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Foreign Secret Intelligence and State Secrets Privilege

Volume 542: debated on Tuesday 27 March 2012

Motion made, and Question proposed, That this House do now adjourn.—(Mr Newmark.)

Thank you, Mr Speaker, for granting this debate.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Motion lapsed (Standing Order No. 9(3)).

Motion made, and Question proposed, That this House do now adjourn.—(Mr Newmark.)

I think the moment of interruption became a moment of terror for me then, Mr Speaker.

I was saying that the commercial squabbles between Mr Bentham, Mr Cecil and Mr Bayat might be viewed as ordinary, but this was no ordinary case. The US intelligence agencies feared the consequences if the truth about their in-fighting emerged and they were determined to stop that truth emerging.

First, it emerged that the CIA had offered Bayat $1 million for his legal fight against Bentham and Cecil. Other evidence suggests that there was a general intent by the CIA to exclude British agencies from the operation, and this may reflect that. Secondly, when Bentham and Cecil’s lawyers pressed the case, CIA officers threatened them, warning that the whole case would be shut down if they continued. Then, in November 2003, a year after litigation began, the American judge suddenly sealed the case, shutting it down without warning, citing the state secrets privilege. All records of the case were expunged, and vanished from the court’s public database. Cecil and Bentham were warned that they must destroy any documents in their possession that related to the case and that they would be in contempt of court if they discussed the case with anyone other than two named American lawyers.

Bentham and Cecil appealed, but this was quickly dismissed, with the decision being explained in a judgment that they were not even allowed to see for themselves. Undeterred, two years ago they returned to London and brought proceedings in London. However, so long is the reach of the American state secrets privilege that Bentham and Cecil were banned from discussing in the English High Court key facts and details of the American litigation. Needless to say, because of that their claim failed.

They realised then the unspeakable truth about which Parliament has until now been kept in the dark—that through heavy-handed use of the state secrets privilege, US agencies can dictate what British judges in British courts are entitled to know and how much British citizens in British courts are entitled to say. I am not here to pass judgment on the merits of Bentham and Cecil’s claim. Without having seen all the evidence I could not hope to come to a fair and accurate judgment, but the same goes for our judges. What chance did Bentham and Cecil or anyone else in a similar position have of getting a fair hearing when the American intelligence agencies can shut down cases without explanation in the US and use the state secrets privilege to control what evidence courts can see in the UK?

When this shocking story was first raised with me six months ago I was very cautious about how to handle it given the sensitivity of the information concerned—the people involved and the techniques used are the kind of thing I tend not to talk about in public—but I feel justified in raising these issues in Parliament today not just because of what this case reveals about the implications of the US state secrets privilege for British justice, but because when an American magazine published the story back in September last year, an advance copy of the article was sent for comment to the CIA as a matter of courtesy. All Governments have ways of restraining newspapers and journals from publishing matters that might jeopardise national security. We use the defence notice, or the defence advisory notice as I think it now is, procedure, and the Americans use other procedures. In this case, however, no attempt was made by the CIA or anyone else to restrict publication of a journal that goes out to millions of readers. No attempt was made to keep this supposedly sensitive information under wraps.

When one considers how heavy-handed the use of state secrets privilege was in respect of Bentham and Cecil, that is astonishing—so astonishing, in fact, that I recently put the question to someone in the know in one of the agencies involved. I asked him, “Why was this not shut down at this stage?” His response was, “Ten years have passed since 9/11, and the culpable people have moved on, so it’s no longer embarrassing.”

This demonstrates only too clearly that although the aim of the American state secrets privilege is to protect national security, in practice it is often used to eliminate embarrassment—political, bureaucratic, organisational or individual embarrassment at past failures. This has been proven to be true of the state secrets privilege from its very first use in the Reynolds case in the 1950s, and it is clearly still true today. It also shows how giving a Government agency an absolute right to secrecy encourages bad behaviour. The American agencies could easily have stopped the defrauding of British citizens without the matter going to court, given their enormous leverage in the matter. Instead, they chose to suppress justice.

I understand that both the Foreign Secretary and the Prime Minister have been aware of the issue for some months. I have three questions, at this point for the Minister, but in due course for them. First, what do the Government intend to do about British citizens being defrauded of millions of pounds in this way and denied justice, with the collusion of United States Government agencies? Have the Government been in discussion with the American Government to correct this injustice? How will they prevent this happening again and being covered up in the same way again?

Secondly, in the light of previous revelations about the UK Government’s complicity in torture and rendition of detainees to locations such as Libya and Afghanistan, or illegally into American hands—an area by definition covered by state secrets privilege—how will the Government prevent the Justice and Security Green Paper proposals being misused in a similar way to cover up illegal acts and embarrassments, rather than to protect national security, which is their supposed aim, particularly when one considers that the Government’s Green Paper proposals are more draconian than the American state secrets privilege, because we do not have the constitutional protection of free speech which occasionally stops state secrets privilege being misused in the States?

Thirdly and finally, can the Minister tell the House whether there is a formal, statutory, reciprocal arrangement to our proposed closed procedures with the American courts? Will we get complete protection—the control principle for our intelligence data given to the Americans, of which there is a great deal—in exchange for the apparently absolute protection that we are giving to American intelligence being disclosed here? Will we have the same level of protection? I suspect that the answer is not the one that the Minister would like to be able to give.

This has been an extraordinary case, which has come to my attention in the past six months. It happens, by accident almost, to crystallise the issues that arise when the inevitably secret agencies of the state are given not just the normal secrecy that is extended to them to allow them to do their job, but secrecy and protection from the proper operation of the justice system in a mature democracy. I would like to hear the Minister, who I know shares many of my liberal values, tell us exactly how he intends to reflect those liberal values in the policies in the year ahead.

