Saturday, December 31, 2005

Democrats Seek Records on Romney, Others

Fri Dec 30, 3:51 PM ET

The Democratic National Committee requested public records from state agencies on their dealings with Gov. Mitt Romney, who may run for president in 2008. His spokesman called it the work of a "dirty tricks attack squad."

The DNC is seeking similar records on at least 10 other potential candidates for the Republican presidential nomination in 2008, spokesman Luis Miranda said.

The letters dated Dec. 7 ask for "any and all records of communication" and are signed by Shauna Daly, who provided a post office box in Washington as her address.

Miranda confirmed to The Boston Globe that Daly is employed by the Democrats as deputy research director. She had previously worked for the presidential campaign of John Edwards, the former senator from North Carolina, and in other races.

The party is asking for records as far back as 1947, the year Romney was born.

Romney is "a Republican with well-known presidential ambitions, and these days, that's not that special," Miranda said. "This is just real standard operating procedure." Campaigns use research in hopes of finding controversial, embarrassing or previously undisclosed information about a politician's past.

Daly's letters request that any fees be waived, but Romney spokesman Eric Fehrnstrom said fulfilling the requests wills cost tens of thousands of dollars.

"Taxpayers shouldn't have to pay for the Democratic National Committee to put its dirty tricks attack squad to work against Mitt Romney, so we'll bill them for it," Fehrnstrom said.

Romney announced Dec. 14 that he would not seek a second term as governor, and although he has yet to say whether he will run for the GOP nomination, it is widely speculated that he will.

Gubernatorial records became an issue in presidential politics in 2004. Democrat Howard Dean, who ran for president, came under criticism because he had some records in Vermont sealed when he left office as that state's governor in 2003. In November, the state Supreme Court ruled that Dean had acted legally.


Justice Dept. Investigating Leak of NSA Wiretapping

Oh, the hypocrisy!
Isn't this a violation under the constitution, to even investigate a whistleblower?
So, in other words, Bush is having his J.D. investigate the person or persons who outed him as a criminal warranting impeachment.
I sense a real war coming; right here, at home and it ain't gonna be pretty.
Probe Seeks Source Of Classified Data

By Dan Eggen
Washington Post Staff Writer
Saturday, December 31, 2005; A01

The Justice Department has opened a criminal investigation into recent disclosures about a controversial domestic eavesdropping program that was secretly authorized by President Bush after the Sept. 11, 2001, attacks, officials said yesterday.

Federal prosecutors will focus their examination on who may have unlawfully disclosed classified information about the program to the New York Times, which reported two weeks ago that Bush had authorized the National Security Agency to monitor the international telephone calls and e-mails of U.S. citizens and residents without court-approved warrants, officials said.

The Justice Department's decision to reveal the opening of a criminal investigation is rare, particularly given the highly classified nature of the probe. White House deputy press secretary Trent Duffy told reporters in Crawford, Tex., yesterday that the department "undertook this action on its own" and that Bush had only learned about it from senior staff earlier in the day.

But Duffy reiterated earlier statements by Bush, who had sharply condemned the disclosure of the NSA program and argued that it seriously damaged national security.

"The fact is that al Qaeda's playbook is not printed on Page One, and when America's is, it has serious ramifications," Duffy said, reading from prepared remarks. "You don't need to be Sun Tzu to understand that," he added, referring to the ancient Chinese general who wrote "The Art of War."

Leak investigations generally begin with a referral to the Justice Department by the agency in question -- in this case the NSA -- which prompts a preliminary inquiry by prosecutors to determine whether a crime has been committed. The opening of a criminal investigation signals that prosecutors believe that laws barring disclosure of classified information by government officials were broken. It is likely to be a full-blown probe involving FBI agents and department investigators.

The case is the latest in a series of clashes between the Fourth Estate and the Bush administration, which has aggressively enforced restrictions on classified information and has frequently complained about press disclosures related to terrorism or the war in Iraq.

Earlier this year, a grand jury investigation by Special Counsel Patrick J. Fitzgerald into the disclosure of CIA agent Valerie Plame's identity resulted in the jailing of Judith Miller, then a reporter at the New York Times, for refusing to testify, and in criminal charges against I. Lewis "Scooter" Libby, who resigned as Vice President Cheney's chief of staff. That probe is ongoing.

In another recent case, the CIA general counsel's office notified the Justice Department in November that classified information had been disclosed in a report by The Washington Post on the existence of secret "black site" prisons in Eastern Europe and elsewhere. Department officials declined to comment yesterday on whether that referral has also led to a full criminal probe.

News of the domestic spying program by the NSA, which is normally restricted to eavesdropping overseas, set off a firestorm of criticism from lawmakers and civil liberties advocates and contributed to the administration's failure to persuade Congress to pass a renewed version of the USA Patriot Act anti-terrorism law. The GOP chairman of the Senate Judiciary Committee has vowed to hold hearings on the NSA program, and some other Republicans have demanded a congressional probe into the leak.

The spying program also angered judges on a special court that administers the Foreign Intelligence Surveillance Act, which governs clandestine surveillance within the United States and which requires warrants for secret searches and wiretaps. One of the panel's members, U.S. District Judge James Robertson, submitted his resignation from the secret court in protest, according to sources familiar with his decision.

Soon after the story broke Dec. 15 in the online edition of the New York Times, Bush and other administration officials took the unusual step of publicly acknowledging the program's existence, describing details of its operation and arguing that the initiative was legal and necessary in a time of war. Attorney General Alberto R. Gonzales said the program "is probably the most highly classified program that exists in the United States government."

The Times said it held the story for a year after the administration argued that its disclosure would harm national security. The published story relied on "nearly a dozen current and former officials," the newspaper said. Times spokeswoman Catherine Mathis declined to comment on the Justice Department probe yesterday.

Lucy Dalglish, executive director of the Reporters Committee for Freedom of the Press, a journalism advocacy group, said the leak probe underscores the need for a federal "shield law" to protect reporters' sources. She and other observers also said that the NSA case appears to be less controversial, from a journalistic point of view, than the Plame case, which involves journalists attempting to protect sources allegedly engaged in political attacks.

"It doesn't seem to me that this leak investigation will take on the importance of the Plame case," said Carl W. Tobias, a law professor at the University of Richmond. "The bigger story here is still the one about domestic spying and whether the president intends, as he said, to continue doing it."

The American Civil Liberties Union, which has argued that a special prosecutor should be appointed to determine whether Bush violated federal wiretapping laws, called the leak probe an unwarranted attack on whistle-blowers.

"Attorney General Gonzales is cracking down on critics of his friend and boss," said ACLU Executive Director Anthony D. Romero.

Staff writer Lisa Rein in Crawford, Tex., contributed to this report.

© 2005 The Washington Post Company

20,000 Mercenaries for the Pentagon

Have Gun Will Travel

U.S.M.C. 1992‒95. Go anywhere do anything. Very fit, kick-ass. Guaranteed no one can beat me in a fight. Do any drug, take any pill, eliminate anyone (legally). No problem!

Very charismatic and a generally nice guy who will do most anything for a nominal fee. Owe my life to a lot of Americans and willing to do most anything to pay back.

M., Philadelphia

Short- or extremely long-range, hand-to-hand, or I’ll bring my own. After these last few years with these people in the Mideast, I want to dispose of some of them.

S.H., Salt Springs, Fla.

Forty-two-year-old former Marine. Am an outstanding specimen of a Patriot. My physical/material accomplishments are commendable. There is no device that I cannot fix or create. Seeking Iraq deployment. Give me a call PLEASE.

R.F., Muscatine, Iowa

I’m a bodyguard in NYC. I’m an excellent driver, not a hero but not a coward either. I know when to run and when to fight, prefer to run, and fight another day.

D.M., Bronx, N.Y.

Former Marine seeks position where he could provide protection against attack by any fruitcake dumb enough to try to bring my charge harm. Don’t like fish but will eat the neck of any invader. Semper Fi.

P.K., Warrington, Pa.

