Sunday, December 27, 2009

Who Burned Down The Reichstag-- And Brought Hitler To Power

On the night of February 27, 1933 in Berlin, the Reichstag, the home of the German Parliament and the symbol of the German state, was ablaze. While it was still smouldering, German police arrested Marinus Van der Lubbe, a Dutch communist with a history of setting buildings on fire. Also at the crime scene was Adolph Hitler, the newly appointed leader of a shaky coalition government. Only hours later he proclaimed that the crime was not the work of a lone arsonist but part of a wider Communist plot to overthrow the German government calling the it a warning"sign from heaven" of the impending Communist Putsch. With such rhetoric, he persuaded President Paul von Hindenburg to sign the Reichstag Fire decree, which temporarily suspended civil liberties in Germany and allowed the mass arrest of Communists, including its members in parliament. After a snap election, Hitler’s Nazi party had the majority necessary to pass the laws that would make Hitler dictator.
To provide evidence of a Communist plot, German authorities arrested Georgi Dimitrov, a Bulgarian Communist, and Stalin’s chief of covert operations in central Europe. They also arrested two his Communist associates, Vasil Tanev and Blagoi Popov. Together with Van Der Lubbe, they were charged with a conspiracy to overthrow the government. The Show trial ran from September to December 1933, and by almost any measure qualified as the trial of the century. It was presided over by judges fromGermany's highest court. It had Hermann Goring, the creator of Hitler’s Gestapo, and other senior Nazi leaders, as star witnesses, and it was one of the first trials to be broadcast live via radio to the entire world. It began on the morning of September 21, 1933 with the rambling testimony of Van der Lubbe. He admitted setting the fire but claimed he had acted entirely on his own. The prosecution then produced evidence found by firemen, including twenty bundles of inflammable material strategically located in different parts of the Reichstag, that cast doubt on the idea that Van der Lubbe, who was half blind, could himself have placed and rigged all these incendiary devices without help. Next Dimitrov, the operative accused of masterminding the conspiracy, was called to the stand. Though not a lawyer, he acted as his own defense lawyer. He agreed with the prosecutors that the fire had been set by a conspiracy, but, turning the tables on them, he argued that it was a Nazi not a Communist conspiracy, With great dramatic flair, he cross-examined Goring about his role in the investigation and the sequence in which evidence was uncovered. Allowing a worldwide radio audience to hear Stalin’s principal agent brutally interrogate Hitler’s alter ego in a German court room about inconsistencies in the investigation. At one point, he provoked a heated exchanges between himself and Goring on the nature of Communism. Dimitrov’s defense proved so effective that he, as well as his two Communist associates, were acquitted. Hitler and Goring were outraged at the verdict, but the chief judge explained that whereas the court was convinced that the fire resulted from a Communist conspiracy, the prosecutors had failed to prove Dimitrov and his associates was part of it. The only person convicted was the hapless Van der Lubbe, who was beheaded in 1934.
While the Leipzig trial was still under way, a counter-trial was staged in London by Willi M├╝nzenberg, the brilliant propaganda chief for the Stalin-controlled Communist International. The evidence it produced took the form of dramatic revelations from masked men who claimed to be Nazi defectors, including one who identified himself as a former storm trooper and testified that his unit in Berlin had set the fire on direct orders from Goring. Another witness identified Van der Lubbe as the homosexual lover of a top Nazi commander and was used as a fall guy. At the end of the one week counter-trial, Goring was convicted of burning down the Reichstag fire to bring Hitler to power. But though the counter-trial provided much grist for the media mill, it turned out that all its evidence had been faked by M├╝nzenberg’s staff. The masked witnesses were not Nazi defectors but Communist loyalists acting out scripted parts. The "Nazi storm trooper," for example, was played by Albert Norden, the editor of the leading Communist newspaper in Germany. By blending together a cocktail of fact and fiction, the counter-trial served to further pollute the evidentiary waters.
When the Red Army captured Berlin in 1945, it also captured the Gestapo archive. Stalin ordered this trove of documents, including some 50,000 pages of legal proceedings and Gestapo investigations bearing on the Reichstag fire, transported under seal to Moscow. For over three decades, they remained a state secret. Then, after the collapse of the Soviet Union in 1990, part of this archive was opened to researchers. The documents , which presumably had been vetted (and possibly added to) by the KGB, showed no evidence that Stalin or Communist party officials had burnt the Reichstag. They did, however, contain evidence showing that the Nazis had been preparing to arrest Communists before the fire. In addition, there was one intriguing report suggesting that the fire had been set by the Nazis themselves. It described a Berlin prison guard telling police investigators that Adolf Rall, a prisoner arrested for theft, had been overheard bragging to other prisoners that he had been part of a Nazi squad that entered the Reichstag through a tunnel and sprinkled flammable liquid inside the building. German investigators were unable to confirm this story. No record of Rall’s interrogation by the Gestapo was ever found and Rall himself had been murdered on the outskirts of Berlin in November 1933 (while the trial was still in progress). So the lead was a literal dead end. In any case, since both the Gestapo and KGB had custody of an archive, and neither agency was above with tampering with documents, the evidentiary value of the documents is at least questionable.
As a result, little more is known seven decades later about one of the most political explosive crimes of the twentieth century. Indeed, all that is known for certain that the Reichstag was deliberately destroyed. Whether a lone arsonist or a conspiracy, the resulting conflagration forever changed history.

Monday, December 21, 2009

The Anthrax Case Falls Apart

The vast anthrax investigation, code-named Amerithrax, ended as far as the public knew on July 29 2008 with the death of Dr. Bruce Ivins, a microbiologist/wiki/Biodefense at the United States Army Medical Research Institute of Infectious Diseases in Fort Detrick, Maryland, at the nearby Frederick Memorial Hospital. The proximate cause of death was an overdose of the pain-killer Tylenol. No autopsy was performed, and there was no suicide note. Less than a week after his apparent suicide, the FBI declared Dr. Ivins to have been the sole perpetrator of the 2001 Anthrax attacks, and the person who mailed deadly anthrax spores to the NBC, the New York Post, and Senators Tom Daschle and Patrick Leahy accompanied by a photo-copied warning. These attacks killed 5 people, closed down the Senate’s Office Building, caused a national panic, and nearly paralyzed the postal system. The FBI’s 6 year investigation of it was the largest inquest in its history, involving 9000 interviews by its agents, the issuance of 6000 subpoenas, and the examination of tens of thousands of photo-copiers, typewriters, computers, and mail-boxes.
But., as massive as it was, it failed to find a shred of evidence that identified the Anthrax killer– or even a witness to the mailings. With the help of a task force of scientists, it found a flask of anthrax that closely matched through its genetic markers the attack anthrax. This flask had been in the custody of Dr. Ivins, a senior biological warfare researcher, who had published no less than 44 scientific papers over three decades, and who was working on developing vaccines against anthrax. As custodian, he provided samples of it to other scientists at Fort Detrick, the Battelle Memorial Institute, and other facilities involved in Anthrax research. According to the FBI’s reckoning, over 100 scientists had been given access to it. Any of these scientists (or their co-workers) could have stolen a minute quantity of this anthrax and, by mixing it into a media of water and nutrients, used it to grow enough spores to launch the anthrax attacks. Consequently, Dr. Ivins, who was assisting the FBI with its investigation, as well as all the scientists who had access to it, became suspects in the investigation. In what approached an inquisition, they were intensely questioned, given polygraph examinations, and played off against one another in variations of the prisoner’s dilemma game. And their labs, computers, phones, homes, and personal effect were scrutinized for possible clues.
As the Amerithrax proceeded over more than a half a decade, the FBI ran into frustrating dead ends, such as its relentless 5 year pursuit of Steven Hatfill, that ended with his exoneration in 2007 and his receiving a $5.8 million settlement from the US government as compensation for the damage inflicted on him. Another scientist became so stressed by the FBI’s games that he began to drink heavily and died of a heart attack. Eventually, the FBI zeroed-in on Dr. Ivins. Not only did he have access to the anthrax, but FBI agents suspected he had subtly misled them into their Hatfill fiasco. A search of his email turned up pornography and bizarre emails which,, though unrelated to anthrax, suggesting that he was a deeply disturbed individual. As the FBI turned the pressure up on him, isolating him at work, and forcing him to spend what little money he had on lawyers to defend himself. He became increasingly stressed. His therapist reported that Ivins seemed obsessed with the notion of revenge and even homicide. Then came his suicide (which as Eric Nadler and Bob Coen show in their documentary The Anthrax War was one of four suicides among bio-warfare researcher.) Since Dr. Ivins odd behavior closely fit the FBI’s profile of the mad scientist it had been hunting, his suicide provided an opportunity to finally close the case. So it pronounced Dr. Ivins the anthrax killer.
But there was still a vexing problem– Silicon.
Silicon was used in the 1960s to weaponize anthrax. Through an elaborate process, anthrax spores were coated with silicon to preventing them from clinging together so as to create a lethal aerosol. But since weaponization was banned by international treaties, research anthrax no longer contains silicon, and the flask at Fort Detrick contained none. Yet, the anthrax grown from it had silicon, according to the US Armed Forces Institute of Pathology. This silicon explained why when the letters to Senators Patrick Leahy and Tom Daschle were opened, the anthrax vaporized into an aerosol. If so, then somehow silicon was added to the anthrax. But Dr. Ivins, no matter how weird he may have been, had neither the set of skills nor the means to deliberately attach silicon to anthrax spores. At minimum, such a process would require highly-specialized equipment, such as a jet mill, that did not exist in Ivins’ lab– or, for that matter, anywhere at the Fort Detrick facility. As Richard O. Spertzel, a former bio-defense scientist who worked with Ivins, explained, the lab didn’t even deal with anthrax in powdered form, adding "I don't think there's anyone there who would have the foggiest idea how to do it." So while Dr. Ivins’ death provided a convenient fall guy, the silicon content still had somehow to be explained.
The FBI’s answer was that the anthrax contained only traces of silicon and those, it theorized, could have been accidently absorbed by the spores from the water and nutrient in which they were grown. No such nutrients were ever found in Ivins’ lab, nor, for that matter, did anyone ever see Dr. Ivins attempt to produce any unauthorized anthrax (a process which would have involved him using scores of flasks.) But since no one knew what nutrients had been used to grow the attack anthrax, it was at. least possible that they had traces of silicon in them which accidently contaminated the anthrax.
Natural contamination was an elegant theory that ran into problems after Congressman Jerry Nadler pressed FBI Director Robert S. Mueller III in September 2008 to provide the House Judiciary Committee with a missing piece of data: the precise percentage of silicon contained in the anthrax used in the attacks. The answer came seven months later. According to the FBI lab, 1.4% of the powder in the Leahy letter was Silicon. "This is a shockingly high proportion," explained Dr. Stuart Jacobson, an expert in small particle chemistry. "It is a number one would expect from the deliberate weaponization of anthrax, but not from any conceivable accidental contamination." Nevertheless, in an attempt to back up its theory, the FBI contracted scientists at the Lawrence Livermore National Labs in California to conduct experiments in which anthrax is accidently absorbed from a media heavily-laced with silicon. When the results were revealed to the National Academy Of Science in September 2009, they effectively blew the FBI’s theory out of the water. The Livermore scientists had tried 56 times to replicate the high silicon content without any success whatsoever. Even though they added increasingly high amounts of silicon to the media, they never even came close to the 1.4 percent in the attack anthrax. Most results were indeed an order of magnitude lower, with some as low as .001 percent. What these tests inadvertently demonstrated is that the anthrax spores could not have been accidently contaminated by the nutrients in the media. " If there is that much silicon , it had to have been added, " Jeffrey Adamovicz, who supervised Ivins work at Fort Detrick, wrote to me. He added that the silicon signature in the attack anthrax could have been added via a large fermerntor– which Battellle and other labs use" but "we did not use a fermentor to grow anthrax at USAMRIID [and] We did not have the capability to add silicon compounds to anthrax spores."
If Dr. Ivins had neither the equipment or skills to weaponize anthrax with silicon, then some other party, with access to the anthrax, must have done it. Even before these startling results, Senator Leahy had told Mueller , "I do not believe in any way, shape, or manner that [Ivins] is the only person involved in this attack on Congress." So, even though the public believed that the Anthrax case had been closed more in 2008, the FBI investigation was back to square one in late 2009.

