The Watchers

by Shane Harris

  Just as ideas got recycled in the government research community, they also tended not to stay secret for very long. Poindexter had lit a match that even before this government meeting had spread into an untamable fire. It was only a matter of time before it spread beyond the Beltway.

  On Wall Street, knowledge was power too. And for as long as anyone could remember, the kind of knowledge that could turn information into money was the province of a special few.

  Traders, brokers, and dealers placed their bets on who was up and who was on the way down based on information that they swapped within a closed, elite, and jealously controlled network. Rumors, tips, and insider intelligence were the currency of the would-be Gordon Gekkos and Sherman McCoys. To augment their privileged sources they had high-priced newsletter subscriptions, Bloomberg computer terminals, and a chattering class of fellow pros to help them keep ahead of the masses.

  And then one day that network was replaced by a new one. The Internet gave rise to a class of day traders, stock aficionados, and amateur investors. A proliferation of financial news sites rivaled what the rulers of the Street had been trading in person. Suddenly, and unceremoniously, the Masters of the Universe had been supplanted by bloggers.

  Joseph Kennedy supposedly had warned that it was time to get out of the market when the shoeshine boy started offering him stock tips. But more than seventy years after the great market crash, Jeff Stewart sensed that this new whirlwind of corporate information was something to be embraced.

  Stewart, a serial entrepreneur working in Manhattan, thought that if he could detect subtle changes in the market in real time, he might make a fortune. Conceptually, the idea was straightforward. Vacuum up corporate press releases, earnings reports, newswire stories, anything on the Internet that gave even the slightest hint of change in the status of a particular company. Then use that formerly privileged information to guide an investment strategy. But not for the long term. Just for the day. Maybe even for the minute, if making gains meant reacting on a moment’s notice to even the slightest event that could spell big change in a traded company’s fortunes.

  Stewart wanted to build total information awareness for Wall Street. He was well aware of Poindexter’s concept, having read about it in the press. Technology made the idea doable. The Internet provided the data, so Stewart just had to build the system to vacuum it up and analyze it.

  He might see an uptick in blog chatter about a particular product—rumors of a soon-to-be-released new version of the iPod, or an environmentalist backlash against paper products, like Kleenex tissues. If those signals could be tied back to a company, and thus to its stock, an investor could hedge his bets. He might be able to know whether the stock would rise or fall before the rest of the market.

  That kind of information was golden. And if obtained in an instant, it could mean the difference between huge losses and huge gains. Stewart needed an early-warning system for arbitrage instead of terrorism. Really, were they all that different?

  In 2004 he started talking to potential customers in New York, particularly hedge fund managers, who were crawling all over the city at the time. Stewart couldn’t walk into a Starbucks without striking up a conversation with one of them, and so he started asking, would you be willing to pay twelve thousand dollars a year for this kind of early-warning and detection system?

  He wanted to know if this was a reasonable fee. After a string of them answered yes, Stewart made hedge fund managers his exclusive target customer. He knew they would pay handsomely for anything that gave them the thinnest edge on their competitors.

  When the time came to actually build the system, Stewart knew whom to ask. The government. And more specifically, researchers who had worked for the intelligence and national security community, who would know if something like this was feasible or had already been built.

  In late 2004 Stewart met with scientists at the Lawrence Livermore lab. He’d been steered to them through his own connections in the New York venture capital set, which were never more than a degree removed from experts in academia and R&D. When Stewart met with the scientists he could see that they had the answers to his questions on the tips of their tongues. Clearly, he thought, they’d already been researching this question of how to harness penetrating insights from massive data. He listened to them, and then he incorporated their ideas into his product.

  Stewart called his system Monitor110. He designed a prototype to gather all information about any changes in a company or product and then to display those changes as they happened. It was a hedge fund manager’s dream.

  Stewart learned that he wasn’t the only one interested in monitoring huge data streams. From his conversations with people in the government, he understood that a big department was also interested in taking this approach—over at the Homeland Security Department. They called it “ADVISE.”

  It didn’t surprise him. Stewart knew that the community of people who specialized in this kind of information exploitation was so small that their ideas were bound to cross-pollinate the government and the corporate world. Looking back, he figured that the scientists at the labs, the ones who had contributed to his system, eventually sold their ideas to the government.

  Stewart was correct.

  Monitor110 earned some favorable media attention as one example of a new, innovative approach to managing information. The financial trade press was abuzz. But inside the intelligence community people knew that Stewart’s creation had the same core that the Livermore lab had sold to Homeland Security to build ADVISE. The BAG was at the heart of Monitor110. The government’s bad idea had made its way to Wall Street.

  They knew about it within the National Security Agency, where technicians referred to “ADVISE/Monitor110,” as if it were the same system. The agency had discarded the BAG when it failed to produce much more than hair balls. That helped spur the move to in-memory databases.