Seventh-generation American. Vietnam vet. World traveler. I “own” SE Asia. Many years there on and off after the war—numerous contacts and old friends in very high places. Will go anywhere, anytime, and complete any task. Tenacious, reliable, sober.

R.R.H., Fort Lauderdale, Fla.

Disposition is quiet, calculating. Not a drinker/drug user. I blend in well. I have the wisdom of many years of experience, but still young enough and in shape (very fit, NO fat) to keep up with these young bucks of today.

Ready to go NOW!

J.L., Omaha

I ride a bicycle every day. I know how to fix flats quickly and do other bicycle maintenance. Can participate in specialized recon by bicycle. I am not a gun nut but can handle a weapon. I am trainable, follow orders, and always watch the backs of my partners. I am in very good physical shape. I have a B.A. in English from Ohio State University.

W.B., Clearwater, Fla.

Twenty years’ construction management, 130 I.Q., and can handle hostile working conditions. Willing to work hard and prove Americans will not be intimidated by terrorists.

I am a firm believer that it is not for us to judge our enemies or those who would try to injure or kill us. I believe we should quickly and precisely terminate them if need be so

Jesus Christ can judge them.

D.D., Hyrum, Utah

This is Have Gun Will Travel, a reading, originally from June 2004, published Wednesday, December 28, 2005. It is part of War, which is part of Readings, which is part of

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Death By Dilution

When fakes of a GlaxoSmithKline anti-malarial drug turned up in Africa, authorities assumed the drug giant would want to know. Instead, they learned about a huge, evil trade in fake drugs -- and about an industry that doesn’t want the truth to get out.

By Robert Cockburn
Issue Date: 12.20.05

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In Graham Greene’s 1949 thriller classic, The Third Man, Harry Lime -- “the dirtiest racketeer who ever made a dirty living” -- peddles diluted penicillin through the sewers of occupied Vienna. During the film’s famous scene atop the city’s Great Wheel, Harry’s friend Holly Martins, played by Joseph Cotten, asks, “Have you ever visited the children’s hospital? Have you ever seen any of your victims?”

“Victims?” replies Orson Welles as Harry, pointing to the tiny figures moving far below them. “Would you really feel any pity if one of those dots stopped moving -- forever? If I said you can have £20,000 for every dot that stops, would you really, old man, tell me to keep my money -- without hesitation?”

* * *

In Vienna, Virginia, not far from Washington, a database of all the fake drugs discovered by the world’s 18 largest drug companies is kept at the Pharmaceutical Security Institute (PSI). The data maintained by the PSI may well hold the key to saving millions of innocent consumers from ingesting lethal counterfeits of the industry’s best-selling medicines -- but it remains inaccessible to outside inquiries for what the industry calls “security” reasons. Fake drugs are indeed the pharmaceutical industry’s most closely guarded secret.

But in September 2002, at a conference in Geneva, a man named Emmanuel Kyeremateng Agyarko made a startling admission. The conference brought together top government officials, scientists, private investigators, and the world’s biggest drug companies for the first global forum to discuss the explosion of fake pharmaceutical drugs in a racket spreading to the West. The media were expressly not invited into the meeting at the luxury hotel overlooking Lake Geneva.

Speaking up from the audience, Agyarko explained how one month earlier he had discovered a deadly counterfeit of the children’s malaria syrup Halfan, which had been diluted to 40-percent strength. Halfan is made by the British drug giant GlaxoSmithKline (GSK). The syrup is a lifesaver for serious cases in Africa, where a resurgence of malaria is killing more than a million people a year, 90 percent of them children under 5 years old.

The fake was discovered on sale in a pharmacy in Kumasi, Ghana’s second-largest city, with a population of approximately 862,000. “It was atrocious,” he recalls of the diluted medicine. “At 40 percent, if anybody takes it they won’t get the desired effect, particularly children. Any malarial infection that is not properly treated could easily end up losing the child.” As chief executive of the Ghana Food and Drug Board, Agyarko says he prepared a warning and then called GSK.

What followed is disputed to this day.

According to Agyarko, corporate staff from GSK’s London headquarters came to his office, took away five bottles of the fake syrup for testing -- and asked him to withhold any warning. “We were going to issue a public statement,” Agyarko explained, until, he said, GSK told him, “‘Please, don’t put that in the press. If you do this you will damage our product.’” He recalls that GSK offered to send in a sales team to remove fake Halfan from Kumasi if his agency kept the story out of the media.

“ [GSK] raised the issue of a problem with the brand if you go out and say that there is a batch that is counterfeited … . They sort of talked us into accepting the fact that if we did [report the fakes], it would badly affect the product. I wouldn’t want to use the word ‘pressure.’ We were encouraged to the view that this was not something that was a large amount.”

After his meeting with GSK, Agyarko’s agency issued no warning. He later came to fear that children could have died as a result of that decision. The company never reported back to him, and he suspected that fakes were still available. “If it does come up again I would not hesitate at all to go public on the matter,” he says now. “I wouldn’t give [GSK] the benefit of doing it themselves.”

Did GSK indeed ask him to withhold the warning? Did children in Kumasi suffer or die from using fake Halfan? At the time, GSK advertising featured a photograph of a healthy, smiling African girl to project the image of a caring company. The corporate Web site opened with the girl’s picture and the GSK mission statement: “Our global quest is to improve the quality of human life by enabling people to do more, feel better and live longer.” Moreover, GSK depicts itself as an industry leader in fighting pharmaceutical fakes. “Fake drugs can kill people,” according to the company’s official policy. “Counterfeits deceive patients.”

When I brought Agyarko’s story to the attention of GSK’s director of international public policy, Jessica Hughes, the corporate response was adamant denial. Louise Sibley, then GSK’s vice president for communications, denied that the Kumasi incident ever occurred, and went further to deny that the company had ever received Agyarko’s alert or his fake Halfan samples. In a corporate statement, she said, “[W]e were not provided with any samples of fakes by the authorities in Ghana, nor were any reports of fakes lodged with us.”

Informed that Agyarko was sticking to his claim, Sibley promised, “If there’s a misunderstanding I’ll run this into the ground.” I suggested that the company’s security director, Graham Satchwell, would know whether GSK had received Agyarko’s alert and samples. “I put in a call to Graham Satchwell, but I think he must be traveling,” she later told me, adding, “I don’t think we are going to have anything more to say on it.”

It was simply Agyarko’s word against GSK’s, and because he insisted that the company had the only evidence, the controversy might have ended there. But a pair of Oxford University scientists had reason to suspect that Agyarko’s story might be true. Based in Bangkok, professor Nicholas J. White and Dr. Paul Newton of Oxford’s Centre for Clinical Vaccinology and Tropical Medicine had been rebuffed by GSK when they asked about fakes of Halfan syrup for research to assess the spread of counterfeit malaria drugs in Southeast Asia.

“It’s despicable,” says the lean, shrewd White, at 54 one of the world’s top malaria experts. “One packet or bottle is the difference between life and death. Poor people normally invest everything in that one medicine. You’ve got one shot and that’s it. They often don’t know why they are suffering and their children have died.” At the scientists’ request, Agyarko teamed up with them to try to prove that the company indeed had received his fake samples, and to find out what GSK really knew about the fake Halfan. White had also asked me to assist the team’s research because I had reported on the racket for the London Guardian and Times newspapers over a period of almost 20 years. (One night before flying back to Beirut in 1982, I met a marketing executive from Beecham (now GSK) who asked me to look for counterfeits of his company’s Amoxil antibiotic, which he believed “the PLO was faking.” After an investigation that included a frightening car chase, I learned that everyone on all sides of the Middle East conflict was making over 50 fakes of well-known medicines because the trade was so lucrative.)

* * *

Why would a caring company want to stop a warning that could save a sick child? In fact, had Agyarko uncovered one of the main causes of the extraordinary spread of fake-drug racketeering? Had the years of inadequate regard for Third World customers by the pharmaceutical industry and governments allowed the racket to move out of the backstreet labs to become a vast criminal enterprise that now accounts for 10 percent of all available medicines? Agyarko’s story offered the first insight into why the racket flourishes largely unchallenged -- and sparked a demand to break the industry’s secrecy.