Saturday, December 12, 2009

Who Killed God's Banker

On June 11, 1982, Roberto Calvi, the chairman of the Banco Ambrosiano, who had become know as "God’s Banker" because of the investments he made for the Vatican, vanished from Italy with a black briefcase full of documents. One week later, his body was found hanging from an orange noose under Blackfriar's Bridge in London; his feet submerged in the swirling waters of the Thames. His black bag was gone. Also missing was $1.2 billion from bank's subsidiaries in the Bahamas, Nicaragua, Peru, and Luxembourg. And the Vatican was missing one-half billion dollars in loans. How did God’s banker come to be dangling at the end of a rope over the Thames?
When the London river police cut down his body from scaffolding under the bridge on the morning of June 19,1982, they found seven large bricks stuffed in his pockets and grey suit. He did not appear to be the victim of a robbery since he had an expensive Patek Phillippe watch on his wrist and about $14,000 in Swiss francs, British pounds and Italian Lire in his wallet. He also had in his pockets a bogus Italian passport in the name of "Gian Roberto Calvino" (which he had used to get into Britain.)
The autopsy, conducted by Professor Frederick Keith Simpson, one of England's most experienced pathologist, only intensified the mystery. There was no river water in his lungs, so he had not drowned. Instead, the cause of death was asphyxia by hanging. Since his neck had not suffered the kind of injury that would have occurred in a free-fall, Professor Simpson determined that Calvi could not have dropped more than 2 feet before his fall was broken by the water. There was no medical evidence whatsoever of foul play such as marks on the arms to indicate he had been restrained, puncture marks on to indicated he had been injected with a drug and no traces of suspicious chemicals in his stomach of drugs (other than the residue of a sleeping pill he had taken the previous night).
The time of the death added further to the mystery. His Patek Phillippe watch, which was not water-proof, stopped at 1:52. While the watch could have stopped for reasons other than water damage, the water marks on the face of it, when taken together with the dropping level of the tide that night at Blackfriar's Bridge, established the latest time at which his body could have been suspended from the scaffolding. After 2:30 am, the level of the water in the Thames at Blackfriar's bridge would not have been high enough to have reached Calvi's wrist (as was calculated from the length of the rope he was hanging by when he was found), so he must have been hanging before then. But he could not have hung himself before 1 a.m. because the river level then would have been above his mouth and left river water in his body. So, if he committed suicide, it he could only have been between 1:00 and 2:30 a.m.
The coroner's jury in 1982, finding no evidence of murder, concluded that Calvi had hung himself.
But suicide during these hours, if possible at all, would require extraordinary activities from a sixty-two year old man, who was over-weight and suffered from vertigo. Despite the darkness, he would have had to find the scaffolding from the walkway along the river, which, since it was nearly submerged, could be seen only by leaning over the parapet wall at a strategic point. He would also have to have found in the dark the bricks (which were identified as coming from a construction site about a block away) and the rope to hang himself. Next, he would have to had hoisted himself over the parapet on the bridge and climbed twelve feet down a nearly vertical iron ladder to the level of the temporary scaffolding. He then would have to step across the two and one-half feet gap onto the scaffolding's rusty poles, which were arranged like monkey-bars in a children's playground, and edge his way about 8 feet along them to tie the rope to the eyelet. After that, he would to shimmy down to the next level of the scaffolding (otherwise the drop from the higher level would have resulted in far more neck damage than there had been.) Finally, after having put the bricks in his pockets and pants fly, and his head in the noose, he would have had to ease himself into the swirling water three feet below by clutching onto the poles (again, avoiding a free fall).
While such an acrobatic maneuver is possible, it would presumably leave some traces such as rust under his fingernails, splinters or abrasions on his hands, tears in his suit. "The long and short of it is we do not know how Calvi's body got onto the end of that rope," Deputy Superintendent John White explained to me. "We don't even know how he got from his hotel, four and one half miles away, to Blackfriar's Bridge."
Since he was "God’s Banker," and in the headlines of every major newspaper, the British authorities, aided by MI-6, continued to investigate even after the suicide verdict. They established that Calvi had arrived in London on June 15 in a chartered plane under a false name (Calvino) and checked into an inexpensive suite in the Chelsea Cloisters, a second-rate residential hotel. When the police searched it after his death, they found his personal belongings-- including his toilet kit-- neatly packed inside two locked suitcases, as if they were waiting to be picked up by someone, but no other trace of his stay there. No hotel employee recalled seeing Calvi leave. the London police spent months canvassing taxi drivers and other potential witnesses, but they could not find anyone in London who had seen him that night. Nor could they find in London any witness to his activities during the three days he had been in London prior to his death. During these London days, he was, as Superintendent White put it, "the invisible man."
Italian authorities ran into a similar stone wall. His flight from Italy was clearly aided by an elaborate conspiracy. He used three false identities, eight separate private plane flight around Europe, a speed boat, four different cars, and 14 temporary residences in getting to the Chelsea Cloisters, in a convoluted itinerary that took him from Rome to Venice by plane, then to Trieste by car, Yugoslavia by a smuggler’s motor boat, Austria by car. He flew to London in a leased jet, and disguised as a Fiat executive. His facilitators included Flavio Carboni, a Sardinian businessman ( who had received $11 million from Calvi for organizing the escape,) Silvano Vittor, a cigarette smuggler, who served as his bodyguard in London, and two strikingly beautiful Austrian sisters, Manuela and Micheala Klienszig. . When they were later arrested, they all denied seeing Calvi the night he disappeared. So there were no witnesses at all.
Seven years later, Carlo Calvi, Calvi's only son, hired Kroll Associates to re-investigate the case. After locating, authenticating and re-assembling the original scaffolding Calvi had hung from, forensic experts retained by Kroll conducted a simple experiment. They had a stand-in for Calvi— same size and weight— walk the possible routes along the scaffolding poles that Calvi would have to walk if he tied the rope and hung himself. The stand-in wore pairs of Calvi's hand-made loafers that were similar to the one he had on when he was found, After each trial, these shoes were then put in water for the same time Calvi's shoes had been submerged, and then microscopically examined by a forensic chemist, who had worked in the London police laboratory for 18 years. In each case, he found that the soles of the stand-in's shoes had picked up yellow paint smears that matched those on the scaffolding poles. Given the pressure of the shoe on the narrow pole, he concluded such tell-tale traces were "unavoidable." Yet, when he examined the soles of the shoes Calvi had actually worn that day with a microscope, he found no traces of yellow pain on the soles. Since there was no way he could have hung himself except to have walked on the scaffolding, Kroll concluded "Someone else had to have tied him to the scaffolding and killed him."
After the Kroll investigation, The coroner's jury quashed its verdict of suicide and declared it was unable to decide between murder and suicide. So like God’s banker, the question of how he met his end was left dangling.
But how could Calvi have been murdered. He couldn't have been forced, alive, onto the scaffolding, without leaving signs of struggle on his body. Nor could he have been drugged unconscious without the drugs showing up in the autopsy examination. But he could have been strangled somewhere else with a rope– death was by asphyxia not drowning and then transported to the scaffolding. Kroll’s investigators came up with the theory that his dead body was taken to the bridge in a small boat sometime around midnight when the high tide would make it possible to moor the boat to Blackfriar’s Bridge, tie the rope to the scaffold, and unload Calvi’s body. The problem with this murder scenario is that it would be visible to anyone passing by the bridge on either bank– hardly a recipe for a perfect crime– and there were many potential potentials. Yet, neither the police nor Kroll could ever find any witness to such a bizarre scene.
As a result, the case remains unsolved.

