23 January 1999. TTA. See White House releases on Clinton's anti-terrorism program
++ Thwarting Tomorrow's Terrors [NYT editorial] ++ Embassy Attacks Thwarted, U.S. Says ++ Con Artist Leaves Reston Firm Reeling ++ Russia's 'Stealth' Bluff: Rollout of Fighter That Hasn't Been Built - - - - - - - - - - - - - http://www.nytimes.com/yr/mo/day/editorial/23sat2.html The New York Times, 23 January 1999 [Editorial] Thwarting Tomorrow's Terrors Biological and chemical terrorism and disabling attacks on American computer networks are not just the stuff of novels and films. Nerve gas has already been released in the Tokyo subways. Hackers and virus programs have struck supposedly secure computer systems. President Clinton is right to plan a coordinated Federal response to what could become a major problem. For the most part, the $2.8 billion program Mr. Clinton unveiled yesterday to detect, prevent or limit the damage from such terrorist attacks is on the mark. The money would finance research into new vaccines; the stockpiling of antibiotics and other medications likely to be needed in response to terrorist attacks; Federal training of state and city medical response teams, and research and training in new computer security methods. A strong Federal role is needed in all these areas, and the spending levels are about right for current needs. The Administration promises to protect constitutional liberties and individual civil rights as it assumes a larger role in terrorist surveillance. Still, two areas bear watching. There have been discussions in the Pentagon, but no decision, about creating a new domestic military command to combat terrorism. That would erode the long-established legal principle that America's armed forces should not be involved in domestic law enforcement. There is also potential danger in Federal monitoring of civilian computer networks for intrusion by hackers. Such monitoring could lead to improper Government surveillance of private correspondence on the Internet and elsewhere. The right role for Washington here is financing research and providing technical advice to the private sector about computer security techniques and software. The rest of the Clinton program warrants rapid Congressional approval and funding. Lethal germs and deadly nerve gases are now easily prepared in bathroom laboratories, and computer hacking skills are common among high school students. Protecting the American public from biological, chemical and computer attack should not get bogged down in Washington's partisan warfare. Copyright 1999 The New York Times Company - - - - - - - - - - - - - http://www.washingtonpost.com/wp-srv/national/daily/jan99/terror23.htm Washington Post, Saturday, 23 January 1999, Page A2 Embassy Attacks Thwarted, U.S. Says By Vernon Loeb Washington Post Staff Writer U.S. intelligence and law enforcement agencies have prevented Osama bin Laden's extremist network from carrying out truck-bomb attacks against at least two American embassies since the bombings of U.S. embassies in Kenya and Tanzania more than five months ago, the Clinton administration's senior counterterrorism official said yesterday. Richard A. Clarke, who occupies the recently created post of national coordinator of counterterrorism and computer security programs, also said U.S. officials do not believe that bin Laden, a Saudi millionaire now living in the mountains of Afghanistan, has acquired chemical or biological weapons despite his contacts with experts in the production of nerve gas and biological toxins. "I think we've made life extraordinarily difficult for [bin Laden], but he's still there," Clark said. "I think it is very difficult for him and his lieutenants to travel. I think it's very difficult for them to raise money or move money or move explosives." Clarke's assessment came as President Clinton unveiled a $10 billion budget proposal for fighting terrorism and protecting the nation's computer infrastructure from attack. "The fight against terrorism is far from over, and now terrorists seek new tools of destruction," Clinton said. In a speech at the National Academy of Sciences, Clinton said his fiscal 2000 budget proposal includes $1.4 billion to enhance domestic readiness in the event of a chemical or biological terrorist attack, an increase of more than 50 percent since fiscal 1998, and $1.46 billion to protect the nation's computer systems. Clinton proposed an array of initiatives in both areas, from new vaccine research to creation of a "Cybercorps" of government computer experts. He said those programs come on top of $7 billion in counterterrorism spending on intelligence, diplomatic security, military readiness and law enforcement, including a tripling of FBI resources since 1993. "We are doing everything we can, in ways I can and ways that I cannot discuss, to try to stop people who would misuse chemical and biological capacity from getting that capacity," Clinton said. "This is not a cause for a panic. It is a cause for serious, deliberate, disciplined long-term concern." Clinton, who took office one month before the 1993 World Trade Center bombing, has since issued three high-level directives making counterterrorism the nation's No. 1 priority. The president's proposals drew immediate praise on Capitol Hill, where lawmakers have voted for large increases in spending on counterterrorism