What began as a hunt for those missing bottles eventually revealed a murderous global trade in fake drugs targeting the sick, vulnerable, and poor. It grew into a survey to discover what major drug companies do -- and don’t do -- to warn patients about fakes. Agyarko’s missing bottles were only a symptom of a far deeper state of denial -- and a clue to the resurgence of malaria in Africa.

* * *

In essence, the global trade in fake drugs operates as a mirror of legitimate commerce. The producers of fakes sell them to dealers who infiltrate them into the retail market. Profits flow from the capacity to counterfeit valuable commodities at very low cost. As the fakes pass from producers to wholesalers to retail outlets, everyone can take a profit and yet still deny complicity.

The pharmaceutical industry and the agencies responsible for protecting the public differ widely on the magnitude of the counterfeiting problem. The Food and Drug Administration (FDA) estimates that around 10 percent of all available medicines are now faked in a racket earning $35 billion a year. The figure exceeds 50 percent in parts of Africa and Asia. The PSI estimate is between 1 percent and 2 percent. Within the industry, however, that figure has little credibility. In a scathing editorial in April 2005, the online U.S. magazine asked: “Why does the industry continue to shy away from developing the infrastructure needed to assess the size of the global problem? The answer is simple: fears of bad publicity and impacts on stock prices.”

Millions of people are left to suffer and die from fake drugs while the industry denies access to information that doctors say could save them. The industry insists that its data on fake drugs must be restricted for security and to avoid public panic. But White believes that the underlying reason is simply profit. In a chilling assessment of pharmaceutical-industry ethics, he says, “Their marketing people must have made the calculations that they are likely to make more profits by not publicizing than by publicizing.”

The Oxford team concluded that most fake-drug data is kept secret because drug companies fear that publicity will harm sales of brand-name drugs in a fiercely competitive business. That has been the industry practice for over 25 years, but the human toll is gradually emerging. In 2001, China reported that 192,000 of its citizens had died from fake drugs. White guesses that between 500,000 and 1 million people die from fakes every year. “I believe that people must have died in their millions,” agrees Dr. Dora Akunyili, the drug regulator of Nigeria and an associate of the Oxford team. “It is mass murder -- terrorism against public health.” To her, companies that conceal fake drugs are not much better than criminals. “They are [maintaining secrecy] because of their selfish gain, because they don’t want to lose money,” she says.

This month Akunyili, 47, will receive the 2005 Grassroots Human Rights Campaigner Award in London’s Houses of Parliament. The streetwise scientist cuts a dashing figure with her traditionally colorful Nigerian costume and hats -- one of which she keeps in her office shot through by the bullet that creased her scalp when she was attacked in a hail of gangster gunfire.

Only as fake drugs spread into lucrative western markets are drug companies and governments finally contemplating determined action against a scheme that the makers of Rolex watches and Gucci handbags have fought in public for decades. There are two victims of fake drugs: companies that lose sales and patients who lose their health. Why don’t they work together? GSK’s Louise Sibley told me, “It’s not our job to give public-health warnings. We don’t make the fakes.” Drug companies pursue fake-drug manufacturers by using their own security and hiring private investigators to trace and facilitate the closing of fake-drug factories. By using covert means, the industry avoids any assessment of its efforts and is accountable to no one.

* * *

The Oxford team’s first break in the Ghana case came when Dr. Newton found a GSK laboratory analysis of counterfeit Halfan syrup in an obscure Internet technical journal on mass spectrometry. He wondered whether that syrup came from Agyarko’s bottles. The GSK research center in Britain had made a breakthrough in identifying fake-drug ingredients -- the chemical “fingerprint” -- in the samples. Their tests showed that the fake syrup contained no halofrantrine active ingredient and had two sulfa additives that Newton knew to be dangerous and should have been made public. But GSK’s scientists, who had quoted Newton’s own research on fake malaria drugs in their report, rejected his request for the source of their fake syrup. “Analyzing counterfeit products of ours can be a very sensitive issue, and if I was to give you further information I would need to clear it with our corporate security and investigations department,” a GSK researcher told him in an e-mail. “The product presented in the paper was found in Central Africa, but for legal reasons, I can’t be more specific at the moment.”

The courteous, donnish White then wrote to Satchwell, the GSK security chief, asking for the source of the fake Halfan syrup and to know whom, if anyone, GSK had warned. A reply arrived from the company’s international public-policy director, Jessica Hughes, who refused to provide answers about the fake syrup but acknowledged “counterfeit Halfan is present in Nigeria and Sierra Leone.”

The Oxford team’s hunt moved to Nigeria, the hub of West Africa’s fake-drug trade and a country notorious for corruption and violence. In June 2002, Nigeria’s drug regulatory body, the National Agency for Food and Drug Administration and Control (NAFDAC), had also alerted GSK to a discovery of fake Halfan syrup -- two months before Agyarko’s warning. As NAFDAC’s chief, Akunyili had issued an immediate public warning through a system set up to identify fake drugs to patients and health workers. Every month, in fact, NAFDAC destroys tons of fake drugs. A typical list includes faked versions of products from the Pfizer, Hoffman La Roche, Novartis, Unilever, Janssen, Astra Zeneca, Boots, Hoechst, Pharmacia & Upjohn, and GSK companies.

Akunyili was furious to hear that her Ghanaian colleague Agyarko had withheld his public warning at GSK’s request. “No company would have the courage to tell me not to publish anything,” she says. “We will still issue a warning even if we find it in just one shop. If you find any fake-drug product in only one shop you can be sure it is in many villages … . People die all the time.” She is driven by the death of her sister Vivienne, a diabetic who received fake insulin. She says that she herself has been a victim of fake Halfan and Amoxil antibiotics. There had been no public warning in either case. “I didn’t know that Halfan had been faked,” says Akunyili. “Everybody can be a victim.” She joined NAFDAC in 2001 when Nigeria suffered from a wave of fake drugs comprising up to 80 percent of the market. Now she is a national hero, known as “Dr. Dora,” who publicizes the counterfeits in schools and villages, roots out corruption, and travels to India and China to stop the fakes at their source.

Eventually the Oxford team learned that GSK had known about a global trade in fake Halfan since at least December 2000, when Belgian customs officials seized a vast haul of GSK counterfeits in transit from China to Nigeria. The Belgian haul included 57,600 packs of fake adult Halfan capsules, along with more than 15,000 packs of Amoxil and Ampiclox antibiotics. GSK says it informed the Nigerian health authorities of the haul. The counterfeiter’s trial revealed that fake GSK drugs were being produced on an industrial scale in factories in China and Thailand. In all, Chinese investigators seized 43 tons of fakes of 17 brands made by seven major drug companies, which only represented a fraction of known output. Chinese authorities say that in 2001 they closed 1,300 fake-drug factories while investigating 480,000 cases worth $57 million.

White’s attempts to publish the Oxford team’s findings were rejected by the leading medical journals -- including The Lancet, the British Medical Journal, and The New England Journal of Medicine -- and several U.K. newspapers. But in October 2004, one year after GSK had denied any knowledge of his fake Halfan discovery, bbc Radio reported Agyarko’s claims. Faced with the broadcast, the company’s London head office reversed position to acknowledge that it had received Agyarko’s alert -- and that it had the fake Halfan syrup bottles all the time. In a new statement that admitted GSK staff had “bumped into” Agyarko, the drug giant still insisted that “[a]t no point was any pressure put on the Ghanaian authorities not to issue a public warning on fake Halfan.”

By then Louise Sibley had left GSK. Louise Dunn, the company’s new vice president for communications, had a new explanation. “There was some confusion over the interactions with Mr. Agyarko,” she said. “The key point here is that there was no wrongdoing.” Neither Sibley nor Dunn had ever called Agyarko, although Dunn says that he “never complained to us.” She added, “There was no intention to hide anything. In our view there were minor discrepancies.”