Friday, November 27, 2009

Annals of Unsolved Crimes: Who Killed Zia?

On August 17, 1988, at 3:58 PM, Pak One, an American built Hercules C-130b transport plane,
carrying its VIP capsule the President of Pakistan, General Zia-ul-Haq, most of his top generals,as well as two American guests– US Ambassador, Arnold L. Raphel and US military missionhead General Herbert Wassom– crashed to earth only 18 miles from the airport in centralPakistan from where it took off. It had been a. bright clear day, and dozens of eye witnesses could see the giant aircraft lurch up and down three times in the sky, as if were on an invisible roller coaster, and then plunge straight into the desert and explode in a fire ball. All 30 persons on board, including four crew members, were dead. Within hours, army tanks sealed off public building and television stations, signifying the change in power. Zia’s reign, which had begun with his own military coup on July 5, 1977, now had ended with his death. But even though the crash altered the face of politics in Pakistan in a way in which no simple Presidential assassination or coup d'etat could have done, its cause remains a mystery.
Former Prime Minister Benazir Bhutto, whose father he had allowed to be executed (and who
herself was assassinated in 2007,) said in the epilogue to her book, Daughter of Destiny "Zia's
death must have been an act of god". But divine intervention is not what brought the plane
down. According to the 365-page report of the forensic investigation done by six American Air
Force experts, headed by Colonel Daniel E. Sowada, no evidence of a accidental mechanical
failure or pilot error had been found. A conclusion of assassination was all but inescapable.

The aviation investigators, following the precepts of Sherlock Holmes, used on a process of
elimination. First, they ruled out the possibility that the plane had blown up in mid air. If it had exploded in this manner the pieces of the plane, which had different shapes and therefore
resistance to the wind, would have been strewn over a wide area-- but that had not happened. By re-assembling the plane in a giant jigsaw puzzle, and scrutinizing with magnifying glasses the edges of each broken piece, they could established that the plane was in one piece when it had hit the ground. They thus concluded structural failure--ie. The breaking up of the plane-- was not the cause. Next, they eliminated the possibility of a missile attack. If the plane had been hit by a missile, it would have generated intense heat which in turn would have melted the aluminum panels and, as the plane dived, the wind would have left tell-tale streaks in the molten metal. But there were no streaks on the panels. And no missile part or other ordinance had been found in the area.
They further rule out the possibility that there was an inboard fire while the plane was in the air since, if there had been one, the passengers would have breathed in soot before they died. Yet, the single autopsy performed, which was on the American general seated in the VIP capsule, showed there was no soot in his trachea, indicating that he had died before, not after, the fire ignited by the crash.
If it was not a missile or fire, the power might have somehow failed in flight. If this had
happened, the propellers would not have been turning at their full torque when the plane crashed, which would have affected the way their blades had broken off and curled on impact. But by examining the degree of curling on each broken propeller blades, they determined that in fact the engines were running at full speed when the propellers hit the ground.
Had the fuel been sabotaged? They ruled out the possibility of contaminated fuel by taking
samples of the diesel fuel from the refueling truck, and, by analyzing the residues still left in the fuel pumps in the plane, they could also tell that they had been operating normally at the time of the crash. They then ruled out any problem with the electric power on the plane because both electric clocks on board had stopped at the exact moment of impact, which they determined independently other evidence.
The final possibility of mechanical failure was that the controls did not work. But the Hercules
C-130 had not one but three redundant control system. The two sets of hydraulic controls were
backed up, in case of a leak of fluid in both of them, by a mechanical system of cables. If any one of them worked, the pilots would have been able to fly the plane. By comparing the position of the controls with the mechanisms in the hydraulic valves and the stabilizers in the tail of the plane (which are moved through this system when the pilot moves the steering wheel), they established that the control system was working when the plane crashed. This was confirmed by a computer simulation of the flight done by Lockheed, the builder of the C-130. They also ruled out the possibility that the controls had temporarily jammed by a microscopic examination of the mechanical parts to see if there were any signs of jamming or binding.
That left the possibility of pilot error. But the crash had occurred after a routine and safe take
off in perfectly clear daytime weather and the hand-picked pilots were fully experienced with the C-130 and had medical check-ups before the flight. Since the plane was not in any critical phase of flight, such as take off or landing, where poor judgment on the part of the pilots could have resulted in the mishap, the investigators ruled out pilot error as a possible cause. Based on this investigation, Pakistan’s Board of Inquiry concluded that the only other possible cause of the crash of Pak-One was a criminal act “leading to the loss of control of the aircraft." It suggested the pilots must have been incapacitated but this was as far as it could go since there was no black box or cockpit recorder on Pak One and no autopsies had been done on the remains of the pilots.
What had happened to the pilots during the final minutes of the flight? When I went to
Pakistan in February 1989, I attempted to answer that question. There were three other planes in the area tuned to the same frequency for communications– the turbojet carrying General Aslam Beg, the Army’s vice chief of staff, which was waiting on the runway at Bahawalpur airport to take off next; Pak 379, which was the backup C-130 in case anything went wrong to delay Pak One; and a Cessna security plane that took off before Pak One to scout for terrorists. With the assistance of the families of the military leaders killed in the crash, I managed to locate pilots of these planes-- all of whom were well acquainted with the flight crew of Pak One and its procedures-- who could listen to the conversation between Pak One and the control tower in Bahawalpur. They independently described the same sequence of events. First Pak One reported its estimated time of arrival in the capital. Then, when the control tower asked its position, it failed to respond. At the Same Time Pak 379 was trying unsuccessfully to get in touch with Pak One to verify its arrival time. All they heard from Pak One was "stand by" but no message followed. When this silence persisted, the control tower got progressively more frantic in its efforts to contact Zia's pilot, Wing Commander Mash'hood. Three or four minutes passed. Then, faint voice in Pak One called out "Mash'hood, Mash'hood". One of the pilots overhearing this conversation recognized the voice. It was Zia's military secretary, Brigadier Najib Ahmed who apparently, from the weakness of his voice, was in the back of the flight deck (where a door connected to the VIP capsule.) If the radio was switched on and was picking up background sounds, it was the next best thing to a cockpit flight recorder. Under these circumstances, the long silence between "stand bye" and the faint calls to Mash'hood, like the dog that didn't bark, was the relevant fact. Why wouldn't Mash'hood or the three other members of the flight crew spoken if they were in trouble? The pilots aboard the other planes, who were fully familiar Mash'hood, and the procedures he was trained in, explained that if Pak One's crew was conscious and in trouble they would not in any circumstances have remained silent for this period of time. If there had been difficulties with controls, Mash'hood instantly would have given the emergency "may day" signal so help would be dispatched to the scene. Even if he had for some reason chosen not to communicate with the control tower, he would have been heard shouting orders to his crew to prepare for an emergency landing. And if there had been an attempt at a hijacking in the cockpit or scuffle between the pilots, it would also be overheard. In retrospect, the pilots of the other aircraft had only one explanation for the prolonged silence: Mash'hood and the other pilots were unconscious while the thumb switch that operated the microphone had been kept opened by the clenched hand of a pilot..
The account of the eyewitnesses at the crash site dove-tailed with the radio silence. They had
seen the plane slowly pitching up and down. According to a C-130 expert I spoke to at
Lockheed, C-130's characteristically go into a pattern known as a "phugoid" when no pilot is
flying it. First, the unattended plane dives towards the ground, then the mechanism in the tail
automatically over-corrects for this downward motion, causing it to head momentarily upwards. Then, with no one at the controls, it would veer downward. Each swing would become more pronounced until the plane crashed. Analyzing the weight on the plane, and how it had been loaded on, this expert calculated the plane would have made three roller-coaster turns before crashing, which is exactly what the witnesses had been reported. He concluded from this pattern that the pilots had been conscious, they would have corrected the "phugoid"-- at least would have made an effort, which would have been reflected in the settings of the controls. Since this had not happened, he concluded, that they were paralyzed or unconscious
One hypothesis he advanced was that the flight crew might have been incapacitated by an
extremely rapid acting chemical agent, such as "VX" nerve gas. It is odorless, easily
transportable in liquid form, and a soda-sized can full would be enough to causes paralysis and
loss of speech within 30 seconds. Nerve gas would leave behind traces of phosphorous, and, as it turned out, the chemical analyzes of debris from the cockpit showed such traces of phosphorous.
So why were autopsies not performed on the bodies of the flight crew to determine whether a
nerve gas or other toxic agent had paralyzed them? The explanation given in the report was that Islamic law requires burial within 24 hours. But this could not been the real reason since the bodies were not returned to their families for burial until two days after the crash, as relatives confirmed to me. Nor were they ever asked permission for autopsy examinations. And, as I learned from a doctor for the Pakistan Air Force, Islamic law not withstanding, autopsies are routinely done on pilots in cases of air crashes. I was further told by doctors at the military hospital in Bahawalpur that parts of the victims' bodies had been brought there in plastic body bags from the crash site on the night of August 17, and stored there, so that autopsies could be performed by team of American and Pakistani pathologists. But before the pathologists had arrived, the hospital received orders to return these plastic bags to the coffins for burial.
These orders to literally bury the evidence came directly from the Army which was now
under the authority of General Beg, who, after having his turbojet pilot circle over the burning
wreckage of Pak One, few immediately back to the capital, Islamabad, to assume command.
For its part, Pakistani military authorities concentrated their investigation on the possibility
that Shi'ite fanatics were responsible for the crash. The co-pilot of Pak One, Wing Commander
Sajid, was a shi'ite (as are more than ten per cent of Pakistan's Moslems), as was one of the
pilots of the back-up C-130. This pilot, though he protested his innocence, was kept in custody
for more than two months and roughly interrogated about whether Wing Commander Sajid had discussed a suicide mission. Finally, the army abandoned this effort after the Air Force
demonstrated that it would have been physically impossible for the co-pilot alone to have caused a C-130 to crash in the way it did.
The government then appointed a commission headed by Justice Shafiur Rehman, a wellrespected judge on the Supreme Court, to establish the cause of the crash. Five years later, in 1993, it issued a secret report concluding that the Army's had so effectively obstructed the
investigation that the perpetrators behind the crash could not be brought to justice. The one
uncounted casualty of Pak One was thus the truth

