Harvey Weinstein’s Army of Spies: The film executive hired

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Harvey Weinstein’s Army of Spies: The film executive hired

Postby admin » Tue Nov 07, 2017 8:31 pm

Harvey Weinstein’s Army of Spies: The film executive hired private investigators, including ex-Mossad agents, to track actresses and journalists.
by Ronan Farrow
November 6, 2017, 6:31 P.M.



Illustration by Adam Maida; Source Photographs by Lenny/IPA/REX/Shutterstock (Argento); Paul Sancya / AP (McGowan); Charles Eshelman / FilmMagic / Getty (Sciorra); Jim Spellman / WireImage / Getty (Weinstein)

In the fall of 2016, Harvey Weinstein set out to suppress allegations that he had sexually harassed or assaulted numerous women. He began to hire private security agencies to collect information on the women and the journalists trying to expose the allegations. According to dozens of pages of documents, and seven people directly involved in the effort, the firms that Weinstein hired included Kroll, which is one of the world’s largest corporate-intelligence companies, and Black Cube, an enterprise run largely by former officers of Mossad and other Israeli intelligence agencies. Black Cube, which has branches in Tel Aviv, London, and Paris, offers its clients the skills of operatives “highly experienced and trained in Israel’s elite military and governmental intelligence units,” according to its literature.

Two private investigators from Black Cube, using false identities, met with the actress Rose McGowan, who eventually publicly accused Weinstein of rape, to extract information from her. One of the investigators pretended to be a women’s-rights advocate and secretly recorded at least four meetings with McGowan. The same operative, using a different false identity and implying that she had an allegation against Weinstein, met twice with a journalist to find out which women were talking to the press. In other cases, journalists directed by Weinstein or the private investigators interviewed women and reported back the details.

The explicit goal of the investigations, laid out in one contract with Black Cube, signed in July, was to stop the publication of the abuse allegations against Weinstein that eventually emerged in the New York Times and The New Yorker. Over the course of a year, Weinstein had the agencies “target,” or collect information on, dozens of individuals, and compile psychological profiles that sometimes focussed on their personal or sexual histories. Weinstein monitored the progress of the investigations personally. He also enlisted former employees from his film enterprises to join in the effort, collecting names and placing calls that, according to some sources who received them, felt intimidating.

In some cases, the investigative effort was run through Weinstein’s lawyers, including David Boies, a celebrated attorney who represented Al Gore in the 2000 Presidential-election dispute and argued for marriage equality before the U.S. Supreme Court. Boies personally signed the contract directing Black Cube to attempt to uncover information that would stop the publication of a Times story about Weinstein’s abuses, while his firm was also representing the Times, including in a libel case.


Boies Schiller & Flexner LLP
575 Lexington Avenue, 7th Floor
New York, NY 10022
11 July 2017

Letter of Engagement

1. This Letter of Engagement sets out the terms whereby Boies, Schiller & Flexner LLP (Hereafter “the Firm”) is engaging B.C. Strategy UK Ltd., a limited company incorporated in England and Wales (registered number: 0815397, hereinafter “Black Cube”), on behalf of a client, (hereafter “the Client”). This letter explains the research process and scope of the litigation support services to be provided to the Client, and attached to it you will find our Terms and Conditions, which shall be considered as a part of this letter.


2. B.C. Strategy UK Ltd is a business intelligence and strategic consultancy firm based in London, Tel-Aviv and Paris. The company, owner of the Black Cube brand in Israel, USA, UK, European Union, Hong Kong, Australia and other countries, specializes in finding tailored solutions to business challenges by gathering high quality intelligence and providing its clients strategic consultancy and guidance. The firm specializes in delivering end-to-end research into corporations, individuals and product markets.

3. Black Cube is a select group of veterans of elite units in the Israeli intelligence community, combined with financial and legal experts. Our team comes from a well-established intelligence background in the fields of information gathering, analysis and research, as well as various legal and financial backgrounds and field operations. The team’s unique background, together with the cutting-edge methodology developed by Black Cube, was the reason we were retained to untangle complex business environments and legal cases for many multi-national clients. Black Cube regularly supplies services for a variety of international corporate and law firms.

4. Black Cube is willing to provide business intelligence services to the Client in accordance with the work plan suggested below, and hereby warrants that all information collected during the project and all other action taken or directed by Black Cube will be obtained in confidence and by legal means and in compliance with all applicable laws and regulations. In accordance, all operations are subject to the law in all relevant jurisdictions.

5. All of Black Cube’s operational methodologies have been approved by K&L Gates, BCL Burton Copeland and Gross, Kleinhandler, Hodak and Co. (top-tier law firms in the US, UK and Israel respectively).