in response to the World Trade Center bombing, a sarin gas attack by the Japanese religious cult Aum Shinriyko in 1995 and the bombing of the federal office building in Oklahoma City later that year. Rep. Thomas J. Bliley Jr. (R-Va.), chairman of the House Commerce Committee, pledged his "full cooperation" but said that, if anything, Clinton's counterterrorism strategy does not go far enough, leaving "huge gaps in federal laws and regulations governing the possession, use and transfer of biological and chemical agents such as anthrax and sarin gas." Clarke declined to go into detail on U.S. counterterrorism operations that he believes preempted the planned truck bombings at embassies in Africa and the Middle East. He would not say which embassies had been targeted, although U.S. officials previously disclosed that they had foiled an alleged attempt by bin Laden associates to blow up the U.S. Embassy in Uganda. Clarke did provide new information in defense of Clinton's decision to fire Tomahawk cruise missiles at the El Shifa pharmaceutical plant in Khartoum, Sudan, in retaliation for bin Laden's role in the Aug. 7 embassy bombings. While U.S. intelligence officials disclosed shortly after the missile attack that they had obtained a soil sample from the El Shifa site that contained a precursor of VX nerve gas, Clarke said that the U.S. government is "sure" that Iraqi nerve gas experts actually produced a powdered VX-like substance at the plant that, when mixed with bleach and water, would have become fully active VX nerve gas. Clarke said U.S. intelligence does not know how much of the substance was produced at El Shifa or what happened to it. But he said that intelligence exists linking bin Laden to El Shifa's current and past operators, the Iraqi nerve gas experts and the National Islamic Front in Sudan. Given the evidence presented to the White House before the airstrike, Clarke said, the president "would have been derelict in his duties if he didn't blow up the facility." Clarke said the U.S. does not believe that bin Laden has been able to acquire chemical agents, biological toxins or nuclear weapons. If evidence of such an acquisition existed, he said, "we would be in the process of doing something." Assessing U.S. counterterrorism policy to date, Clarke said it's no accident that there have been so few terrorist attacks on American soil. "The fact that we got seven out of the eight people from the World Trade Center [bombing], and we found them in five countries around the world and brought them back here, the fact we can demonstrate repeatedly that the slogan, 'There's nowhere to hide,' is more than a slogan, the fact that we don't forget, we're persistent -- we get them -- has deterred terrorism," he said. Copyright 1999 The Washington Post Company - - - - - - - - - - - - - http://www.washingtonpost.com/wp-srv/frompost/jan99/octagon23.htm Washington Post, Saturday, 23 January 1999, Page E1 Con Artist Leaves Reston Firm Reeling By David S. Hilzenrath Washington Post Staff Writer In the murky realm where business and espionage converge, the Iranian-born arms merchant went by many names. As Jamshid Hashemi, he made headlines in 1991 claiming to have helped Ronald Reagan's 1980 presidential campaign negotiate to delay the release of U.S. hostages in Iran until after the election. A few years later, calling himself James Khan, he brokered a deal in which Octagon Inc. of Reston would supply Iran with $72.6 million of satellite phones. To Octagon's humiliation and near ruin, the deal evaporated, along with about $1.3 million of the company's money. In 1997, traveling under the name Signor Mario Cabrini, and carrying a stolen Italian passport, he was stopped at the Dublin airport trying to flee British prosecutors. But it was by the name Jamshid Hashemi Naini that the ailing man in his sixties appeared last month in London's Old Bailey and pleaded guilty to swindling Octagon and other businesses in Europe, Asia and the United States out of millions of dollars through a series of elaborate scams. A British judge denounced the former McLean resident as "an accomplished international con man," adding, "Ruthless is a correct word to describe your attitude to your victims." It was a dramatic day of judgment for a man who helped launch two congressional investigations of the Reagan-Bush campaign. In a burst of publicity in 1991, Hashemi claimed to have attended meetings in Madrid in the summer of 1980 between Reagan-Bush campaign manager William Casey, who would later become CIA director, and an Iranian delegation. Hashemi alleged that Casey asked the Iranians to hold the U.S. hostages until after the 1980 election, promising that an incoming Reagan administration would reward Iran by releasing military equipment and frozen assets. The investigations concluded that the conspiracy theory was unsupported. For students of the so-called October Surprise, the December guilty plea offered one more reason to doubt Hashemi's word. For the former Octagon executives who fell victim to his fraud, the plea was a measure of vindication. "If you think Octagon was stupid for doing the deal, there were a lot of other companies just as stupid," former Octagon chief executive John Thomas Royall said in a recent interview. Through his defense lawyer in London, Hashemi declined to comment. "He has told me that he