Friday, November 20, 2009

The Enduring Mystery of Lee Harvey Oswald

The endless tangle of questions about bullets, trajectories, wounds, time sequences and inconsistent testimony that has surrounded the assassination of President John F. Kennedy in 1963 and has obsessively fascinated, if not entirely blinded, two generations of self-styled assassination investigators, probably never will be satisfactorily resolved. Each new release of documents from the various bureaucracies involved in the nearly half century old investigation may only deepen the apparent contradictions.
Within this morass of facts. however, there is a central actor, Lee Harvey Oswald. His rifle, which fired the fatal bullet into the president, was found in the sniper's nest at the Texas Book Depository. So was his palm print. He had also bought the ammunition. His cartridge cases were found near the body of a murdered policeman on the route of his flight.
In light of such evidence, the issue that ought to have concerned Americans was not Oswald's technical guilt but whether he was involved with others in the assassination. Oswald was not a "loner- in the conventional sense. Ever since he was handed a pamphlet about the Rosenberg prosecution at the age of 15, he was a joiner, seeking affiliations with groups at home and abroad. When he was only 16. he wrote the Socialist Party "I am a Marxist and have been studying Socialist Principles for well over five years" and he requested information about joining their "Youth League. He subsequently made membership inquiries to such organizations as the Socialist Workers Party, the Socialist Labor Party, The Gus Hall-Benjamin Davis Defense Committee, The Fair Play for Cuba Committee and the Communist Party, USA— correspondence that brought him under surveillance by the FBI.
Oswald also joined the Marine Corps. And after a two-year stint as a radar operator, Oswald sought still another affiliation: in October 1959 he became the first Marine to defect to the Soviet Union. In Moscow, he delivered a letter stating. "I affirm that my allegiance is to the Union of Soviet Socialist Republics." Not only did he renounce his American citizenship but he told the U.S. consul that he intended to turn over to the Soviet Union military secrets that he had acquired while serving in the Marines, adding that he had data of "special interest" to the Russians. Since he indeed had exposure to military secrets such as the U-2 spy plane, his defection had serious espionage implications. Oswald thus had not only compromised the secret data he had come in contact with in the Marines, but put himself firmly in the hands of another country. He was now completely dependent on Russia for financial support, legal status and protection.
Before disappearing into the Soviet hinterland for a year, Oswald spelled out his operational creed in a long letter to his brother. From Moscow, he wrote presciently of his willingness to commit murder for a political cause: "I want you to understand what I say now, I do not say lightly, or unknowingly, since I've been in the military .... In the event of war I would kill any American who put a uniform on in defense of the American Government --", and then ominously added for emphasis, "Any American." His willingness to act as an assassin was now known to anyone who read this letter, which included not only his Russian hosts but American intelligence, since his letter was intercepted by the CIA and microfilmed.
Oswald returned from the Soviet Union in June 1962, joined by his Russian wife Marina, and settled in Dallas. He then acquired the means for killing. He purchased a rifle with telescopic sights and a revolver from a mail-order house under a false name. He also lectured a small circle of friends on the need for violent action rather than mere words. His particular focus was General Edwin A. Walker, an extreme conservative, who had been active in Dallas organizing anti-Castro guerrillas. For example, he suggested to a German geologist, Volkmar Schmidt that General Walker should be treated like a "murderer at large". He did not stop at fierce words. For weeks, he methodically stalked Walker's movements, photographing his residence from several angles. He then had his wife photograph him, dressed entirely in black, with his revolver strapped on a holster on his hip, his sniper's rifle in his right hand, and two newspapers, The Worker and The Militant, in his left hand. He made three copies of the photograph-- one of which he inscribed, dated "5--IV-63" and sent to a Dallas acquaintance, George De Mohrenschildt (who had also seen his rifle). He then left with his rifle wrapped in a raincoat, telling his wife he was off to "target practice", but his target, General Walker, was out of town that night. Five nights later, Oswald returned to Walker's house, and fired a shot at him that missed his head by inches, demonstrating to those that saw the photograph that he had the willingness to kill.
After the failed assassination, another friend, Ruth Paine, drove Oswald and his family to New Orleans, where he became the organizer for the Fair Play for Cuba Committee, which opposed the efforts of the Kennedy administration to overthrow Castro. . Aside from printing leaflets, staging demonstrations, getting arrested and appearing on local radio talk shows in support of Castro that summer, Oswald attempted to befriend leaders of and infiltrate anti-Castro groups that were organizing sabotage raids against Cuba. By this time, he apparently considered himself a sleeper operative, writing in August 1963 to the central committee of the Communist Party USA, and asking "Whether in your opinion, I can compete with anti-progressive forces above ground, or whether I should always remain in the background, i.e. underground." During this hot summer, while practicing sighting his rifle in his backyard, according to his wife, he told her about his plan to hijack an airliner to Cuba, saying he might earn a position in Castro's government. Then, on September 9th, in a report that appeared on the front page of the New Orleans Times-Picayune, Castro, who had been the target of a number of assassination attempts by the CIA, warned that if American leaders continued "aiding plans to eliminate Cuban leaders ... they themselves will not be safe".
The implication of this warning was not lost on Oswald. Telling his wife that they might never meet again, he left New Orleans two weeks later headed for the Cuban Embassy in Mexico City. To convince the Cubans of his bona fides-- and seriousness-- he had prepared a dossier on himself, which included a 10 page resume, outlining his revolutionary activities, newspaper clippings about his defection to the Soviet Union, documents he had stolen from a printing company engaged in classified map reproduction for the US Army, his correspondence with the Fair Play for Cuba Committee executives, and, as if to demonstrate his lethal capability , the photographs linking him to the Walker shooting.
Oswald applied for a visa at the Cuban Embassy on the morning of September 27th 1963. He said that he wanted to stop in Havana en route to the Soviet Union. On the application the consular office who interviewed him, noted: "The applicant states that he is a member of the American Communist Party and Secretary in New Orleans of the Fair Play for Cuba Committee." Despite such recommendations, Oswald was told that he needed a Soviet visa before the Cuban visa could be issued. He argued over this requisite with the Cuban counsel, Eusebio Azque, in front of witnesses, and reportedly made wild claims about services he might perform for the Cuban cause. During the next five days, he traveled back and forth between the Soviet and Cuban embassies attempting to straighten out the difficulty. When he telephoned from the Cuban embassy to arrange an appointment at the Soviet Embassy with an officer called Valery Vladimirovich Kostikov, he set off alarm bells at the CIA, which had been surreptitiously monitoring the phone line. Kostikov was a KGB officer who had been under close surveillance in Mexico by the FBI. By the time the CIA had identified Oswald, and notified the FBI, he had left Mexico.
When he returned to Dallas, Oswald assumed a different identity--"O.H.Lee-- and, separating himself from his family, he moved to a rooming house. He also forbade his wife from divulging his whereabouts.
On October 18th, Oswald's visa was approved by the Cuban Foreign Ministry despite the fact that he had not officially received a Soviet visa, as required. Apparently unaware of this development, he wrote another letter to the Soviet Embassy, referring to his meeting with Kostikov in Mexico, and adding cryptically: "Had I been able to reach the Soviet Embassy in Havana as planned, the embassy there would have had time to complete our business." When FBI counterintelligence intercepted this letter in Washington. it urgently requested its field agent in Dallas to question him.
The FBI agent, James Hosty, unable to locate Oswald, warned his wife she could be sent back to Russia. When his wife told him about the FBI warning he threatened to bomb its Dallas office. By this time, Oswald had a menial $1.50 hour job at the Texas Book Depository, which overlooked the convergence of the three main streets into central Dallas.
On November 22nd, at 12:30 PM, as the President’s car passed the book depository, a burst of rifle fire fatally wounded him. Less than two hours later, a Dallas policeman had been shot and killed, and, near the shooting, Oswald was arrested with the murder weapon in his hand. He was charged with killing the policeman and, shortly afterwards, assassinating the President. Then, on November 24th, Oswald was shot to death in Dallas police headquarters by night club owner Jack Ruby.
The Warren Commission concluded– rightly I now believe– that Oswald fired all the shots that killed the President. But conspiracies do not necessarily require multiple rifleman to accomplish their purpose. And what the Warren Commission could not absolutely rule out, as two of its members pointed out to me, was the possibility that Oswald had acted at the behest of others. After all, he had advertised his willingness to undertake a high-profile assassination by circulating photographs connecting himself to the shooting of General Walker. Any party who was monitoring his activities in Dallas, New Orleans or Mexico City could have discerned from them that he was a potential assassin awaiting a mission. With his mind set on such violent actions as hijacking a plane, blowing up the FBI office, or killing "any American," not much would be required to prod him to violence. He had sought liaisons in dangerous quarters and someone could have provided him with an inducement. But with Oswald forever silenced by Ruby, and intelligence services capable of expunging embarrassing data about their contacts with a Presidential assassins from their files, it is doubtful that we will ever know who, if anyone, influenced Oswald to act on November 22nd 1963.