  Recycled ideas. Recycled baggage. Again, the surveillance narrative had reached new heights of absurd complexity. A failed technology to track down terrorists, which had been ditched by the NSA. Then it was repackaged and sold to the Homeland Security Department, whose core mission was to protect the country against terrorists. Then it leaked out into the private sector, where it was adopted by Wall Street moneymen. But the technology died there too, overwhelmed by the proliferation of noisy data on the Internet, particularly junk spam messages about companies and stocks that ended up clogging Monitor110’s output. Years later one would have to wonder if it would have been smart enough to detect the pending meltdown of the global economy, which was set off in part by opaque transactions by the very companies that would have purchased such a system.

  Monitor110 wasn’t built on the BAG alone. Stewart talked to dozens of technologists, at the labs, in academia, and in the private sector. But to those who knew the BAG’s sordid tale, Monitor110 was just another casualty of a long struggle. Stewart was reaching for the same, elusive ring as the NSA and Poindexter.

  Monitor110 shut down, and its creator moved on to new pursuits. By the end of 2006 Poindexter had engaged in new ventures too, with Saffron, the associative memory technology making gains in Iraq. He’d eventually pitch it to civilian agencies in government too, including the IRS for tax fraud detection.

  Poindexter maintained his close ties with high officials in the administration, particularly those like Fran Townsend, who were on the front lines of the terror war. But he couldn’t have predicted that one of his oldest allies, and great fans, was about to take over that war, and to change its course for years to come.

  CHAPTER 29

  ASCENSION

  At the age of sixty-three, with a distinguished Navy career behind him and the rewards of a seven-figure salary ahead, Mike McConnell never expected to find himself in the Oval Office. And yet that’s where he spent almost every morning now, as the newly minted director of National Intelligence. In February 2007 the onetime NSA director and retired admiral was sworn in as the president’s ne
w spy master, the man George Bush would depend on to bring some professionalism and calm back to the cantankerous intelligence community. Bush was convinced that certain career employees, particularly at the CIA, had tried to sabotage his reelection bid in 2004. Unnamed intelligence officials had leaked accounts of “cooked” intelligence on Iraqi weapons programs and claimed that the White House had relied on dubious reporting to make the case for war. The latter turned out to be true, but the intelligence community was hardly vindicated, since its analysts had relied on those sources in the first place. Porter Goss’s leak hunt at the CIA and the firing of Mary McCarthy only deepened the distrust between the president and his spies, and it reinforced the feeling among many career intelligence officials that the Bush administration had politicized intelligence to a dangerous degree.

  McConnell was widely seen as a professional and a nonpartisan. But he had been reluctant to return to the fold, having been out of government more than ten years now. The NSA was his last post, and he’d done better than most retired intelligence officers in the private sector. McConnell had twice turned down offers to join the Bush administration—once in July 2006, when director of national intelligence John Negroponte offered him the deputy slot, and then again in September, when McConnell was offered the top job. It was well-known that while the DNI was supposed to be the new chief executive of the spy agencies, the defense secretary still controlled most of the intelligence budget. The statute creating the DNI hadn’t vested the office with enough legal leverage to overrule the Pentagon.

  Had McConnell decided to return in 2006 he would have had to contend with Donald Rumsfeld, who was presiding over an internecine war with the civilian intelligence agencies. Rumsfeld, long distrustful of the CIA, was setting up a covert human intelligence apparatus that reported through the Defense Department chain of command and not to the agency. The CIA had always run foreign espionage operations, and stories abounded about hard-headed, inexperienced Pentagon spies running amok because they weren’t coordinating with CIA station chiefs in foreign capitals. Negroponte had been unable to halt Rumsfeld’s advances.

  But then, in November 2006, Rumsfeld’s star finally burned out. Republicans were dealt a “thumpin’ ” in the midterm elections, as Bush called it, and Democrats took control of both houses of Congress for the first time in a dozen years. Voters had rebuked the Iraq war, and by extension, Rumsfeld’s leadership. He was out. The administration announced it was putting up Robert Gates, an ex-CIA director, to replace him.

  On December 23, as McConnell was preparing for the Christmas holiday, his secretary walked into his spacious corner office at Booz Allen Hamilton, about twenty miles outside the capital. “The vice president’s on the phone,” she said.

  “The vice president of what?” McConnell asked.

  “The vice president of the United States.”

  McConnell jumped up and grabbed the phone. “Mr. Vice President! Mike McConnell here.”

  Dick Cheney got right to the point. “Mike, the president and I want you to consider a nomination to be the next DNI.”

  Cheney had known McConnell from the first Bush presidency, when then captain McConnell was the intelligence officer for the chairman of the Joint Chiefs of Staff, Colin Powell, and unexpectedly found himself helping to fight a war. When Saddam Hussein amassed forces on Iraq’s border with Kuwait, McConnell predicted the invasion almost a day early. But he was an intelligence expert and unfamiliar with ground warfare tactics. He’d never expected to be engaged in combat operations. Nevertheless, McConnell was such a quick study that Powell eventually put him in charge of daily press briefings during Operation Desert Storm. After the war Powell and Cheney, who was the defense secretary, supported McConnell for director of the NSA. It was a three-star position, and McConnell had been promoted only recently to be a one-star admiral. McConnell’s patrons ensured that he was bumped up in rank.