doesn't want to speak to anyone nor will he authorize me to speak to anyone until he has been released from custody and has returned home to the U.S.A.," Brian Spiro said. Hashemi's prison sentence of three years and two months would have been much longer if not for unspecified help he had given British and U.S. security agencies, among other mitigating factors, England's Serious Fraud Office quoted the judge as saying. According to British authorities, Hashemi was the image of wealth and respectability. He impressed his victims with conspicuous displays -- a Rolex watch, gold jewelry, a chauffeur-driven Rolls Royce. As the Serious Fraud Office described them, the swindles followed a pattern. Posing as a middleman, Hashemi enticed his victims with offers to purchase commodities as varied as German gas masks and Vietnamese rice. He told them he was representing an agency of the Iranian government. The key to the fraud was that Hashemi demanded that the suppliers put up performance bonds or deposits -- large sums of money that they would forfeit if they failed to fulfill their end of the bargain. The guarantees were written to favor the buyer, and the wording was nonnegotiable. Once Hashemi had the money in hand, he accused the supplier of failing to live up to its obligations and diverted the funds into a global network of more than 50 bank accounts. Investigators eventually discovered that letters and contracts supposedly sent from Iran were created on his computers in London. By the British government's account, targets of Hashemi's deceit included Victorimex, a government-owned agricultural firm in Vietnam; Dragerwerk AG, a German maker of medical and industrial goods; Hagenuk Telecom GmbH, a German firm that was to supply satellite and cordless phones; and W.L. Gore & Associates Inc. of Delaware, maker of the waterproof fabric Gore-Tex, which discussed the possibility of furnishing the Iranian military with suits to protect against nuclear, chemical and biological attack. Hagenuk and W.L. Gore paid thousands of dollars of Hashemi's alleged expenses but averted the potentially costlier loss of performance bonds. W.L. Gore discovered a week before its guarantee was due that Hashemi had been arrested. An early victim was a close friend of Hashemi's family for many years who ran a jewelry business that he patronized, according to the prosecution. "I trusted Hashemi and I was pleased and eager to learn about commodity trading from an expert and successful businessman," Dau Joseph, owner of the Mondia Jewelry store in Tysons Corner Center, told British authorities. "[H]e had two Rolls Royces and a yacht and was very wealthy so I thought that he would have no reason to trick me." In 1992, Hashemi allegedly proposed that she supply rice to feed the Iranian army. The intermediary was Alpha Enterprises and Trading Co., a business Hashemi incorporated in Panama. Joseph eventually transferred $278,000 of guarantee money -- most of it put up by an Asian rice supplier -- from her Swiss bank account to Alpha's Swiss bank account. That was the last she saw of the money. Hashemi later accused her of "trading with the enemy" and told her not to contact him anymore, according to the prosecution. Royall, the former Octagon chief executive, remembers "James Khan" as "charming, gracious, polite, courteous" when they met in 1994. Khan sent a chauffeur-driven Mercedes-Benz to whisk him from his London hotel to an office elegantly furnished with antiques and Oriental rugs. Khan was wearing a large gold medallion around his neck, over his suit and tie. The two discovered they had something in common: Both belonged to the Tower Club in Tysons Corner. Octagon was one of the year's hottest new stocks. Its business included clearing Army bases of unexploded ordnance and providing classified telecommunications services at a Navy weapons testing facility. But Octagon, which didn't produce satellite phones, was merely acting as middleman to the middleman in the deal with Khan. Octagon was to purchase the phones, which fit in a briefcase, and deliver them for use by Iran's national oil company as it built a pipeline through desert and mountains. If the deal went as planned, Octagon could have profited by more than $10 million, Royall said. At dinner in London, Octagon President Steven W. Koinis was introduced to an Iranian general whose high-level contacts were supposed to make things happen. Octagon hired a London law firm to investigate Khan's background, and the firm turned up nothing suspicious, Royall and Koinis said. In April 1994, Octagon signed the contract with Khan's firm, James MacKenzie International Trading PLC. Octagon then had 10 days to produce a $3.63 million performance bond, but no bank would touch it, the prosecution said. One hitch was the requirement that any dispute be settled in Iran, under Islamic law. Octagon proposed that both sides put up their money at the same time, but Khan rejected that idea, saying his hands were tied by the buyer in Iran. Soon, Khan was threatening Octagon with a lawsuit for breach of contract. In July 1994, Octagon and Khan agreed to split the contract into two more manageable pieces, and Octagon put up a deposit of $1,265,000. Octagon issued a press release, and its stock soared by more than 70 percent. But the financing Khan was to provide never materialized. Octagon's