6. Furthermore, Black Cube seeks advice and guidance from top tier law firms in any other jurisdiction in which we operate, in order to ensure full compliance to local laws and regulations, specifically with regard to privacy and data protection.


7. The primary objectives of the project are:

a) Provide intelligence which will help the Client’s efforts to completely stop the publication of a new negative article in a leading NY newspaper (hereinafter “the Article”);

b) Obtain additional content of a book which current being written and includes harmful negative information on and about the Client (hereinafter “the Book”).

8. Of course, any other specific request or requirement from the Client will be taken into consideration.

The Research Team

9. For the Duration of the project, Black Cube will allocate a dedicated team of expert intelligence officers that will operate in the USA and any other necessary country:

a) A project manager with specific experience in managing similar business intelligence projects. The project manager will be in charge of building the research plan, managing the team, allocating resources, scheduling, and presenting results to the Client.

b) Intelligence analysts – experts in web-based data gathering and database access, social networks and pattern analysis.

c) A full-time agent by the name of “Anna” (hereinafter “the Agent”), who will be based in New York and Los Angeles as per the Client’s instructions and who will be available full time to assist the Client and his attorneys for the next four months, commencing on the date of this Letter of Engagement. Said Agent can utilize the services of “Roe” of Black Cube as the coordinator.

d) An investigative journalist as per the Client request (hereinafter “the Journalist”).

e) Avatar Operators – experts in relevant media analysis and relations, in all available social networks.

f) Linguists – for all relevant languages including English.

g) Operations experts with extensive experience in social engineering.

h) In house legal advisor – for advice on the legality of collection methods and operations; focusing on privacy, data protection and database access.

10. The team is supported by our board of directors and advisors – businessmen in key positions in Israel and abroad and former heads of the Israeli intelligence forces, all of whom contribute from their vast experience and worldwide connections.

Schedule and Fees

11. The final report will be provided within four (4) months from 10 July 2017, i.e. by November 10, 2017. However, due to the urgency of the project, Black Cube will utilize its blitz methodology in order to allocate additional resources in the beginning of the project.

12. Regular updates, delivered in face to face meetings with the firm and client along with written status reports, will be given to the Firm and Client to present findings and discuss further directions.

13. Relevant information will be provided to the Firm and Client as it becomes available.

14. The price for this project will be USD$200,000, to be paid in four equal tranches of $50,000, inclusive of all costs (i.e. databases and software licenses, flights, travel, computers and special accessories, and out of pocket expenses) (hereinafter “the Retainer”). The Client will not bear any additional expenses unless agreed upon in advance. The Client has caused to be paid, on July 10, 2017, $50,000 of the $190,000 Settlement Sum (as such term is defined in the Settlement Agreement, dated as of the date hereof, between Black Cube and the Firm, acting on behalf of the Client). $100,000 of the Settlement Sum shall be paid to Black Cube upon the signing of this Engagement Letter and the remaining $40,000 of the Settlement Sum shall be paid to Black Cube within 10 days of the signing of this Engagement Letter. The first tranch of the Retainer ($50,000) shall be paid by August 10, 2017. The remaining three tranches of the Retainer (each of $50,000) shall be paid on September 10, 2017, October 10, 2017 and November 10, 2017.

15. On, or within 10 days of, the date hereof, the Client shall pay Black Cube a refundable, lump sum amount of $40,000 for the services of the Journalist. The Journalist’s assignment is to conduct 10 interviews per month over a four month period, commencing on the date hereof, of interested persons. Black Cube shall promptly report to the Client the results of such interviews by the Journalist. If such interviews are not so conducted, then such $40,000 shall be repaid by Black Cube to the Client immediately after the expiration of such for month period; provided that, such refund shall not need to be made if Black Cube is fully successful in achieving all of its other objectives, tasks and mandates pursuant to this LoE.

16. In the event in which Black Cube provides intelligence which will directly contribute to the efforts to completely stop the Article from being published at all in any shape or form, Black Cube will be paid a success fee of USD$300,000.

17. Furthermore, in the event in which Black Cube succeeds in achieving the other half of the Book’s content (approximately 250 pages in total) in readable book and legally admissible format (and not just based on interviews or recordings but the actual Book), Black Cube will be paid, an additional success fee of USD$50,000.

18. If none of the objectives set forth above are achieved by Black Cube within four months of the date hereof, then Black Cube will provide its services to achieve those objectives for another month at no charge or fee.

