Rogue spy agencies are conducting mass surveillance on the public without real oversight

Last week's explosive revelation from whistleblower Edward Snowden that the United States' National Security Agency is hoovering up billions of phone and internet records worldwide, a bombshell that unleashed a firestorm of international condemnation, was not without a certain ironic symmetry.

Before James Clapper, who told the Senate Intelligence Committee in March the NSA never collected "any type of data" on Americans, at least not "wittingly", became the Director of National Intelligence he had worked for a private security company, Booz Allen Hamilton.

When Snowden revealed the NSA had harvested data worldwide - arguably the most damning leak of US secrets ever, demolishing Clapper's testimony - the whistleblower said he earned US$200,000 ($251,000) a year at Booz Allen Hamilton.

Both men were players in what the American Civil Liberties Union (ACLU) calls the surveillance industrial complex (SIC). The SIC has been steadily privatised since the late 1990s, when Clapper advised the NSA that the US needed to keep abreast of rapid technology advances. The reference to Dwight Eisenhower's prophetic 1961 warning about the subversive threat the emerging military industrial complex posed to democracy, is apt.


Snowden has stirred debate less about rogue employees but more about rogue spy agencies that conduct mass surveillance without real oversight.

Whatever the legality of the NSA's metadata collection (challenged this week by an ACLU lawsuit), Snowden has shone a light not only on data-mining tools such as Prism but also on the burgeoning realm of private security. It is a for-profit labyrinth way beyond the ken of Cold War spies such as East Germany's Stasi. The huge trove of intelligence, stored in Utah, is data-mined using tools supplied by Silicon Valley firms such as Palantir Technologies, which has an office in New Zealand.

For in the post-9/11 intelligence world, in which billions of dollars are lavished annually on national security - a broadly defined, nebulous term - the private sector has been handsomely rewarded as such work is outsourced.

About 1.4 million Americans have top-secret security credentials. A further 3.5 million are cleared for lower security levels. It is estimated about a quarter of Americans are employed in US surveillance work for private companies.

A 2010 Washington Post series found 1931 private firms worked with the US security establishment, which has 16 different intelligence agencies.

Private players include Science Applications International Corporation (SAIC), which works for the Pentagon and the NSA. In 2011 the Stockholm International Peace Research Institute rated SAIC the world's 12th biggest "arms producing and military service" firm (excluding China), with 41,000 staff. More than 20,000 have US security clearances, making SAIC one of the world's biggest private intelligence outfits. Last year, Booz Allen Hamilton employed 25,000 people worldwide and earned US$5.8 billion - mostly public money as Americans unwittingly paid to be spied on - a drop in the bucket for parent company the Carlyle Group, the private equity firm worth US$176 billion.

According to a June 6 Salon article by Tim Shorrock, author of Spies for Hire: The Secret World of Outsourced Intelligence, Palantir was first funded by the CIA in 2005 and "is one of the hottest players in US intelligence". Its software, used to analyse intelligence in real-time, "maps out social networks for counter-intelligence purposes and is in huge demand throughout government and in the financial and banking industries".

Palantir denies its Prism software is the same data-mining Prism intelligence agencies used and that Snowden outed to the Guardian.


High-tech company Narus, a Boeing subsidiary, makes software so the NSA can snoop on fibre-optic cables.

Bill Binney, also an NSA whistleblower, claims Narus can analyse 100 billion emails a day.

Maintaining this sprawling private spy complex, largely clustered near NSA headquarters at Fort Meade, consumes billions of public dollars annually.

The Office of the Director of National Intelligence says US$74.4 billion was spent on intelligence gathering last year: US$53.9 billion on civilian snoops and $21.5 billion on the military arm, including the NSA. Spending peaked at US$80.1 billion in 2010. The global war on terror has been good, very good, for business.

In 2007, Shorrock reported private contractors absorbed about 70 per cent of the total sum, a percentage he says is still relevant.

Private spies need security clearance, but private contractors largely process this expensive prerequisite.

"What usually happens is someone will work at the NSA for a couple of years, then quit and go to work for a defence contractor," says Christopher Soghoian, principal technologist with the ACLU, "who will send them back to the very same building in which they worked before. Except now they get double the salary. The Government has a difficult time because contractors hire them all away."

Little wonder the Senate Intelligence Committee has queried costs.

It is a lucrative revolving door. Clapper's predecessor as director of national intelligence was John McConnell, now a vice-president at Booz Allen. For-profit intelligence-gathering in secret joint ventures with the US taxpayer has obvious pitfalls.

NSA's failed Trailblazer project, an early data-mining tool involving SAIC, Booz Allen and others, cost "billions of dollars" before it was cancelled in 2005, according to the Government Accountability Project. Soghoian says Washington has a name for this costly, self-sustaining phenomenon: "Self-licking icecream cones."

Privatised surveillance is analogous to the sector that employs military contractors, often former soldiers, to protect VIPs. Overlap is not uncommon.

"In many cases, companies that build the bombs also supply the intelligence staff," says Soghoian. "It's familiar faces like Boeing, Lockheed Martin and Raytheon."

After creating sophisticated spy tools, high-tech companies also supply analysts and technicians such as Snowden to operate them.

Former NSA and CIA chief General Michael Hayden, now involved with cyber-security as a Chertoff Group executive, refers to this murky realm as "Digital Blackwater", a reference to the notorious US mercenary firm.

Besides data-mining, private contractors help provide intelligence for military activities such as pin-pointing targets for drone strikes.

"They're involved in all military agencies that do intelligence," Shorrock told Democracy Now! this week. "They do everything that the Government does."

Which raises the issue of oversight - who polices private spooks? Providing technology is one thing; recruiting contractors as US spies is another.

"Contracts can hide operations [an agency] wants to keep secret," Shorrock told the Herald. "A contractor can hire a sub-contractor and there's much less accountability. Sometimes there's black projects they want to keep real deep ... you don't really know what these sub-contractors are doing."

Transparency is hard to find in the surveillance state. "Yes, almost by definition contractors are subject to less oversight by Congress," says Steven Aftergood, who writes the Secrecy News newsletter for the Federation of American Scientists.

"The agencies are funded by Congress and are answerable to them. The contractors are funded by the agencies and are at least one big step removed from congressional oversight," he says.

The potential for corruption or misuse looms large. As the NSA seeks damage control, insisting its snoops have halted "dozens of terror plots", worrying signs suggest privatising Big Brother can curb lawful dissent.

Take the energy sector.

As opposition to huge fossil-fuel projects - often touted as vital to national security - grows worldwide, protesters are being targeted for surveillance. A recent Nation of Change report found the Institute of Terrorism Research and Response, a security firm contracted to Pennsylvania law enforcement, had spied on protesters, a trend that "represents a larger pattern of corporate and police spying on environmental activists fuelled in part by the expansion of private intelligence gathering since 9/11".

Given the link between fossil fuels and climate change - viewed as a security threat by the US - this is a grey area.

"By being indexed in this category, groups like Greenpeace are now on the same plateau as al-Qaeda and other terror groups," says Jeffrey Monaghan, a researcher with the Surveillance Studies Centre at Queens University in Kingston, Ontario.

"This has become a new form of normal."

It is also money in the bank for companies who grow rich by spying on the public.