebrecht case, the company undertook to pay $ 2.9 billion as a fine for their misdeeds, to be divided by the FPS amongst themselves, the U.S. Department of Justice (DOJ) and the Prosecutor-General of Switzerland. The part that is to remain in Brazil is to be under the charge of the Car Wash prosecutors in Curitiba.

According to the agreement, this money is to be for reparation of ” material and non- material damages” caused by the corruption at Odebrecht. According to the explanation given by the FPS in Parana to ConJur, 80% of the money will remain in Brazil, 10% with the USA and 10%, in Switzerland. Thus, the FPS will be responsible for managing R$ 6,8 billion.

Of that amount that is to remain in Brazil, 97.5% is to go to “public bodies, companies and foundations and mixed economy companies” damaged by the deeds of the engineering company. In other words, $ 1.71 billion is to be directed at the discretion of the FPS. The other 2.5% is to go to the Federal purse in compensation for having committed administrative impropriety.

The sharing out of the money is set forth in paragraph 3 of clause 7 of the agreement, according to which the “total amount is to go to the Federal Prosecution Service”. In response to questions from ConJur however, the FPS asserts that “the agreement does not give the resources to the Federal Prosecution Service nor place them under management by the Prosecution Service”. According to the official explanation, the money will be paid to the “victims”, wherever the FPS is responsible the administrative impropriety suit adheres to the FPS agreement.

Although the agreement is public and one of its clauses says that the money will be at the disposal of the FPS, its destination is described in a secret clause of the document, “Appendix 5”. This document was not published by the Prosecution Service and is being dealt with carefully by the 13th Federal Court of Curitiba, which was led by the now Minister of Justice Sergio Moro throughout Operation Car Wash. At least three times, Moro denied requests for access to this appendix under the argument that it could harm investigations underway.

The agreement with Odebrecht is dated December 2016 and is therefore older than the Petrobras one signed in September 2018 and published in January this year. But many of the elements that raise suspicions about the intentions of the Car Wash prosecutors and its anti-corruption crusade were already there — and have not been seen.

In the case of Petrobras, annexes of the agreement were published recently and revealed these intentions: the setting up of a foundation in which the money, $ 650 million, is to be directed at interventions to combat corruption. This fund is to be managed by the operation Car Wash prosecutors in Curitiba. Naturally, it will be sent to friendly bodies. This text was suspended by Justice Alexandre de Moraes of the Federal Supreme Court.

The Odebrecht agreement has been better protected. But we do already know, for example, that the money that is to remain in Brazil will not be sent to a Treasury account, as mandated by Supreme Court jurisprudence. It is to be under the control of members of the self-proclaimed Car Wash task force.

Rendering services
In exchange, they undertake to “manage” together with the Comptroller-General of the Union, with the Attorney-General of the Union and the Accounts Court of the Union so that they do not question the amount of the fine nor accuse the company and their directors of administrative impropriety.

Car Wash prosecutors
In exchange for managing the millionaire fine, Car Wash prosecutors undertake to ‘manage’ so that oversight bodies do not interfere in the agreement
Reproduction/YouTube

In bureaucratic jargon, “manage” means articulating and in some cases making non-official requests. In the case of public agents receiving money to do so in the name of private individuals, it is administrative advocacy, explained one specialist who spoke to ConJur on the condition of not being identified.

The U.S. chapter of the agreement has less to do with power and more to do with business. Amongst the various requirements Odebrecht has undertaken to meet is the nomination of an “external monitor of compliance with the agreement” to submit reports every 120 days.

These reports must be shown to the board of directors of the company and to the head of the FCPA division of the U.S. Department of Justice. The last item of the last annex of the agreement with the DoJ explains that the reports expected by the U.S. government will “probably include proprietary, financial, commercial and secret competition information”.

FCPA is the abbreviation for the U.S. international anti-corruption law. It exists to punish companies abroad that trade on the U.S. stock exchanges or with U.S. companies. But analysts have pointed out that the law has been used as an instrument of expansion of the economic influence of the U.S. government through private companies in other countries.

This analysis is not very popular amongst prosecutors at the DoJ who discredit the argument whenever they can. But the fact is that at the start of operation Car Wash, Odebrecht had 240,000 employees. According to the company, there are now 60,000.

Defence case
The defence for ex-President Lula, made by the lawyer Cristiano Zanin Martins, has been trying to access the documents for the agreement since May 2017, without success. Moro has turned down three requests for access in the space of little more than one year. The first denial was in September 2017, when the then judge said that handing over a copy of the document could harm other investigations underway. On May 24th of the next year, he was more clear: “There is no need for access to the case documents of the plea bargain “. In the third denial, in August 2018, he merely repeated the decision of the previous year.

Lula
Since May 2017, ex-President Lula has tried to obtain access to the case documents of the Odebrecht agreement with the FPS, unsuccessfully
Ricardo Stuckert

In February, Zanin filed a motion with the Supreme Court alleging violation of Binding Ruling 14 of the STF over the denials. The ruling guarantees the defence access to all elements of the inquiry already documented, provided the access does not harm diligences underway — exactly the argument used by Moro.

According to the lawyer, access to the documents could corroborate the defence case that Lula never received any payment for any “service” rendered to Odebrecht, and that the charges made against him have not been repeated in the U.S. They were brought in Brazil to ensure benefits for the Odebrecht family and for ex-executives of the company.

Moro argued that access to the agreement documents is not necessary. But Zanin uses the example of Petrobras: the agreement was signed in September 2018 and was published on January 30th of this year. Only weeks later, details of the setting up of the fund by the FPS were published — and the information was seen to be essential to the process, to the point of a Supreme Court Justice suspending that part until further information becomes available to judge the merits.

There and here
Lula’s defence have spoken of two main reasons for having access to the agreement documents. The first is that, in appendix 5, says the claim, there is information on the destination of the money paid by Odebrecht by way of the fine, and the FPS is arguing that Lula pay a fine in indemnification for the damages caused to the country for his corrupt deeds. But he is charged with receiving an apartment from the construction company. If both he and the company pay fines for the same facts, there would be punishment twice over, argues Zanin, which would harm the ex-President.

Justice Fachin
There was no “flagrant illegality” in Moro’s decisions denying Lula’s defence access to the agreement of Odebrecht with the FPS, says Justice Luiz Edson Fachin
Rosinei Coutinho / SCO STF

Lula also asked to see what there was in the My Web Day system. This concerns a parallel accounts software to control the bribes paid, owed and received, used by the “structured operations sector”, the bribes department, as the newspapers called it. But when the Federal Police obtained access to the system, they reported the lack of integrity of the files, with data deleted or corrupted.

For Lula’s lawyer, the fact of these files being corrupted argue in favour of his client. Odebrecht told different stories in Brazil and in the USA. Here they said hey bribed Lula for him to intercede on behalf of the company at Petrobras. One of these interventions was for the nomination of ex-directors responsible for maintaining the tender fraud scheme functioning.

But to the DoJ, the Odebrecht executives described how the cartel worked that engineering companies set up to defraud Petrobras tenders and over bill for civil construction contracts, but nothing about Lula.

No smoke
At the Supreme Court, Justice Luiz Edson Fachin also denied the request for access. According to him, there was no “flagrant illegality” in Moro’s decisions, and therefore there was no reason to grant the motion. The decision was made on March 15 of this year, and also calls for further information from the self-proclaimed Car Wash task force.