Among those discrepancies was the complete disappearance of the fake Halfan bottles that the company finally admitted receiving from Agyarko. GSK claims that no trace of the Kumasi fake Halfan sample survives. “Mr. Agyarko did provide us with a sample of the Halfan,” says Dunn. “But we don’t have any records of the tests. What our procedure would be now is that absolutely everything gets tested at the time.” She says it is no longer possible to compare the Kumasi fake to other fake Halfan syrups in Africa, which would be the key to mapping their source and spread. The disappearance of the critical evidence also eliminated any chance of using the syrup’s chemical fingerprint to identify possible victims.

As for the fake Halfan syrup whose test results were found online by Newton, Dunn says that sample came from Sierra Leone. She says that the company informed the Sierra Leone minister of health about those counterfeits. But the Pharmaceutical Board of Sierra Leone, which investigates all fake drugs and issues public warnings, never received any such information from GSK or the minister of health, according to the board’s director, Michael J. Lansana, who called the omission “unfortunate.” The head of Sierra Leone’s Malaria Control Program, Dr. Sirian Kamara, who works with Lansana to uncover fake drugs, also says that no warning ever arrived.

Most curiously, the news of Agyarko’s fake Halfan alert never reached Graham Satchwell, then GSK’s security director. Asked about the Agyarko case at a conference in Paris in March, he was stunned. “I know nothing of that!” he shouted from the conference platform. “If you are trying to suggest that I would [in] any way conceal anything that would cause the death of anyone, let alone children, then you are very mistaken indeed.”

Later, Satchwell told me that he had led GSK’s anti-counterfeiting operations, and that he should have received all reports of fake drugs, including Agyarko’s Halfan find. He said no one at GSK told him about the Kumasi case or about the attempts to contact him concerning Agyarko’s claims. A former U.K. policeman, Satchwell took personal risks as an undercover buyer to obtain fake drug samples. He has testified at congressional hearings on fake drugs. Sir David Hare, the British dramatist, has lionized Satchwell’s integrity in a play exposing government and corporate negligence. Why was he not told about the Agyarko case?

“There is a large anti-counterfeit team at GSK,” says Dunn, “so the involvement or noninvolvement of one individual is not unusual or significant.” But Satchwell questions the official GSK version.

“If GSK knows that the [fake] sample was received,” he says, “then they should know who received it and what happened next. If a test was undertaken, then the results would have been recorded. The department concerned with doing that were an efficient and organized bunch.” Satchwell was pushing to build up a record of all fake GSK drug cases to be used for intelligence analysis to trace sources and pathways. “There are umpteen things you can profile within the packaging and the product in order to identify counterfeit ‘strains.’ This was -- and is -- done.”

GSK declined to allow any interviews with Louise Sibley or the GSK staffers who met with Agyarko. As for Satchwell’s comments, Dunn says, “We have no comment.” The company’s fake-drug policy states, “GSK rigorously investigates any case of suspected counterfeiting.” But GSK still refused to answer questions about the actions it took following the fake Halfan syrup find in Kumasi. And Dunn says she cannot understand how withholding fake-drug data can harm patients. “I would like some evidence,” she says.

There is no way of finding such evidence -- yet. For “security” reasons, the industry’s fake-drug data is kept confidential at the PSI, which collates fake-drug discoveries made by the world’s 18 biggest drug companies, including Pfizer and GSK, some dating back more than a decade. The institute’s stated goals are “protecting the public health” and “sharing information on the counterfeiting of pharmaceuticals.” Whether it fulfills either is questionable. Dr. Lembit Rago, director of medicine safety for the World Health Organization, has been frustrated by the PSI’s secrecy. “We’ve been discussing it with [the PSI] for a long time,” he says, “but they are not willing to open up the databases. They really don’t like [the idea].”

A PSI spokesman insists that the secrecy is necessary to prevent criminals from being tipped off before police arrests. But Chris Jenkins, a founding member of the PSI now serving as an analyst and associate director at Pinkerton Consulting and Investigations, says there is an additional explanation. “At the outset, we [PSI] were against having data online that anyone could interrogate,” says Jenkins, who set up the original psi fake-drug computer data system in the 1990s, with its access restrictions. “There were also commercial reasons. If a patient came to harm as a result of a counterfeit product, the company’s good reputation is in danger of disappearing, together with a loss of confidence in the products. From the company’s perspective, there is then the inherent danger of rival products being preferred in the marketplace.”

Jenkins says that the industry’s security regime was designed to prevent the major drug companies from using fake-drug information to take commercial advantage of one another.

“The one thing we were trying very hard to do was to keep [data] out of the hands of the commercial people in any of the companies,” he says. “We always had this possibility, which is why things were sanitized. One had to produce reports for the CEO, but beyond that it was kept very close. The only people [in a member company] nominated to PSI were senior people with anti-counterfeit responsibilities, such as security directors and IP lawyers. You can imagine trying to get 20 top companies trying to share information, a lot of which was extremely commercial-in-confidence. The importance of meeting sales targets is such that you can even find cutthroat competition between different operating divisions of the same company, let alone between two companies competing in the same market with similar drugs.”

Could that explain why Graham Satchwell never learned of the fake Halfan in Ghana?

Dr. Sebastian J. Mollo of the PSI confirms that data is routinely withheld from members. “Since [PSI’s] inception, it was recognized that a great deal of this information would remain confidential and would not be disseminated. There is proprietary information that cannot be disclosed, either to peer member companies or to the general audience.”

The industry has turned fake-drug data into a potential weapon against itself, inadvertantly offering the racketeers a layer of immunity they never could have imagined. Some companies have, on rare occasions, issued public warnings, including GSK (and Johnson & Johnson, Serono, Hoechst, Wellcome Foundation [now GSK], Merck Sharp & Dhome, and Genentech), but the list is tiny compared with the racket’s size. “Fake drugs should be reported like infectious diseases,” says White. “By not making the public aware you create a market (for fakes). Drug companies are making it easier for the criminals.”

High profits, low costs, minimal legal risks, and little publicity are drawing crime gangs away from arms and narcotics. High-tech photocopiers turn out perfect drug packaging for every type of treatment for heart disease, birth control, meningitis, kidney disease, cancer, or depression. Out-of-date and damaged drugs get relabeled for sale, transforming a $22 drug into a $450 drug by creating a higher dosage label.

Most fakes are made in China, Southeast Asia, India, Russia, and the Middle East and then infiltrated into the legitimate global drug-distribution system. What is surprising is how many ordinary people are needed to make the racket work. Officials and health workers meant to protect patients are bribed and intimidated to put fake drugs into a distribution system that is like a sieve. “An awful lot more [fake drugs] get through than are seized,” says Jenkins. Inside the system, fake drugs are very hard to find and then are often ignored, even in the United States.

Once taken, a fake antibiotic pill made of rice starch or a vaccine made of water is virtually untraceable in the body. Victims succumb to their illnesses, leaving no sign of a crime. In the absence of investigations, very few victims have ever been unidentified. Its anonymity has allowed the racket to be ignored and to thrive.

The most vulnerable are malaria victims. The resurgence of malaria now affects more than 500 million people in Africa. Mosquitoes carry the disease in a “meal of blood” passed from one human victim to another. The most dangerous parasite, Plasmodium falciparum, kills more than 800,000 African children under 5 years old annually, according to the World Health Organization. It is Africa’s biggest child killer, destroying families, health services, and economies. But the role of fake drugs in promoting malaria is barely ever mentioned.

In November 2005, for example, Bill and Melinda Gates gave $250 million to fight malaria. “It’s a disgrace that the world has allowed malaria deaths to double in the last 20 years, when so much could have been done to stop the disease,” declared the Microsoft billionaire. “Millions of children have died.” Is Gates aware that his generosity and the efforts of pharmaceutical research-and-development staff are being diluted by fake drugs? Experts are linking the resurgence of the disease to the growth of fake drugs, in a terrible cycle of neglect over the past two decades.

The explosive growth of malaria has created a sales boom for both drug companies and counterfeiters. “Anti-malarial drugs have now really become the focus” of the fake racket, says Dr. Allan Schapira of the World Health Organization’s Roll Back Malaria project. “It is murder. It is incredibly cruel.”

