Dirtier than Watergate

The Reagan-era espionage system that has managed to stay under the radar.

It was described as dirtier than Watergate, and involved US government dealings with Iraq, Libya, Korea and even the late British publishing tycoon Robert Maxwell. The story is deep, dark and complex; a web of strange dealings and dubious characters, it implicates wealthy arms dealers, Israeli intelligence services, the Soviet KGB, MI5 and the CIA. But unlike Watergate, this scandal, from a particularly dark chapter in American history, has appeared in no Hollywood film and is yet to reach a satisfying conclusion.

It began in the late 1970s, when the Washington-based software developer Inslaw pioneered people-tracking technology, designed to be used by prosecutors to monitor case records. Known as the Prosecutor's Management Information System (PROMIS), the software was developed under grants from the US department of justice. The US government, as it helped fund the creation of PROMIS, had been licensed to use the software on condition that it did not modify, distribute or create derivative versions of it. The government, however, did not stick to this agreement.

Under the Ronald Reagan administration's covert intelligence initiative known as "'Follow the Money", the US National Security Agency (NSA) misappropriated PROMIS for sale to banks in 1982. The version of PROMIS sold by the NSA had been "espionage-enabled" through a back door in the programme, allowing the agency to covertly conduct real-time electronic surveillance of the flow of money to suspected terrorists and other perceived threats to US national interests.

A letter from the US department of justice in 1985, later obtained by Inslaw, documented more plans for the covert sale and distribution of the espionage-enabled version of PROMIS, this time to governments in the Middle East (which would surreptitiously allow the US to spy on foreign intelligence agencies). The letter outlined how sales of the software were to be facilitated by the late Saudi billionaire Khalid bin Mahfouz and the arms dealers Adnan Khashoggi and Manucher Ghorbanifar. PROMIS should be delivered without "paperwork, customs, or delay", it stated, and all of the transactions paid for through a Swiss bank account.

In the years that followed, friends of then attorney general Edwin Meese, including a Reagan associate, Dr Earl Brian of the government consultancy firm Hadron, Inc, were reportedly allowed to sell and distribute pirated versions of PROMIS domestically and overseas. As a House judiciary committee report found in 1992, these individuals were apparently permitted to do so "for their personal financial gain and in support of the intelligence and foreign policy objectives of the United States".

Brian, who was later jailed for four years on an unrelated fraud charge in 1998, has since denied any association with the Inslaw case. According to the former arms broker and CIA "contract operative" Richard Babayan, however, he was instrumental in selling PROMIS to the governments of Iraq, Libya and Korea. When Brian was unable to market PROMIS further, it is claimed that, with the help of Rafi Eitan, a high-ranking Israeli intelligence officer, the British publisher Robert Maxwell was recruited to assist.

In a sworn affidavit, the investigative author Gordon Thomas recounts how Eitan told him Maxwell alone sold over $500m worth of espionage-enabled versions of PROMIS – including licences to the UK, Australia, South Korea, Canada and the Soviet KGB. The British counter-intelligence agency MI5, according to Eitan (who himself was an adviser to the UK secret service MI6), used PROMIS to track members of the Irish Republican Army (IRA), as well as Irish republican political leaders including Gerry Adams.

Inslaw alleges the US government, by selling PROMIS to other governments around the world, engaged in what equates to "multibillion-dollar theft". This claim was supported by two separate courts in 1988, which ruled that it "took, converted, stole" PROMIS from Inslaw "through trickery, fraud and deceit". Three years later, however, a court of appeal overturned both rulings on a "jurisdictional technicality" after pressure from the federal justice department.

Now more than two decades since he pioneered PROMIS, the Inslaw president Bill Hamilton today believes the story illustrates an enduring, fundamental problem at the heart of the US justice system. "[It] chronicles the continued inability of the US government to enforce federal criminal laws in cases involving national security issues, or even to render ordinary civil justice," he says. "National security appears to suspend the checks and balances built into the system of government in the United States, to the detriment of the citizens."

Some, including the US government, have tried to dismiss the Inslaw saga as conspiracy. But a message relayed to Bill Hamilton and his wife from the former chief investigator of the Senate judiciary committee, Ronald LeGrand, seems to confirm that the strange PROMIS affair – which remains unresolved – is much more than just a case of chronic paranoia.

