China’s Best Method of Industrial Espionage

Posted on February 5, 2016February 5, 2016 by Denise Simon

Obscure Chinese Firm Dives Into $22 Trillion U.S. Market

Bloomberg: When Cromwell Coulson heard that an obscure Chinese real estate firm had agreed to buy the Chicago Stock Exchange, he was shocked.

“My first reaction was, ‘Wow, that’s who they’re selling to?”’ said Coulson, the chief executive officer of OTC Markets Group Inc. in New York. “These new buyers have no connection to Chicago’s existing business. They’re completely disconnected from the current business of supporting the Chicago trading community. So wow, that’s out of left field.”

While the world has gotten used to seeing Chinese companies snap up overseas businesses, the purchase of a 134-year-old U.S. stock market by Chongqing Casin Enterprise Group — a little-known property and investment firm from southwestern China — raises a whole host of questions. For starters, why does a provincial Chinese business with no apparent ties to the securities industry have any interest in buying one of America’s smallest equity exchanges? And will U.S. regulators sign off?

So far, Casin Group’s intentions are unclear, with calls to the company’s Chongqing headquarters going unanswered on Friday. If the deal does pass muster with American regulators, it would mark the first-ever Chinese purchase of a U.S. equity exchange, giving Casin Group a foothold in a $22 trillion market where even the smallest bourses have room to grow if they can provide the best price for a stock at any given moment.

The Chicago Stock Exchange — a subsidiary of CHX Holdings Inc. — is minority-owned by a group including E*Trade Financial Corp., Bank of America Corp., Goldman Sachs Group Inc. and JPMorgan Chase & Co., according to the company. The minority shareholders are also selling their stake, Chicago Stock Exchange Chief Executive Officer John Kerin said in a phone interview.

The deal values the exchange at less than $100 million, according to a person familiar with the matter, who asked to not be identified because the terms weren’t disclosed publicly. Mark O’Connor, a spokesman for the exchange, declined to comment on the size of the transaction.

Overseas Shopping

Casin Group’s offer, announced on Friday in a statement from the Chicago exchange, comes amid an unprecedented overseas shopping spree by Chinese companies. Businesses from Asia’s largest economy have announced $70 billion of cross-border acquisitions and investments this year, on track to break last year’s record of $123 billion, according to data compiled by Bloomberg.

While many of those deals had obvious business rationales, the reasons for Casin Group’s bid are less clear. The company, founded in the 1990s through a privatization of state-owned assets, initially focused on developing real estate projects in Chongqing, before expanding into the environmental and financial industries. While the firm owns stakes in banks and insurers, it has no previous experience owning an exchange.

Chinese Growth

Lu Shengju, the majority owner and chairman of Casin Group, wants to help bring Chinese companies to U.S. markets, according to the statement from Chicago’s bourse.

“We have reviewed CHX’s plans to improve market share through new growth initiatives and fully support them,” Lu, a torch bearer during the Beijing Olympic games in 2008, said in the statement, which didn’t disclose terms of the deal. “Together, we have a unique opportunity to help develop financial markets in China over the longer term and to bring exciting Chinese growth companies to U.S. investors.”

The Chicago Stock Exchange could serve as a venue for Chinese companies to list, said Dale Rosenthal, a clinical assistant professor of finance at the University of Illinois at Chicago.

“Because they’re an exchange, they can list stock,” Rosenthal said. “It has the potential to raise Chicago’s profile in China.”

Casin Group is no stranger to investing in outside businesses, including overseas targets. Three years ago, the firm increased its stake in Shenzhen-listed Guoxing Property to 30 percent, becoming the biggest shareholder. Guoxing, now 60 percent owned by Casin Group, has soared 170 percent in the past two months, versus a 19 percent drop in the CSI 300 Index, data compiled by Bloomberg show. Casin Group bought a 25 percent stake in Singapore-based Great Eastern Life Assurance in 2013.

“It’s interesting to see the Chinese increase their footprint in the U.S.,” said Ramon Camacho, a principal at RSM US LLP, an audit, tax and consulting company based in Chicago. “These investors are looking for a platform to showcase and bring to market Chinese companies.”

The company’s bid for the Chicago bourse could face political opposition, with American regulators and politicians taking a skeptical approach toward foreign investments in industries deemed important to national interests. When Germany’s Deutsche Boerse AG wanted to buy the owner of the New York Stock Exchange in 2011, U.S. Senator Charles Schumer, a Democrat from New York, raised obstacles. The deal was finally scrapped on monopoly concerns.