19. Black Cube also hereby covenants and agrees with the Firm that it shall deliver (in the most professional and discreet manner) to the Firm, on behalf of the Client, all transcripts, recordings, tapes and other materials prepared, collected or made by or on behalf or of Black Cube for the benefit of the Client pursuant to this Letter of Engagement immediately as they become available (and in no event later than 3 business days after they become available) in readable and legally admissible format, whether or not there is any dispute then pending between the Client and Black Cube or otherwise.

20. The payment of the success fees will be independent from, and in addition to, any other fee paid according to this agreement.

21. This Letter of Engagement supersedes all prior agreements, written or otherwise, between the parties (including, in particular, the Letter of Engagement, dated October 24, 2014, between Black Cube and the Firm, acting on behalf of the Client (hereinafter “the Original LoE”) and the Client, whether written, oral or otherwise) and Black Cube acknowledges and agrees that it is not and will not be entitled to any fees (whether success fees or otherwise, whether pursuant paragraphs 16 through 18 of the Original LoE or otherwise) or costs under the Original LoE.

22. We agree that Black Cube will solely look to the Client and not the Firm for payment of any amounts due under this engagement and shall hold the firm harmless from any costs arising out of this engagement.

We are looking forward to working with you on this opportunity. I firmly believe that Black Cube’s high-level intelligence capabilities will enable us to deliver to you the desired results of this case.

With kind regards,

Dr. Avi Yanus, Director


I agree to the terms of this letter and the BC Strategy UK Ltd. Terms and Conditions on behalf of the
Client: Boies Schiller & Flexner, LLP
Name: David Boies
Signed: David Boies
Date: July 11, 2017


Boies Schiller & Flexner LLP
575 Lexington Avenue, 7th Floor
New York, NY 10022
24 October 2016

Letter of Engagement

1. This Letter of Engagement sets out the terms whereby Boies, Schiller & Flexner LLP ( “the Firm”) is engaging B.C. Strategy UK Ltd., a limited company incorporated in England and Wales (registered number: 0815397, hereinafter “Black Cube”), on behalf of a client, (hereafter “the Client”). This letter explains the research process and scope of the litigation support services to be provided to the Client, and attached to it you will find our Terms and Conditions, which shall be considered as a part of this letter.


2. B.C. Strategy UK Ltd is a business intelligence and strategic consultancy firm based in London, Tel-Aviv and Paris. The company, owner of the Black Cube brand in Israel, USA, UK, European Union, Hong Kong, Australia and other countries, specializes in finding tailored solutions to business challenges by gathering high quality intelligence and providing its clients strategic consultancy and guidance. The firm specializes in delivering end-to-end research into corporations, individuals and product markets.

3. Black Cube is a select group of veterans of elite units in the Israeli intelligence community, combined with financial and legal experts. Our team comes from a well-established intelligence background in the fields of information gathering, analysis and research, as well as various legal and financial backgrounds and field operations. The team’s unique background, together with the cutting-edge methodology developed by Black Cube, was the reason we were retained to untangle complex business environments and legal cases for many multi-national clients. Black Cube regularly supplies services for a variety of international corporate and law firms.

4. Black Cube is willing to provide business intelligence services to the Client in accordance with the work plan suggested below, and hereby warrants that all information collected during the project and all other action taken or directed by Black Cube will be obtained in confidence and by legal means and in compliance with all applicable laws and regulations. In accordance, all operations are subject to the law in all relevant jurisdictions.

5. All of Black Cube’s operational methodologies have been approved by K&L Gates, BCL Burton Copeland and Gross, Kleinhandler, Hodak and Co. (top-tier law firms in the US, UK and Israel respectively).

6. Furthermore, Black Cube seeks advice and guidance from top tier law firms in any other jurisdiction in which we operate, in order to ensure full compliance to local laws and regulations, specifically with regard to privacy and data protection.


7. The primary objective of the project is to identify the entities behind the negative campaign against the Client (hereinafter – “the Campaign”), and support the Client’s efforts to put a stop to it.

8. Of course, any other specific request or requirement from the Client will be taken into consideration.

The Research Team

9. For the Duration of the project, Black Cube will allocate a dedicated team of expert intelligence officers that will operate in the USA and any other necessary country:

a) A project manager with specific experience in managing similar business intelligence projects. The project manager will be in charge of building the research plan, managing the team, allocating resources, scheduling, and presenting results to the Client.

b) Intelligence analysts – experts in web-based data gathering and database access, social networks and pattern analysis.

c) Avatar Operators – experts in relevant media analysis and relations, in all available social networks.

d) Linguists – for all relevant languages including English.

e) Operations experts with extensive experience in social engineering.

f) In house legal advisor – for advice on the legality of collection methods and operations; focusing on privacy, data protection and database access.

10. The team is supported by our board of directors and advisors – businessmen in key positions in Israel and abroad and former heads of the Israeli intelligence forces, all of whom contribute from their vast experience and worldwide connections.