The current head of the 13th Federal Court of Curitiba, Luiz Antonio Bonat, repeated to Fachin the arguments of his predecessor: allowing access to the agreement documents would harm investigations underway. He added that the documents Lula asked to see, “in the main, corresponded to information which had no wider relevance”. “However, there is no obstacle to providing this information”, Bonat concluded in his ruling.

In response, Lula’s defence asked Fachin to reconsider the previous decision and that it would suspend the criminal case against the ex-President in the case of the apartment. “Is it possible to guarantee that the version of facts from Odebrecht in the plea bargain agreement documents is the same as that given in the court cases? Or are there things in the agreement documents approved there not relevant to the petitioner’s defence?”

Click here to read the Odebrecht agreement with the FPS
Click here to read the Odebrecht agreement with the DoJ
Click
here to read the Lula petition to obtain access to the agreement documents
Click
here to read the Justice Fachin ruling on the Lula petition
Click
here to read the judge Luiz Antonio Bonat document to the Supreme Court on the Odebrecht agreement
Click
here to read the request for reconsideration submitted to Justice Fachin

Claim 33.543
Criminal case 5063130-17.2016.4.04.7000, at Federal Justice in Parana

Pedro Canario is chief editor at Consultor Juridico.

Beyond Censorship: Destroying Free Thought Online

Very good analysis of where the Internet is being taken to homogenise Truth and learning in the image of what the powers that be say is truth. Truthstream Media quite rightly say that this is very dangerous.

The Global Economy Is a Time Bomb Waiting to Explode

Financial storm
Marshall Auerback / Independent Media Institute

In the aftermath of the greatest financial calamity since the Great Depression, then–chief of staff for the Obama administration Rahm Emanuel made the call for aggressive action to prevent a recurrence of the meltdown of 2008.

Although the U.S. government’s system of checks and balances typically produces incremental reform, Emanuel suggested that during times of financial upheaval, the traditional levers of powers are often scrambled, thereby creating unique conditions whereby legislators could be pushed in the direction of more radical reform. That’s why he suggested that we should never let a crisis go to waste. Ironically, that might be the only pearl of wisdom we ever got from the soon-to-be ex-mayor of Chicago, one of those figures who otherwise embodied the worst Wall Street-centric instincts of the Democratic Party. But give Rahm props for this one useful insight.

But we did let the crisis of 2008 go to waste. Rather than reconstructing a new foundation out of the wreckage, we simply restored the status quo ante, and left the world’s elite financial engineers with a relatively free hand to create a wide range of new destructive financial instruments.

To cite some examples, consider the case of the UK, where England’s local councils have taken on significant risk via structural financial products known as “LOBO loans” (lender option borrower option). Financial blogger Rob Carver explains how they work:

“[Let’s] say I offer to lend you £40 and charge you 3% interest for 5 years. Some other guy comes along and offers you the same deal; but the twist is he will have the option to ask for his money back whenever he likes.

“You wouldn’t borrow money from him because it’s clearly a worse deal. …

“Suppose he sticks to his guns but as a concession he will lend you the money at only 2.9% interest. Would you take that? What about 2.5%? 2%?”

What Carver is describing here is the so-called “teaser”: a seductively low starting interest rate that is sufficiently attractive to induce the buyer to take on the LOBO in the first place. It’s designed to entice someone away from fixed interest rate borrowing (which at least has the virtue of being constant and therefore more readily predictable). The seductive quality of the teaser is that one’s borrowing costs might appear “cheaper” than the higher initial fixed-rate costs offered by the Public Works Loan Board (PWLB), a wing of the government. But the troubles become more apparent with the passage of time.

What happens if and when rates unexpectedly move up? In general, as Carver notes, having to suddenly repay your loan when interest rates have risen to 4 percent is the worst possible time for you. It’s akin to taking away the umbrella the minute it starts to pour. Worse, the authority is likely locked into a contract that typically has a lifespan of 40-70 years. (And who can forecast with any degree of certainty the trend of interest rates over that sort of time span? It makes the whole notion of buying an instrument on that premise to be speculative in the extreme.) Banks have the option of raising rates at their discretion, and although the councils are able to opt out of their contract, they will pay huge penalties if they seek to renegotiate or exercise that option to opt out.

So there’s a huge negotiating imbalance built into the contract, and the likely upshot is that the local council ends up paying more in interest charges over the course of the loan. How much more? According to an activist group, #NoLOBOs (created to help housing authorities combat the impact of these instruments), “a substantial number of housing councils are facing 7-9 % interest rates, which is more than twice the current rate of lending at the PWLB.” And in many instances, the municipalities have been burdened with these higher borrowing costs at a time when additional funding from the national government has been cut back, so they are confronted with a double whammy on both sides of the balance sheet.

What was initially sold as a means to manage risk, then, ultimately metamorphoses into a recipe for financial fragility, especially when it occurs at the municipal level with institutions that don’t have the capacity to create new currency (as a federal authority can do). The “teaser” becomes a poison pill. This means a local authority (or level of government that is a user, rather than issuer, of currency) can go bust.

To give some sense of the magnitude of the market, the Independent notes:

“There is around £18bn worth of private sector loans on councils’ books, according to figures from the Department for Communities and Local Government. … [A]round £15bn of these are Lobos.

“Annual sales to local authorities regularly topped £1bn in the run-up to the financial crisis and peaked at £1.5bn in 2007, before crashing to £600m a year later and then dwindling to nothing in 2012.”

Their revival since 2012 has resulted in hundreds of millions of pounds being skimmed from struggling town hall budgets, which were hit by the double whammy of these toxic instruments, along with austerity-imposed cutbacks from the national government. One particularly egregious example was the cash-strapped town of Newham, which had £398m of exposure to LOBOs back in 2014. Faced as well with cutbacks from the national Tory government, the local council was forced to remove financial support from a homeless hostel, “leading to the eviction of a group of single mothers to save £41,000,” reported British publication Private Eye.

Needless to say, banks and brokers have profited handsomely from the whole exercise, pocketing hundreds of millions of pounds in profits.

Here’s another disaster waiting to happen: Globally, financial markets today are seeing a rebirth of “collateralized loan obligations” (CLOs), instruments broadly similar to the “collateralized debt obligations” (CDOs), which helped to blow up the financial system in 2008. CDOs were asset-backed instruments, a “blended” security comprised of risky mortgage-backed bonds and much of the rest from theoretically safer tranches. The theory underlying them was that the lower the investment quality, the higher the compensating yield, but in reality most turned out to be toxic junk. What distinguishes CLOs from their CDO “cousin” is that instead of repackaging mortgages, subprime and otherwise, CLOs repackage corporate loans, and consumer credit, such as car loans.

Unfortunately, in yet another instance of lessons unlearned from 2008, the collateralized loan obligations, like the CDOs, have virtually non-existent investor protection, “with over 70 percent lacking any covenants that would allow monitoring of financial condition and early intervention to manage problem borrowers. This exacerbates the risk of higher losses,” argues Satyajit Das, a former banker who first identified the risks to financial stability posed by these kinds of instruments back in 2008. In fact, Das elaborates, “relative to mortgages, [CLOs] typically are made up of fewer and larger loans, which increases concentration risk. Leveraged loans are highly sensitive to economic conditions and defaults may be correlated, with many loans experiencing problems simultaneously.” Which intuitively makes total sense: during a slowdown, virtually all economic activity slows down, whether that be housing, car sales, or consumer borrowing. Diversification of risk is therefore more apparent than real.