Heavy Scrutiny

Some Chinese companies have come under heavy scrutiny as they tried to enter U.S. markets. Huawei Technologies Co., China’s largest phone-network equipment maker, was barred by the U.S. in 2011 from participating in building a nationwide emergency network.

The U.S. Securities and Exchange Commission would have to approve the deal, because the exchange is a self-regulatory organization. The new owners will have to show they intend to follow all of the regulations imposed on stock exchanges, whose listing and trading rules also must be approved by the SEC.

Additionally, the takeover would probably be reviewed by the Committee on Foreign Investment in the U.S., said Anne Salladin, a lawyer at Stroock & Stroock & Lavan LLP in Washington. CFIUS, a panel of government officials led by the Treasury Department that examines purchases of American businesses by foreign investors, can recommend the president block transactions it believes compromise national security. It can also impose changes to address any concerns.

“It’s a Chinese investment, and it’s in a potentially sensitive sector: financial infrastructure,” Salladin said.

CFIUS has been closely scrutinizing purchases of American businesses by Chinese buyers. Last month, Royal Philips NV abandoned its plan to sell its lighting-components unit to a Chinese-led investment group following opposition from CFIUS.

“If you have a U.S. stock exchange that’s primarily satisfying Chinese companies, the regulators are gonna look very closely at it,” Coulson said. “If your core business is listing Chinese companies in the U.S., that’s going to pick up a lot of regulatory scrutiny and caution.”

China Industrial Espionage:

This new book is the first full account, inside or outside government, of China’s efforts to acquire foreign technology.

Based on primary sources and meticulously researched, the book lays bare China’s efforts to prosper technologically through others’ achievements. For decades, China has operated an elaborate system to spot foreign technologies, acquire them by all conceivable means, and convert them into weapons and competitive goods—without compensating the owners. The director of the US National Security Agency recently called it “the greatest transfer of wealth in history.”

Written by two of America’s leading government analysts and an expert on Chinese cyber networks, this book describes these transfer processes comprehensively and in detail, providing the breadth and depth missing in other works. Drawing upon previously unexploited Chinese language sources, the authors begin by placing the new research within historical context, before examining the People’s Republic of China’s policy support for economic espionage, clandestine technology transfers, theft through cyberspace and its impact on the future of the US.

This book will be of much interest to students of Chinese politics, Asian security studies, US defence, US foreign policy and IR in general.

***

China’s long history of spying on business

CNN: The United States indicted five members of China’s People’s Liberation Army Monday, accusing them of hacking into American companies and pilfering closely-guarded trade secrets. The charges — rejected by Beijing as “purely ungrounded and with ulterior purpose” — are a dramatic escalation in a squabble between the two countries over spying. But they will surprise few Americans working in sensitive industries.

While many countries engage in industrial espionage, China has long been among the most aggressive collectors of economic secrets — both online and off, experts say.

“I can tell you they [China] are the most pervasive,” Kevin Mandia, founder of cybersecurity firm Mandiant, told CNN. “The indictment is about taking intellectual property … it’s the theft of trade secrets, it’s economic espionage.” Full article here.

Putin’s Hidden Agents in ISIS

Posted on February 5, 2016February 5, 2016 by Denise Simon

It is about a global power-ranking. When Russia and Iran team up to destabilized Syria, refugees, millions of them flee. Destination for the refugees, The West. The West is forced to accommodate millions, pay for them, house them, educated them and provide medical care, breaking the financial structure. How come Russia has not taken any refugees or Iran or any country in the Middle East? They already know. Now the challenge for the West is to have aggressive leadership by the United States, not until 2017 will that be realized or will it?

The KGB/FSB has an agenda, it is well underway…..As you read below, submit your thoughts.

NewAmerican: On December 6, 2015, in a televised interview with the Ukrainian news program ТСН Тиждень (TSN Tyzhden, Ukrainian for TSN Weekly), a former FSB officer admitted that Russia is behind ISIS while ostensibly opposing it.

Former FSB officer codenamed “Yevgeniy” (shown, back toward camera) revealed that Russia’s FSB security services was, at the very least, complicit in the Paris attacks carried out by ISIS, and most shockingly that the FSB was involved in the creation of ISIS, which it influences through its agents who staff it as well as other related Islamic terrorist organizations.

