Foreign Secret Intelligence and State Secrets Privilege

Jim Shannon Excerpts

Tuesday 27th March 2012 Commons Chamber

[Mr David Davis (Haltemprice and Howden) (Con)]

Thank you, Mr Speaker, for granting this debate.

The story I am about to tell is extraordinarily dramatic. Frankly, had I not been able to verify some of the hard facts for myself, I would not have believed it. Essentially, the story is of an intelligence-gathering operation that, had it gone ahead, would very likely have yielded advance information about the 9/11 attack in New York. The operation was delayed by what can only be described as a turf war between American intelligence agencies, and as a result the intelligence opportunity was lost.

The American Government then used the state secrets privilege to cover up that embarrassment, and did so in such a heavy-handed way that it facilitated the defrauding of some British citizens of millions of pounds. This is the same state secrets privilege, and the same American Government, that the British Green Paper on justice and security is designed to protect. The case I am about to describe will show how intelligence agencies misuse these laws not to protect our security, but to avoid their own embarrassment and, sometimes, to cover up criminal activity.

In the mid-1990s, Afghanistan, a country of almost 30 million people, had fewer than 10,000 working telephones. There was no mobile phone network and no internet, and ordinary Afghans had to queue for hours to use the few functioning public phone boxes. The country had even lost its international dialling code. In 1998, the Taliban Government decided Afghanistan needed a new phone network. As no domestic companies had the necessary expertise, they invited foreign companies to bid for the rights to build the network. The company they chose was called Telephone Systems International.

Based in New Jersey, TSI was owned by one Ehsanollah Bayat, a Kabul-born American citizen on friendly terms with the highest echelons of the Taliban Government, and particularly its leader, Mullah Omar. Helped by Mr Bayat’s powerful connections, TSI was awarded the exclusive licence to build and operate Afghanistan’s new telephone network, including domestic, international, mobile and landline calls.

Mr Bayat had a problem: he had the connections, the funding and the exclusive contract, but he had no telecommunications expertise. He needed expert advice and operational skills, and sought it from two British citizens. One was Stuart Bentham, a former officer in the Corps of Royal Engineers. The other was Lord Michael Cecil. Between them, Bentham and Cecil had built new mobile phone networks in Kenya, Uzbekistan and Tajikistan, and Bayat wanted them both on board. In 1998, they struck a deal under which Bentham and Cecil would each receive shares in TSI, amounting to about 30% of the company, in exchange for overseeing the building of the Afghan mobile network.

So far, so ordinary, you might think, except that Mr Bayat was no ordinary telecoms entrepreneur. Cecil and Bentham knew his secret, but at this point the Taliban had no idea that the man they had asked to build their phone network was an FBI informer. With their man now in charge of Afghan telecoms, the FBI saw a once-in-a-lifetime opportunity to gather intelligence on the Taliban and, of course, al-Qaeda.

The plan was simple: the Taliban wanted American equipment for their new phone network, so the FBI and NSA—the National Security Agency—would build extra circuits into all the equipment before it was flown out to Afghanistan for use. Once installed, these extra circuits would allow the FBI to record or listen live to every single landline and mobile phone call in Afghanistan. The FBI would know the time the call was made and its duration, the caller’s name, the number dialled, and even the caller’s PIN. The FBI would also be able to monitor the telephone gateways channelling international calls in and out of the country—gateways already being used by Bin Laden, Mullah Omar and their associates, thanks to the satellite phones given by Mr Bayat to Taliban Ministers as gifts.

The FBI gave the operation the codename Operation Foxden. Encouraged by a supportive Taliban Administration and eager American intelligence agencies, work on the new Afghan phone network began in earnest in 1999. Early progress was good, until suddenly, on independence day in 1999, the Clinton Administration imposed trade sanctions on Afghanistan and banned American citizens from doing business with the Taliban Government. For months, TSI had been legally exporting telecoms equipment to Afghanistan. Overnight, this activity had become a serious criminal offence. Construction of the Afghan phone network was delayed, as was the opportunity for the FBI to eavesdrop on the Taliban’s and al-Qaeda’s conversations.

In the meantime, the American security services continued to discuss the project. In December 1999 and January 2000, Stuart Bentham and Lord Cecil flew to the US for meetings with officials from the FBI and NSA. Both agencies remained convinced that building and tapping the Afghan phone network from the ground up was a massive intelligence opportunity. The NSA even provided $30 million of funding, and offered technical support, cover stories and fake passports to TSI employees to help get the job done.