* * *

The marketing of fake drugs and the resurgence of malaria are inseparable. “It kills the voiceless children, who cannot protest,” explained Dr. Martin Meremikwu of Nigeria’s Calabar University at the launch in October of Gsunate Kit, a new artesunate anti-malarial drug. “Malaria hardly kills adults, which explains why we don’t seem to give the fight against malaria enough attention. The tragedy is that while 90 percent promptly take drugs when they have malaria, only 15 percent get ‘good’ drugs. The fraudulent practice of fake-drug manufacturers, inappropriate use of the available drugs, and the mutation of the malaria parasite are responsible for the resistance of malaria parasite to drugs.”

No one has assessed the extent of fake malaria drugs in Africa along the lines of Newton's study in Southeast Asia. Anti-malarials are known to be among the most faked drug types. But the danger does not stop there. The use of fake drugs is helping the malaria parasites to quickly mutate to become resistant to new drugs. Akunyili says diluted fake drugs are “feeding the malaria parasite with little doses” that build more resistant strains. You don’t have to take a fake drug to suffer its effects. Resistance is accelerated and then spread by mosquitoes to the next victim. As more patients fall prey so the need for more drugs grows, encouraging the trade in fakes that fuels the cycle. Dr Jan Rozendaal, who ran the European Community malaria project in Southeast Asia’s Mekong region in 1998, believes that fake drugs were causing most malaria deaths. But such warnings have gone largely unheeded. This leaves questions about the effectiveness of any new drugs while the use of fakes is rife.

There is a lot of money to be made now in combating malaria. GSK’s tests of an experimental malaria vaccine on children in Africa were greeted last year with a ringing headline in the London Times: “Malaria vaccine to save millions of children.” Within a month, the British government had made an unprecedented $5 billion presale for the still-unproven vaccine (and was criticized by malaria experts for investing so much in one Western company).

But while a company can be paid billions for a new drug, its patients have no guarantee of getting the real thing. There is little incentive to publicize the danger. Vaccines have been faked with tragic results. The 1995 Niger meningitis epidemic led to the worst known fake-drug incident, when 60,000 people were given vaccines made by SmithKline Beecham (now GSK) and Pasteur Merieux before they were found to be nothing but water. Some 3,000 people died. SmithKline Beecham was criticized in the French press for failing to take legal action amid speculation that it feared damaging trade with Nigeria, which had donated the fake vaccines.

* * *

Has the pharmaceutical industry made a huge miscalculation by using a strategy that now harms its own interests as well as its customers? Without effective laws or close cooperation among companies, governments, and international organizations, the racket has metastasized, according to the Public Library of Science Medicine, which finally published the Oxford team's industry survey in April. White and Akunyili now want international legislation to end the secrecy by enforcing mandatory reporting by drug companies of all fake-drug finds, and for government authorities to investigate and issue public warnings. “This is not a role for the pharmaceutical industry which has a serious conflict of interest,” says White, who also wants PSI data opened to health authorities. “The information kept on PSI databanks could absolutely help limit the number of casualties from fake drugs. It is entirely preventable.”

Akunyili says the next and most difficult step in the campaign against counterfeit drugs is to identify the victims. In the case of Halfan, it could be possible to detect the link between the criminal and the victim by checking the chemical fingerprint developed by GSK against that of the fake syrup. But is there any will to find the victims?

The pharmaceutical industry, backed by the FDA, is pursuing a new methods to stop counterfeiting, such as high-tech covert markers in drug packaging. But when GSK put holograms on its Halfan, according to Akunyili, “these criminals faked their hologram.” She believes that consumers represent an untapped pool of highly motivated “detectives” who could expose fake drugs to protect both themselves and the industry. White agrees that the public should be told which drugs are being faked without companies revealing sources. Such public warnings directly attack the racket itself. “When people stop buying fakes the market dries up,” says Akunyili. “Companies benefit in the long term.”

When the racket began to take off in 1982, Hoechst pharmaceuticals discovered the power of publicity against counterfeits in Beirut, where wartime conditions had encouraged a plague of fakes. Hoechst fought back with an advertising campaign warning patients about a fake of its diabetes drug Daonil. There was no panic and there were no lost sales. Indeed, Hoechst says it gained credibility, and when its customers stopped buying fakes the supply dried up. Why don’t drug companies use this vast resource of human intelligence and let consumers check their own drugs?

Clearly the companies worry that the victims will come back to haunt the industry -- creating the legal and public-relations disaster the secrecy was meant to prevent. Chris Jenkins believes that the PSI could face a legal challenge to open its databases. “Only the PSI has an overview of the known racket,” he says. “In theory, every fake-drug case reported by the companies should be on there.” Pieced together, the PSI fake-drug data could reveal the scale of the racket and its human toll through specific companies, drug names, discovery dates, and locations. Jenkins and other private investigators fear that they, too, could be held liable for keeping confidential the fake-drug data they have obtained for pharmaceutical clients.

Such fears have been stimulated by a series of breakthrough court cases in the United States, which argued that a drug company may be liable for the safety of its customers if it possesses information that could save them. It is a question with implications for millions of patients around the world.

It will probably never be known if any children suffered from diluted Halfan in Ghana. But in 2002, around the same time that the fake syrup turned up in Kumasi, prosecutors in a courthouse in Kansas City were exposing the horrors of fake drugs in America -- and the identity of their victims.

On December 5, 2002, Kansas City District Judge Ortie Smith changed the perception of the racket from that of copyright infringement to mass murder. Pharmacist Robert R. Courtney pleaded guilty to diluting the cancer drugs Gemzar, made by Eli Lilly, and Taxol, made by Bristol Myers-Squibb. Courtney made extra money, and at least 17 patients died. Judge Smith told him, “Your crimes are a shock to the conscience of a nation, the conscience of a community, and the conscience of this court. You alone have changed the way a nation thinks.” He sentenced the pharmacist to 30 years in prison.

Investigations by the FDA and the FBI -- of a case that had been the FBI’s top priority until September 11 -- found that since 1992, Courtney had diluted 72 different medicines, affecting some 400 doctors and more than 4,000 patients. During the hearing Assistant U.S. Attorney Gene Porter apologized for identifying the victims by code numbers instead of their names. Noting that they were indeed persons, Porter read out the names of the 17 women who died without any warning from Courtney’s diluted drugs. They were, wrote Kansas City Star reporter Mark Morris, “brave women, fighting desperately against cancers that never seemed to get better, no matter how many treatments they endured.”

What happened next riveted the attention of the pharmaceutical industry -- and its lawyers.

Victims and surviving families filed hundreds of lawsuits against Courtney and against Eli Lilly and Bristol-Myers, alleging that the two companies knew or should have known that Courtney was diluting their drugs because sales data showed that he sold greater quantities than he bought. The companies denied any liability and argued that they had no duty to protect their customers from Courtney’s criminal acts. But faced with the prospect of a legal precedent that could hold drug companies responsible for fake-drug victims where they had knowledge of the racket, Eli Lilly and Bristol-Myers Squibb settled more than 300 lawsuits out of court -- without any admission of wrongdoing. In February 2003, Courtney’s victims received around $71 million in settlement payments from the companies.

What would such an investigation reveal in Kumasi, or a thousand other African or Asian communities? Whether it is brought about in courts or through government action, the mandatory reporting of fake drugs would save potential victims everywhere.

* * *

In the 2004 GSK corporate responsibility report, Chairman Sir Christopher Gent and CEO Dr. JP Garnier assured stockholders, “Our ten corporate responsibility principles set the standard for everyone, since responsible business is only a reality if it is practised by all employees at all times. … We invite you to read this report for more information on all our corporate responsibility principles, and we welcome your comments and suggestions.”

As Holly Martins might say, “Have you ever visited the children’s hospital?”

Robert Cockburn is a writer and a former foreign correspondent who has reported for the Times of London and the BBC.

© 2005 by The American Prospect, Inc.

The US and Iran: Is Washington Planning a Military Strike?


Is Washington Planning a Military Strike?