Schedule and Fees

11. The final report will be provided within two months from signature of letter of engagement. However, due to the urgency of the project, Black Cube will utilize its Blitz methodology in order to allocate additional resources in the beginning of the project.

12. Regular updates, delivered in face to face meetings with the firm and client along with written status reports, will be given to the Firm and Client to present findings and discuss further directions.

13. Relevant information will be provided to the Firm and Client as it becomes available.

14. The price for this project per months will be 100,000 USD ($200,000 USD in total), inclusive of all costs (i.e. databases and software licenses, flights, travel, computers and special accessories, and out of pocket expenses). The Client will not bear any additional expenses unless agreed upon in advance. The Client has the option to terminate the engagement after the first month if it is not satisfied with the results produced thus far with no obligation to pay the second month’s fee.

15. The first monthly payment be due upon the signing of the letter of engagement, and the second monthly payment will be due 30 days after the signing of the letter of engagement.

16. In the event in which the Client uses the intelligence provided by Black Cube, in a litigation, in a different juridical process, in the media or in presentation to authorities, Black Cube will be paid a success fee of 100,000 USD.

17. Additionally, in the event Black Cube succeeds in achieving the objective, including putting a stop to the negative campaign, Black Cube will be paid an additional success fee of 200,000 USD.

18. Furthermore, in the event in which Black Cube discovers that there was a concerted effort on the part of an individual or entity behind the negative campaign (e.g. a business competitor) that was not otherwise known to the Client and which resulted from activities beyond the normal scope of the objective and work contemplated in this engagement, Black Cube will be paid an additional success fee of 300,000 USD.

19. The payment of the success fee will be independent from, and in addition to, any other fee paid according to this agreement.

20. VAT will be added, only if necessary, according to English law.

21. We agree that Black Cube will solely look to the Client and not the Firm for payment of any amounts due under this engagement and shall hold the firm harmless from any costs arising out of this engagement.

We are looking forward to working with you on this opportunity. I firmly believe that Black Cube’s high-level intelligence capabilities will enable us to deliver to you the desired results of this case.
With kind regards,

Dr. Avi Yanus, Director


I agree to the terms of this letter and the BC Strategy UK Ltd. Terms and Conditions on behalf of the
Name: Amy Habie
Signed: Amy Habie
Date: 10/27/16

Boies confirmed that his firm contracted with and paid two of the agencies and that investigators from one of them sent him reports, which were then passed on to Weinstein. He said that he did not select the firms or direct the investigators’ work. He also denied that the work regarding the Times story represented a conflict of interest. Boies said that his firm’s involvement with the investigators was a mistake. “We should not have been contracting with and paying investigators that we did not select and direct,” he told me. “At the time, it seemed a reasonable accommodation for a client, but it was not thought through, and that was my mistake. It was a mistake at the time.”

Techniques like the ones used by the agencies on Weinstein’s behalf are almost always kept secret, and, because such relationships are often run through law firms, the investigations are theoretically protected by attorney-client privilege, which could prevent them from being disclosed in court. The documents and sources reveal the tools and tactics available to powerful individuals to suppress negative stories and, in some cases, forestall criminal investigations.

In a statement, Weinstein’s spokesperson, Sallie Hofmeister, said, “It is a fiction to suggest that any individuals were targeted or suppressed at any time.”

In May, 2017, McGowan received an e-mail from a literary agency introducing her to a woman who identified herself as Diana Filip, the deputy head of sustainable and responsible investments at Reuben Capital Partners, a London-based wealth-management firm. Filip told McGowan that she was launching an initiative to combat discrimination against women in the workplace, and asked McGowan, a vocal women’s-rights advocate, to speak at a gala kickoff event later that year. Filip offered McGowan a fee of sixty thousand dollars. “I understand that we have a lot in common,” Filip wrote to McGowan before their first meeting, in May, at the Peninsula Hotel in Beverly Hills. Filip had a U.K. cell-phone number, and she spoke with what McGowan took to be a German accent. Over the following months, the two women met at least three more times at hotel bars in Los Angeles and New York and other locations. “I took her to the Venice boardwalk and we had ice cream while we strolled,” McGowan told me, adding that Filip was “very kind.” The two talked at length about issues relating to women’s empowerment. Filip also repeatedly told McGowan that she wanted to make a significant investment in McGowan’s production company.