In an environment of prevailing low interest rates (and, hence, lower yields from conventional instruments), debt investors have been told (again) that they can enhance their portfolio returns, through these higher-yielding CLOs, while mitigating risk simply by diversifying. In theory, the risk is dispersed, but in practice, as Das has pointed out, if you’re simply diversifying different kinds of financial excrement, the end result is more likely to be insolvency for the whole instrument. A common theme is that in spite of the disastrous performance of these instruments during the market crash, many of the underlying loans today still lack standard provisions to protect lenders, such as reporting and requirements to maintain certain income and asset levels. Consequently, more toxic junk is being passed around the system like a hot potato. Last one holding the potato loses.

Given the scale of issuance, all major financial institutions are likely to be left holding these bags. CLOs, notes Das, have been growing at a rate of around $100bn a year for the past decade, and total levels outstanding now approach the size that existed in the CDO market by the time of the 2008 crisis. As the cycle has matured, the quality of the assets of the loans has diminished, and the borrowers have become increasingly leveraged.

This follows a classic pattern of a typical borrowing cycle, as credit structures move from relatively stable “hedge financing” (where the underlying units can meet payment commitments out of income flow) to “Ponzi” finance (borrowing simply to pay interest on the interest), a process originally outlined by the economist Hyman Minsky. Based on the relatively benign conditions of the recent past, both borrowers and lenders are lulled into a false sense of security and increase their respective risk profiles accordingly. Minsky was by no means the only economist whose work has become associated with manias, panic and crash. He built his analysis on the shoulders of analysts of the Great Depression, such as Irving Fisher, John Maynard Keynes, and John Kenneth Galbraith. But what distinguishes Minsky’s scholarship is that he focused it on the “upward” source of the financial instability, as opposed to its disastrous denouement. In relation to today’s CLO market, the parallel is that the decade-long period of stability in the aftermath of 2008 (in reality, faux stability achieved through the injection of trillions of dollars in public sector bailouts) has again given the users a stream of data providing the illusion that leverage is safe.

Rather than respond to each financial meltdown by seeking to curb the activities that led to the crisis in the first place, the sheer ongoing dominance of our financial sector has ensured that policy has merely worked to bail out the big players, and do everything to keep the rigged casino of the economy in their favor. Thus, financial institutions continue to concoct increasingly esoteric and opaque financial instruments that they market to less financially sophisticated counterparties.

Let’s roll back the tape to a few financial crises ago, from the early 1990s. At that time, Bob Citron, the Orange County treasurer, bankrupted his county via leveraged investments he made in structured notes (i.e., customized notes designed to fit the investment wishes and opinions of particular institutional buyers). If you tailor an exotic instrument to fit your investment outlook, you’d better know what you’re doing and appreciate the downside risks. Customization entails a level of financial expertise that Citron later conceded he did not fully possess. He was a sitting duck in a sea of sharks (to mix metaphors). Citron made a bet on the direction of interest rates (he bet they would stay low, which was wrong). As a result of his miscalculation, by 1994 Orange County’s investment portfolio began hemorrhaging hundreds of millions of dollars, ultimately going broke. Without conceding any liability, ultimately Merrill Lynch paid out $400m in penalties to settle the case.

That was an early warning signal, which unfortunately remained unheeded, as it was followed in quick succession by the Asian financial crisis in 1997, the bankruptcy of Long-Term Capital Management and the concomitant Russian debt default in 1998, the dot.com bust, and finally the complete seizure of the global financial system by 2008. Each time, a common foolhardy notion was the idea that higher levels of reward could be achieved without any corresponding increase in risk. All of this occurred against a backdrop of deregulation, minimal transparency and inadequate market supervision.

If you thought the near-breakdown of the global economy in 2008 was enough to make global policymakers and regulators rethink their persistent accommodation of financial innovation and deregulation, think again. Regulators have continued to accommodate this complexity, rather than minimizing it. Complex financial systems beget yet more complex (and ultimately ineffective) regulation. It is better to simplify the system in order to improve the quality of the regulation and the ease of oversight (which the complexity is designed to avoid).

Unfortunately, that’s not what our policymakers have done. Instead of redesigning the system, the monetary authorities have simply inserted themselves in the chain of intermediation that included an ever-evolving variety of books of business without actually considering whether there were too many weak links in the credit chain in the first place. Rather than shorten or redesign the economy’s credit structures, and curb the risks accordingly, central banks instead have simply acted as the ultimate guarantors in a supply chain from money-like instruments to longer-term and riskier credit. Absent any kind of sanction for undertaking more systemically dangerous activities, our policymakers have therefore made the same mistakes that were made in the early 2000s: they are establishing perverse ongoing incentives that increase risk, punishing the timid (prudent?) with low returns. It’s a classic illustration of Gresham’s Law, whereby bad money drives out good.

So here we go again. No less a figure than Claudio Borio, the chief economist of the Bank for International Settlements central, who warned of the dangers of a synchronized housing bubble well before the 2008 crisis, is again sounding the alarm about a recurrence. The crash gave us a chance to downsize finance and restrict its ability to wreak comparable havoc on the economy going forward. Instead, we let the crisis go to waste, which almost certainly means a nasty sequel to 2008 facing us in the near future.

Found at: Truthdig

This article was produced by Economy for All, a project of the Independent Media Institute.

“It is Babel”, says Brazilian Supreme Justice on the US$ 680 million for Car Wash Foundation

marco-aurelioTales Faria at UOL

Justice Marco Aurélio Mello of the Brazilan Supreme Federal Court considers the destination of US$ 650 million to a foundation managed by the Operation Car Wash (Lava Jato) prosecutors to promote anti-corruption policies to be absurd. The money was deposited in January. It is the fruit of an agreement between US authorities, Petrobras and the team of the so-called Republic of Curitiba where Lava Jato is based. It represents 80% of the capital the Brazilian state company had to return to the US Treasury due to the irregularities found in Car Wash. According to Marco Aurélio Mello, such a destination, besides being illegal, sets up a super-entity and bypasses any oversight or control of its accounts. To this blog, he argued:

As has always been sustained by the Supreme Court, public bodies are funded only through the budget approved by the legislature. The mixing of public and private is not in the interests of the State, is not in the interests of society. It is  pernicious to allow ‘super-entities’, and not to allow financial oversight. It is a loss of parameters, it is out of control, it is an administrative mess. It is Babel.

The power conferred on the prosecutors of Paraná is provoking fear in Bolsonaro’s closest circles. Allies of the President argue that he puts off to a possible second mandate his proposal to repeal re-election. Without the chance to run again, Bolsonaro would leave his government vulnerable during the campaign “Moro 2022”.

Sergio Moro is the leading judge behind Operation Car Wash which found alleged corruption in Lula’s PT government, sentenced him to prison and took him out of the running for the Brazilian Presidency, and who then became Justice Minister in the government that took power in Lula’s absence.

The foundation proposed is dangerous because with the same bias that took out Lula from the election, if present in the efforts of education and propaganda, could simply be used to support judge Moro’s political ambitions to get elected to lead the next government.

In the style of Moro – spying and extortion to persecute Cristina Kirchner

carlos-stornelli-marcelo-dalessio

Carlos Stornelli (left), Marcelo D’Alessio (right)

Argentinean federal judge Alejo Ramos Padilla charged the false lawyer Marcelo D’Alessio as a member of an illegal organisation “dedicated to carrying out intelligence and psychological operations against various persons who were then blackmailed or coerced, until they panicked, finally declaring themselves in a certain way and becoming “repentant witnesses”, the Argentinean version of the “plea bargains” so common in the Brazilian Operation Car Wash (Lava-Jato).