The FSB, which stands for Federal Security Service in Russian, was organized in 1995 as the successor to the Soviet KGB. After the KGB was officially dissolved in 1991, it was briefly renamed the AFB (Agency for Federal Security), which was reorganized that same year as the MB (Ministry of Security). In 1993, the MB became the FSK (Federal Counter-Intelligence Service), which was again reorganized into its present form and name as the FSB on April 12, 1995.

Yevgeniy reportedly specialized in both terrorist organizations and counter-terrorism activities within the FSB. Defecting for personal reasons rather than ideological, Yevgeniy told TSN’s Andriy Tsaplienko that among the vast number of refugees entering Europe were certain Russian operatives whose task it was to infiltrate the Muslim communities. Financed by the FSB, these undercover Muslim operatives would rise to prominence within their respective communities, in turn providing the Kremlin with valuable intelligence of Muslim activates in Europe and allowing Moscow to exert influence over the communities. More here.

****

WikiLeaks Forum:
Part one of this series looked at the historical manipulation of Islamists by Russian security services. Jihadists were armed and trained to fight by the FSB and GRU in places like Georgia and Nargono-Karabakh. Domestically, jihadists were infiltrated by the FSB into nationalist separatist movements in Dagestan and Chechnya, effectively painting those movements as religious radicals rather than freedom fighters battling an oppressive regime in Moscow.
Related Posts

Part two looked at a few specific examples of Chechen and Georgian jihadists who are probably witting or unwitting FSB assets, and how they have become power players within ISIS. The reasons for this are twofold and represent a re-creation of the same strategy used in Chechnya. Chechen jihadists helped to re-contextualize the Syrian rebels, Islamizing them in the world’s eyes. By doing this, they also acted as a spoiler force, preventing the CIA from being able to train and arm many Syrian rebels because of the presence of so many jihadi groups, a draw for many of the moderates in the region.
This article will take a look at ISIS propaganda, or what the world’s intelligence services would call information operations or psychological operations, and ask the question as to whether there is a hidden hand behind these propaganda videos.

Wahhabywood

The allure that ISIS holds for young jihadis and the fear they inspire in the rest of the world stems not from the actual combat prowess of the organization, but from its image. That image is carefully crafted, and much has been written about the high production values of the propaganda ISIS puts out. Their videos display dehumanized Islamic warriors in black masks, fully devoted to the cause of creating an Islamic caliphate. They never sleep, they never tire, they will conquer the entire world, bathing it in the blood of infidels and installing some kind of Muslim mojo hocus pocus 7th-century sharia law, or so we are told.

ISIS represents the darkest nightmares the Western world has about the Middle East, Arabs, and Muslims. The Islamic State represents a temporally displaced land of barbarians that has no place in the modern world. These nightmares are carefully cultivated by ISIS in slick propaganda films that show a deep awareness of liberal Western cultural values; the images and actions in these films are often specifically targeting Western audiences. ISIS’s reputation in the Middle East, much of it gained by way of their propaganda, is so profound, this author has been told that when an ISIS convoy rolls up to a village, all they need to do is blink their headlights and the locals will completely abandon their homes without a fight.

Their propaganda is good. Maybe too good.

ISIS propaganda targets Western liberal sensitivities in a very deliberate manner. There are many ways they do this, but four stand out quite clearly.

1. Mass executions, especially of Christians.
ISIS thrives on the blood bath of mass executions. No one is spared. Shia Muslims, children, ordinary civilians, so-called infidels and apostates, suspected traitors, Kurds, it hardly matters to ISIS. They are also known to carry out summary beheadings when they arrive in a village of the first person they can get their hands on just to prove that they are now in charge. However, it is the deliberate mass murder of Christians in Syria, Iraq, and Libya that is clearly designed to antagonize Western populations.

2. Sexual slavery
Openly flaunting sexual slavery is another propaganda point for ISIS, one that intentionally provokes Western values, but arguably human values across the world. Murder is one thing, but holding slave auctions in Mosul and selling off 13-year-old Yezidi girls or handing them out as gifts to ISIS fighters is particularly vile. ISIS is quite proud of this and brags about it in videos and public statements; their brand of sharia law also openly endorses it. This savage behavior deliberately provokes Westerners sensitive to gender issues.

3. Destruction of antiquities
The truth is that many Americans could care less about what happens in the Middle East. Arabs have been killing each other for hundreds of years and will continue to do so unabated. But even some of the most jaded people in the West get outraged at the destruction of antiquities. Following in the footsteps of the Taliban, who destroyed ancient Buddha statues, ISIS knows that their destruction of ancient Roman and Assyrian artifacts and structure will invite the ire of the world.