Saturday, November 14, 2009

The Case Of The Radioactive Corpse

November 23rd is the third anniversary of the radiation death in London of the former KGB officer Alexander Litvinenko. By now, most, if not all, the crucial evidence in the case has either vanished or been suppressed. The radioactive isotope to which he was exposed was an extremely exotic isotope that has only a brief half- life of 138.4 days. After nine half-lives, over 99 percent of it is gone. Traces of other isotopes made with the Polonium 210, and which could have possibly identified the nuclear reactor that produce it, and which have even briefer half-lives, no longer exist in identifiable quantities. So there is no longer a radioactive trail, if indeed there ever was one.
Even before the disappearance of the Polonium 210, the crime scenes in London had been too badly compromised to determine any clear chronology of the contamination. Police did not initially seal off the places where Litvinenko and his associates visited because they did not know that they were dealing with a radioactive poison. It took the hospital over two weeks to correctly identify the Polonium 210 and, during this time, the sites were scrubbed clean and walked through. So, several weeks later, different radiation levels at these sites could be due to nothing more than cleaning or traffic. Nor was the container ever found in which the Polonium 210 was transported or were there any witnesses to its existence. Consequently, the only evidence as to where, when and how Litvinenko was exposed to Polonium 210 comes from the autopsy performed on his radioactive body which was done on December 1, 2006 at the Royal London Hospital. But the pathologists’ findings– as well as the autopsy slides, autoradiography films, and toxicology report– have been kept secret from not only the public and Litvinenko’s family members, but from Britain’s partner in the joint-investigation, Russia.
When I asked a former top official of Scotland Yard about the autopsy, he told me authoritatively that "there is good reason for its secrecy." He then added that there was one leak that "caused a near panic at the Crown Prosecutors office" because it was "accurate."
The leak he referred came from Scotland Yard and was published on January 7, 2007 in the London Telegraph. It revealed that Litvinenko’s "post-mortem examination revealed two ’spikes’ of radiation poisoning," meaning that Litvinenko was exposed to Polonium 210 on at least two different occasions. This finding alone, if accurate, undermines the initial hypothesis of investigators that Litvinenko had been poisoned only once: in the Pine Bar of the Millennium Hotel on November 1st, 2006. If Litvinenko had multiple encounters with the same Polonium 210, it would require a different explanation. Had Litvinenko wittingly or unwittingly been in possession of a vial of the Polonium 210 that leaked on him twice? Did a poisoner administered Polonium 210 to him on two different occasions? Or was there some other way to account for his multiple exposures? But even though this finding made the case much murkier, Scotland Yard already had a prime suspect, Andrei Lugovoi, a former Russian intelligence officer, who had been with Litvinenko in the Pine Bar just hours before he fell ill.
The Suspect
Lugovoi, a 42 year old Russian businessman, had tested positive for Polonium 210, as did his hotel rooms. He also admitted that he had met with Litvinenko both on November 1st and in mid October. So he had opportunity. Even though he denied any part in Litvinenko’s death, or any knowledge about the Polonium 210, to British detectives in Moscow, Britain’s crown prosecutors decided he should stand trial in London and they requested his extradition. Since Britain had no extradition treaty with Russia, and the Russian Constitution prohibits the extradition of its citizens, Russia rejected the request. Britain then retaliated by expelling Russian diplomats and effectively ending the Russian involvement in the joint investigation.
When I went to Moscow that December to interview the Russian investigators, and examine the evidence the British had furnished for its extradition request, the Russian inquiry was at a complete standstill. The special prosecutor said that without access to the pathology reports, or being allowed to talk to Litvinenko’s doctors, it was not possible even to establish "the cause of death of Litvinenko" or that culpability of anyone, including Lugovoi.
I next went to see Lugovoi, who just had been elected to the Russian Dumas. Since as a member of the Dumas he was invulnerable to prosecution, I found him eager to discuss his relationship with Litvinenko. They both had been intelligence officers in the 1990s, but then Lugovoi had become a supporter of Putin while Litvinenko had done everything he could to discredit him, So how did they come together? Lugovoi answered in a single word: "Berezovsky."
Boris Abramovich Berezovsky, a billionaire now living in London, had been the single most powerful oligarch in Russia in the 1990s. He not only controlled whole sectors of the Russian economy, and the country's largest television channel, but he was part of the Kremlin apparatus, serving as the deputy secretary of its National Security Council. Both Litvinenko and Lugovoi acted a his protectors in the FSB, which was the successor agency to the KGB. Litvinenko was deputy head of its organized crime unit, while Lugovoi was in the 9th Directorate, which was responsible for guarding top Kremlin officials, including Berezovsky, before becoming head of security at Berezovsky’s television channel. They both also performed extraordinary services for Berezovsky. Litvinenko saved Berezovsky when, with a gun in one hand and his FSB credentials in the other, he prevented Moscow police from arresting him on a murder charge. He then ended his own career in the FSB by exposing a FSB faction’s alleged plan to assassinate Berezovsky. As a consequence, Litvinenko was imprisoned. Lugovoi meanwhile helped Berezovsky’s partner break out of a Moscow prison–an act for which he served prison time. During this tumult, Berezovsky moved to London and became Putin’s arch foe. He repaid Litvinenko by helping him to escape to England in November 2000, where he financially supported him and his investigations for the next six years. How did he repay Lugovoi?, I asked. Lugovoi answered with a wry smile, by "bringing me to Litvinenko."
The reunion came in January 2006 in London. Berezovsky had rented Blenheim Palace– the birthplace of Winston Churchill– to give himself a lavish 60th birthday party. There were some 300 guests in formal attire and, in the center of the room, a giant ice sculpture representing St. Basil's Cathedral on Red Square covered with Caspian caviar. Berezovsky’s seating plan placed Lugovoi at a small table with three men: On his right was Litvinenko, who now engaged in conducting investigations into Russian atrocities in Chechnya. Across from him was Akhmed Zakayev, the exiled leader of the Chechen resistence who headed the Committee on Russian War Crimes in Chechnya. On his left was Alexander Goldfarb, who ran Berezovsky’s foundation which help support both Litvinenko’s and Zakayev’s activities. These men at the table would be among the last to see Litvineko before his death ten months later. Lugovoi would meet with him in the Pine Bar at 5 pm on November 1st. Zakayev then would drive Litvinenko from the Pine Bar to Berezovsky’s office (and the next day to the hospital). At the hospital, Goldfarb would write Litvinenko’s dramatic death bed statement accusing Putin of assassinating him.
But that evening, as Lugovoi recalls it, there was nothing but good cheer and celebration toasts. There also emerged a joint venture between him and Litvinenko. The idea, according to Lugovoi, was to use his connections in Moscow to gather "business data" that Litvinenko could sell to London clients, including Berezovsky.
As this project developed, much of the "business data" concerned individuals connected in one way or another with the Russian energy giant Yukos Oil. Yukos was no ordinary oil company: With tens of billions of dollars stashed away in accounts in Cyprus, Gibraltar and other offshore havens, it had become by the early 2000s a virtual counter-state to the government. In the battle that ensued between it and the government, it was charged with tax fraud and, through enormous fines, its assets in Russia were effectively expropriated. The two principal owners of its holding company were Mikhail Khodorkovsky, who was imprisoned in Siberia. And Leonid Nevzlin, who fled to Israel. In Tel Aviv, Nevzlin set up a private intelligence company, ISC Global, with divisions in London and Tel Aviv, to gather information that would help him fight Russian efforts to get Yukos’ offshore accounts. After a re-organization in 2005, the London branch, changed its name to RISC Management, Ltd. Shortly thereafter it called in Lugovoi and Litvinenko, and according to Lugovoi, retained them on behalf of its anonymous client to gather information in Moscow. Initially, it asked for relatively innocuous reports, such as one entitled, "Main characteristics of Russian Organized Crime in 2003-2005." But soon it was asking for more sensitive data, including government files on corrupt Russian tax officials. When Lugovoi resisted these requests, Litvinenko suggested that he might have a "problem" renewing his British visa, and then his visa was indeed held up. When he agreed to cooperate, his visa was instantly renewed. Lugovoi also got $8,000 wired into his bank account.
Then, in September 2006, Litvineko made a trip to Tel Aviv to meet personally with Nevzlin and to personally hand=deliver "The Yukos file." Nevzlin admits receiving the dossier from Litvinenko, but said it was unsolicited. After Litvinenko returned from Israel. Lugovoi says he found him increasingly on edge. On October 27th, after Lugovoi was summoned to London by Berezovsky, Litvinenko retrieved the cell phone he had been using for RISC business, and removed the SIM card, which contained a digital trail of his contacts. When he next saw Litvinenko on November 1st at the Pine Bar to discuss their planned meeting the next day at RISC, he seemed even edgier. Then the next day Litvinenko called to say he was sick and cancelled the meeting. Lugovoi returned to Moscow, and 2 weeks later, learned that Litvinenko was dying and that he was contaminated with the radioactive isotope.
When I asked Lugovoi who was providing the expenses for his trips to London, he said Litvinenko gave it to him in cash but it obvious to him that Litvinenko himself did not have the resources to finance him, Clearly there was a missing element. Was the elephant in the room Berezovsky?
After all, Berezovsky not only had been financing Litvinenko even since he had defected to London, he owned the house in which he lived and the office which he used (both of which had been contaminated by Polonium 210). Lugovoi had also seen him at the RISC office on one occasion. Berezovsky also shared a common interest with the former owners of Yukos in opposing Putin’s efforts to seize offshore accounts and in blocking Russian extradition requests for both him and Nevzlin. Berezovsky was the only person, other than Litvinenko, to call Lugovoi on the cell phone reserved for RISC activities . So he could hardly have been unaware of Litvinenko’s and Lugovoi’s information-gathering business.
The Compramat game
For a further insight into this business, I went to the person who accompanied Lugovoi to London for two meeting, Dmitry Kovtun, a compact man in his mid forties who had served in a Soviet Army intelligence unit in Germany. After leaving the military, he became a consultant first in Germany and then in Russia attempting to broker energy deals. I him at the Porto Atrium, a restaurant on the Leninsky Prospect know for its extensive wine cellar. He explained that Lugovoi, who had been his close friend since childhood, had proposed he go to London with him on October 16th 2006 to find new consulting work. Lugovoi’s contact there turned out to be Litvinenko, who spent most of his next two days with them. He recalled that Litvinenko first took them to a building owned by Berezovsky in Mayfair for a meeting with a security company before going to another one at RISC. That evening Litvineko invited them to a trendy Moroccan restaurant for dinner and then escorted them to various night spots, including a lap dancing club called Hey Jo His next encounter with Litvinenko came 2 weeks later. He had gone to Hamburg to renew his German residency permit when Lugovoi invited him to come to London for a major soccer match (for which Berezovsky was providing tickets.) When he arrived on November 1st, he went to the Millennium hotel, where Lugovoi was staying with his family, and met him at hotel’s Pine Bar. Then they were joined by Litvinenko for a pre-game drink. That was his last contact with Litvinenko.
After he returned to Moscow, he tested positive for Polonium 210. So did the visa form he had signed in Hamburg on October 29th, the London nightclubs they visited on October 16th and 17th, and his room at the Great Western Hotel where he stayed on October 16th. But the Transaero plane on which he arrived in London on the morning of October 16th had no traces of Polonium 210. So he deduced he must have been exposed on the 16th and then left a radioactive trail in London and Hamburg. (German prosecutors concluded in November 2009 that the Polonium 210 traces in Hamburg did not constitute enough evidence to continue their investigation of Kovtun.)
When I pressed him about what had happened at the meetings, he said they seemed like just "courtesy meetings" through which Litvinenko could show that he had contacts in Moscow. After leaving RISC, however, Litvinenko made an extraordinary proposal to Kovtun. He said that a number of Russian billionaires had established residence in Spain. He suggested that he and Lugovoi should work with him in Spain to "solve problems" for these Russian expatriates. When Kovtun asked,"What kind of problems?", Litvinenko laughed "Don’t worry. We’ll provide their problems and then fix them." It became clear to him that the "game" that Litvinenko was proposing was dealing in "compramat," or compromising information.
The Italian Job
Litvinenko’s game may have involved more than merely unearthing existing Compramat. Consider, for example, his collaboration with Mario Scaramella, who was the third of Litvinenko’s associates contaminated with Polonium 210, Scaramella, a lawyer and self-styled nuclear waste investigator, had met Litvinenko while working for a highly-controversial Italian Parliamentary Committee attempting (without success) to uncover putative KGB penetrations in Italy. Scaramella also believed that their was a "Red Mafia" of ex-KGB men who smuggled arms, including nuclear components, from eastern Europe. So Litvinenko, who had himself monitored organized crime in the KGB, helped Scaramella organize operation to entrap them. One of their targets was an ex-KGB agent living in Naples. To compromise him, they arranged for a box of contraband Russian rocket grenades to be delivered to him, and then tipped-off the Naples police that he was planning to use them to assassinate someone. He was duly arrested but then the scheme backfired because Scaramella and Litvinenko’s plotting was overhead by SISMI, the Italian intelligence agency, which was tapping Scaramella’s phone. So the ex-KGB man was released from custody and other information Scaramella had provided police came under scrutiny, including his tip that led police to a suitcase containing enriched uranium rods that supposedly belonged to other "Red Mafia"agents trafficking. in nuclear component. By the time, Scaramella flew to London on November 1st 2006 to meet Litvinenko at the Itsu Sushi restaurant, Italian authorities were preparing to criminally charge Scaramella with planting false evidence as part of a compramat plot. And when Scaramella was released from the London hospital where he tested positive for Polonium 210, he was imprisoned in Naples on charges of calumny and arms smuggling. (He is currently under house arrest awaiting trial scheduled for May 2010.)
Whatever their merit or legality, Litvinenko was involved in covert activities that went beyond those ordinarily engaged in by a political dissident. But were they related to the Polonium 210 that caused his death?
The Importance Of Polonium
Polonium 210 is tightly controlled by the International Atomic Energy Agency (IAEA) for a singular reason: it can be used trigger an early-stage nuclear bomb. The United States and Russia both used Polonium 210 in their early weapons before moving on to more sophisticated (and stable) triggers. Almost every country secretly attempting to build nuclear weapons, including Israel, South Africa, Iraq and North Korea, have also experimented with Polonium 210. Consequently, its detection anywhere outside a known nuclear facility is considered, as noted in a US intelligence report, "a key indication of a nuclear weapons program in its early stages."
The small quantity of Polonium 210 found in London could have been made in any country that has an uninspected nuclear reactor– a list in 2006 that included Russia. Britain, China, France, India, Israel, Pakistan and North Korea (which manufactured a substantial quantity for its October 2006 nuclear tests. It also could have been stolen from stockpiles in the former Soviet Union or America, where, according to the International Atomic Energy Agency’s Illicit Trafficking Data Base, there had been 14 incidents of missing industrial Polonium-210 since 2004.
Wherever it originated, we know that it was smuggled into London and that it contaminated at least four men– Litvineko, Lugovoi, Kovtun and Scaramella– as well as offices, restaurants, and automobiles. The possible time it arrived could be narrowed down by the autopsy report, which remains, even 3 years after Litvinenko’s death, a state secret. Beyond that evidence, there is only conjecture. What remains unanswered is the crucial question: why was a component for an early stage nuclear bomb was brought to London in 2006.