Filip was persistent. In one e-mail, she suggested meeting in Los Angeles and then, when McGowan said she would be in New York, Filip said she could meet there just as easily. She also began pressing McGowan for information. In a conversation in July, McGowan revealed to Filip that she had spoken to me as part of my reporting on Weinstein. A week later, I received an e-mail from Filip asking for a meeting and suggesting that I join her campaign to end professional discrimination against women. “I am very impressed with your work as a male advocate for gender equality, and believe that you would make an invaluable addition to our activities,” she wrote, using her wealth-management firm’s e-mail address. Unsure of who she was, I did not respond.

Filip continued to meet with McGowan. In one meeting in September, Filip was joined by another Black Cube operative, who used the name Paul and claimed to be a colleague at Reuben Capital Partners. The goal, according to two sources with knowledge of the effort, was to pass McGowan to another operative to extract more information. On October 10th, the day The New Yorker published my story about Weinstein, Filip reached out to McGowan in an e-mail. “Hi Love,” she wrote. “How are you feeling? . . . Just wanted to tell you how brave I think you are.” She signed off with an “xx.” Filip e-mailed McGowan as recently as October 23rd.

In fact, “Diana Filip” was an alias for a former officer in the Israeli Defense Forces who originally hailed from Eastern Europe and was working for Black Cube
, according to three individuals with knowledge of the situation. When I sent McGowan photos of the Black Cube agent, she recognized her instantly. “Oh my God,” she wrote back. “Reuben Capital. Diana Filip. No fucking way.”

Ben Wallace, a reporter at New York who was pursuing a story on Weinstein, said that the same woman met with him twice last fall. She identified herself only as Anna and suggested that she had an allegation against Weinstein. When I presented Wallace with the same photographs of Black Cube’s undercover operative, Wallace recalled her vividly. “That’s her,” he said. Like McGowan, Wallace said that the woman had what he assumed to be a German accent, as well as a U.K. cell-phone number. Wallace told me that Anna first contacted him on October 28, 2016, when he had been working on the Weinstein story for about a month and a half. Anna declined to disclose who had given her Wallace’s information. Over the course of the two meetings, Wallace grew increasingly suspicious of her motives. Anna seemed to be pushing him for information, he recalled, “about the status and scope of my inquiry, and about who I might be talking to, without giving me any meaningful help or information.” During their second meeting, Anna requested that they sit close together, leading Wallace to suspect that she might be recording the exchange. When she recounted her experiences with Weinstein, Wallace said, “it seemed like soap-opera acting.” Wallace wasn’t the only journalist the woman contacted. In addition to her e-mails to me, Filip also e-mailed Jodi Kantor, of the Times, according to sources involved in the effort.

The U.K. cell-phone numbers that Filip provided to Wallace and McGowan have been disconnected. Calls to Reuben Capital Partners’ number in London went unanswered. As recently as Friday, the firm had a bare-bones Web site, with stock photos and generic text passages about asset management and an initiative called Women in Focus. The site, which has now been taken down, listed an address near Piccadilly Circus, operated by a company specializing in shared office space. That company said that it had never heard of Reuben Capital Partners. Two sources with knowledge of Weinstein’s work with Black Cube said that the firm creates fictional companies to provide cover for its operatives, and that Filip’s firm was one of them.

Black Cube declined to comment on the specifics of any work it did for Weinstein. The agency said in a statement, “It is Black Cube’s policy to never discuss its clients with any third party, and to never confirm or deny any speculation made with regard to the company’s work. Black Cube supports the work of many leading law firms around the world, especially in the US, gathering evidence for complex legal processes, involving commercial disputes, among them uncovering negative campaigns. . . . It should be highlighted that Black Cube applies high moral standards to its work, and operates in full compliance with the law of any jurisdiction in which it operates—strictly following the guidance and legal opinions provided by leading law firms from around the world.” The contract with the firm also specified that all of its work would be obtained “by legal means and in compliance with all applicable laws and regulations.”

Last fall, Weinstein began mentioning Black Cube by name in conversations with his associates and attorneys. The agency had made a name for itself digging up information for companies in Israel, Europe, and the U.S. that led to successful legal judgments against business rivals. But the firm has also faced legal questions about its employees’ use of fake identities and other tactics. Last year, two of its investigators were arrested in Romania on hacking charges. In the end, the company reached an agreement with the Romanian authorities, under which the operatives admitted to hacking and were released. Two sources familiar with the agency defended its decision to work for Weinstein, saying that they originally believed that the assignment focussed on his business rivals. But even the earliest lists of names that Weinstein provided to Black Cube included actresses and journalists.