4. Targeting homosexuals
ISIS beheads and murders people at whim, but full-page spreads of professionally done photographs capturing ISIS tossing homosexual men from rooftops is something else entirely. Gay rights is an important issue in the West, and ISIS not only murders gays but makes sure that the entire world knows about it by recording these executions.
It is important to remember that none of these propaganda videos or pictures are released without permission from ISIS. We see what ISIS wants us to see. I am not cherry-picking the worst behavior of ISIS to present to our readers, I’m simply pointing out the images they want foremost in our minds. ISIS is baiting the Western world. Their end goal is also stated in the open: They want a coalition of Western nations to attack them.

Reflexive control

Reflexive control is a theory of psychological warfare designed to control enemy perceptions and has been studied and developed by Russian intelligence services for over 40 years. “Reflexive control is defined as a means of conveying to a partner or an opponent specially prepared information to incline him to voluntarily make the predetermined decision desired by the initiator of the action,” writes Timothy Thomas. Reflexive control involves studying the opposition’s decision-making process, then introducing socially, strategically, or politically loaded information into that process in order to influence it in a direction favorable to your objectives.

Russian defense analysts perceive America’s 1980s “Star Wars” or SDI program as a perfect example of reflexive control. According to the Russians, America knew that the USSR would respond to match horizontal and vertical proliferation of weapons, as well as the countermeasures to stop them. Therefore, America instituted the Star Wars program to trick the Soviet Union into investing in novel new weapons programs it could not afford, which then led to the crash of the Soviet economy. By doing this, we “compelled the enemy to act according to a plan favorable to the U.S.” (Thomas, 239).

By definition, reflexive control occurs when the controlling organ conveys (to the objective system) motives and reasons that cause it to reach the desired decision, the nature of which is maintained in strict secrecy. The decision itself must be made independently. A “reflex” itself involves the specific process of imitating the enemy’s reasoning or imitating the enemy’s possible behavior and causes him to make a decision unfavorable to himself (Thomas, 241).

In other words, once you understand how the enemy thinks, you then feed him information you know will cause him to reach an independent decision favoring your own strategy. In essence, you are using deception to trick the enemy, hoping that they will blunder into something that they wouldn’t attempt if they knew that they were being presented with loaded, and potentially false, information. While we are focused on Russian stratagems here, it may also be useful to reflect back of the deception tactics used by China as well, many of them derived from the period of the Warring States.

ISIS feeds the West loaded information

There is no proof that Russian intelligence has a hand in ISIS information/propaganda operations. However, considering what we have discussed thus far, this scenario should be taken seriously. ISIS is actively gaming the psychological makeup of Western audiences in order to provoke the United States and allied nations into a full-blown military confrontation with the Islamic State in Syria and Iraq. If the hypothesis about Russian influence agents in ISIS is correct, and if they are participating in ISIS propaganda efforts, then we should ask why Russia would be interested in doing this to begin with.

The answer is fairly straightforward. Keeping America bogged down and preoccupied in the Middle East is of massive benefit to the Russian Federation. By goading America into another war in the Middle East, Russia has more opportunity to engage in military aggression in Ukraine, Dagestan, Chechnya, Georgia, Moldova, Akbazia, Nagorno-Karabakh, Uzbekistan, Tajikistan, Turkmenistan, and on and on throughout Russia’s near abroad. For sure, there would also be some more specific tactical and strategic goals, but in the general sense, the Gulf War III would help keep America off Russia’s back.

ISIS, and perhaps Russian intelligence, understands America’s future rationalizations for war very well. In the past we could justify war as being battles against communism or fascism for the preservation of the American way of life. Before that, more jingoistic narratives about manifest destiny were brought into play. But these justifications for war, racial or nationalistic, will have no place in future liberal Western nations. Instead wars will be justified as fights for gay rights, women’s rights, and other equality issues. One hypothetical example: Americans will be told that we have to invade Iran because gays are stoned to death or beheaded by the Iranian regime.

The Islamic State knows that there is no better way to terrify and incite Americans than to use mass executions, the murder of Christians, the use of sex slaves, the destruction of ancient relics, and the killing of homosexuals. ISIS is at war with Western consciousness, and it is a very deliberate effort.