Recent reports in the German media suggest that the United States may be preparing its allies for an imminent military strike against facilities that are part of Iran's suspected clandestine nuclear weapons program.
Ah, Christ almighty, here we go again. Can't someone stop these fools if the White House?

Following Iranian President  Mahmoud Ahmadinejad's recent anti-Israel statements, reports are increasing that Washington may be preparing its allies for a military strike against Iran.
Following Iranian President  Mahmoud Ahmadinejad's recent anti-Israel statements, reports are increasing that Washington may be preparing its allies for a military strike against Iran.
It's hardly news that US President George Bush refuses to rule out possible military action against Iran if Tehran continues to pursue its controversial nuclear ambitions. But in Germany, speculation is mounting that Washington is preparing to carry out air strikes against suspected Iranian nuclear sites perhaps even as soon as early 2006.

German diplomats began speaking of the prospect two years ago -- long before the Bush administration decided to give the European Union more time to convince Iran to abandon its ambitions, or at the very least put its civilian nuclear program under international controls. But the growing likelihood of the military option is back in the headlines in Germany thanks to a slew of stories that have run in the national media here over the holidays.

The most talked about story is a Dec. 23 piece by the German news agency DDP from journalist and intelligence expert Udo Ulfkotte. The story has generated controversy not only because of its material, but also because of the reporter's past. Critics allege that Ulfkotte in his previous reporting got too close to sources at Germany's foreign intelligence agency, the BND. But Ulfkotte has himself noted that he has been under investigation by the government in the past (indeed, his home and offices have been searched multiple times) for allegations that he published state secrets -- a charge that he claims would underscore rather than undermine the veracity of his work.

According to Ulfkotte's report, "western security sources" claim that during CIA Director Porter Goss' Dec. 12 visit to Ankara, he asked Turkish Prime Minister Recep Tayyip Erdogan to provide support for a possibile 2006 air strike against Iranian nuclear and military facilities. More specifically, Goss is said to have asked Turkey to provide unfettered exchange of intelligence that could help with a mission.

DDP also reported that the governments of Saudi Arabia, Jordan, Oman and Pakistan have been informed in recent weeks of Washington's military plans. The countries, apparently, were told that air strikes were a "possible option," but they were given no specific timeframe for the operations.

In a report published on Wednesday, the Berlin daily Der Tagesspiegel also cited NATO intelligence sources claiming that Washington's western allies had been informed that the United States is currently investigating all possibilities of bringing the mullah-led regime into line, including military options. Of course, Bush has publicly stated for months that he would not take the possibility of a military strike off the table. What's new here, however, is that Washington appears to be dispatching high-level officials to prepare its allies for a possible attack rather than merely implying the possibility as it has repeatedly done during the past year.

Links to al-Qaida?

Members of the People's Liberation Army of Kurdistan (ARGK) who are the military wing of the Kurdistan Workers Party (PKK) in mountain hideout in northern Iraq near the Turkish border.
Members of the People's Liberation Army of Kurdistan (ARGK) who are the military wing of the Kurdistan Workers Party (PKK) in mountain hideout in northern Iraq near the Turkish border.
According to DDP, during his trip to Turkey, CIA chief Goss reportedly handed over three dossiers to Turkish security officials that purportedly contained evidence that Tehran is cooperating with Islamic terror network al-Qaida. A further dossier is said to contain information about the current status of Iran's alleged nuclear weapons program. Sources in German security circles told the DDP reporter that Goss had ensured Ankara that the Turkish government would be informed of any possible air strikes against Iran a few hours before they happened. The Turkish government has also been given the "green light" to strike camps of the separatist Kurdistan Workers' Party (PKK) in Iran on the day in question.

The DDP report attributes the possible escalation to the recent anti-Semitic rants by Iranian President Mahmoud Ahmadinejad, whose belligerent verbal attacks on Israel (he described the Holocaust as a "myth" and called for Israel to be "wiped off the map") have strengthened the view of the American government that, in the case of the nuclear dispute, there's little likelihood Tehran will back down and that the mullahs are just attempting to buy time by continuing talks with the Europeans.

The German wire service also quotes a high-ranking German military official saying: "I would be very surprised if the Americans, in the mid-term, didn't take advantage of the opportunity delivered by Tehran. The Americans have to attack Iran before the country can develop nuclear weapons. After that would be too late."

Despite the wave of recent reports, it's naturally difficult to assess whether the United States has any concrete plans to attack Iranian nuclear facilities. In a January 2005 report in the New Yorker, US investigative journalist Seymour Hersh claimed that clandestine American commando groups had already infiltrated Iran in order to mark potential military targets.

At the time, the Bush administration did not dispute Hersh's reporting -- it merely sought to minimize its impact. In Washington, word circulated that the article was filled with "inaccurate statements." But no one rejected the core reporting behind the article. Bush himself explicitly stated he would not rule out the "option of war."

How great is the threat?

So is the region now on the verge of a military strike or even a war? In Berlin, the issue is largely being played down. During his inaugural visit with US Defense Secretary Donald Rumsfeld in Washington last week, the possibility of a US air strike against Iran "hadn't been an issue," for new German Defense Minister Franz Josef Jung, a Defense Ministry spokesman told SPIEGEL ONLINE.
CIA Director Porter Goss.
CIA Director Porter Goss.

But the string of visits by high-profile US politicians to Turkey and surrounding reports are drawing new attention to the issue. In recent weeks, the number of American and NATO security officials heading to Ankara has increased dramatically. Within a matter of only days, the FBI chief, then the CIA chief and, most recently, NATO General Secretary Jaap De Hoop Scheffer visited the Turkish capital. During her visit to Europe earlier this month, US Secretary of State Condoleezza Rice also traveled to Turkey after a stopover in Berlin.

Leading the chorus of speculation are Turkish newspapers, which have also sought to connect these visits to plans for an attack on Iran. But so far none of the speculation has been based on hard facts. Writing about the meeting between Porter Goss and Tayyip Erdogan, the left-nationalist newspaper Cumhuriyet wrote: "Now It's Iran's Turn." But the paper didn't offer any evidence to corroborate the claims.

Instead, the paper noted that the meeting between the CIA chief and Erdogan lasted longer than an hour -- an unusual amount of time, especially considering Goss had previously met with the head of Turkey's intelligence service, the MIT. The Turkish media concluded that the meetings must have dealt with a very serious matter -- but they failed to uncover exactly what it was. Most media speculated that Erdogan and Goss might have discussed a common initiative against the PKK in northern Iraq. It's possible that Goss demanded secret Turkish intelligence on Iran in exchange. Regardless what the prospects are for a strike, there's little chance a US air strike against Iran would be launched from its military base in the Turkish city of Incirlik, but it is conceivable that the United States would inform Turkey prior to any strike.

Skepticism in Ankara
US Defense Secretary Donald H. Rumsfeld talks to the media during his visit to the Incirlik Air Base, southern Turkey, on Monday, 04 June 2001.
US Defense Secretary Donald H. Rumsfeld talks to the media during his visit to the Incirlik Air Base, southern Turkey, on Monday, 04 June 2001.

Until now the government in Ankara has viewed US military activities in the region at best with skepticism and at worst with open condemnation. At the beginning of 2003, Ankara even attempted to prevent an American ground offensive in northern Iraq against the Saddam regime. A still-irritated Donald Rumsfeld has repeatedly blamed military problems in Iraq on the fact that this second front was missing.

Two weeks ago, Yasar Buyukanit, the commander of the Turkish army and probable future chief of staff of the country's armed forces, flew to Washington. After the visit he made a statement that relations between the Turkish army and the American army were once again on an excellent footing. Buyukanit's warm and fuzzy words, contrasted greatly with his past statements that if the United States and the Kurds in northern Iraq proved incapable of containing the PKK in the Kurd-dominated northern part of the country and preventing it from attacking Turkey, Buyukanit would march into northern Iraq himself.

At the same time, Ankara has little incentive to show a friendly face to Tehran -- Turkish-Iranian relations have long been icy. For years now, Tehran has criticized Turkey for maintaining good relations with Israel and even cooperating with the Israeli army. Yet despite those ties to Israel, Ahmadinejad's recent anti-Israeli outbursts were reported far less extensively in Turkey than in Europe.