On October 28, 2016, Boies’s law firm, Boies Schiller Flexner, wired to Black Cube the first hundred thousand dollars, toward what would ultimately be a six-hundred-thousand-dollar invoice. (The documents do not make clear how much of the invoice was paid.) The law firm and Black Cube signed a contract that month and several others later. One, dated July 11, 2017, and bearing Boies’s signature, states that the project’s “primary objectives” are to “provide intelligence which will help the Client’s efforts to completely stop the publication of a new negative article in a leading NY newspaper” and to “obtain additional content of a book which currently being written and includes harmful negative information on and about the Client,” who is identified as Weinstein in multiple documents. (In one e-mail, a Black Cube executive asks lawyers retained by the agency to refer to Weinstein as “the end client” or “Mr. X,” noting that referring to him by name “will make him extremely angry.”) The article mentioned in the contract was, according to three sources, the story that ultimately ran in the Times on October 5th. The book was “Brave,” a memoir by McGowan, scheduled for publication by HarperCollins in January. The documents show that, in the end, the agency delivered to Weinstein more than a hundred pages of transcripts and descriptions of the book, based on tens of hours of recorded conversations between McGowan and the female private investigator.

Weinstein’s spokesperson, Hofmeister, called “the assertion that Mr. Weinstein secured any portion of a book . . . false and among the many inaccuracies and wild conspiracy theories promoted in this article.”

The July agreement included several “success fees” if Black Cube met its goals. The firm would receive an additional three hundred thousand dollars if the agency “provides intelligence which will directly contribute to the efforts to completely stop the Article from being published at all in any shape or form.” Black Cube would also be paid fifty thousand dollars if it secured “the other half” of McGowan’s book “in readable book and legally admissible format.”

The contracts also show some of the techniques that Black Cube employs. The agency promised “a dedicated team of expert intelligence officers that will operate in the USA and any other necessary country,” including a project manager, intelligence analysts, linguists, and “Avatar Operators” specifically hired to create fake identities on social media, as well as “operations experts with extensive experience in social engineering.”

Social engineering attacks are not only becoming more common against enterprises and SMBs, but they're also increasingly sophisticated. With hackers devising ever-more clever methods for fooling employees and individuals into handing over valuable company data, enterprises must use due diligence in an effort to stay two steps ahead of cyber criminals.

Social engineering attacks typically involve some form of psychological manipulation, fooling otherwise unsuspecting users or employees into handing over confidential or sensitive data. Commonly, social engineering involves email or other communication that invokes urgency, fear, or similar emotions in the victim, leading the victim to promptly reveal sensitive information, click a malicious link, or open a malicious file. Because social engineering involves a human element, preventing these attacks can be tricky for enterprises.

-- Social Engineering Attacks: Common Techniques & How to Prevent an Attack, by Nate Lord

The agency also said that it would provide “a full time agent by the name of ‘Anna’ (hereinafter ‘the Agent’), who will be based in New York and Los Angeles as per the Client’s instructions and who will be available full time to assist the Client and his attorneys for the next four months.” Four sources with knowledge of Weinstein’s work with Black Cube confirmed that this was the same woman who met with McGowan and Wallace.

Black Cube also agreed to hire “an investigative journalist, as per the Client request,” who would be required to conduct ten interviews a month for four months and be paid forty thousand dollars. Black Cube agreed to “promptly report to the Client the results of such interviews by the Journalist.”

In January, 2017, a freelance journalist called McGowan and had a lengthy conversation with her that he recorded without telling her; he subsequently communicated with Black Cube about the interviews, though he denied he was reporting back to them in a formal capacity. He contacted at least two other women with allegations against Weinstein, including the actress Annabella Sciorra, who later went public in The New Yorker with a rape allegation against Weinstein. Sciorra, whom he called in August, said that she found the conversation suspicious and got off the phone as quickly as possible. “It struck me as B.S.,” she told me. “And it scared me that Harvey was testing to see if I would talk.” The freelancer also placed calls to Wallace, the New York reporter, and to me.

Two sources close to the effort and several documents show that the same freelancer received contact information for actresses, journalists, and business rivals of Weinstein from Black Cube, and that the agency ultimately passed summaries of those interviews to Weinstein’s lawyers. When contacted about his role, the freelancer, who spoke on condition of anonymity, said that he had been working on his own story about Weinstein, using contact information fed to him by Black Cube. The freelancer said that he reached out to other reporters, one of whom used material from his interviews, in the hopes of helping to expose Weinstein. He denied that he was paid by Black Cube or Weinstein.

Weinstein also enlisted other journalists to uncover information that he could use to undermine women with allegations. A December, 2016, e-mail exchange between Weinstein and Dylan Howard, the chief content officer of American Media Inc., which publishes the National Enquirer, shows that Howard shared with Weinstein material obtained by one of his reporters, as part of an effort to help Weinstein disprove McGowan’s allegation of rape. In one e-mail, Howard sent Weinstein a list of contacts. “Let’s discuss next steps on each,” he wrote. After Weinstein thanked him, Howard described a call that one of his reporters made to Elizabeth Avellan, the ex-wife of the director Robert Rodriguez, whom Rodriguez left to have a relationship with McGowan.