Basically, we see Daesh, we see the Islamic State — especially in the West — we see it from the surface, which is the mix of their propaganda; their version of what they really do. You see the pictures of actual killings, slaughtering, beheadings, blowing up things, mixed with their propaganda, or mixed with the things which are not true. They are controlling whatever comes out of their area. For example, if you take the pictures and the images we have of the Islamic State, 99% are approved by their PR department. They give us pictures of all these lined-up Humvees, guys with guns, perfect afternoon light set in the desert. They have accepted the presence of a few photographers who are in the area, from AFP, Reuters, AP; the big agencies, no matter if they would be considered Zionists, masons, imperialists, infidel agencies — they are in their area and they had to swear allegiance and in most cases the office is directly controlling all the images before they are permitted to submit them or it’s made clear to them. They sort of tell them, ‘if you do something wrong which harms our reputation, you know what will happen to you. We know you; we will find you.’ So the images that are transferred through the agencies, all the big agencies, are images that have been approved by Daesh. And Daesh invites the photographers to their events.—Christoph Reuters

None of this proves that this effort is being led, sponsored by, or covertly influenced by Russian intelligence assets. ISIS seems quite capable of hiring contractors with technical expertise, from oil industry engineers to computer hackers. Also, it is not as hard to make professional-looking films as it was 10 or 20 years ago. A kid with a decent digital camera and a laptop with film-editing software can do a pretty good job at filmmaking. Perhaps ISIS has developed all of this methodology on their own, but I am far from the first person to be surprised by ISIS’s slick Madison Avenue-worthy propaganda.

There are far more questions than answers here. For example, what about the Baath party leadership cells that actually run ISIS? These old dogs are not suicidal by any means and are actually quite cunning. A coalition of Western states spearheading a third Gulf War seems like it would be counterproductive to their goals. Yet, it would be impossible to believe that a few influence agents within ISIS have completely hijacked their propaganda efforts away from the Baathists. Maybe they are getting something in return? One can only speculate. While the first two parts of this article give some solid evidence for the reader to ponder, part three is an extrapolation on the first two articles. We don’t know if Russian intelligence has a hand in ISIS propaganda.

El Chapo’s America: Flooded with Heroin-Fentanyl

Posted on February 5, 2016February 5, 2016 by Denise Simon

The DEA operation, called “Project Cassandra,” is meant to disrupt and dismantle Hezbollah’s global network that supplies drugs to the U.S. and Europe as well as cut into the terror organization’s ability to fund its activities through drug trafficking.

In the investigation, authorities uncovered a network of money couriers who collect and transport millions of euros in drug proceeds from Europe to the Middle East. The currency is then paid in Colombia to drug traffickers using the Hawala disbursement system, which makes it difficult to track. ***

Last spring, Brazil’s Civil Police arrested Hamzi Ahmad Barakat in the city of Curitiba under allegations that he had connections to a network of front companies that fleeced Lebanese immigrants who had recently moved to Brazil.

Barakat, who allegedly has ties to the infamous Triple Frontier region, is listed in the United States as a member of Hezbollah and is suspected of trafficking arms, drugs, explosives and counterfeit bills.

“He was preying on his own countrymen, using their identities to create companies to carry out schemes,” said Cassiano Aufiero, the police investigator in charge of the case.

Aufiero added that while he knew of Barakat’s purported ties to the Islamic militant group, he said that he was under arrest for different matters, including embezzlement and the creation of false documents.

Barakat’s arrest shed more light on the Triple Border region, which has become a hotspot for smugglers and drawn the attention of the U.S., Israel and governments throughout South America.

The region has drawn a number of immigrants for the Middle East, particularly from Lebanon, and is believed to be one of Hezbollah’s major areas of operation outside of the Islamic world, due to its seclusion, loose borders, rampant political corruption and weak judicial system. Brazil has one of the largest Lebanese population’s outside of Lebanon with at least 7 million people from that country residing there and some estimates claiming closer to 13 million.

In 2004, Barakat’s brother, Assad Ahmad Barakat, was named by the Treasury Department as one of Hezbollah’s “most prominent and influential members” and was believed to have used an electronics wholesale store in the Triple Frontier as a cover for raising funds for Hezbollah. The Brazilian police arrested him in 2002 and deported him to Paraguay, where he went to prison for tax evasion.

The Department of Justice National Drug Threat Assessment report.

Fentanyl: drug 50 times more potent than heroin ravages New Hampshire

Of 69 fatal overdose victims last year, 68% had taken the synthetic opioid, which Mexican cartels have learned to make and smuggle to interstate highways. The drug ‘is what is killing our citizens,’ says Manchester’s police chief

Guardian: to the Drug Enforcement Administration, fentanyl is a synthetic opioid 100 times more powerful than morphine, and 30-50 times more powerful than heroin.