The key point in this case is that the judge considers there to be an accord between the intelligence services and the Justice Department that goes against the democratic system using blackmail, coercion, dossiers, distortion and false lawyers demanding money of people, and furthermore, to set up and run judicial cases.

All this is very similar to the judicial scheme carried out in Brazil by the ex-judge Sergio Moro (now recompensed with the post of Minister of Justice in the government of Jair Bolsonaro), regarding bribes linked to the multinational Odebrecht, which had the aim of imprisoning ex-President Lula da Silva and of impeding him from participating in the elections. In the Argentinean case, they are seeking the imprisonment of ex-President Cristina Fernandez de Kirchner, to stop her from running against the current President Mauricio Macri seeking re-election in October.

In the 220 pages of his resolution, Judge Ramos Padilla showed there was a close link between the prosecutor Carlos Stornelli (an Argentinean Deltan Dallagnol) and the supposed lawyer D’Alessio, evident from the many messages and audios exchanged over Whatsapp, and by a four hour meeting between them at the Pinamar resort, as well as handwritten messages in notebooks seized during investigations. Due to this, the magistrate requested the Prosecution Service to investigate the prosecutor, and to begin the due process, if considered pertinent.

In this first resolution, the task is to describe the mechanisms of the crime, as to how Stornelli and D’Alessio extorted the businessman Pedro Etchebest, or how they used a hidden camera against the lawyer José Manuel Ubeira, or used the “repentant witness” statement of Leonardo Fariña, or coerced an ex-member of staff of the Venezuelan state company PDVSA to declare himself repentant.

Despite Stornelli refusing to hand over his mobile phones to enable the frequency and kind of contacts with D’Alessio to be determined – who is the nephew of the Clerk-General of the government, Carlos Marcelo D’Alessio – a third businessman appeared denouncing D’Alessio for extortion and involving the lawyer Rodrigo Gonzalez and the judicial operator of the newspaper Clarín, Daniel Santoro, although they have denied the charge.

The meeting place of the four, Stornelli, D’Alessio, Gonzalez and Santoro, was the restaurant El Obrero, decorated with photos of President Macri. Its owner is a partner in another business venture, of Charly Liñani – denounced by the ex-presidential secretary Pablo Barreiro, of the Cristina Kirchner government, for attempted extortion, committed together with D’Alessio and Gonzalez, as revealed by the journalist Horacio Verbitsky on his site Cohete a la Luna.

The messages and audios also show attempts to use Leonardo Fariña, forcing him to make the declarations required to incriminate Cristina Kirchner. Fariña presented himself spontaneously to the court, and told how D’Alessio offered him to take part in the extortion against Etchebest. That charge has been presented to the Justice Department.

The judicial dispatch includes various audios in which, by means of a plan to extort, one can glimpse the possibility of including the businessman Mariano Martínez Rojas, responsible for the fraud against the workers of the newspaper Tiempo Argentino intended to dismantle the outlet, which now functions as a cooperative of journalists. The blackmail involving Martínez Rojas attempted to make him testify against the Peronista governor of the province of Formosa, Gildo Insfran.

The operation to transform another executive into a repentant witness – Gonzalo Brusa Duvat, who worked in a branch of Venezuelan oil company PDVSA in Argentina – has the same characteristics. Duvat was threatened with an economic criminal judicial case, but would guarantee that the process would disappear in the files if he accepted to declare himself “repentant” for Stornelli.

Once softened up with the threat of a legal suit against him, D’Alessio and the journalist for Clarin, Daniel Santoro, published articles about the declaration by Duvat as repentant, which was announced with pomp and circumstance in dozens of audios and Whatsapp messages. The judge said the precise role of Santoro and of other journalists involved still had to be analysed.

What surprised analysts is that D’Alessio managed to join Stornelli’s investigation team, who is a Federal prosecutor, without being a lawyer and without being registered to work at the Prosecution Service. The other assistants of the prosecutor soon delivered a copy of the declaration D’Alessio later sent to another conservative journalist, Eduardo Feinman – a situation which is at the very least unusual and unprecedented.

Another surprise was the transcription made by the magistrate of a phone tap dated February 4th, in which the false lawyer speaks to someone identified as Andrés Goldemberg: “I am at your disposal, if you need to extract someone”. It also mentions he is able to make available an aeroplane with 14 seats to carry out the operation.

“(The evidence) leads me to the conviction that at least within his post at the Prosecution Service, there was a promiscuous situation (of Stornelli), generating relationships of complicity and mutual collaboration which should not have been permitted, with the consent of the prosecutor, including the carrying out of intelligence and psychological operations to achieve the expected results in the judicial investigations or to attend to the magistrate himself”, wrote the judge.

Rubén Armendariz is a Uruguayan journalist and political scientist, associated with the Latin-American Strategic Analysis Centre (CLAE)
Published originally at estrategia.la

Lula at his grandson’s funeral

Lula grandson funeral

On leaving the cemetery, Lula stood up on the Federal Police car and waved to his supporters. When he got down, the Federal Police agent said: “You should not have done that”.

“You know that I had to”, responded Lula.

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’

Who Will Fix Facebook?

facebook-fakebook4By Matt Taibbi (Rolling Stone)

James Reader tried to do everything right. No fake news, no sloppiness, no spam. The 54-year-old teamster and San Diego resident with a progressive bent had a history of activism, but itched to get more involved. So a few years ago he tinkered with a blog called the Everlasting GOP Stoppers, and it did well enough to persuade some friends and investors to take a bigger step.

In its effort to clamp down on fake news, Russian trolls and Nazis, the social media giant has also started banning innocent people, proving again it can’t be trusted to regulate itself

“We got together and became Reverb Press,” he recalls. “I didn’t start it for the money. I did it because I care about my country.”

In 2014, he launched Reverb, a site that shared news from a pro-Democratic stance but also, Reader says, took great care to be correct and factual. The independent watchdog site mediabiasfactcheck.com would declare it strongly slanted left but rated it “high for factual reporting, as all news is sourced to credible media outlets.”

The site took off, especially during the 2015-16 election season. “We had 30 writers contributing, four full-time editors and an IT worker,” Reader says. “At our peak, we had 4 million to 5 million unique visitors a month.”

Through Facebook and social media, Reader estimates, as many as 13 million people a week were seeing Reverb stories. Much of the content was aggregated or had titles like “36 Scariest Quotes From the 2015 GOP Presidential Debates.”But Reverb also did original reporting, like a first-person account of Catholic Church abuse in New Jersey that was picked up by mainstream outlets.

Like most independent publishers, he relied heavily on a Facebook page to drive traffic and used Facebook tools to help boost his readership. “We were pouring between $2,000 and $6,000 a month into Facebook, to grow the page,” Reader says. “We tried to do everything they suggested.”

Publishers like Reader jumped to it every time Facebook sent hints about changes to its algorithm. When it emphasized video, he moved to develop video content. Reader viewed Facebook as an essential tool for independent media. “Small blogs cannot exist without Facebook,” he says. “At the same time, it was really small blogs that helped Facebook explode in the first place.”

But Reader began noticing a problem. Starting with the 2016 election, he would post articles that would end up in right-wing Facebook groups, whose followers would pelt his material with negative comments. He also suspected they were mass-reporting his stories to Facebook as spam.

Ironically, Reader, whose site regularly covered Russia-gate stories, suspected his business was being impacted by everyone from Republican operatives to MAGA-hat wearers and Russian trolls anxious to dent his pro-Democratic content. “It could have been Russians,” he says. “It could have been domestic groups. But it really seemed to be some kind of manipulation.”

