Priestap: FBI’s Strzok Played “More Central Role Than Previously Known” In Clinton, Russia Probes

Peter Strzok, the FBI counterintelligence agent pulled off Special Counsel Robert Mueller’s probe last year for sending anti-Trump / pro-Clinton text messages to his “lovebird” FBI mistress, played a more central role than previously known in both the Russia and Hillary Clinton investigations, a lawmaker told Fox News on Tuesday. 

The assessment of Strzok’s involvement comes after six hours of closed-door interviews with FBI espionage chief Bill Priestap, along with an analysis of “recent records.” 

Priestap was interviewed Tuesday as part of an ongoing joint investigation by the House Judiciary and Oversight committees. Priestap was Strzok’s supervisor and oversaw both the Russia and Clinton investigations.

The lawmaker described Strzok as a very cooperative witness, but added that unanswered questions remained about Priestap’s overseas travel. One line of questioning Tuesday concerned a trip to London by Priestap in May 2016 and whether it was connected to the Russia case.

The trip was referenced by Strzok in a May 4, 2016 text message to FBI lawyer Lisa Page that said “Bill” would be “back from London next week.” –Fox News

Strzok emailed Priestap on January 30, 2016 along with another colleague to express dismay about statements made by former White House Press Secretary Josh Earnest claiming that Hillary Clinton was not the target of the FBI probe into her use of a private server while she was Secretary of State. 

“Below not helpful,” Strzok wrote. “Certainly the WH is going to do whatever it wants, but there is a line they need to hold with regard to the appearance of non-interference.”

We also learned in May that Peter Strzok went on a secret trip to London in the summer of 2016 to meet with Australian ambassador, Alexander Downer, to describe his meeting with Trump campaign advisor, George Papadopoulos. The FBI kept details of the operation secret from most of the DOJ – with “only about five Justice Department officials” aware of the full scope of the case. 

Fearful of leaks, they kept details from political appointees across the street at the Justice Department. Peter Strzok, a senior F.B.I. agent, explained in a text that Justice Department officials would find it too “tasty” to resist sharing. “I’m not worried about our side,” he wrote. –NYT

And in what appears to reveal Strzok’s own doubts over the case right after he returned from London, a text message he sent to his mistress, former FBI lawyer Lisa Page, reads “I cannot believe we are seriously looking at these allegations and the pervasive connections.”

Strzok was reassigned to the FBI’s Human Resources department following the discovery of over 50,000 text messages sent between he and Page, many of which showed overt bias towards Hillary Clinton and against Donald Trump. While Strzok remains on the FBI’s payroll, Lisa Page resigned in May to “pursue other opportunities.” 

Congressional investigators will interview two other FBI officials later in the month; Michael Steinbach – former head of the agency’s national security division, and Steinbach’s predecessor, John Giacalone. Furthermore, DOJ Inspector General Michael Horowitz – whose highly anticipated report on FBI misconduct is reportedly going to come any day, is also expected to brief lawmakers.

Cambridge Analytica Boss ‘Borrowed’ $8 Million Before It Collapsed, FT Reports

Shortly after former Cambridge Analytics CEO Alexander Nix learned British media was reporting on allegations about his firm’s role in the leak of Facebook data, he allegedly withdrew $8 million from the company… and investors are not happy.

In a lengthy and detailed story in The Financial Times, Nix is accused of making off with the funds right before the firm collapsed into liquidation; and the investors who had backed a potential rebranding of the firm are pressing Nix to repay the money.

The investors said Emerdata, a company set up last year to acquire and rebrand Cambridge Analytica and a related company, SCL Group, had raised $19m from powerful international investors in January to expand the company’s services and bid for more commercial work.

The money ran out quickly, the people said, because of outstanding bills to advertisers and other suppliers, and because of the alleged withdrawal by Mr Nix. According to some of the people, Mr Nix has indicated that he intends to repay part of the money. One person added that Mr Nix said the withdrawal was made in exchange for unbooked services.

Bankruptcy filings in New York show that Cambridge Analytica received an $8.8m loan from Emerdata before it entered administration, though it is not clear what the loan was intended for.

Documents show the debt is classified as an unsecured “non-priority” loan that might not have to be returned.

But the story gets even more intriguing when one finds out who the ‘investors’ in the apparent rebranding of Cambridge Analytica’s “data-science-as-a-service” business model…

Company filings in the UK show Emerdata earlier this year issued nearly 2m shares and added several new directors to its board including Rebekah and Jennifer Mercer, the daughters of hedge fund billionaire and prominent Trump supporter Robert Mercer.

