Some hilarity ensued this past week when The New Yorker published an article by Adam Entous and Ronan Farrow describing a memo, allegedly circulated within the Trump administration, that outlined the participants in a media “echo chamber” designed to undermine Trump’s foreign policy. The participants were said to include former Obama national security officials Ben “Echo Chamber” Rhodes and Colin Kahl, among others, along with at least half a dozen well-known media figures.
Entous and Farrow depicted the memo as basically a conspiracy theory, encapsulated in a document that “read like a U.S. military-intelligence officer’s analysis of a foreign-insurgent network.” Said the article:
Instead of being about enemies in a distant war zone, however, the network described in the memo consisted of former aides to President Barack Obama.
The memo claimed that the “communications infrastructure” that the Obama White House used to “sell Obamacare and the Iran Deal to the public” had been moved to the private sector, now that the former aides were out of government. It called the network the Echo Chamber and accused its members of mounting a coördinated effort “to undermine President Trump’s foreign policy” through organized attacks in the press against Trump and his advisers.
The hilarity came from the blogosphere on the right. It is so manifestly true that Rhodes and Kahl have, in fact, created an organization dedicated to undermining Trump’s foreign policy, it’s not reasonably disputable. They call it National Security Action, and it’s their own nonprofit formed in February 2018. Its board is chock full of Obama alumni, including Susan Rice, Samantha Power, Tom Donilon, Denis McDonough, Wendy Sherman, Jon Finer, Avril Haines, Jen Psaki, and Mona Sutphen, just to name a few.
According to the National Security Action homepage, the group’s objectives include:
National Security Action is dedicated to advancing American global leadership and opposing the reckless policies of the Trump administration that endanger our national security and undermine U.S. strength in the world. …
Building a strong, unified, progressive opposition to the Trump administration’s dangerous policies, which are making the United States less safe and diminishing our standing and influence in the world.
This seems pretty straightforward. Of course, when the “Echo Chamber” memo was supposedly circulating, in 2017, National Security Action hadn’t been formed yet. Arguably, however, if there was such a memo being spread around in Trump circles, it tends to make the Trump folks seem prescient rather than paranoid.
David Harsanyi has a nice article at The Federalist making a broader case on this. I recommend it.
Meanwhile, there was a more interesting nugget buried in the New Yorker piece. Backtracking just a bit, the authors, Entous and Farrow, are following up on articles published in May 2018 on the same topic, although at the time it wasn’t tied up in a bow and garnished with the “Echo Chamber memo” hook. The focus in the earlier reporting was on the Israeli intelligence firm Black Cube, which had allegedly tried to develop deceptive communications with Rhodes’ and Kahl’s wives, in order to glean information from them.
The “money” assertion from the May 2018 reporting was that Black Cube had been hired to probe Rhodes and Kahl by the Trump administration. This allegation came from the UK Guardian‘s Observer, where Mark Townsend and Julian Borger had just recounted it as a “dirty ops” campaign, and even had an indignant quote from former UK Foreign Secretary Jack Straw, neatly incorporating Benjamin Netanyahu into the condemnatory soundbite:
These are extraordinary and appalling allegations but which also illustrate a high level of desperation by Trump and [the Israeli prime minister] Benjamin Netanyahu, not so much to discredit the [Iran] deal but to undermine those around it.
An anonymous Brit weighed in as well:
It’s bloody outrageous to do this. The whole point of negotiations is to not play dirty tricks like this.
The Observer article was filed at 4 PM Eastern time on 5 May 2018 (a Saturday), and the New Yorker piece is dated 6 May, which would be an impressive land-speed record for an in-depth follow-up if the two pieces were not coordinated.
But the more important point is the nugget mentioned above. Black Cube has denied throughout the spates of reporting on this that the Trump administration hired them to dig up anything on Rhodes or Kahl.
Rather, Black Cube has reportedly said that the digging on the Obama officials was incident to their work for another, entirely unrelated client: a shipping company, for whose interests the Iran sanctions had relevance.
Entous and Farrow alluded to this in their recent article:
A source familiar with the operation has maintained that the investigation of Rhodes and Kahl was part of Black Cube’s work for a private-sector client in the shipping industry, pursuing commercial interests.
And that is interesting.
Bloggers sympathetic to the anti-Trump point of view pooh-poohed the explanation, as popular left-wing site Moon of Alabama did in May. But Moon of Alabama at least went to the trouble of laying out Black Cube’s case, even if only to try to knock it down. Citing an article from Haaretz (paywall), MofA quotes this disclosure from “a source close to the company” (emphasis added by MofA):
…the Israeli intelligence company was acting on behalf of a business entity, however, and not on behalf U.S. President Donald Trump’s aides.
A source close to the company said the purpose of its data collection was to serve the client’s business or legal interests, and had nothing to do with Trump. The source also said correspondence regarding Iranian nuclear issues related to the business interests of the client who hired the spy firm.
The article includes an additional disclaimer.
He [the source] added that neither the Iranian nuclear program nor Barack Obama associates were at the heart of the intelligence gathering operation: Any mention of them was intended purely to buy the trust of the parties, in order to obtain information not connected to Iran.
Granted, MofA isn’t buying any of this. But Black Cube hasn’t actually made a practice of issuing false public statements. Its record indicates it either keeps its mouth shut — overtly; as in, “We do not comment, etc.” — or discloses information that checks out, although it may not be illuminating.
The reason this is interesting is that what is disclosed in the Haaretz report can be worked with, and does appear to check out. (The sentence about buying the trust of the parties by mentioning Obama associates is arresting, however, and does not seem to have a straightforward meaning, at least at a politically anodyne level.)
In a any case, Black Cube does have a client in the shipping industry, and the client’s reported interests — the reasons for hiring Black Cube — do intersect with the sanctions on Iran. And at least one of the client’s interests is a rather remarkable one.