Still, Erdogan has been demonstrably friendly towards Israel recently -- as evidenced by Erdogan's recent phone call to Ariel Sharon, congratulating the prime minister on his recent recovery from heart surgery. In the past, relations between Erdogan and Sharon have been reserved, but recently the two have grown closer. Nevertheless, Turkey's government has distanced itself from Sharon's threats to stop Iran from developing a nuclear weapon on his own if nobody else steps up to the task.

The Turkish government has also repeatedly stated that it opposes military action against both Iran and Syria. The key political motivation here is that -- at least when it comes to the Kurdish question -- Turkey, Syria and Iran all agree on one thing: they are opposed to the creation of an independent Kurdistan in northern Iraq. But if the United States moves forward with an attack against Iran, Turkey will have no choice but to jump on board -- either as an active or passive partner.

It's a scenario that has Erdogan and his military in a state of deep unease. After all, even experts in the West are skeptical of whether a military intervention against nuclear installations in Iran could succeed. The more likely scenario is that an attack aiming to stop Iran's nuclear program could instead simply bolster support for Ahmadinejad in the region.

CorpWatch : Haiti Telecom Kickbacks Tarnish Aristide

by Lucy KomisarSpecial to CorpWatch
December 29th, 2005

cartoon by Khalil Bendib

Two U.S. lawsuits charge that former Haitian President Jean-Bertrand Aristide and his associates accepted hundreds of thousands of dollars in kickbacks from politically connected U.S. telecom companies. "Plus ça change," one might say in Haiti. The more the leadership in this corruption riddled country changes, the more things stay the same.

President Aristide's sudden departure from Haiti in 2004 is stalked by controversy. His defenders say he was a champion of the poor hustled out of the country by a Bush administration fearful of his radical populism. His critics charge that he was a corrupt and cynical demagogue building power by appealing to the poor and repressing opposition.

Lawsuits filed this Fall challenge the former priest’s image of political purity and raise claims that both he and U.S. corporate executives scammed illegal profits off the hemisphere’s poorest population. In one suit, a fired executive charged his former employer, the U.S. telecom IDT (Newark, NJ), with corruption, defamation, and intimidation under the New Jersey anti-racketeering law. In the second, the government of Haiti contends that IDT, Fusion (New York, NY) and several other North American telecoms violated the federal RICO anti-racketeering statute. Both suits allege that Aristide, now in exile in South Africa, and his associates, took kickbacks.

The story that the suits reveal is emblematic of the business relationship between a powerful rich country and a tiny impoverished nation linked by technology – and corruption. It starts out ironically: with a Western policy, designed to protect U.S. companies from price competition, which acts to give poor countries a break.

International phone calls access the routing systems of both the caller’s country and the recipient’s. The phone company where the call originates routinely pays a per-minute charge or "termination fee" for accessing the overseas system. The goal of this arrangement is to level the playing field in situations where most of the calling goes in one direction. There are, for example, far more Haitians in America who can afford to call family in their native land than there are Haitians in Haiti who have the money to dial America. Without the 23 cents termination fee, only the U.S. company would be paid and the Haitian phone service would not be reimbursed for maintaining its infrastructure.

The U.S. established a system of fixed fees – the international settlements policy (ISP) – in the 1980s, based on a practice dating to the 1930s, to strengthen the bargaining position of American telecoms against foreign carriers. In spite of the rhetoric of free-market competition, the U.S. didn’t want foreign phone companies making deals that forced U.S. companies to compete against each another. The Federal Communications Commission fixed the per-minute rates and required all U.S. companies to pay it. Companies had to inform the FCC and competitors if they negotiated lower rates.

The lawsuits charge that some U.S. firms cut secret deals to pay Haiti cut-rate per-minute fees while kicking back hundreds of thousands of dollars to Aristide and his associates. Instead of providing the Haitian phone company with money to build up infrastructure and services, the deals helped corrupt officials to loot the system.

Bipartisan Friends in High Places

IDT corporate governance gets failing marks from The Corporate Library and Institutional Shareholder Services, which rate companies for institutional investors. The board that flunked the governance test includes highly connected Washington insiders from both parties.

IDT'S Republican Buddies (+1 Dem)

CEO James Courter, was a Republican New Jersey congressman from 1979 to 1991.

Vice President Dick Cheney is a friend of Courter's, and when Net2Phone, an IDT internet phone company, went public in 1999, he arranged for Cheney to buy 1,000 initial shares. According to David Cay Johnston in the New York Times, Cheney paid $15,000 for the shares and sold them the same day for $26,574, a neat profit of 77.2 percent.

Prominent Republicans on IDT's board of directors include:

Jeane J. Kirkpatrick, former ambassador to the United Nations;

Jack F. Kemp, former New York congressman and Republican vice presidential hopeful;

James S. Gilmore III, former governor of Virginia; and

Rudy Boschwitz, former senator from Minnesota.

Pete Wilson, former governor of California, is on the board of the IDT Entertainment subsidiary.

William F. Weld, former Massachusetts governor who plans to run for governor of New York, was a director of the IDT board and chair of its governance committee until he resigned this fall.

Slade Gorton, former Republican Senator from Washington, replaced him.

Leon E. Panetta, the lone IDT Democrat, a former congressman who was chief of staff in the Clinton administration, is on the board of the IDT Telecom unit.

Fusion Telecommunications' Political Connections

Past and present board members include:

Marvin Rosen, former finance chair of the Democratic National Committee;

Joseph P. Kennedy II, Massachusetts Congressman;

Thomas "Mack" McLarty III, Clinton special envoy to Latin America.

John Sununu, chief of staff for former President George H.W. Bush, joined the advisory board after Kennedy and McLarty resigned.

Artistide's supporters are loath to believe that the charismatic former priest may have betrayed Haiti’s desperate poor who saw him as their savior throughout tumultuous years of alternating hope and despair. Elected president for a five-year term from 1991 to 1996, Aristide was almost immediately forced into exile by a military coup. Three years later, a U.S.-led force, acting under a U.N. resolution, invaded Haiti to restore him to the presidency. When Aristide’s first term ended in February 1996, he was constitutionally barred from succeeding himself. His close associate, former Prime Minister René Préval, served as president until Aristide was returned to office in February 2001. Citing evidence of fraud, the Organization of American States' electoral observation mission declined to certify the elections.

In February 2004, Aristide either resigned (the U.S. version) or was kidnapped (his story) and flown by the U.S. to South Africa.

Phone Home

Haiti’s phone system had become a contentious issue between the U.S., which demanded that it be privatized, and Aristide, who wanted it to remain government-owned. In the late 1990s, the Clinton administration cut off $500 million in promised loans and aid amidst charges by members of Congress that Aristide’s government was rife with corruption.

According to the lawsuits filed in Miami and Newark federal courts, the political corruption was a two-way street running between politically connected North American companies and Aristide's government. Haiti's Telecom sector is estimated at 400 million minutes a year, valued at $48 million. During the governments dominated by Aristide (1994-2004), Teleco (Télécommunications d'Haïti), the Haiti national telephone company, made agreements with foreign telephone companies, including IDT, Fusion Telecommunications, Skyytel (Montreal), Cinergy (Miami) and IPIP/Terra (Miami), granting them rights to connect to Haiti phone lines.

The suit by the Haitian government says that payments to Teleco were diverted or kicked back to Aristide's group through companies and bank accounts in the offshore Turks and Caicos Islands and the British Virgin Islands. A key company was Mont Salem in the Turks and Caicos. The offshore companies were described as "agents" or "consultants" for Teleco. These Caribbean tax havens are known for setting up shell companies and bank accounts that guarantee secrecy to the owners, who routinely use them to hide and launder the money of corruption, fraud, tax evasion, drug trafficking, and other crimes.