As a reminder, the prominent conservative billionaire investor, Trump campaign supporter and patron of Steve Bannon, Robert Mercer, stepped down as co-chief executive and board member of the world’s most profitable and secretive hedge fund, Renaissance Technologies, on January 1, 2018.

Additionally, Johnson Ko, executive director of Reorient Group, was also added as a director of Emerdata in January. Mr Ko is a business partner of Erik Prince, another Trump associate and the founder of private mercenary group Blackwater, at the security firm Frontier Services Group.

And judging by the second half of The Financial Times’ story, Cambridge Analytica was planning a full resurrection as documents seen by the FT confirm that a holding company was established to acquire Cambridge Analytica and SCL Group, which had previously focused on defense (which explains Erik Prince’s influence) and political work (which explains the Mercer’s interest), including Donald Trump’s presidential campaign. These documents and a private placing memorandum set out plans to raise about $30m to pitch for more commercially-related work and develop a “high-volume core business” with off-the-shelf data-targeting products.

“Governments have access to vast quantities of data; on both their own citizens and foreign nationals. These data can be used to help governments identify, segment and target key audiences for campaigns of information or influence.”

Cambridge Analytica also formed a working group of senior ex-military personnel and government executives to identify products and services most relevant to government clients, according to the documents.

We suspect this is very much not the last we hear of Cambridge Analytica’s ‘business model’ though getting on the wrong side of the Mercers and Erik Prince may mean that this is the last we hear from Mr. Nix.

Russia Building The Trans-Arabian Railway Will Make The Saudis More Multipolar

Authored by Andrew Korybko via Oriental Review,

The CEO of Russian Railways, the state-backed leader in this industry, announced his company’s intent in participating in the Trans-Arabian Railway during last week’s Saint Petersburg International Economic Forum (SPIEF), thus drawing attention to a project that’s been on the drawing board for a few years already but has failed to get off the ground.

The concept is for the GCC states to tighten their non-energy economic integration with one another through a coastal railway that hugs the southern edge of the Persian Gulf and would run from Kuwait to Oman, but this vision hasn’t yet been prioritized. That might change in the coming future, however, as a result of trilateral cooperation between Russia, Saudi Arabia, and China.

To explain, Saudi Crown Prince Mohammed Bin Salman’s ambitious Vision 2030 agenda of socio-economic reforms dovetails perfectly with China’s One Belt One Road global vision of New Silk Road connectivity in the sense that it aims to position the Wahhabi Kingdom as a tri-continental economic hub for Afro-Eurasia.

Some of the over $130 billion worth of investments that China clinched in Saudi Arabia last year alone will be used to modernize the recipient’s economy and place it on the trajectory for developing a sustainable post-oil future, and it’s here where Russia’s railway expertise comes in.

Russian Railways has been working very hard to establish itself as a global player and the Trans-Arabian Railway project provides the perfect opportunity for showcasing its services. Not only that, but it’s a quid pro quo for Saudi investment in the Russian economy over the past couple of years, and it will help to accelerate the Russian-Saudi rapprochement, too. 

Moscow’s deepening all-around involvement in Arab affairs, especially with the influential GCC, will enable it to gain wider respect and acceptance as a Mideast power as well.

Altogether, Russia’s successful involvement in the Trans-Arabian Railway project and China’s game-changing investments in the Kingdom could help Saudi Arabia diversify its foreign policy and ultimately become more multipolar as a result.

China Offers $72 Billion MLF “To Ensure Banking Liquidity Remains Stable”

Just hours after we warned that it was time to start worrying about China’s debt default avalanche, and shortly after the PBOC lowered its credit quality restrictions for collateral, China offered its Medium-term Lending Facility (MLF) to inject CNY463bn (~$72bn) of liquidity.

As we detailed earlier, the recent blow out in Chinese corporate bond spooked none other than the PBOC, which last last Friday announced that it will accept lower-rated corporate bonds as collateral for a major liquidity management tool in a move that analysts see as designed in part to restore confidence in the country’s corporate bond market.

Specifically, the central bank said that it had decided to expand the collateral pool for the medium-term lending facility (MLF) to include corporate bonds rated AA+ or AA by domestic rating agencies.  The central bank also added as collateral financial bonds rated AA and above with proceeds to support rural development, small enterprises and green projects, as well as high-quality loans supporting green projects and small enterprises, the PBoC said in a statement posted on its website.

The PBoC said the expansion of collateral would “help alleviate the financing difficulties of small companies and to promote the healthy development of the corporate bond market.”