“Fentanyl is what is killing our citizens,” said Manchester’s chief of police, Nick Willard, in testimony before Congress last week.

In 2013, the city of Manchester had 14 fatal overdoses, one of which (7%) involved a victim with fentanyl in their system, according to Willard. In 2015, 69 people fatally overdosed, 68% of whom had taken fentanyl. The state statistics are no more cheery. Officials at the office of the chief medical examiner in New Hampshire say they have yet to receive testing results from 36 suspected overdoses, but they’ve counted 399 fatal overdose victims so far, more than two-thirds of whom died with fentanyl in their system.

“It’s not like Mario Batali,” said Willard from his office in Manchester, comparing heroin dealers cutting their supply with the famed chef. “These guys are just throwing it in a mixer. You could get a bag that’s perfect and no one is going to die from it. You could also get a bag [that’s] straight fentanyl and that would kill you.”

Willard said that during a recent raid in Manchester, he found a dealer mixing fentanyl with whey protein. In another sting that led to a seizure in Lawrence, Massachusetts, the dealer was allegedly mixing heroin and fentanyl in a kitchen blender.

For the most part, said Willard, the story of opiate use in Manchester follows the same patterns as the rest of the country. The crisis was ushered in by the rise of prescription painkillers like OxyContin. Addicts looking for a cheaper high frequently turned to the more dangerous, yet significantly cheaper, heroin.

The turning point, he says, happened sometime after 2010, when Purdue Pharma altered the medication to make it more difficult to tamper with and get high. Suppliers in Mexico were quick to keep up with the burgeoning market, and addicts in Manchester, which sits near Interstate 93, Route 3, Route 81, and Route 9, had no problem tapping into the supply. More here.

Chicago:

“What Al Capone was to beer and whiskey, Guzmán is to narcotics,” Art Bilek, the commission’s executive vice president, said at the time. Except, Bilek added, Guzmán “is clearly more dangerous than Al Capone was at his height.” (Zambada is plenty dangerous, too: Prosecutors say he commanded logistics and security for the cartel, including assassinations. He is suspected in a number of slayings, including the murders of government officials.)

The cartel’s scope is staggering. About half of the estimated $65 billion worth of illegal cocaine, heroin, and other narcotics that Americans buy each year enters the United States via Mexico, according to law enforcement experts (though the drugs often originate in South or Central America). More than half of that is believed to be supplied by Sinaloa. Drug enforcement experts estimate, conservatively, that the cartel’s annual revenues exceed $3 billion: more than those of the Chicago Mercantile Exchange Group.

In Chicago, the cartel has a near monopoly. “I’d say 70 to 80 percent of the narcotics here are controlled by Sinaloa and Chapo Guzmán,” says Jack Riley, director of the DEA’s Chicago office. “Virtually all of our major investigations at some point lead back to other investigations tied to Sinaloa.”

In August 2009, five months after Zambada’s capture, a federal grand jury in Chicago indicted him and 45 others tied to a Sinaloa-led drug ring in the city. Patrick Fitzgerald, the U.S. attorney at the time, called the indictments “the most significant drug importation conspiracies ever charged in Chicago,” claiming that the cartel imported and distributed nearly $6 billion worth of illegal narcotics mostly to the Chicago area between 1990 and 2008.

North Korea Missile or Satellite Launch?

Posted on February 4, 2016February 4, 2016 by Denise Simon

IAEA on North Korea

Countdown to Launch: New Activity at the Sohae Horizontal Processing Building

By 38 North

Editor’s Note: With North Korea’s recent notifications to the International Maritime Organization (IMO) and International Telecommunication Union (ITU) that it would launch an “earth observation satellite” between February 8 and February 25, 38 North has initiated a series of brief imagery analysis updates to closely follow developments at the North’s Sohae Satellite Launching Station (“Tongchang-dong”). This is the first of these updates.

Activity at the Horizontal Processing Building

Recent commercial satellite imagery indicates that the level of activity at the Horizontal Processing Building at the Sohae Satellite Launching Station (“Tongchang-dong”) is suggestive of preparations for a space launch and supports North Korea’s announced launch window of February 8 through 24. During past launches, this building has been used to receive the various rocket stages. Once received, they are assembled in the horizontal position to test all connections, perform final testing of subsystems and prepare the stages for mounting on the launch pad. Specifically, on February 1, there are nine vehicles present, of which two are likely to be buses. Compared with only one vehicle present on January 25, this level of activity is similar to that seen prior to the previous launch in 2012 and is suggestive of launch preparations.