Thank you, Mr. Deputy Speaker, for giving me the opportunity to make the final speech—at your discretion—before we adjourn for Easter. I congratulate my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) on securing this debate and on the compelling way in which he laid out his case this evening. I recognise the strength of feeling and sincerity with which he raises this specific case and the wider associated issues it serves to illuminate. I will aim to do justice to the three questions he put to me at the conclusion of his speech, but first I would like to give some context for my answers.

The security agencies play a vital role. They gather intelligence to protect our national security, with particular reference to the Government's defence and foreign policies, in the interests of the UK's economic well-being, and to prevent or detect serious crime. They provide warning of states taking actions hostile to UK interests, or planning such actions. They disrupt terrorism plots. Intelligence disrupts counterfeiting, drug trafficking and other serious offences, and intelligence can provide information on the intentions and capability of hostile state or non-state actors to launch cyber attacks against UK networks.

The agencies conduct their activities in compliance with the law and in a manner consistent with our values. Agency personnel devote considerable time and effort to ensuring that this is the case, and a system of oversight exists. That oversight includes the invaluable work of the Intelligence and Security Committee, composed of parliamentarians drawn from both Houses of Parliament and of two former High Court judges, who act as independent commissioners.

As my right hon. Friend said, the Government published a Green Paper on this issue in October 2011. In doing so, and in considering now the responses, this Government were, are and always will be guided by respect for fundamental rights to justice and fairness. It is always right that the Government should be held properly to account. The Green Paper's proposals will enable better scrutiny, which is a vital element in a healthy democracy.

Let me say a word about foreign intelligence. Threats to our security cross borders. We cannot confront them on our own, neither can we do it without co-operating with intelligence partners on the basis of trust. We rarely have all the pieces of the intelligence picture, and we must analyse the information we have alongside that we receive from our partners to create the fullest possible picture of the threats to our national security.

The ability of other countries to share intelligence with us without fear that we will have to disclose it is absolutely vital to our national interest. My right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind) made that point eloquently in a newspaper article this morning. If we cannot uphold the control principle—the rule that any further use of intelligence requires the agreement of the agency that provided it—and others do not share information with us as a consequence, we incur very real risks to our security. No responsible Government should willingly run such risks. We expect, and demand, the same protection for the intelligence we share with our overseas partners as we offer to those who have shared their information with us. However, under the current legal framework, sensitive material may have to be disclosed in civil proceedings, putting at risk the vital overseas relationships we depend on, as well as sensitive techniques and the lives and safety of individuals.

The Government aim to achieve in any new legislation a system in which there is justice and accountability, in which secret material is protected as it should be in all our interests for the reasons I have just explained, and there is fairness for all parties. We seek to balance all those laudable objectives, including a system where there is justice and accountability.

The Green Paper sets out proposals for handling sensitive material in civil proceedings, including the introduction of closed material procedures. At the same time, it proposed strengthening oversight of the activity of the agencies. Some 90 submissions were received in response to the consultation, of which Ministers will take account when making decisions on the measures to be introduced. I will not prejudge those decisions here.

Let me turn to the questions that my right hon. Friend posed at the end of his speech. On the specific case he raises, what I can say is that the Government are aware of the case, as he has said. We will continue to look into the matter and will decide how to respond to the representations already made on behalf of Mr Bentham and Lord Cecil in due course, and my right hon. Friend’s contribution to our deliberations this evening will of course form part of those considerations.

My right hon. Friend’s second question goes to the nub of the issue, and I can speak to the House at greater length on this broader principle. How do we ensure that new arrangements apply to only the most sensitive material and are not used, as he put it, “to cover up illegal acts and embarrassments”? Ministers will consider that carefully, but I can assure him now that this is not about covering up embarrassment. It is about facilitating the work of the courts by enabling them to look at all relevant material while giving the most sensitive material proper protection. It is about putting more information before the courts than is currently possible for the very small number of cases where sensitive material is centrally relevant. The court would play a critical role and would simply not accept Government justifications for public interest that it considered were made only for the purposes of hiding embarrassment or seeking to cover up unlawful conduct. The circumstances in which a closed material procedure might be necessary are exceptional and rare. They are not wide in scope. Sensitive information is central to a very small number of cases currently before the United Kingdom courts.

On my right hon. Friend’s final question, I am told that, in the United States, Executive Order 13526 provides for the classification and protection of information where

“the unauthorized disclosure of the information reasonably could be expected to result in damage to the national security, which includes defence against transnational terrorism”.

With regard to foreign Government information, the order explicitly states:

“The unauthorized disclosure of foreign government information is presumed to cause damage to the national security.”

I simply wish to make one point and ask that the Minister takes it back to his Department. In The New York Times v. the United States in 1971 the point about the disclosure of foreign information was advanced as one of the Nixon Government’s attempts to stop the Pentagon papers being published. It was rejected by the court on constitutional grounds, and constitutional lawyers have said that the Executive Order makes no difference to that and cannot transcend the constitution. I ask that his Department, in its approach to the Green Paper, makes it clear that there is not that absolute rejoinder the other way, because it is very important that we understand that we are at equal arms with our ally.

I am grateful for that intervention, because it is obviously in our interests that there is reciprocal sharing of information with the United States and a clear understanding of the status of that information. I will certainly draw my right hon. Friend’s comments to the attention of people within the Foreign and Commonwealth Office so that they can consider them in any further submissions made by the Department.

The Government are committed to safeguarding national security. Drawing on our society’s fundamental values, we are also pledged to protect the liberties and way of life of our citizens. Those aims—protecting our national security and liberty and way of life of our citizens—need not be in conflict.

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

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

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

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

I wish the House, and those who work here, visit us and follow our proceedings, a very happy and peaceful Easter.

Question put and agreed to.

House adjourned.