Avellan told me that she remembered the interview. Howard’s reporter “kept calling and calling and calling,” she said, and also contacted others close to her. Avellan finally called back, because “I was afraid people might start calling my kids.” In a long phone call, the reporter pressed her for unflattering statements about McGowan. She insisted that the call be off the record, and the reporter agreed. The reporter recorded the call, and subsequently passed the audio to Howard.

In subsequent e-mails to Weinstein, Howard said, “I have something AMAZING . . . eventually she laid into Rose pretty hard.” Weinstein replied, “This is the killer. Especially if my fingerprints r not on this.” Howard then reassured Weinstein, “They are not. And the conversation . . . is RECORDED.” The next day, Howard added, in another e-mail, “Audio file to follow.” (Howard denied sending the audio to Weinstein.) Avellan told me that she would not have agreed to coöperate in efforts to discredit McGowan. “I don’t want to shame people,” she said. “I wasn’t interested. Women should stand together.”

In a statement, Howard said that, in addition to his role as the chief content officer at American Media Inc., the National Enquirer’s publisher, he oversaw a television-production agreement with Weinstein, which has since been terminated. He said that, at the time of the e-mails, “absent a corporate decision to terminate the agreement with The Weinstein Company, I had an obligation to protect AMI’s interests by seeking out—but not publishing—truthful information about people who Mr. Weinstein insisted were making false claims against him. To the extent I provided ‘off the record’ information to Mr. Weinstein about one of his accusers—at a time when Mr. Weinstein was denying any harassment of any woman—it was information which I would never have allowed AMI to publish on the internet or in its magazines.” Although at least one of Howard’s reporters made calls related to Weinstein’s investigations, Howard insisted that he strictly divided his work with Weinstein from his work as a journalist. “I always separated those two roles carefully and completely—and resisted Mr. Weinstein’s repeated efforts to have AMI titles publish favorable stories about him or negative articles about his accusers,” Howard said. An A.M.I. representative noted that, at the time, Weinstein insisted that the encounter was consensual, and that the allegations were untrue.

Hofmeister, Weinstein’s spokesperson, added, “In regard to Mr. Howard, he has served as the point person for American Media’s long-standing business relationship with The Weinstein Company. Earlier this year, Mr. Weinstein gave Mr. Howard a news tip that Mr. Howard agreed might make a good story. Mr. Howard pursued the tip and followed up with Mr. Weinstein as a courtesy, but declined to publish any story.”

Weinstein’s relationship with Kroll, one of the other agencies he contracted with, dates back years. After Ambra Battilana Gutierrez, an Italian model, accused Weinstein of sexually assaulting her, in 2015, she reached a settlement with Weinstein that required her to surrender all her personal devices to Kroll, so that they could be wiped of evidence of a conversation in which Weinstein admitted to groping her. A recording of that exchange, captured during a police sting operation, was released by The New Yorker last month.

During the more recent effort to shut down emerging stories, Kroll again played a central role. E-mails show that Dan Karson, the chairman of Kroll Americas’ Investigations and Disputes practice, contacted Weinstein at his personal e-mail address with information about women with allegations. In one October, 2016, e-mail, Karson sent Weinstein eleven photographs of McGowan and Weinstein together at different events in the years after he allegedly assaulted her. Three hours later, Weinstein forwarded Karson’s e-mail to Boies and Weinstein’s criminal-defense attorney, Blair Berk, and told them to “scroll thru the extra ones.” The next morning, Berk replied that one photo, which showed McGowan warmly talking with Weinstein, “is the money shot.”

Berk defended her actions. “Any criminal-defense lawyer worth her salt would investigate unproven allegations to determine if they are credible,” she said. “And it would be dereliction of duty not to conduct a public-records search for photographs of the accuser embracing the accused taken after the time of the alleged assault.”

Another firm, the Los Angeles-based psops, and its lead private investigator, Jack Palladino, as well as another one of its investigators, Sara Ness, produced detailed profiles of various individuals in the saga, sometimes of a personal nature, which included information that could be used to undermine their credibility. One report on McGowan that Ness sent to Weinstein last December ran for more than a hundred pages and featured McGowan’s address and other personal information, along with sections labelled “Lies/Exaggerations/Contradictions,” “Hypocrisy,” and “Potential Negative Character Wits,” an apparent abbreviation of “witnesses.” One subhead read “Past Lovers.” The section included details of acrimonious breakups, mentioning Avellan, and discussed Facebook posts expressing negative sentiments about McGowan. (Palladino and Ness did not respond to multiple requests for comment.)