At the nearby covered rail station, the shed roof obscures the view of any activity within. On February 1, a small utility pole (i.e., for lighting or communications) has been erected near the northeast corner of the shed.

Figure 1. Increased activity at the Horizontal Processing Building and rail station.

No New Activity at the Launch Pad

Recent imagery indicates no significant changes at the Sohae launch pad since last viewed on January 25. The work platforms on the gantry tower remain folded forward, with the environmental covers in place, obscuring any activity that might be taking place within. It is also not possible to see whether a space launch vehicle (SLV) is already present within the utility platforms.

No personnel or vehicles appear present elsewhere on the launch pad or in the fuel/oxidizer bunker. The rail-mounted transfer structure, which will likely be used to move the various rocket stages from the underground station or the stationary processing building to the launch pad, remains at the south end of the pad adjacent to the stationary processing building. Although there is no activity indicating an imminent launch, the gantry tower and launch pad complex appear to be in a condition capable of conducting a launch within the announced launch window of February 8 through 24.

Figure 2. Environmental covers still obscure any activity that might be taking place inside the gantry tower.

Low Activity at other Key Launch related Facilities

Recent imagery indicates a still low level of activity at other key facilities likely to be involved in a space launch when compared to January 25. Specifically:

There are no significant changes at what is believed to be the launch control building. The structure appears to be in good condition. Activity at this facility should increase as the launch date grows closer.
No activity is noted at the building North Korea has previously identified at the Satellite Control Building. On January 25, there were five vehicles present in the two buildings in the VIP housing area. By February 1, only one vehicle is present. Extended vehicle activity in this area—seen prior to the 2012 launch—could mean that scientists and engineers are present.
There are no significant changes at what is believed to be the National Aerospace Development Administration (NADA) Auditorium between January 25 and February 1, although the adjacent helicopter pad had been cleared of snow. Guests, dignitaries and workers would view the launch from this location.

Vertical Engine Test Stand Appears Ready

Activity noted at the vertical engine test stand during the last month indicates that an engine test could be conducted at any time and with little prior notice. There are no significant changes noted at the vertical engine test stand between January 25 and February 1. The rail-mounted environmental shelter remains immediately adjacent to the test stand. No personnel are visible and there are no indications that an engine test has recently taken place. The complex appears capable of conducting a test at any time.

Figure 3. Engine test stand appears ready for use.

For media licensing options, please contact [email protected].

Finally, Hillary’s Security Clearance in Jeopardy?

Posted on February 4, 2016February 4, 2016 by Denise Simon

Humm –> Expect to undergo one or more interviews and often a polygraph as part of the clearance process. These steps are used by investigators to get a better understanding of your character, conduct and integrity. You might also have to answer questions designed to clear up discrepancies or clarify unfavorable data discovered during the background investigation. The ultimate goal is for government security personnel to determine your eligibility for a clearance, a decision based on the totality of the evidence and information collected.

August of last year: Intelligence community wants Clinton’s security clearance suspended

WashingtonTimes: Security experts say that if Hillary Rodham Clinton retained her government security clearance when she left the State Department, as is normal practice, it should be suspended now that it is known her unprotected private email server contained top secret material.

“Standard procedure is that when there is evidence of a security breach, the clearance of the individual is suspended in many, but not all, cases,” said retired Army Lt. Gen. William Boykin, who was deputy undersecretary of defense for intelligence in the George W. Bush administration. “This rises to the level of requiring a suspension.”

“The department does not comment on individuals’ security clearance status,” the official said.

Mrs. Clinton is the front-runner for the Democratic presidential nomination. A campaign spokesman did not reply to a query, but she did get a vote of support from a key congressional Democrat.

Sen. Dianne Feinstein, the top Democrat on the Senate intelligence committee, said Thursday there is no evidence Mrs. Clinton herself sent classified information and that the emails now under scrutiny were not marked classified at the time she sent them.

Clinton’s Security Clearance Is Under Scrutiny

Bloomberg: Now that several e-mails on Hillary Clinton’s private server have been classified, there is a more immediate question than the outcome of the investigation: Should the former secretary of state retain her security clearance during the inquiry? Congressional Republicans and Democrats offer predictably different answers.