CICC confirmed as much, writing in a note that “the expansion of collateral for MLF, to some extent, is intended to bolster confidence in lower-rated corporate bonds … and to avoid creating an apparent net financing gap which would impact the real economy.”

Translated: the PBOC is providing yet another backdoor bailout to China’s latest and greatest distressed sector in hopes of avoiding an avalanche of defaults as credit conditions become increasingly tighter as the PBOC hikes tit for tat with the Fed.

*  *  *

Today’s MLF was offered at 3.3% -very marginally above the 3.25% one-year term rate for the last MLF in February saying it was “to ensure banking liquidity remains stable”

Notably, 259.5 billion yuan of MLF loans werer set to mature on Wednesday, so today 463 billion yuan really exposes the need for liquidity (rolling all the prior loans and an additional 203.5 billion yuan was required).

However, there was also a net withdrawal of open market operations of 180 billion yuan due to maturing repo agreements.

Which means the net liquidity injected today was 23.5 billion yuan (still around $3.6 billion).

While today’s PBOC intervention may delay the moment of reckoning for the world’s most indebted corporate sector, it will not eliminate it. One potential catalyst: Chinese companies have to repay a total of 2.7 trillion yuan of bonds in the onshore and offshore market in the second half of this year, and together with another 3.3 trillion yuan of trust products set to mature in the second half, the funding problems will get worse. As already more than eight high-yield trust products have delayed payments so far this year.

To be sure, Beijing will do everything in its power to avoid a default waterfall, but another emerging – pardon the pun – risk is that as Boyd concludes, negative sentiment towards Chinese corporates could become a major headwind for EM debt, even as the crises in Argentina, Brazil and Turkey appear to calm down, resulting in another significant capital outflow from Emerging Markets, and even more pained complaints from EM central bankers begging the Fed to halt its tightening, or else.

Edward Snowden: “The People Are Still Powerless… But Now They’re Aware”

Authored by Ewan MacAskill and Alex Hern via The Guardian,

Five years after historic NSA leaks, the whistleblower tells the Guardian he has no regrets…

Edward Snowden has no regrets five years on from leaking the biggest cache of top-secret documents in history. He is wanted by the US. He is in exile in Russia. But he is satisfied with the way his revelations of mass surveillance have rocked governments, intelligence agencies and major internet companies.

In a phone interview to mark the anniversary of the day the Guardian broke the story, he recalled the day his world – and that of many others around the globe – changed for good. He went to sleep in his Hong Kong hotel room and when he woke, the news that the National Security Agency had been vacuuming up the phone data of millions of Americans had been live for several hours.

Snowden knew at that moment his old life was over. “It was scary but it was liberating,” he said. “There was a sense of finality. There was no going back.”

What has happened in the five years since? He is one of the most famous fugitives in the world, the subject of an Oscar-winning documentary, a Hollywood movie, and at least a dozen books. The US and UK governments, on the basis of his revelations, have faced court challenges to surveillance laws. New legislation has been passed in both countries. The internet companies, responding to a public backlash over privacy, have made encryption commonplace.

Snowden, weighing up the changes, said some privacy campaigners had expressed disappointment with how things have developed, but he did not share it.

“People say nothing has changed: that there is still mass surveillance. That is not how you measure change. Look back before 2013 and look at what has happened since. Everything changed.”

The most important change, he said, was public awareness.

The government and corporate sector preyed on our ignorance. But now we know. People are aware now. People are still powerless to stop it but we are trying. The revelations made the fight more even.

He said he had no regrets.

If I had wanted to be safe, I would not have left Hawaii (where he had been based, working for the NSA, before flying to Hong Kong).”

His own life is uncertain, perhaps now more than ever, he said. His sanctuary in Russia depends on the whims of the Putin government, and the US and UK intelligence agencies have not forgiven him. For them, the issue is as raw as ever, an act of betrayal they say caused damage on a scale the public does not realise.

This was reflected in a rare statement from Jeremy Fleming, the director of the UK surveillance agency GCHQ, which, along with the US National Security Agency. was the main subject of the leak. In response to a question from the Guardian about the anniversary, Fleming said GCHQ’s mission was to keep the UK safe: What Edward Snowden did five years ago was illegal and compromised our ability to do that, causing real and unnecessary damage to the security of the UK and our allies. He should be accountable for that.”

Jeremy Fleming of GCHQ addresses a security conference. Photograph: Owen Humphreys/PA

The anger in the US and UK intelligence communities is over not just what was published – fewer than 1% of the documents – but extends to the unpublished material too. They say they were forced to work on the assumption everything Snowden ever had access to had been compromised and had to be dumped.