Reader saw drops in traffic. Soon, ad sales declined and he couldn’t afford to invest in Facebook’s boosting tools anymore, and even when he did, they weren’t working in the same way. “It was like crack-dealing,” he says. “The first hits are free, but pretty soon you have to spend more and more just to keep from losing ground.”

 He went to Facebook to complain, but Reader had a difficult time finding a human being at the company to discuss his problems. Many sources contacted for this story describe a similar Kafka’s Castle-type experience of dealing with Facebook. After months of no response, Reader finally reached an acquaintance at Facebook and was told the best he could do was fill out another form. “The guy says to me,‘It’s about scale, bro,’ ” he recalls. In other words, in a Facebook ecosystem with more than 2 billion users, if you’re too small, you don’t matter enough for individual attention.

After all this, on October 11th this year, Reader was hit with a shock. “I was driving home in San Diego when people started to call with bad news,” he says. They said Reverb had been taken offline. He got home and clicked on his computer:

“Facebook Purged Over 800 Accounts and Pages for Pushing Political Spam,” a Washington Post headline read.

The story described an ongoing effort against “coordinated inauthentic behavior” and specifically named just a few sites, including Reverb, that were being removed.The Facebook announcement mentioned “timing ahead of the U.S. midterm elections,” implying that the deletions had been undertaken to preserve the integrity of American democracy — from people like James Reader.

Reader wasn’t alone. He was one of hundreds of small publishers to get the ax in Facebook’s October 11th sweep, which quickly became known as “the Purge” in alternative-media circles. After more minor sweeps of ostensibly fake foreign accounts over the summer, the October 11th deletions represented something new:the removal of demonstrably real American media figures with significant followings. Another round of such sites would be removed in the days before the midterms, this time without an announcement. Many of these sites would also be removed from other platforms like Twitter virtually simultaneously.

“All this happens on the same day?” Reader asks. “There’s no way it’s not connected.”

The sites were all over the map politically. Some, like the Trump-supporting Nation in Distress, had claimed Obama would declare martial law if Trump won in 2016. Others, like Reverb and Blue State Daily, were straight-up, Democrat-talking-point sites that ripped Trump and cheered the blues.

Many others, like the L.A.-based Free Thought Project and Anti-Media, were anti-war, focused on police brutality or drug laws, and dismissive of establishment politics in general. Targeting the latter sites to prevent election meddling seemed odd, since they were openly disinterested in elections. “If anything, we try to get people to think beyond the two parties,” says Jason Bassler, a 37-year-old activist who runs the Free Thought Project.

James Reader sits at his home in San Diego, CA on Friday, November 2, 2018. Reader, the publisher of online news site Reverb Press, found his page unpublished by Facebook in October, but he’s never been told why. Photograph by Sandy Huffaker for Rolling Stone

Reader tried to access his sites. The Facebook page for Reverb had been unpublished. Same for his old Everlasting GOP Stoppers blog. Even a newer page of his called America Against Trump, with 225,000 followers, was unpublished. “Everything I’d worked for all those years was dead,” he says.

Reader seethed about being lumped in with Russian election meddlers. But somehow worse was Facebook’s public description of his site as being among “largely domestic actors using click bait headlines and other spam tactics to drive users to websites where they could target them with ads.”

This grated, since he felt that Facebook’s programs were themselves designed to make sure that news audiences stayed in-house to consume Facebook advertising.

“This is all about money,” Reader says. “It’s a giant company trying to monopolize all behavior on the Internet. Anything that can happen, they only want it to happen on Facebook.”

AFTER DONALD TRUMP was elected in 2016, Facebook — and Silicon Valley in general — faced a lot of heat. There was understandable panic that fake news — be it the work of Russian ad farms, or false stories spread about Barack Obama by Macedonian trolls, or insane conspiracy theories about Hillary Clinton and “Pizzagate” — was having a destructive impact, responsible for everything from Brexit to the election of our Mad Hatter president.

Everyone from journalism professors to sociologists to former Facebook employees blamed the social network for rises in conspiracism, Russian meddling and hate speech.“News feed optimizes engagement,” said former Facebook designer Bobby Goodlatte. “ Bullshit is highly engaging.”

Politicians began calling for increased regulation, but Facebook scoffed at the idea that it was responsible for Trump, or anything else. Moreover, at least publicly,the firm had always been resistant to sifting out more than porn, threats and beheading videos. Its leaders insisted they were about “bringing people together,” not editing content. “We are a tech company, not a media company,” CEO Mark Zuckerberg said in 2016, after visiting with the pope.

Facebook’s touchy-feely vibing about togetherness and “friends” was probably part true,part thin veil for a voracious business plan: get as many humans herded in-site as possible, so they can have truckloads of ads shoved through their eyeballs. Restricting speech was a problem because it meant restricting speakers, which meant restricting cash flow.

To keep regulatory wolves at bay, Facebook had one thing to bargain with: its own unused political might. By 2017, 45 percent of Americans were getting news from Facebook, making it by far the largest social media news source in the country. A handful of executives could now offer governments (including our own) a devil’s bargain: increased control over information flow in exchange for free rein to do their booming eyeball-selling business.

We could have responded to the fake-news problem in a hundred different ways. We could have used European-style laws to go after Silicon Valley’s rapacious data-collection schemes that incentivize click bait and hyper-partisanship. We could have used anti-trust laws to tackle monopolistic companies that wield too much electoral influence. We could have recognized de facto mega-distributors as public utilities, making algorithms for things like Google searches and Facebook news feeds transparent, allowing legitimate media outlets to know how they’re being regulated, and why.

Instead, this story may be turning into one of the oldest narratives in politics: the misuse of a public emergency to suspend civil rights and concentrate power. One recurring theme of the fake-news controversy has been a willingness of those in power to use the influence of platforms like Facebook, rather than curtail or correct them. Accused of being an irresponsible steward of information, Facebook is now being asked to exercise potentially vast and opaque new powers.

The accumulation of all these scandals has taken a toll on the company. A recent Pew survey found that 44 percent of users between ages 18 and 29 deleted Facebook from their phones in the past year.

Now there’s this. You thought you didn’t like Facebook before? Wait until you see it in its new role as Big Brother.

THE IRONY IS, Facebook’s business model once rested on partisanship, divisiveness and clickbait. One of the many reasons Trump won, as former Facebook product manager Antonio García Martínez described in Wired, was the campaign’s expert use of Facebook’s ads auction, which rewarded ad developers for efficiently stoking lizard-brain responses. The company, García Martínez wrote, “uses a complex model that considers both the dollar value of each bid as well as how good apiece of clickbait . . . the corresponding ad is.”

A canny marketer, García Martínez wrote, could “goose” purchasing power if Facebook’s estimation of its “clickbaitness” was high. The Trump campaign’s superior grip on this dynamic allowed it to buy choice ad space at bargain prices, while the reverse was true for Clinton.

In other words, the same company that rewarded the red-meatiest content and hyperpartisan drivel that political lunatics like alleged MAGA Bomber Cesar Sayoc devoured was now publicly denouncing sites like Reverb News for . . . clickbait.

Reader wondered why his site had been chosen. He admits to using multiple backup profiles, which is a technical violation, but he insists this would have previously earned a slap on the wrist. Several of the other deleted sites were right-wing or libertarian (although Facebook hasn’t released a full list of the purged sites). Reader wondered if Facebook — as it reportedly did after a Gizmodo piece in 2016 claimed Facebook suppressed conservatives — was attempting to over compensate by targeting a blue-leaning operation.