  McConnell told Cheney he was honored to be considered for the DNI job. But he wanted some time to think about it. He was about to have a big family gathering. Would it be okay to give an answer after Christmas?

  “Fine,” Cheney said.

  When McConnell had polled his friends and his wife the two recent times he was offered an administration job, they’d all had the same advice—don’t take it. He would have had limited ability to be effective, they said. But this new offer came at an extraordinary moment. McConnell had heard that his longtime friend, retired Air Force general James Clapper, was coming back to the Pentagon as Bob Gates’s intelligence chief. Clapper was one of the most seasoned military intelligence officers in the country. He’d run the Defense Intelligence Agency as well as the National-Geospatial Intelligence Agency, a client of Booz Allen that specialized in the production of highly detailed maps and ran a constellation of imagery satellites. McConnell called Clapper, whose nomination hadn’t yet been announced. They compared notes. Was this the right time to come back? Could they make a difference, get real work done and put the community back on track? McConnell wondered if he should talk to Gates before he made a decision. “Absolutely you need to talk to Gates,” Clapper said. “Do you have the number for Cables?”

  Cables was a kind of superswitchboard that could connect callers to the defense secretary anywhere in the world. McConnell said he probably had the number somewhere, but Clapper gave it to him so he didn’t have to waste any time looking.

  McConnell identified himself to the operator as a former NSA director, and said that the administration had offered him the intelligence director’s position. “I need to speak to your boss,” McConnell said.

  Moments later Gates called back from aboard his airplane as he flew out of Baghdad. He already knew that McConnell would be offered the post.

  “You’re supportive of my nomination?” McConnell asked.

  “Yes,” Gates replied.

  McConnell had a list of goals. He thought that the intelligence culture needed to be reformed for the modern age of asymmetric threats. He wanted to update the key executive order, 12333, to make it clear that the DNI was the new leader of the community and had specific authorities. And McConnell thought that surveillance law needed an overhaul. “If I take the job, will you assist me in getting things done?” he asked. Gates assured McConnell that he would.

  That was all he needed to hear. The proverbial stars had aligned. Gates at the Pentagon, ready to help. Clapper coming back. Hayden, a former NSA director and a friend now in charge at the CIA. It was a rare moment to serve, and to put the grown-ups back in charge. McConnell called Steve Hadley, Bush’s national security adviser, and accepted the nomination.

  Bush made the formal announcement in early January, and McConnell was sworn in six and a half weeks later. The morning of the ceremony, held at the DNI’s headquarters on an air base outside downtown Washington, McConnell looked out on a sea of familiar faces. There in the front row was Gates. Hayden sat next to him. Like a lot of intelligence graybeards across Washington on that February morning, they had a reason to smile: One of their own was back in charge.

  McConnell spent the first few months on the job getting adjusted to the hours. He was up at four in the morning, usually six days a week, sometimes seven. He held a round of meetings with senior staff, warm-ups for the president’s daily intelligence briefing that began around seven or eight o’clock. Bush was unusually demanding. Many of his predecessors had taken their daily briefing from someone lower on the totem pole, leaving the chiefs to focus on the business of actually running their organizations. But Bush liked McConnell with him in the Oval every day, as his emissary and his eyes and ears. McConnell found that in order to focus on the items that had brought him back to government in the first place—the management and reshaping of the intelligence community—he had to work until ten or eleven o’clock each night. But he got up to speed, just as he had during the first Gulf War. McConnell learned to master the dual-hatted nature of the job—president’s intelligence chief and CEO of American spy craft.
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br />   One day in May 2007, McConnell found himself in the Oval Office once again. It was a packed house, with most of the administration’s senior national security leadership present. Bush and Cheney were there, as were Gates, Hadley, Fran Townsend, the NSA director, Keith Alexander, and Treasury Secretary Henry Paulson, among others. The purpose of the meeting was to discuss the growing insurgency in Iraq, which was racking up casualties at an alarming rate. McConnell wanted to get Bush’s permission to use a particularly modern weapon on the insurgents, one that he had come to admire and fear.

  Information operations, or IO in the parlance of its practitioners, was digital combat, a form of physical and psychological attack. It was something McConnell had become well acquainted with during his four-year tenure at the NSA. He had set up an information warfare unit at the agency to specialize in attacking and manipulating an adversary’s computer systems. IO encompassed a range of tactics, including targeted hacking to knock out electrical power stations and command centers; scrambling of vital battlefield communications and coordinates; even the falsification of information in an adversary’s own databases. Disinformation, deception, and denial were the tools of this thoroughly modern warfare. Now, more than a decade after he’d helped the NSA perfect the technologies, he wanted to use them in Iraq.

  Since the American invasion Iraq was becoming a wireless nation. Cellular phone licenses were among the first contracts issued by the provisional government. McConnell had gone to Iraq the previous month, and he knew that the insurgents had shown remarkable deftness in communicating with disposable mobile phones. They also used the Internet to spread propaganda videos featuring grisly beheadings and footage of roadside bombings. The insurgents’ entire campaign to rid Iraq of American forces was supported by an information network. McConnell wanted to penetrate it, and to use it against the insurgency.