The client in question was discussed in a feature article on Black Cube at Forbes Israel in June 2018, by Yuval Hirshorn. The client is Taiwanese shipping magnate Nobu Su — an identification that dovetails with information posted on Twitter by an Israeli journalist after the May 2018 story about Black Cube and the Obama officials came out.
Black Cube op targeting former Obama staffers was allegedly about business dispute bw 2 shipping companies – 1 of which Taiwanese – involving Iranian sanctions regime. Per Israel Ch2 news
— Neri Zilber (@NeriZilber) May 7, 2018
The owner does have a dispute with another shipping company, the Greek firm Lakatamia, which sued him over an oral agreement. But here is the really significant passage on Nobu Su and his reason for hiring the Israelis:
Su is talking about an enormous billion dollar lawsuit that he filed last year against Bank RBS, the Royal Bank of Scotland, and several of its executives. According to several of the arguments, between 2007 and 2009 the bank set up two fictitious accounts in his name, from which it fraudulently withdrew enormous sums of money that the bank used for various needs that serve its own interests, such as collateral for loans from the US Federal Reserve. Su claims that the 2008 financial crisis, and the financial predicament Su consequently found himself in, made him a convenient target for blackmail.
The period 2007-2009 also falls within the timeframe (2005-2009) when the Royal Bank of Scotland was engaged in money-laundering for Iran sanctions violators (along with drug cartels and arms dealers), culpable activity for which the bank paid $100 million in fines, in December 2013, to authorities of the U.S. federal government and the state of New York.
Of special interest here are two additional points. One is that the U.S. settlement with RBS was a settlement, with fines, but no prosecution. This was a burgeoning pattern in that period, usually implemented as a deferred prosecution agreement (DPA), with even the most egregious cases of sanctions violations by the big international banks. (There is more on this, with links, at the Liberty Unyielding article on Preet Bharara linked below.)
The other point is that Nobu Su’s complaint is about his personal information being misused by RBS to set up fictitious accounts through which the bank laundered huge sums of money.
That pattern was found (links below) in probably the most notorious case of sanctions-related money-laundering during the Obama years: that of international banking giant HSBC. In a DPA one year before RBS’s, in December 2012, HSBC was found to have laundered tens of billions of dollars on behalf of Iran sanctions violators, along with violators of other sanctions (on Libya and Cuba, for example), as well as drug cartels, terrorists, and arms dealers.
No prosecutions came out of that case either. The bank paid $1.9 billion in fines, and entered an agreement under which it would be monitored and supervised by U.S. federal authorities. (In fact, when longtime FBI official James Comey joined the HSBC board in early 2013 — before his appointment later that year as FBI director — he was fulfilling one of the requirements of the decree.)
Industry observers and civic watchdogs were very critical of the arrangements at the time. Concerns in the Senate that Loretta Lynch was insufficiently stringent with HSBC, during her investigation of the bank as a U.S. District Attorney, ended up slowing her confirmation as attorney general.
And although not much was done with a specific trove of information provided by an HSBC whistleblower in 2012, it was later pursued more vigorously by Senator David Vitter (R-LA), after the Republicans retook the Senate in the 2014 election. That information was about more than 1,000 customer accounts that had been misused in the same way Nobu Su alleges that his was at RBS. Customers’ personal information was reportedly used to set up fictitious accounts for enormous sums of money to flow through — unbeknownst to the innocent customers.
In 2017, the Senate put out a report of more than 330 pages outlining the extraordinary HSBC money-laundering enterprise. The specifics of the customer account misuse, meanwhile, are laid out at the Vitter link above, but a short summary is included in this article:
[Whistleblower John] Cruz was able to document a complex criminal scheme that involved wiring billions of dollars of money for Mexican drug cartels and Middle Eastern terrorists thorough thousands of bogus accounts created through identity theft. The scheme used the names and Social Security numbers of hundreds of unsuspecting current and former customers. It allegedly had the active participation of regional bank managers, branch managers and employees, as well as bank compliance officials at hundreds of HSBC locations throughout the nation. The money ultimately was wired by the bank to undisclosed bank accounts internationally.
What’s remarkable about this is not merely that Nobu Su’s complaint against RBS fits the pattern of customer abuse by big banks involved in money-laundering for sanctions violators and other criminals. It’s that — if the May 2018 reporting is true about Black Cube’s probing attempts against Rhodes and Kahl — there may have seemed to be some reason for the intelligence company to develop information on the two NSC-level officials, incident to assisting a client with such a situation.
We know too little at the moment to go anywhere useful with that. I emphasize that nothing in this summary indicates any sort of sanctions-related wrongdoing on the part of Rhodes or Kahl. But it remains interesting that when the Observer report came out in May 2018, and Black Cube ultimately acknowledged that the probes of Rhodes and Kahl were related to its work for a client, a Black Cube spokesman mentioned the Iran sanctions in connection with that work (see full thread):
Thread : 1. Right after the report published in the #Observer, I asked the #BlackCube spokesman if Black Cube is in fact the Israeli firm. His answer (yesterday morning) was : "Not related to us". https://t.co/2O0JVO64vn
— Emmanuelle Elbaz-Phelps (@manuelbaz) May 7, 2018
…and then a Black Cube source gave Haaretz the cryptic line about “buying trust.”
Any mention of them [“Obama associates”] was intended purely to buy the trust of the parties, in order to obtain information not connected to Iran.
You could go with Moon of Alabama, if you preferred, and just assume the Trump administration hired Black Cube to play dirty tricks on Rhodes and Kahl. But what came from Black Cube would, in fact, match the reporting from all sources, and fits an independently verifiable real-world pattern. The question is what it means.