Tiffany Willis Clark, whose page for her site Liberal America was taken down on November 2nd, is similarly baffled as to why. A self-described “Christian left” publisher from Texas who pushes a Democratic line, she says Liberal America, with its 750,000 followers, is a“lifestyle site” about “raising conscious kids who are aware of the suffering of others.” She insists she’s never engaged in any banned Facebook behaviors and is careful to source everything to reputable news organizations. An example of her content is a listicle, “87 Things Only Poor Kids Know and ConservativesCouldn’t Care Less About,” that contains lines like “We go to the doctor when we’re sick, but mom doesn’t.”

Clark created the site for political and spiritual reasons, and believes she has helped reach people with her down-to-earth approach. “I’ve had people tell me they’ve switched parties because of us,” Clark says. “We didn’t do this for the money. That was a happy accident.”

She was surprised to see traffic take off after launching in 2013, and began investing in the site as a business. Clark estimates that she has spent $150,000 on Facebook boosting tools since 2014. “I basically put my life savings into this, and it’s gone,” she says. Like many of the people contacted for this story, she regrets having built a business around an Internet platform with a constantly shifting set of standards.

“Facebook seems to be redefining its mission minute to minute,” she says. “They started with fake news, moved to Alex Jones, and now it seems to be anything that’s not mainstream media.”

The belief that the recent deletions represent the start of a campaign against alternative media in general have been stoked by the fact that in its efforts to police fake news, Facebook recently began working with a comical cross section of shadowy officialdom: meeting with the Foreign Influence Task Force at the FBI and the Department of Homeland Security; partnering with the Atlantic Council, a NATO-connected organization featuring at least six former CIA heads on its board; and working with a pair of nonprofits associated with the major political parties, the National Democratic Institute and the International Republican Institute.

“It’s a blatant attack on independent media in advance of the election,” says Sean Conners of Blue State Daily.

 Professional Journalists and an admin to more than a hundred social media accounts for independent media and charity sites. “Lots of people I know have been affected. And not enough reporters are paying attention.”

 NEWSFLASH: There’s always been weird shit on the Internet. Not long ago,that’s even what a lot of us liked about the medium. Everything was on the Net, from goat sex to “Thirteen Bizarre Stipulations in Wills” to all the evidence you needed if you wanted to prove Sasquatch is real. None of this was ever regulated in any serious way, in keeping with a historically very permissive attitude toward speech.

We’ve traditionally tolerated fakes (the 1938 radio broadcast of The War of the Worlds reportedly scared one in 12 listeners into believing Earth had been invaded by Mars) and conspiracy kooks like the LaRouchians. In modern history,we’ve mostly relied upon libel laws, market forces and occasional interventions from the Federal Communications Commission to regulate speech.

Obviously, no one has a constitutional right to a Facebook page or a Twitter account. As ACLU lawyer Ben Wizner points out, there’s no First Amendment issue here. “To the extent First Amendment rights figure in at all, they’re enjoyed by the companies, who get to decide what does and does not go on their platforms,” he says. But the fact that removals are probably legal does not mean they’re not worrisome. If a handful of companies are making coordinated decisions about content, especially in conjunction with official or quasi-official bodies, this has far-reaching implications for the press.

Eric Goldman of the Santa Clara University School of Law calls the problem “soft censorship,” adding, “We’re seeing removal of content that isn’t illegal but the government doesn’t like. It’s a backdoor form of censorship.”

Mark Zuckerberg before Congress in April. “We are a tech company, not a media company,” he has insisted, and denied Facebook’s role in the 2016 presidential election. Photograph by Stephen Voss/Redux

Once viewed as a revolutionary tool for democratization and personal empowerment,the Internet always had awesome potential as a lever for social control, as we’ve already seen overseas.

When it comes to Internet companies working with governments, there are two main dangers.

In the first, a repressive government uses an Internet platform to accelerate human-rights abuses. The worst example of this is in Myanmar, where the U.N. recently concluded Facebook may have been key in helping incite government-sponsored genocide against that nation’s Rohingya Muslim minority.

The campaign against the Rohingya led to mass murder, arson and rape, and caused 700,000 to flee abroad and left thousands dead. The attackers were egged on by Myanmar officials and descended upon Rohingya settlements in a murderous rage.

A series of posts on Facebook in the Buddhist-majority country called Muslim minorities maggots, dogs and rapists, and said things like, “We must fight them the way Hitler did the Jews.” Facebook at the time had only a handful of Burmese speakers on staff reviewing this content, and the U.N. concluded that the platform had “turned into a beast.”

Facebook has since deleted accounts of Myanmar military figures accused of inciting violence, citing the same offense it applied to the likes of James Reader: “coordinated inauthentic behavior.”

The flip side of being too little engaged is to have intimate relationships between foreign governments and companies involved in speech regulation.

In March this year, for instance, after the company had unknowingly helped spread a campaign of murder, rape and arson in Myanmar, Facebook unpublished the popular Palestinian news site SAFA, which had 1.3 million followers.

SAFA had something like official status, an online answer to the Palestine Authority’s WAFA news agency. (SAFA has been reported to be sympathetic to Hamas, which the publication denies.) Its operators say they also weren’t given any reason for the removal. “They didn’t even send us a message,” says Anas Malek, SAFA’s social media coordinator. “We were shocked.”

The yanking of SAFA took place just ahead of a much-publicized protest in the region: the March 30th March of the Great Return, in which Gaza Strip residents were to try to return to their home villages in Israel; it resulted in six months of violent conflict. Malek and his colleagues felt certain SAFA’s removal from Facebook was timed to the march. “This is a direct targeting of an effective Palestinian social media voice at a very critical time,” he says.

Israel has one of the most openly cooperative relationships with Facebook: The Justice Ministry in 2016 boasted that Facebook had fulfilled “95 percent” of its requests to delete content. The ministry even proposed a “Facebook bill” that would give the government power to remove content from Internet platforms under the broad umbrella of “incitement.” Although it ultimately failed, an informal arrangement already exists, as became clear this October.

That month, Israel’s National Cyber Directorate announced that Facebook was removing “thousands” of accounts ahead of municipal elections. Jordana Cutler, Facebook’s head of policy in Israel— and a former adviser to Prime Minister Benjamin Netanyahu — said the company was merely following suggestions. “We receive requests from the government but are not committed to them,” Cutler said.

This template should worry Americans. The First Amendment prevents the government from ordering platforms to take down content. But as is clear in places like Israel,sometimes a suggestion is more than just a suggestion. “If they say they’re ‘not obligated,’ that should come with an asterisk,” says Goldman.

The most troubling example of private-public cooperation is probably the relationship between Google and China.The company whose motto was once “Don’t Be Evil” is reportedly going ahead with plans for a censor-friendly “Dragonfly” search engine. The site could eliminate search terms like “human rights” and “Nobel prize” for more than a billion people.

The lack of press interest here is remarkable. Had an American company on the scale of Google helped the Soviets develop a censorship tool, the story would have dominated the press, but it has barely made headlines in the States.

Somewhere between the Myanmar and Israel models is the experience of Germany, which last year passed a broad Network Enforcement Act (NetzDG) requiring deletion of illegal content that violates German law against incitement to crime, hatred or the use of banned political symbols. Facebook tried to keep up with the NetzDG by hiring thousands to work in “deletion centers” in Essen and Berlin.But this year a German court ruled Facebook cannot take down content that is not illegal, which some believe may force the company to allow things like nude pictures. “This will get really interesting,” is how one European tech-policy researcher put it.