Koinis met with a private investigator from Vance International Consulting Inc. in London. In short order, Stuart Page, a former Scotland Yard detective, linked James Khan with Jamshid Hashemi of October Surprise fame. Eventually, Vance's probe helped point the way for British authorities. The Iranian general whose influence Hashemi had touted turned out to be another prop in the deception. Through an interpreter, he told Page that he had fled Iran's fundamentalist revolution and occasionally accepted invitations to join Hashemi for dinner. He spoke no English and enjoyed the dinners without understanding the conversation, Page said. Following the September 1994 revelation that it had been duped, Octagon cratered. Its stock plunged, employees were laid off, shareholders sued, credit dried up, and in February 1995, the company and its insurer agreed to pay $1.75 million to settle investors' complaints that it misrepresented the deal. In April 1995, Octagon was dropped from the Nasdaq Stock Market. By late 1997, shares that once topped $14 were trading for 3 cents, and the company was sold. Octagon won a civil judgment against Khan, but it was hardly worth the trouble. The funds it managed to locate and seize covered only a fraction of the loss. Royall was dismissed in February 1995, though he said he was being cast as a scapegoat. The company later settled a lawsuit by acknowledging that Royall was improperly fired. Without admitting or denying wrongdoing, he and Koinis each agreed to pay penalties of $35,000 to settle Securities and Exchange Commission complaints. Koinis said the SEC didn't seem to realize that "we're the guys that caught him." "[U]nfortunately, we were too smart," Koinis said. "We figured it out." Even after Octagon announced that it had uncovered a "worldwide scheme to defraud," Hashemi set new traps using new corporate identities, the British government said. For anyone who knew where to look for information on Hashemi in 1994, the public record would have provided ample warning. A House task force completed its investigation of the October Surprise theory in January 1993, and its report said the CIA had concluded years before that Hashemi was a "trafficker in intelligence to whomever would buy it" and "dishonest and untrustworthy beyond belief." By early 1980, the CIA "had uncovered substantial information about fraudulent business dealings" by Hashemi, the report added. The report said Hashemi was indicted for selling arms to Iran in the 1980s and cooperated with U.S. Customs in a sting operation to get the charges dropped. When he met with House investigators, the man also known as Mohamed Balanian, Abdula Hashemi and Jamshid Khalaj was going by the name he gave Octagon: James Khan. But using so many identities could lead to an identity crisis. At the Tower Club, scene of power lunches, Hashemi instructed the staff never to greet him by name, Royall and Koinis later learned. Even as he was negotiating with Octagon, James Khan filed papers in Fairfax County Circuit Court to change his name again, stating as his reason "similarity of my name to an actor." Apparently, he didn't want to be confused with James Caan. By the time he entered his guilty plea several weeks ago, Hashemi had rendered sufficiently valuable service to the British and U.S. governments to win a measure of leniency, British Judge Andrew Collins declared. But the nature of that assistance isn't clear. In a 1997 interview with London's Sunday Times, Hashemi claimed that MI6, the British spy service, asked him to arrange weapons sales to Iran in the 1980s and then monitored his every move to ferret out Iran's suppliers. He also claimed that MI6 asked him to procure Chinese Silkworm missiles. Was he telling the truth? "We wouldn't want to get into that," said Peter Reid, a spokesman for the British Embassy. Hashemi was arrested in the fraud case in 1996 and released on bond. In July 1997, he was stopped at Dublin Airport trying to board a flight for New York. The Italian passport he was carrying was one of thousands of blanks stolen in an armed robbery in Naples. Hashemi returned to London, where he underwent heart surgery and then was jailed. With credit for time already served, he could be released in February. To Koinis, who has built a new life as an investment banker in the Middle East, and Royall, now a consultant to technology companies, that would be "a great injustice." In sentencing Hashemi, the judge cited his poor health. But wealth is another matter. Most of the money Hashemi is accused of stealing -- at least $4.9 million -- has never been recovered. Copyright 1999 The Washington Post Company - - - - - - - - - - - - - http://www.iht.com/IHT/TODAY/SAT/FPAGE/plane.html International Herald Tribune [Paris], Saturday, 23 January 1999 Russia's 'Stealth' Bluff: Rollout of Fighter That Hasn't Been Built By David Hoffman 0Washington Post Service MOSCOW - With much fanfare on a snowy tarmac at the Zhukovsky test field last week, Russia rolled out its long-awaited fifth-generation "stealth" fighter jet in front of dignitaries that included the minister of defense, Igor Sergeyev. The plane, with the number 01 on the fuselage, was hailed by Mr. Sergeyev as a "revolution in the Russian Air Force." Mikhail Korzhuyev, director of the MiG company, which designed the plane, boasted: "If this plane