"What Mr and Mrs Hamilton think happened, did happen," LeGrand wrote, conveying information he had received from a trusted government source. "The Inslaw case is a lot dirtier for the Department of Justice than Watergate was, in both breadth and depth. The Department of Justice has been compromised in the Inslaw case at every level. "

Ryan Gallagher is a freelance journalist based in London, currently working for the Frontline Club. His website is here.

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Why are boundary changes bad for Labour?

New boundaries, a smaller House of Commons and the shift to individual electoral registration all tilt the electoral battlefield further towards the Conservatives. Why?

The government has confirmed it will push ahead with plans to reduce the House of Commons to 600 seats from 650.  Why is that such bad news for the Labour Party? 

The damage is twofold. The switch to individual electoral registration will hurt Labour more than its rivals. . Constituency boundaries in Britain are drawn on registered electors, not by population - the average seat has around 70,000 voters but a population of 90,000, although there are significant variations within that. On the whole, at present, Labour MPs tend to have seats with fewer voters than their Conservative counterparts. These changes were halted by the Liberal Democrats in the coalition years but are now back on course.

The new, 600-member constituencies will all but eliminate those variations on mainland Britain, although the Isle of Wight, and the Scottish island constituencies will remain special cases. The net effect will be to reduce the number of Labour seats - and to make the remaining seats more marginal. (Of the 50 seats that would have been eradicated had the 2013 review taken place, 35 were held by Labour, including deputy leader Tom Watson's seat of West Bromwich East.)

Why will Labour seats become more marginal? For the most part, as seats expand, they will take on increasing numbers of suburban and rural voters, who tend to vote Conservative. The city of Leicester is a good example: currently the city sends three Labour MPs to Westminster, each with large majorities. Under boundary changes, all three could become more marginal as they take on more wards from the surrounding county. Liz Kendall's Leicester West seat is likely to have a particularly large influx of Tory voters, turning the seat - a Labour stronghold since 1945 - into a marginal. 

The pattern is fairly consistent throughout the United Kingdom - Labour safe seats either vanishing or becoming marginal or even Tory seats. On Merseyside, three seats - Frank Field's Birkenhead, a Labour seat since 1950, and two marginal Labour held seats, Wirral South and Wirral West - will become two: a safe Labour seat, and a safe Conservative seat on the Wirral. Lillian Greenwood, the Shadow Transport Secretary, would see her Nottingham seat take more of the Nottinghamshire countryside, becoming a Conservative-held marginal. 

The traffic - at least in the 2013 review - was not entirely one-way. Jane Ellison, the Tory MP for Battersea, would find herself fighting a seat with a notional Labour majority of just under 3,000, as opposed to her current majority of close to 8,000. 

But the net effect of the boundary review and the shrinking of the size of the House of Commons would be to the advantage of the Conservatives. If the 2015 election had been held using the 2013 boundaries, the Tories would have a majority of 22 – and Labour would have just 216 seats against 232 now.

It may be, however, that Labour dodges a bullet – because while the boundary changes would have given the Conservatives a bigger majority, they would have significantly fewer MPs – down to 311 from 330, a loss of 19 members of Parliament. Although the whips are attempting to steady the nerves of backbenchers about the potential loss of their seats, that the number of Conservative MPs who face involuntary retirement due to boundary changes is bigger than the party’s parliamentary majority may force a U-Turn.

That said, Labour’s relatively weak electoral showing may calm jittery Tory MPs. Two months into Ed Miliband’s leadership, Labour averaged 39 per cent in the polls. They got 31 per cent of the vote in 2015. Two months into Tony Blair’s leadership, Labour were on 53 per cent of the vote. They got 43 per cent of the vote. A month and a half into Jeremy Corbyn’s leadership, Labour is on 31 per cent of the vote.  A Blair-style drop of ten points would see the Tories net 388 seats under the new boundaries, with Labour on 131. A smaller Miliband-style drop would give the Conservatives 364, and leave Labour with 153 MPs.  

On Labour’s current trajectory, Tory MPs who lose out due to boundary changes may feel comfortable in their chances of picking up a seat elsewhere. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.