Wednesday, October 28, 2009

Death Of A Witness

On Sunday, October 25th 2009, Jeffry Picower drowned in the swimming pool of his Palm Beach mansion, the victim of an apparent heart attack. His untimely death left in limbo, if not totally silenced, crucial questions about the role he played in what may be the greatest disappearance act in the annals of financial history. Picower was the main (though not the only) conduit through which most of the stolen money in the Madoff Ponzi scheme was systematically siphoned out of the accounts of other investors. As Irving Picard, the court-appointed Trustee, notes in complaint, Picower got "either directly or through the entities he controlled, more than $7.2 billion of other investors’ money." He did not get this money by his good luck, fortunate timing, or random chance. He made regular quarterly withdrawals of the putative profits credited to his accounts. Nor did his profits proceed from his acumen at picking stocks since, as we know by now, all the profits Madoff reported were the result of his invention, not his trading. Picower, a long time associate of Madoff’s, had special access to Madoff’s operation. According to the Trustee’s complaint, he must have been aware that what was going on was highly-irregular since his accounts reported "profitable trading before they were opened or funded; execution of trading instructions that hadn’t yet been given; inexplicable changes in account positions; and – at Picower’s direction – the accomplishment of investment results over time periods that already had expired." In other words, his trades were invented afterwards and back-dated. Unlike other investors, he was advised in advance of Madoff’s monthly profit "targets," or the amounts with which Madoff planned to pad Picower’s accounts, and, through this knowledge, he or his assistant could request higher or lower "profits" for various accounts. Moreover, to amplify Picower’s fictional profits, Madoff extended him so much fictional credit that his accounts had, as the Trustee reports, a "negative net cash balance of approximately $6 billion at the time of Madoff’s arrest." Picower even collaborated in his spectacular, if fictitious, trading success by, as the Trustee notes in the complaint, as he had " specifically directed such fictitious activity." For example, at one point, he faxed Madoff back-dated letters to support fabricated trades. In some of the faked trades, Picower’s reported "profit"s ran as high as 550% . As a result, the Picower was able to withdraw over $2.4 billion just between 2002 and 2008.
Why were such staggering notional profits systematically credited to the Picower accounts? Unless Madoff was channeling a large part of the money he stole to Picower for reasons of friendship or charity, the multi-billion dollar skim must have been part of the scheme itself. If so, was Picower following Madoff’s instructions in re-depositing the $7.2 billion he withdrew? And, if this was part of the exit strategy– and all Ponzi schemes need an exit strategy-- where is that money today? Unfortunately, the answer to these crucial question may have died in the drowning pool along with Picower.