In January 2000, Mr Bayat and his team were gradually finding a way to work around the sanctions and the limitations placed on them, and he made plans to fly to Afghanistan to get construction moving. According to a TSI technical expert who was on the ground in Kabul at the time, the new phone network could and would have been up and running in months. But the CIA had become aware of the project and had decided it could continue only under its control. Thus started a turf war that set the project back by some 20 months. Instead of getting the Afghan phone network built and starting to eavesdrop on Taliban leaders and al-Qaeda leaders, officials from the FBI and CIA spent more than a year and a half fighting over who should be in charge. Furthermore, when it was decided that the FBI should hand control of the project to the CIA, the CIA’s near east division and counter-terrorism centre then proceeded to bicker among themselves over which of the subsets of the CIA should run the operation.

Eventually the bickering stopped and finally, 20 months after the project had been put on hold, TSI was given the green light to resume building Afghanistan’s phone network. Within days, and with MI6’s blessing, Bayat’s British advisers, Bentham and Cecil, met CIA officials and technical experts at the Sheraton hotel, New Jersey. There they discussed future plans, Afghan satellite capacity and the possibility of more American funding. The project seemed to be back on track, but it was too little, too late. The Sheraton meeting, held in a room overlooking the World Trade Centre, took place on 8 September 2001. Three days later, while Bentham and Cecil were travelling by taxi from Heathrow to Matrix Chambers to get advice on the legality of their operation from Ken Macdonald QC, they heard on the radio the terrible news of the destruction of the twin towers of the World Trade Centre.

Of course, we cannot say for certain that if US intelligence agencies had managed to tap the Afghan phone network sooner, we would have intercepted evidence in time to stop the 9/11 attacks, but it seems quite likely. After all, there was clearly a good deal of related activity in Afghanistan immediately prior to 9/11. Northern Alliance leader Ahmad Shah Massoud was assassinated two days before the 9/11 attacks, clearly to a timetable and clearly in a move to take out a potential US proxy against al-Qaeda and the Taliban. It is probable that there was telecoms traffic relating to that, if not to the 9/11 attack itself. In addition, Massoud had told the European Parliament only that summer to expect a massive “spectacular” attack against the west in the near future, presaging the 9/11 attack.

So it looks as if a huge opportunity was missed, but that is only half the story.

[Jim Shannon (Strangford) (DUP)]

rose—

[Mr Davis]

I am sorry, but I shall not give way. I hope that the hon. Gentleman does not mind, but I am sticking to a very narrow script on this occasion.

By early 2002, coalition forces had toppled the Taliban and controlled most of the country. In April, the new Afghan phone network, which now connected all the major Afghan cities, was officially launched, with Hamid Karzai making the first official telephone call. The project had been a belated success and was then very profitable indeed. As agreed at the outset, Mr Bayat gave shares in TSI to Cecil and Bentham, the two British men whose advice had helped him get the Afghan phone network off the ground. In May 2002, a declaration by the American Federal Communications Commission in Washington confirmed that, showing that Cecil and Bentham each owned 15% of the shares in TSI, with Bayat owning 51%. However, not long afterwards Bayat changed his tune. He first offered to buy out Cecil and Bentham for derisory sums, then denied that they were entitled to any shares at all. That “Bayat” is an Arabic term for an oath of honour must have seemed a cruel irony.

For months the dispute continued, eventually ending up in the New York southern district court, where Bentham and Cecil claimed the value of the shares they had been promised and Mr Bayat accused the British men of fraud, deceit and conspiracy. “So what?” one might think. After all, commercial squabbles between former business partners happen every hour of every day in courts around the entire world.

--- Later in debate ---

[Jim Shannon]

Have there been other occasions when American institutions and the American Government have not exchanged intelligence information with the British Government—to our detriment?

[Mr Browne]

The point I wish to make to the hon. Gentleman and to all Members is that we cannot be confident that we will have access to, or have secured, all the information that we could possibly hope to secure in order to safeguard the United Kingdom national interest, so, when we have an opportunity to draw on the additional information provided by reliable and long-standing allies, it is in our interests and, if reciprocated, in their interests for us to pool our information so as better to protect the citizens of our country and the country with which we enter into that reciprocal arrangement. That is the basis on which we operate, with a limited number of countries but we do have that basis, and we have to be confident, as do other countries, that such information will be handled sensitively and consistent with the undertakings that have been given. That is the basis on which we seek to discharge our obligations.

The point I seek to make in conclusion, however, is that we do not regard safeguarding our national security, and the means by which we wish to disclose such information in certain circumstances, necessarily to be inconsistent with protecting the liberties and way of life of our citizens. Indeed, we regard it as necessary that the two operate in tandem, so I want to reassure the House that we are extremely mindful of the need, as I say, to protect those essential liberties.

We must do all we can to achieve both aims, taking account of the views that we have heard throughout the consultation process, and Ministers not just in my Department but in others, most particularly the Ministry of Justice, will have listened to this debate with interest and will do so to subsequent opportunities that Members have to feed their views into the process.