If content removal is messy in Germany,which has clear and coherent laws against certain kinds of speech, how would such an effort play out in America, which has a far more permissive legal tradition?

We would soon find out.

Just more than a year ago, on October 31st, a subcommittee of U.S. senators held a hearing to question representatives of Google, Facebook and Twitter. The subject was“Extremist Content and Russian Disinformation Online: Working With Tech to Find Solutions.” The grilling took place during the peak of public outrage about fake news. Facebook had just announced it would be turning over about 3,000 ads created by a Russian “Internet Research Agency.”

For the hearing, the tech firms sent lawyers to take abuse. The two chief counsels present — Colin Stretch of Facebook and Sean Edgett of Twitter, plus Richard Salgado, law enforcement director at Google — looked pained throughout, as though awaiting colonoscopies.

Although the ostensible purpose of the event was to ask the platforms to help prevent foreign interference in elections, it soon became clear that Senate partisans were bent on pushing pet concerns.

Republican Chuck Grassley, for instance, pointed to ads targeting Baltimore,Cleveland and Ferguson, Missouri,which he said “spread stories about abuse of black Americans by law enforcement. These ads are clearly intended to worsen racial tensions.”

Hawaii Sen. Mazie Hirono insisted that the Russian ads had affected the election and asked the Silicon Valley reps to come up with a “mission statement” to “prevent the fomenting of discord.”

When Stretch tried to offer a hedging answer about Facebook’s mission being the promotion of community (translation: “We already have a good enough mission”), Hirono cut him off and reminded him of a word he had used earlier.“Authenticity,” she said. “I kind of like that as a mission statement.”

Even if one stipulates every concern about foreign meddling is true, Hirono was playing with fire. Tightening oversight to clamp down on illegal foreign propaganda is one thing. Asking the world’s most powerful media companies to create vague new missions in search of “authenticity” and the prevention of “discord” is something else.

So how would the Senate make Facebook bend the knee? We got a clue in July, when Sen.Mark Warner released a white paper waving a regulatory leash at Silicon Valley. Warner proposed legislation requiring “first-party consent for data collection,” which would cut back on the unwanted use of personal data. This was a gun to the head of the industry, given that most of the platforms depend on the insatiable collection of such data for advertising sales.

The companies by then had already made dramatic changes. Google made tweaks to its normal, non-Chinese search engine in April 2017. Dubbed “Project Owl,” the changes were designed to prevent fake news — Holocaust-denial sites were cited as an example — from scoring too high in search results.

Although the campaign against fake news has often been described as necessary to combat far-right disinformation, hate speech and, often, Trump’s own false statements, some of the first sites to feel the sting of the new search environment seemed to be of the opposite persuasion. And this is where it becomes easy to wonder about the good faith of American efforts to rein in the Internet.

After Google revised its search tool in 2017, a range of alternative news operations— from the Intercept to Common Dreams to Amy Goodman’s Democracy Now! — began experiencing precipitous drops in traffic.

One of the first was the World Socialist Web Site (WSWS). According to reporter Andre Damon, the agency performed tests to see how the site fared under the new Google search. It found that in the old search, WSWS stories popped up very high. A few months later, they were nowhere to be found. “If you entered‘social inequality,’ we were the number-two story in April 2017,” says Damon.“By August, we were out of the top 100 for the same search.”

Damon and other sat WSWS, using data from the marketing analytic company SEMRush and Google Webmaster, ran tests on a dozen other anti-war, progressive-leaning sites. They found their own search traffic had dropped 67 percent, and estimated Alternet was down 63 percent, Wikileaks down 30 percent. Every site they measured was down at least 19 percent. “Google pioneered this,” says Damon. (Google stressed that rankings shift with any algorithmic update, and the company says it does not single out sites by name.)

Facebook had also already made dramatic changes to its algorithm, and it wasn’t just left-wing sites that were seeing the crunch. Kevin Roose of The New York Times recently featured a Pennsylvania-based right-wing site called Mad World News that, like Reader, had spent enormous sums on Facebook tools tobuild an audience — a staggering half-million dollars, the site’s founders claimed. But starting in 2017, the site’s traffic dropped from 20 million views a month to almost nothing, especially after Facebook implemented its “Trusted Sources” algorithm, which de-emphasized commercial sites in favor of more-familiar “local” content.

“Have some integrity, give the money back” is what the Mad World founders told Roose.

But soon, mere algorithmic changes wouldn’t be enough, and the age of outright bans began. On May 17th, Facebook announced it would be working with the Atlantic Council.

Often described by critics as the unofficial lobby group of NATO, the council is a bipartisan rogues’ gallery of senior military leaders, neocons and ex-spies. Former heads of the CIA on its board include Michael Hayden, R. James Woolsey, Leon Panetta and Michael Morell, who was in line to be Hillary Clinton’s CIAchief.

The council is backed financially by weapons-makers like Raytheon, energy titans like Exxon-Mobil and banks like JP Morgan Chase. It also accepts funds from multiple foreign countries, some of them with less-than-sterling reputations for human rights and — notably — press freedoms.

One of its biggest foreign donors is the United Arab Emirates, which this year fell nine spots down, from 119th to 128th place, out of 180 countries listed in the World Press Freedom Index.

When Rolling Stone asked the Atlantic Council about the apparent contradiction of advising Facebook on press practices when it is funded by numerous speech-squelching foreign governments,it replied that donors must submit in writing to strict terms. The statement reads:

“[The] Atlantic Council is accepting the contribution on condition that the Atlantic Council retains intellectual independence and control over any content funded in whole or in part by the contribution.”

Around the same time the partnership was announced, Facebook made a donation to the Atlantic Council between $500,000 and $999,000, placing it among the biggest donors to the think tank.

The social media behemoth could easily have funded its own team of ex-spooks and media experts for the fake-news project. But Facebook employees have whispered to reporters that the council was brought in so that Facebook could “outsource many of the most sensitive political decisions.” In other words, Facebook wanted someone else to take the political hit for removing pages.

(Facebook did not respond to a question about having outsourced sensitive political decisions, but it said it chose the Atlantic Council because the council has “uniquely qualified experts on the issue of foreign interference.”)

Facebook announced its first round of deletions on July 31st, a day after Warner’s whitepaper was made public. In this first incident, Facebook unpublished 32 sites for “inauthentic behavior.” The accounts looked like someone’s idea of a parody of agitprop. One, Black Elevation, shows the famous photo of Huey Newton in a chair, holding a spear. Significantly, one event page — announcing a counterprotest to an upcoming Unite the Right 2 neo-Nazi march — turned out to be run by areal grassroots protest group called the Shut It Down DC Coalition. These people were peeved to be described as “inauthentic” in the news.

“This is a real protest in Washington, D.C.,” said spokeswoman Michelle Styczynski. “It is not George Soros. It is not Russia. It is just us.”

But the news headlines did not read “Facebook Removes Some Clearly Bogus Memes and One Real Domestic Protest Page.” Instead, the headlines were all gravitas: “Facebook Pulls Fake Accounts That Mimicked Russian Tactics,” wrote The Wall Street Journal; “Facebook Grapples With a Maturing Adversary in Election Meddling” was the unironic New York Times headline.

About a week later, on August 6th, one of the biggest jackasses in American public life was quieted. Four major tech firms — Apple, YouTube, Facebook and Spotify —decided to either completely or partially remove Infowars conspiracy lunatic Alex Jones. Twitter would soon follow suit.