Details about the IDT charges are laid out in the case filed by D. Michael Jewett, who was IDT’s associate regional vice president for the Caribbean in 2003. That year, Jewett says, the company vice-president told him that IDT agreed to pay kickbacks to Aristide's Turks and Caicos bank account in return for a favorable phone deal in Haiti. Instead of the FCC-mandated 23 cents a minute for calls originating in America, Teleco was willing to accept only 9 cents a minute--with 3 cents kicked back to Aristide, Jewett said.

Jewett's Tale

IDT fired Jewett in November 2003, within a week after IDT got back its signed contracts from Teleco and Mont Salem. He fought for and won unemployment benefits, then hired a lawyer. He filed suits for wrongful dismissal in federal court in Newark in May 2004 and October 2005. He claims he was fired because he opposed the deal.

Jewett's version of events goes like this: The initial Teleco proposal called for IDT to deposit funds in a U.S. bank account. But fearing that it might pay and get no agreement, IDT decided to negotiate directly with Aristide. In August 2003, IDT executive vice president for International Business Development Jack Lerer met with Aristide in Haiti. A month later Lerer told Jewett the plan: IDT would deposit money in a Turks and Caicos account that Aristide had set up under the name Mont Salem. In September 2003 the deal was sealed: Teleco would receive 6 cents and Mont Salem would keep 3. Teleco's records were falsified to show Mont Salem as the carrier, not IDT.

Aristide's Miami lawyer, Ira Kurzban, refused Corpwatch’s request for comment on the telecoms cases.

Lawyers for the Haiti government say they know from Teleco billing statements that Mont Salem was paying Teleco 6 cents a minute for the minutes it was billing to IDT. They know from pleadings and a judicial order in the Jewett case that the rate in the IDT-Mont Salem agreement was 9 cents a minute. Putting the records together, the Haitian government lawsuit asserts that in one six-month period in 2004, IDT paid $302,588 in kickbacks to the Aristide group.

The U.S. Department of Justice, the United States Attorney in Newark, NJ, and the Securities and Exchange Commission have initiated investigations into the charges against IDT.

Offshore Adventures

One of the strongest links to Aristide is Mont Salem. Its Turks and Caicos incorporation papers show registration in June 2000 with capital of $5,000 – not much for a real company. Its registered agent was Timothy O'Sullivan of Miller, Simons and O'Sullivan, Turks and Caicos. The owner of shares was "M & S Nominees Ltd," (Miller and Simmons), listed at the same Turks and Caicos address. It fits the model of a classic offshore shell company designed to receive and launder money, rather than that of a real firm.

Where did the money go? Asked who the real Mont Salem owners are, Adrian Corr --lawyer for Miller, Simons and O'Sullivan in the Turks and Caicos--confirmed that "You can have nominee [strawman] directors," but declined to say if Mont Salem's listed owners were fakes. "I don’t know. You put me on the spot," said Corr. "I don’t want to answer any questions about this. I have lawyers retained; It's better you speak with them. It's [former New Jersey] Governor Byrne's law firm." His attorney Kerrie Heslin at Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein in Newark did not respond to numerous requests for comment.

Neither did Mont Salem's lawyer, Michael Weinstein, at Podvey, Meanor, Catenacci, Hildner, Cocoziello & Chattman, also in Newark.

IDT's CEO James Courter and the company's attorney in the Jewett case, Leslie Lajewski (Grotta, Glassman & Hoffman in Roseland, NJ), also declined to return phone calls and emails seeking comment.

The Federal court in Newark court dismissed the RICO claim on grounds of “standing” but accepted the whistleblower cause of action as well as Jewett’s claims of defamation and intentional infliction of emotional distress. The case will soon proceed to discovery, where his lawyer will be able to demand internal IDT records.

Meanwhile, more details are available from the president of Skyytel, a Montreal company which, according to the Haiti lawsuit, got a similar kickback deal. While denying payment of kickbacks, Colin Povall does acknowledge that Skyytel's 2003 agreement with Teleco provided for payment of 9 cents a minute to Mont Salem as Teleco's agent. Again, the Haitian telecom would reap only 6 cents a minute.


The Lawsuit

The Haitian government-Teleco lawsuit filed was in Miami Nov. 2, 2005, under the U.S. RICO (Racketeer Influenced and Corrupt Organizations) statute. The defendants are:

Former President Jean-Bertrand Aristide. He lives in Pretoria, South Africa.

Faubert Gustave, minister of the Economy and Finance 2201-4. He lives in Sarasota, FL

Rodnée Deschineau, general manager of the government-owned Banque Populaire Haïtienne from 2001-4. He lives in Dorchester, Mass.

Lesly Lavelanet, the brother-in-law of Aristide's wife, Mildred Trouillot Aristide. He controlled several companies, including Digitek SA and Global Spectrum SA. He lives in Coral Springs, FL.

Fred Beliard, who lives in Cooper City, FL.

Alphone Inevil, Director of Planning at Teleco from 1997 to 2002, then Director General to 2004. He lives in Lakeland, FL.

Jean Rene Duperval, Director for International Affairs for Teleco from 2003 to 2004. He lives in Miramar, FL.

Adrian Corr, an attorney with the law firm of Miller, Simons and O'Sullivan in the Turks and Caicos Islands.

"Mont Salem approached us," he explained. "We never met anybody in Haiti. Fred Beliard is the only one I met. He was dealing with some powerful people." Beliard, a Haitian, is accused in the lawsuit of participating in the kickback scheme. Povall said, "Adrian Corr, we only heard about him when it came to sign the contract; his name was on the contract." One of Skyytel's advisors is Ronald Beliard, who runs a telecom consulting company in Quebec and is related to Fred Beliard.

The Haiti lawsuit says that Skyytel paid Mont Salem $872,371 in kickbacks.

Another player in the alleged scheme is Fusion Telecommunications, a U.S. firm that the Haitian government lawsuit says made a suspect deal through a shell company. Run by former high-level Clinton administration officials, Fusion, according to the suit, made payments to Teleco via CW Holdings, a company with a bank account in Florida. Lawyers for Haiti do not know where CW Holdings is registered; they could not locate it in either Haiti or Florida.

Fusion, through its representative, Howard Rubenstein Public Relations in New York, acknowledged to Corpwatch that in mid-2001, "Fusion was instructed to make payments that it owed to Teleco to the account of CW Holdings in Bank Atlantic in Florida. In invoices that Fusion received from Teleco, Teleco accounted for Fusion’s payments to CW Holdings as payments made to Teleco. Fusion made payments to CW Holdings for three months until Teleco instructed Fusion to make all future payments directly to Teleco." The amount, according to the PR firm was "less than $1 million a month."

Fusion did not respond to queries about where CW Holdings was registered or the cost of the minutes it paid to that intermediary or to Teleco.

Up to the Courts

As the lawsuits make their way through various courts, Aristide, in exile in South Africa, is silent on the topic. His Miami lawyer, Ira Kurzban, was emailed Corpwatch's references to Aristide's alleged telecom kickbacks, but he declined to comment on them. In a statement issued after the Haiti lawsuit was filed, he declared it a "political investigation" by the current Haiti government, and noted that no one has been able to find "the money that the president supposedly took." He said that "there is none" and that "there are no Swiss bank accounts." None of the suits refer to Swiss accounts. His statement did not mention or refute the charges of telecom kickbacks or Aristide's receipt of them through a Turks and Caicos shell company.

If it turns out that an American company paid cut-rate fees for minutes, it violated U.S. Federal Communication Commission rules. If it paid kickbacks, it also violated the U.S. Foreign Corrupt Practices Act, which bans payment of bribes or kickbacks to get foreign contracts. It will be left to the Justice Department to file charges.

Meanwhile, in November 2004, to help U.S. companies negotiate better deals, ISP rules were ended in routes where U.S. carriers get termination rates at or below levels set by the FCC. For lower income countries such as Haiti, the benchmark is 23 cents, the old standard which, for Haiti, is no longer a guaranteed minimum. Jacki Ponti, the spokesperson for the FCC, refused, or was unable, to provide information about the current U.S.-Haiti rates.

Lucy Komisar is a New York journalist writing a book on the international impact of the offshore bank and corporate secrecy system.