The State Department announced Friday that it would not release 22 e-mails from Clinton’s private server after a review found they contained information designated as top secret. U.S. officials who reviewed the e-mails tell us they contain the names of U.S. intelligence officers overseas, but not the identities of undercover spies; summaries of sensitive meetings with foreign officials; and information on classified programs like drone strikes and intelligence-collection efforts in North Korea.

The FBI is investigating the use of Clinton’s home server when she was secretary of state, which the bureau now has. The New York Times reported in August that Clinton is not a target of that investigation. We reported in September that one goal is to discover whether a foreign intelligence service hacked in.

Representative Adam Schiff, the ranking Democrat on the House Intelligence Committee, said Clinton should not lose her security clearance for receiving information that was not marked classified at the time. “I’m sure she does hold a clearance, and she should,” he told us.

Representative Mike Pompeo, a Republican member of that committee who also has read the e-mails, told us, “It’s important, given all the information we now know, that the House of Representatives work alongside the executive branch to determine whether it’s appropriate for Secretary Clinton to continue to hold her security clearances.”

Senate Intelligence Chairman Richard Burr told us the decision lies with the White House. “I think that’s up to what the National Security Council is comfortable with,” he said.

Burr, who has also read all 22 e-mails, said Clinton should have known to better protect the information they contain. “They are definitely sensitive,” he said. “Anybody in the intelligence world would know that the content was sensitive.”

His Democratic counterpart, Senator Dianne Feinstein, who also read them, told us that Clinton didn’t originally send any of the e-mails and that they were largely from her staff, although she did sometimes reply. Feinstein said the intelligence community is being overly cautious by designating the e-mails as top secret.

“There’s no question that they are over-classifying this stuff,” she said.

Clinton’s discussion of classified programs on an unclassified e-mail system is hardly rare. The issue, called “spillage,” has plagued the government for years. It can apply to anything from a spoken conversation about intelligence programs outside of a secure facility, to printing out a document with classified information on an unsecure printer.

Still, it is forbidden. The State Department’s Foreign Affairs Manual says “transmitting classified information over a communication channel that is unauthorized for the level of information being transmitted” is a “security violation.” Such violations must be investigated by the State Department’s own bureaus of human resources and diplomatic security. Punishment can vary from a letter of reprimand to loss of security clearance, according to the manual.

When asked about the status of Clinton’s security clearance, State Department spokesman John Kirby said: “The State Department does not comment on individuals’ security clearance status. We will say, however, that generally speaking there is a long tradition of secretaries of state making themselves available to future secretaries and presidents. Secretaries are typically allowed to maintain their security clearance and access to their own records for use in writing their memoirs and the like.”

The Clinton campaign declined to comment.

During the Obama administration, it has not been automatic for officials to lose their security clearance while an investigation is underway. Just last week, the Washington Post reported that the chief of naval intelligence, Vice Adm. Ted Branch, had his security clearance suspended because he is wrapped up in a Justice Department investigation into contracting corruption. He has not been able to read, see, or hear classified information since November 2013. Branch has not been charged with any crime and continues to serve in that post.

But when then-CIA director David Petraeus came under FBI investigation at the end of 2012, his security clearance was not formally revoked. After he resigned, his access to classified information was suspended, according to U.S. officials. In that case, Petraeus had provided notebooks with highly classified information to his biographer and mistress Paula Broadwell, whose security clearances did not permit her to receive it.

Unlike Broadwell, officials familiar with the e-mails tell us that Clinton and her e-mail correspondents were cleared to receive the information that has been classified after the fact. Steven Aftergood, who heads the project on government secrecy for the Federation of American Scientists, told us, “It’s entirely possible for information to start out as unclassified and to be classified only when the question of public disclosure arises.”

William Leonard, who oversaw the government’s security classification process between 2002 and 2008 as the director of the Information Security Oversight Office, told us this kind of “spillage” was common. “The bottom line is this, if you have the opportunity to pore through any cleared individual’s unclassified e-mail account, it’s almost inevitable you would find material that someone, some way would point out should be classified.” He also said that in Clinton’s case, “there is no indication that she deliberately disregarded the rules for handling classified information so I see no reason why she should not remain eligible for a security clearance.”

Nonetheless, Leonard added that Clinton’s decision to use the private e-mail server as secretary of state “reflected exceedingly poor judgment, and those that advised her on this did not serve her well.”

The FBI investigation may determine that neither Clinton nor her aides broke the law, but Clinton herself has said she used poor judgment. It’s an open question how that poor judgment will affect her access to state secrets, during and after the FBI’s investigation.