There was a plus for the agencies. Having scrapped so much, they were forced to develop and install new and better capabilities faster than planned. Another change came in the area of transparency. Before Snowden, media requests to GCHQ were usually met with no comment whereas now there is more of a willingness to engage. That Fleming responds with a statement reflects that stepchange.

In his statement, he expressed a commitment to openness but pointedly did not credit Snowden, saying the change predated 2013. “It is important that we continue to be as open as we can be, and I am committed to the journey we began over a decade ago to greater transparency,” he said.

Others in the intelligence community, especially in the US, will grudgingly credit Snowden for starting a much-needed debate about where the line should be drawn between privacy and surveillance. The former deputy director of the NSA Richard Ledgett, when retiring last year, said the government should have made public the fact there was bulk collection of phone data.

The former GCHQ director Sir David Omand shared Fleming’s assessment of the damage but admitted Snowden had contributed to the introduction of new legislation. “A sounder and more transparent legal framework is now in place for necessary intelligence gathering. That would have happened eventually, of course, but his actions certainly hastened the process,” Omand said.

The US Congress passed the Freedom Act in 2015, curbing the mass collection of phone data. The UK parliament passed the contentious Investigatory Powers Act a year later. 

Ross Anderson, a leading academic specialising in cybersecurity and privacy, sees the Snowden revelations as a seminal moment. Anderson, a professor of security engineering at Cambridge University’s computer laboratory, said:

Snowden’s revelations are one of these flashbulb moments which change the way people look at things. They may not have changed things much in Britain because of our culture for adoring James Bond and all his works. But round the world it brought home to everyone that surveillance really is an issue.

MPs and much of the UK media did not engage to the same extent of their counterparts elsewhere in Europe, the US, Latin America, Asia and Australia. Among the exceptions was the Liberal Democrat MP Julian Huppert, who pressed the issue until he lost his seat in 2015.

“The Snowden revelations were a huge shock but they have led to a much greater transparency from some of the agencies about the sort of the things they were doing,” he said.

One of the disclosures to have most impact was around the extent of collaboration between the intelligence agencies and internet companies. In 2013, the US companies were outsmarting the EU in negotiations over data protection. Snowden landed like a bomb in the middle of the negotiations and the data protection law that took effect last month is a consequence.

One of the most visible effects of the Snowden revelations was the small yellow bubble that began popping up on the messaging service WhatsApp in April 2016: “Messages to this chat and calls are now secured with end-to-end encryption.” 

Before Snowden, such encryption was for the targeted and the paranoid. “If I can take myself back to 2013,” said Jillian York, the director for international freedom of expression at the digital rights group the Electronic Frontier Foundation, “I maybe had the precursor to [the encrypted communication app] Signal on my phone, TextSecure. I had [another email encryption tool] PGP, but nobody used it.” The only major exception was Apple’s iMessage, which has been end-to-end encrypted since it was launched in 2011.

Developers at major technology companies, outraged by the Snowden disclosures, started pushing back. Some, such as those at WhatsApp, which was bought by Facebook a year after the story broke, implemented their own encryption. Others, such as Yahoo’s Alex Stamos, quit rather than support further eavesdropping. (Stamos is now the head of security at Facebook.)

“Without Snowden,” said York. “I don’t think Signal would have got the funding. I don’t think Facebook would have had Alex Stamos, because he would have been at Yahoo. These little things led to big things. It’s not like all these companies were like “we care about privacy”. I think they were pushed.”

Other shifts in the technology sector show Snowden’s influence has in many ways been limited. The rise of the “smart speaker”, exemplified by Amazon’s Echo, has left many privacy activists baffled. Why, just a few years after a global scandal involving government surveillance, would people willingly install always-on microphones in their homes?

“The new-found privacy conundrum presented by installing a device that can literally listen to everything you’re saying represents a chilling new development in the age of internet-connected things,” wrote Gizmodo’s Adam Clark Estes last year.

Towards the end of the interview, Snowden recalled one of his early aliases, Cincinnatus, after the Roman who after public service returned to his farm. Snowden said he too felt that, having played his role, he had retreated to a quieter life, spending time developing tools to help journalists protect their sources. “I do not think I have ever been more fulfilled,” he said. 

But he will not be marking the anniversary with a “victory lap”, he said.

There is still much to be done.

“The fightback is just beginning,” said Snowden.

“The governments and the corporates have been in this game a long time and we are just getting started.”