was used to beat off the British-American air raids on Iraq, 90 percent of all the launched guided weapons, including cruise missiles, would be shot down before they reached targets on the territory of Iraq." But there was just one problem. The plane on the tarmac was not the plane they were talking about. In fact, the plane they were talking about does not exist, except on the drawing board, and may never be built. Instead, the Russian designers substituted a more ordinary jet fighter, which itself has never flown, and was built for testing engines. It is not clear exactly why the Russians staged the event, but disclosure that they faked what they described as a fighter for the 21st century has stirred heated exchanges in recent days. Alexander Zhilin, a journalist for the newspaper Moscow News, who had once been an aerospace magazine correspondent, was invited to the roll-out by Yevgeni Shaposhnikov, one-time Soviet defense minister and now adviser on aviation to President Boris Yeltsin. Rumors had circulated for years about Russia's top-secret stealth fighter. Some specialists had been quoted as saying the program had run out of money. But the ceremony offered a tantalizing look at the plane and suggested the program was still alive. Mr. Zhilin recalled when he saw the plane at the Jan. 12 event: "I was taken aback." It was not the long-rumored stealth interceptor. It was something else. At first, Mr. Zhilin said in an interview, he thought perhaps the Russian secret services had staged an elaborate deception, to fool foreign intelligence services. But, he said, "the plane was too roughly made" to even qualify as a decoy. The plane on the tarmac, he noticed, lacked radar-evading stealth characteristics. For example, he knew that stealth technology required hiding the air-intakes, to achieve the smooth edges that evade radar. But the plane on the tarmac had large, angled air intakes that could easily show up on radar. It did not have other stealth characteristics; for example, it lacked a special radar-absorbing coating, or hidden places for the weapons. A Western expert who saw the pictures of the plane on the tarmac said, "The visible structure was not new." In fact, according to Mr. Zhilin and others, the plane on the runway was built years ago to test the prototype engines for a new fighter. It was a flying laboratory for the engines alone, not a combat plane, Mr. Zhilin said. On the Russian television news that evening, there were no questions asked about the great advance in Russian military aviation. The news reports, showing the plane on the tarmac, told of the first glimpse of the MFI, the Russian acronym for multifunction, front-line fighter. "According to experts, it can attack up to 20 targets simultaneously," the Itar-Tass news agency reported. Mr. Sergeyev was quoted by Interfax as saying that the new fighter was better than anything in the Russian Air Force and was "not inferior to the most advanced Western models." "BLUFF" was the headline over Mr. Zhilin's article saying that the whole ceremony had been for a plane that does not yet exist. The Western expert agreed, saying it was "industry hype." In fact, the Soviet Union did begin a fifth-generation stealth fighter project in the early 1980s. It was given the code name Project 1/42, and planned to be a 30-ton, twin-engine, single-seat plane capable of flying more than twice the speed of sound. On the drawing board, at least, the $70 million fighter was to have thrust-vector ring engines allowing it to make tight turns at any speed. But Project 1/42 ran into financial trouble. It was frozen in 1994, and supposedly terminated in 1997. Some mock-ups and parts of the plane reportedly exist at the design bureaus that worked on it. Russian officials have hinted at air shows that Project 1/42 was never fully canceled. But Mr. Zhilin said, "The program has stopped." He said his sources were workers on the real stealth plane who were angry about the ceremony. To test the supersonic engines, Russian designers built a test plane designated Project 1/44. It was the one that was rolled out on the tarmac, Mr. Zhilin said, recalling that he had seen the same airplane two years ago in a hangar. Mr. Zhilin speculated that what he called the "bluff" had been carried out to cover up financial misdealings in the aerospace industry. He said some officials were questioning whether government money for Project 1/42 had disappeared. The MiG company has been stung by the disclosures. In response to questions, a spokesman, Sergei Samatov, said Mr. Zhilin's claims "are not true to reality, to put it mildly." He added the fighter "is not a bluff and it is practically ready for the first flight that will happen in March 1999." But another official acknowledged that the plane that was rolled out on the runway was in fact the engine-testing model, a far cry from the stealth version. Anatoli Kvochur, deputy head of the Gromov flight-test institute, said that the test plane was "roughly speaking the first flying model" of the stealth. "Naturally," he said, "the plane will be different, it will have a different wing, but it will happen after a certain stage of flying tests." "This country needs such a plane," he said. "Whether our budget can afford such a plane is a different thing." Copyright 1999 International Herald Tribune. - - - - - - - - - - - - -