Saturday, October 17, 2009

A Nobel Perspective

President Obama’s Nobel Peace Prize has sparked an understandable range of reactions, from surprise and outrage to apologetics for the Nobel Committee’s decision to honor him so prematurely. It’s worth remembering that nominations for the Peace Prize must be received by February 1 of each year, meaning that Obama was nominated less than two weeks after becoming president.
Then again, getting nominated is not difficult. Nominations can be made by, among others, any members of national assemblies and governments; judges on the Inter-Parliamentary Union Permanent Court of Arbitration, the International Court of Justice, or the International Court of Justice; or university professors of history, political science, philosophy, law, or theology. This year saw a record 205 nominations. Unlike the Academy Awards, the Nobel Committee keeps the full list of nominations secret for several years. It was revealed well after the fact, for example, that Hitler, Stalin, and Mussolini received nominations—though in Hitler’s case, before he decided to invade Norway.
Perhaps that’s not so ironic when one recalls that Alfred Nobel was an arms dealer and dynamite inventor. But he specified in his will in 1895 that a five-person Nobel Committee elected by the Norwegian Parliament should award the Peace Prize to “the person who shall have done the most or the best work for fraternity between nations, for the abolition or reduction of standing armies and for the holding and promotion of peace congresses.” Nominations are considered at a meeting attended by permanent advisers to the Nobel Institute, which consists of the Institute’s director and research director and a small number of Norwegian academics with expertise in subject areas relating to the prize. Some nominees have even campaigned for the award during this evaluation period. Oil magnate Armand Hammer spent an estimated $5 million in 1989, for instance, trying to sway the Norwegians’ decision. He made it to the short list, but lost out to the 14th Dalai Lama.
The five-person committee selects the laureate in October. The prize is presented annually in Oslo, in the presence of the king, on December 10, the anniversary of Nobel’s death. In 2009, four out of the five key deciders were women. Though the committee seeks a unanimous decision, the winner may receive a simple majority of three votes.
So considering the Nobel Committee’s inner workings and its history, President Obama’s award is perhaps not so surprising after all.

Thursday, October 01, 2009

Mystery Of The Arctic Sea

The surfeit of imaginative speculation in the world press about the disappearance and reappearance in the Atlantic of a Maltese cargo ship named the "Arctic Sea," includes even a scenario in The Harvard Crimson – taken no less from a video game– in which a team of masked Israeli Commandos drop out of the sky from a helicopter onto the Arctic Sea, "subdue the crew and remove weapons unlisted on the ship’s manifest." Eye-popping headlines such as "Was Russia's 'Hijacked' Ship Carrying Missiles to the Mideast?" (Time Magazine), "Arctic Sea ghost ship 'was carrying weapons to Iran'" (Daily Telegraph) and "Missing channel pirate ship carried Russian arms for Iran"(Times Of London) floated through the media world but no one could be found who actually claimed to have seen a cargo of missiles or other arms aboard the so-called "ghost ship." Nor was there a scintilla of evidence that it was headed to Iran. What is known to date is that the Arctic Sea is far more prosaic. It is registered in Malta and owned and managed by two Finnish corporations, Arctic Sea Ltd and Solchart Management Ab, which in turn are owned and controlled by Victor Matveev, a Russian citizen. and is manned by a Russian crew. Its last voyage began uneventfully on July 23, 2009, in Jakobstad, Finland. After a routine inspection by Finnish authorities for contraband, it left with a timber cargo on a 2 week trip to Algeria. Its route would take it through the English Channel to the Atlantic and then, via the narrow strait of Gibraltar to the Algerian port of Bejaia, in the Mediterranean. For the first week of the voyage, the ship’s Automatic Identification System sent out signals indicating that it was on its prescribed course. All appeared normal when it made radio contact with British authorities on July 28th as it passed into the Atlantic. But on July 30, its Automatic Identification System stopped sending out its position and the Arctic Sea did not go through the strait of Gibraltar. On August 3rd, Renaissance Insurance Group, the ship’s insurer in Moscow, received an phone call demanding a ransom of 1.5 million Euros.
Meanwhile, Israel got into the act. According to a highly-reliable source close to Mossad, Israel informed Moscow through intelligence channels that it suspected the Arctic Sea was carrying a hidden cargo of missiles and was on a course that could take it to Iran. This warning helped galvanize the Russians into action. The Russian Defense Ministry, after determining that the ship was in the sea lanes off Africa, dispatched the frigate Ladny to pursue it. On August 17th, after finding the Arctic Sea in the Cape Verde Islands, Russian troops boarded it and arrested 8 Russian non-crew members from Estonia and Latvia– six of whom had served time in prison. According to crew members, this gang had hijacked the ship only a day after it left Finland, having allegedly arrived an inflatable motor launch early in the mourning of July 24th. After diverting the ship from its course, the hijackers painted a new name on the ship, "Jon Jin 2" in an apparent attempt to disguise it. According to Russian defense ministry, the subsequent search of the ship did not find missiles or other contraband. In addition, a crew member interviewed by the New York Times confirmed that "There was only lumber on board." He said "I was personally in all areas and in the ballast tanks. There was nothing else in there. I can say this with 100 percent certainty."
If so, why was Israel concerned that the ship might be carrying a secret arms cargo? Such suspicion could well have been triggered by the motor launch that the Russians found concealed under a pile of timber on deck. Presumably, the hijackers planned this vessel for they get away, but such a partially camouflaged object with its pontoons could have be misinterpreted by aerial surveillance as a hidden arms cargo.
The Russian search also found an intriguing discrepancy in the cargo. According to the Russian news service RIA Novosti, the Russians discovered that instead of the 6,000 tons of relatively-valuable hardwood listed on the ship’s manifest there was cheap pine timber. If so, it raises the question: why would a cheap cargo be substituted for an expensive one– unless it was not intended to reach the buyer in Algeria..
A key piece of the puzzle may be the ransom demand the insurer received on August 3rd. Modern pirates typically hijack a ship not for its cargo but to extort a ransom or other payment from its insurer, and the Arctic Sea was heavily insured. According to the security chief of its insurer, Renaissance Insurance Group, the anonymous caller claiming to represent the hijackers threatened to scuttle the ship unless the company paid the 1.5 million Euros. But the caller provided no instructions for paying this money, so apparently the purpose of this call was merely to establish to the insurer that this missing ship was in imminent danger of being sunk. If not for the misguided intelligence about missiles that set off an international search for it, the Arctic Sea might have been quietly disappeared in the Cape Verde Islands, making the insurer liable for insured value of the lost ship and cargo. I
The Russian investigation headed by the celebrated deputy chief prosecutor Alexander Bastrykin is now reportedly examining such issues as to whether the ransom demand was actually made by the captured hijackers, whether there was any complicity by any crew members, and whether there is any connection between this incident and the loss of the Arctic Sea’s sister ship, the MV Teklivka which capsized off Egypt in 2006. Since Bastrykin is now interrogating all the parties involved, the answer may prove less elusive than the missing ship– or its cargo.