Jones was infamous for, among other things, claiming the child victims of the Sandy Hook shooting were fakes, and his ongoing trolling of grieving Sandy Hook parents is one of the most revolting episodes in modern media. Jones is a favorite of Trump, who once gave Infowars a White House press pass.

The axing of Jones by the tech platforms was cheered by almost everyone in the mainstream press in “Ding-dong! The witch is dead” fashion.

“Finally,”exhaled Slate. “It’s about time,” said Media Matters. Even the right-wing Weekly Standard saluted the move, saying, “There’s no reason for conservatives to be defending this guy.”

Few observers raised an eyebrow at the implications of the Jones episode. The objections were more about the “how?” — not the “who?”

“Nobody complains about Alex Jones [being removed], which you can understand,” says David Chavern of the News Media Alliance. “But what rule did he violate? How does what he did compare to what other people saying similar things did? Nobody really knows.”

“I hate Alex Jones, I hate Infowars,” says the Georgia-based alternative journalist Rodrigo. “But we all saw what was coming.”

Reverb’s James Reader was one of the voices cheering the demise of Jones. Now conservatives are gloating over Reader’s removal from Facebook. “I have to take my lumps on that,” he says. “I still contend we don’t make incitements to violence or any of the bad things Jones does. But I should have been paying attention to the larger story. We all should have.”

AFTER THE REMOVAL of Jones, media and tech-industry types alike wondered about the“what next?” question. What about people who didn’t incite hate or commit libel but were merely someone’s idea of “misleading” or “divisive”?

The Atlantic Council in September put out a paper insisting media producers had a“duty of care” to not “carry the virus” of misinformation. Noting bitterly “the democratization of technology has given individuals capabilities on par with corporations,” the council warned that even domestic content that lacked“context” or “undermines beliefs” could threaten “sovereignty.”

Healing could accelerate, the council argued, by pressuring the market “gatekeepers” to better “filter the quality” of content. “This does not need to be government driven,” it wrote. “Indeed it is better if it is not.”

What does it look like when corporate “gatekeepers” try to “filter” social malcontents? Bassler of the Free Thought Project already had a pretty good idea. Bassler is controversial. On the one hand, he’s one of the most extensive recorders of law-enforcement misbehavior in America.His sites are essentially a giant archive of police-brutality videos. But he has a clear fringe streak. Sift through Free Thought headlines and you’ll find stories about everything from chemtrails to studies that question the efficacy of vaccines.

Overall, the Free Thought Project is a bit like a more politicized, Internet-era version of In Search Of: a mix of real news and the conspiratorial. It aims to fill clear gaps in mainstream-media coverage but also dabbles in themes that would make the Columbia Journalism Review cringe.

Like Reader, Bassler, he says, tried to comply with every Facebook request over the years,because his business depended on it. “I’m not interested in just building a circle jerk of people who agree with me,” says Bassler. “I’m trying to make a difference,so I need Facebook. That’s where the normies are, you know? That’s where you reach people.”

After 2016, Facebook made reaching the “normies” harder for smaller producers. Long before it brought in partners like the Atlantic Council and the International Republican Institute, Facebook invited mainstream-media partners to help fact-check sites. Those included the Associated Press, PolitiFact, FactCheck.org, Snopes and even The Weekly Standard.

Jason Bassler’s more radical page was also shut down with no explanation.
Photo credit: Birch Studio Photography


Bassler did not do well in this process. Four Free Thought Project stories came up factually wanting under reviews. This caused traffic to plummet in the past two years, under a new Facebook policy algorithmically demoting “false news.” The Free Thought Project may not be ProPublica, but Bassler is no Alex Jones. In two cases, his “false” ratings were later overturned by PolitiFact and AP. But his business still took the hit.

The panel-review system poses serious issues. There’s the obvious problem of established media possibly being offered money from Facebook (reportedly as much as $100,000 annually) to directly reduce the business of smaller competitors.

A story by the Columbia Journalism Review about this process quoted unnamed checkers who professed to be unsure of how Facebook was picking sites for review. Some wondered why mainstream-media stories, like from Fox or MSNBC, were being filtered out. Others wondered why Facebook wasn’t fact-checking paid content.

Conspiracy theories aren’t always wrong, and people who have a conspiratorial bent are for this reason often the first to see real problems. Some important early reporting about the 2008 financial crisis, for instance, came from Zero Hedge,a site now routinely dismissed as conspiratorial.

If the question of whether reporting of this type is or is not legit is left up to panels of corporate media — who are often the targets of criticism from such sites — then even legitimate journalism that “undermines beliefs” will soon become rare. Especially when one considers that “reputable” media is often itself an actor in larger political deceptions (the Iraq-WMD episode being the most recent famous example of how terrible and lasting the consequences of disinformation can be), there’s tremendous danger in removing sites willing to play that challenging role.

Bassler’s Free Thought Project was eventually removed on October 11th. We can’t make any assumptions about why. But the opacity of the sifting process makes it hard not to wonder if such sites were chosen for something other than legitimate reasons.

“Unless they make their methodology transparent, we can’t give them the benefit of the doubt,” says Chavern. “Eventually, ‘Trust us’ isn’t going to be good enough.”

THE NEW ERA of “content regulation” has been a mixed bag. Along with bans of neo-Nazi Daily Stormer content from sites like Google, we’ve seen removals of content like a picture of two women kissing or the banning of Arab-language atheist pages in Muslim countries. Venezuela-based left-wing sites like TeleSUR and VenezuelaAnalysis.com have been suspended or deleted from Facebook, feminist cartoonists have seen content removed in India, and videos of self-immolating Tibetan monks have been found to have violated Facebook“community standards.”

Meanwhile,in smaller incidents, libertarians like Daniel Mac Adams of the Ron Paul Institute, progressive organizations like Occupy London and controversial writers such as Australian Caitlin Johnstone — among numerous others — have all been suspended from Twitter and other platforms.

Many of these cases involved suspensions triggered by user complaints, another potential problem area. Since the scale of Internet operations is so vast —billions of pieces of content a day are introduced on platforms like Facebook —companies will always be forced to rely on users to flag problems. As the motives for bans expand, we’ll see more and more people trying to mass-report their online foes into suspensions or bans. Rolling Stone found examples on both the left and the right. For Wizner of the ACLU, this feels key. “If you’re going to have billions of users,” he says, “it’s always going to be Whac-A-Mole. You can’t do it to scale.”

Whatever the democratic cure for what ails us, what we’re doing now is surely the opposite of it. We’ve empowered a small cadre of ex-spooks, tech executives, Senate advisers, autocratic foreign donors and mainstream-media panels to create an unaccountable system of star-chamber content reviews — which unsurprisingly seem so far to have mostly targeted their harshest critics.

“What government doesn’t want to control what news you see?” says Goldman, the law professor.

This is power that would tempt the best and most honest politicians. We’ve already proved that we’re capable of electing the worst and least-honest politicians imaginable. Is this a tool we want such people to have?

On his run to the White House, Donald Trump mined public anxiety and defamed our democracy, but that was just a prelude to selling authoritarianism. On some level, he understood that people make bad decisions when they’re afraid. And he’s succeeded in his short reign in bringing everyone down to his level of nonthinking.

This secretive campaign against fake news may not be Trump’s idea. But it’s a Trump-like idea, something we would never contemplate in a less-frenzied era.We’re scared. We’re not thinking. And this could go wrong in so many ways. For some, it has already.

“It’s Reverb Press today,” says Reader.  “It could be you tomorrow.”

©2018 Penske Media Corporation