Wednesday, August 26, 2009

The Madoff Exception

On September 4th, 2009, the Securities and Exchange Commission’s Inspector General revealed that Wall Street’s watchdog agency failed to adequately investigate six "detailed and substantive complaints" that, if properly pursued, could have exposed Bernard Madoff’s massive Ponzi scheme. The real issue is why the SEC did not pursue these leads?
Clearly Madoff had enormous influence at the SEC. Since the 1980s, he had served on its advisory panels and was constantly consulted by its top officials on issues such as computerized trading. During one investigation of his own firm, he confided to a SEC investigator that he was on "the short list" to be the next SEC Commissioner, which would make him his boss. While Madoff was not appointed to the SEC, that investigation was, as the SEC inspector general points out, prematurely terminated Madoff had become so closely identified with the SEC by the early 2000s that a controversial SEC short-selling exception that benefitted Madoff became famously known on Wall Street as "The Madoff Exception."
Even as early as 1992, Madoff had become such a trusted figure in the eyes of the SEC officials that he was able to help them dispose of what appeared to be a possible Ponzi scheme. The alarm bells were set off when SEC investigators discovered that an unregistered investment company named Avellino and Bienes was offering "100% safe investments" . As noted in the Inspector General’s report, such "high and extremely consistent rates of return over significant periods of time to "special" customers" were viewed by at least 4 SEC examiners as "red flags" of a fraud involving over $441.9 million, which in the early 1990s was a sizable sum in the investment world. Indeed, it was reminiscent of the now infamous Charles Ponzi in the 1920s who paid the guaranteed "interest" to old investors out of the funds of his new investors. Neither Frank Avellino or his junior partner Michael Bienes had been licensed to sell securities, yet they and their associates had sold these guaranteed notes to 3100 investors between 1962 and 1992. The different rates they offered was yet another red flag. Larger investors got a guaranteed annual return of a 20 percent– which in some years was more than ten times the banks’ interest rate– while smaller investors got between 13.5 and 15 percent. Adding to the SEC’s concern, the firm was unable, or unwilling, to produce financial records with Avellino telling the court appointed auditors that he did not keep detailed records because "My experience has taught me not to commit any figures to scrutiny." He insisted that furnishing his own trading data was unnecessary since "every single dollar, it is invested in long-term Fortune 500 securities" with a single broker, who makes every investment decision/ And that broker was Bernard Madoff, with whom he had 5 accounts. To prove no money was missing, Avellino provided the SEC examiners with the most recent statements he received from Madoff. The New York Enforcement Staff Attorney handling the case did not find "Avellino and Bienes’ testimony altogether convincing." The next step was to verify the statements with Madoff. When on November 16, 1992, SEC examiners conducted an examination of Madoff’s firm "to verify certain security positions carried for the accounts of Avellino & Bienes," Madoff was well prepared for their visit/ He provided them with putative copies of records from the Depository Trust Corporation (DTC) showing that he had made the trades listed in the Avellino and Bienes accounts. Madoff’s stock record exactly matched the DTC statement. The examiners did not go any further. They concluded that there was no Ponzi scheme, and merely fined Avellino and Bienes $500,000 for their illegal brokerage business, which they closed down.
What the SEC did not do was to go to the DTC and verify that the records Madoff gave them were authentic. If its investigators had merely made a phone call to the DTC, they would have discovered in 1992 that those records were hastily forged and that the Avellino and Bienes accounts were only a small part of Madoff’s much larger Ponzi scheme.. As we now know from the testimony of Frank DiPascali, Jr , Madoff somehow knew the SEC examiners were about to descend on his office and demand these records. In his 2009 debriefing by the SEC, Dipascali specifically identified the SEC’s Avellino & Bienes investigation as an occurrence when "Madoff scrambled to ... fabricate credible account records to corroborate the purported trading in the accounts." The rush to fake the records described by DiPascalini suggests that Madoff might have had advance knowledge as to the SEC’s actions.
In any case, the SEC’s failure to verify Madoff’s records is difficult to explain in light of Madoff’s long-term relationship with Avellino’s firm. Madoff and Avellino had both worked together in the small accounting office of Madoff’s father-in-law Sol Alpern, who was deeply involved, if not the organizer, of the money-raising operation. Alpern also helped set up Madoff’s brokerage operation in 1960 by providing him with $50,000 to finance it and then funneling into it the guaranteed investments his firm sold. When Alpern retired, Avellino and his junior partner, Michael Bienes, took over the business and changed its name to Avellino and Bienes.
That Madoff’s name is not even mentioned by the SEC actions against Avellino and Bienes, even though his records were central to the quashing of the case, may be some indication of the influence he had developed at the SEC. Such influence would also explain why six subsequent complaints against Madoff himself were not fully investigated and why the SEC consistently neglected to verify Madoff’s accounts against the readily-available DTC records. But how could Madoff have such influence over his regulators? As Madoff’s dealing with the Fairfield Greenwich Group in 2006 demonstrates, he had advanced knowledge about the SEC’s moves. In that investigation, the SEC was dealing with an allegation that he was hiding his role as a money-manager for its funds. According to phone records that came to light in a lawsuit filed by the state of Massachusetts, Madoff called two of Fairfield Greenwich’s top executives in Bermuda, and informed them of the question that SEC investigators would ask them about their relation with him. He then furnished the answers that would satisfy them without revealing Madoff’s true role. As for the SEC investigators themselves, he pointed out, "They work for 5 years for the [SEC] Commission and then become a compliance manager at a hedge fund." The implication here was that SEC officials had a powerful incentive to be cooperative in this matter since their future lay with hedge funds, not the SEC.
He clearly had one or more reliable sources. The SEC kept to the Madoff script and, when it got the answered he provided, it did not pursue the investigation. Such high-value feed-back, which could have come from unwitting sources or from someone cooperating with him. In either case, it would explain how Madoff evaded SEC scrutiny. ***
[UPDATE 9/5/2009]

Thursday, August 06, 2009

Can Diamonds Survive A Free Market?

Despite its celebrated slogan "Diamonds Are Forever," De Beers, which has dominated the diamond business for over a century, is discovering that diamond profits are not forever. It reported in July that its profits for the first half of 2009 fell by no less than 99%. The problem is not that the mining giant is running out of diamonds. Its highly-efficient diamond mines in South Africa, Botswana and Namibia still supply about 40 percent of the world’s gem-sized diamonds. Nor have diamonds lost their value. They not only remain a vital part of the engagement ritual but their retail price of engagement rings has actually risen in 2009. What is killing De Beer’s profits is the prohibitive cost of running a cartel. The cartel arrangement is necessary to sustain the illusion that diamonds are rare.
Diamonds, to be sure, once were exceedingly rare. Then, in the late 19th century, huge pipes full of diamond ore were discovered in South Africa, and the diamond prices fell to less than one dollar a carat. Cecil Rhodes, who by 1890 had consolidated almost all the pipe mines into his De Beers Company. wrote in a letter that diamonds were on the verge of becoming a "frightful drug" on the market unless production was restricted. To create the balance between world supply and demand, Rhodes proposed that the annual production be limited to roughly the number of "licit relationships," as he termed engagements, in the United States., which was then the main market for diamonds. Ernest Oppenheimer, who took over De Beers after Rhodes’ death, further perfected the cartel by taking over the Diamond syndicate in London. This arm of the cartel, run by Oppenheimer’s brother Otto, gave De Beers control over the global distribution market and evolved into the innocuous- sounding "Central Selling Organization," The Oppenheimers used it to allocate the world’s rough diamonds to diamond cutters in Antwerp, Tel Aviv, and other cutting centers according to its terms. If a cutter wanted to be part of the arrangement, he had to blindly accept all the diamonds offered to him in a box by De Beers, and follow its rules. Ernest Oppenheimer wrote: "the only way to increase the value of diamonds is to make them scarce." Working through an intricate system of bankers, shell corporations, and buying agents, De Beers bought up diamonds wherever they were found, acting as the buyer of last resort, and, if necessary, adding them to its stockpile. When demand for diamonds collapsed in the great depression, Oppenheimer closed all major mines, cutting production from 2,242,000 carats in 1930 to 14,000 carats in 1933. His son Harry, who succeeded him in 1957, continued this strategy, telling shareholders that De Beers had no choice but to tightly control the global supply of diamonds because "wide fluctuations in price, which have, rightly or wrongly, been accepted as normal in the case of most raw materials, would be destructive of public confidence in the case of a pure luxury such as gem diamonds, of which large stocks are held in the form of jewelry by the general public." In other words, if prices were allowed to go down, the diamonds-are-forever illusion would shatter, and people would begin to sell their diamonds. Under his regime, when new diamond mines were discovered any place in the world, De Beers negotiated through one of its front companies to buy all those diamonds, even if it meant locking them up in its vaults in London. No distinction was made between friends and foes. At the height of the Cold War, when diamonds were discovered in Siberia, De Beers arranged with the Soviet Union to take its entire output. This deal required De Beers in the 1980s to buy from the Soviet Union 2.6 million carats a year– nearly one-quarter of the world's production– which provided Moscow with so much hard currency that the head of the Russian Diamond Administration said, "We call ourselves the country's foreign exchange department."
While this global cartel succeeded in sustaining the illusion of scarcity, by the 1990s it began to put increasing financial strain on the company’s finances. Ironically, what sealed the cartel’s fate was the Oppenheimer family’s effort to tighten its iron grip on De Beers through a leveraged buyout in 2004. Up until then, the Oppenheimers, who only owned about 8 percent of De Beers relied on a maze of interlocking companies to control it. After the buy-out, 40 percent of the company was directly owned by Oppenheimer family’s holding company and 45% was owned by the Anglo-American Corporation, in which the Oppenheimers were major share-holders. But to effect the buy-out De Beers had borrowed over $ 4 billion from banks, who imposed covenants that restricted its ability to borrow further to buy diamonds for its stockpile. "Debt drove the deal, as it always does," one shrewd London banker observed. As a result, he added "The new De Beers is not the old De Beers."
When the recession collapsed demand for diamond in 2008, De Beers could still shut down its mines– and in 2009 it reduced its production by 91%– But, given its debt burden and covenants, it could not borrow to buy the growing surplus of diamonds from other mines around the world. So it could not continue the century-old cartel arrangement. The European Union, which had found that De Beers had violated its anti-monopoly rules by stockpiling Russian diamonds, provided a convenient fig leaf for its exit strategy . Instead of renewing its deal to buy Russia’s rough diamonds in 2009, De Beers handed over the job of stockpiling surplus diamonds to the Russian-government backed diamond monopoly, Alrosa. For Alrosa to support prices, it not only had to stockpile the enormous production from the Siberian mines but after new pipe mines had been discovered in Angola, it had to negotiate a De Beers-style arrangement with the Angolan government to buy up its diamonds. "If you don’t support the price," Andrei V. Polyakov, an Alrosa official told the New York Times, "a diamond becomes a mere piece of carbon," while a top Alrosa strategist said, "We have to tell people that diamonds are valuable...We are trying to maintain the price, just as De Beers did, But what we are doing is selling an illusion." But even if the Russians fully understood the requisites of the cartel, they faced an almost intractable problem in the form of $5 to $7 billion worth of diamonds that were already in the "pipeline" that extended from the cutters and jewelry manufacturers to the wholesalers.. With the dearth of retail sales in 2008, these diamonds could only be contained in the pipe line for a limited time before the banks who had financed their purchase in 2007-8 at the height of the bubble, took action to get repaid, which would cause fire sales at the wholesale level. Alrosa has not as yet intervened to absorb these diamonds, and it may not have the resources to do so. According to a major diamond dealer affiliated with De Beers "Alrosa is not De Beers. It doesn’t have the network of connections with dealers and financiers, or experience, to control the pipe line." If so, diamond prices could go into a free fall, and finally test Harry Oppenheimer theory that the diamond illusion cannot survive the destructive price swings of a free market.