Other firms were also involved in assembling such profiles, including ones that focussed on factors that, in theory, might make women likely to speak out against sexual abuse. One of the other firm’s profiles was of Rosanna Arquette, an actress who later, in The New Yorker, accused Weinstein of sexual harassment. The file mentions Arquette’s friendship with McGowan, social-media posts about sexual abuse, and the fact that a family member had gone public with an allegation that she had been molested as a child.

All of the security firms that Weinstein hired were also involved in trying to ferret out reporters’ sources and probe their backgrounds. Wallace, the reporter for New York, said that he was suspicious when he received the call from the Black Cube operative using the pseudonym Anna, because Weinstein had already requested a meeting with Wallace; Adam Moss, the editor-in-chief of New York; David Boies; and a representative from Kroll. The intention, Wallace assumed, was to “come in with dossiers slagging various women and me.” Moss declined the meeting.

In a series of e-mails sent in the weeks before Wallace received the call from Anna, Dan Karson, of Kroll, sent Weinstein preliminary background information on Wallace and Moss. “No adverse information about Adam Moss so far (no libel/defamation cases, no court records or judgments/liens/UCC, etc.),” Karson wrote in one e-mail. Two months later, Palladino, the psops investigator, sent Weinstein a detailed profile of Moss. It stated, “Our research did not yield any promising avenues for the personal impeachment of Moss.”

Similar e-mail exchanges occurred regarding Wallace. Kroll sent Weinstein a list of public criticisms of Wallace’s previous reporting and a detailed description of a U.K. libel suit filed in response to a book he wrote, in 2008, about the rare-wine market. psops also profiled Wallace’s ex-wife, noting that she “might prove relevant to considerations of our response strategy when Wallace’s article on our client is finally published.”

In January, 2017, Wallace, Moss, and other editors at New York decided to shelve the story.
Wallace had assembled a detailed list of women with allegations, but he lacked on-the-record statements from any victims. Wallace said that the decision not to run a story was made for legitimate journalistic reasons. Nevertheless, he said, “There was much more static and distraction than I’ve encountered on any other story.”

Other reporters were investigated as well. In April, 2017, Ness, of psops, sent Weinstein an assessment of my own interactions with “persons of interest”—a list largely consisting of women with allegations, or those connected to them. Later, psops submitted a detailed report focussing jointly on me and Jodi Kantor, of the Times. Some of the observations in the report are mundane. “Kantor is NOT following Ronan Farrow,” it notes, referring to relationships on Twitter. At other times, the report reflects a detailed effort to uncover sources. One individual I interviewed, and another whom Kantor spoke to in her separate endeavor, were listed as having reported the details of the conversations back to Weinstein.

For years, Weinstein had used private security agencies to investigate reporters. In the early aughts, as the journalist David Carr, who died in 2015, worked on a report on Weinstein for New York, Weinstein assigned Kroll to dig up unflattering information about him, according to a source close to the matter. Carr’s widow, Jill Rooney Carr, told me that her husband believed that he was being surveilled, though he didn’t know by whom. “He thought he was being followed,” she recalled. In one document, Weinstein’s investigators wrote that Carr had learned of McGowan’s allegation in the course of his reporting. Carr “wrote a number of critical/unflattering articles about HW over the years,” the document says, “none of which touched on the topic of women (due to fear of HW’s retaliation, according to HW).”

Weinstein’s relationships with the private investigators were often routed through law firms that represented him. This is designed to place investigative materials under the aegis of attorney-client privilege, which can prevent the disclosure of communications, even in court.

David Boies, who was involved in the relationships with Black Cube and psops, was initially reluctant to speak with The New Yorker, out of concern that he might be “misinterpreted either as trying to deny or minimize mistakes that were made, or as agreeing with criticisms that I don’t agree are valid.”

But Boies did feel the need to respond to what he considered “fair and important” questions about his hiring of investigators. He said that he did not consider the contractual provisions directing Black Cube to stop the publication of the Times story to be a conflict of interest, because his firm was also representing the newspaper in a libel suit. From the beginning, he said, he advised Weinstein “that the story could not be stopped by threats or influence and that the only way the story could be stopped was by convincing the Times that there was no rape.” Boies told me he never pressured any news outlet. “If evidence could be uncovered to convince the Times the charges should not be published, I did not believe, and do not believe, that that would be averse to the Times’ interest.”

The New York Times did not hire Boies to secretly advance their editorial agenda. Determining whether there is a conflict of interest that requires the lawyer to relinquish either or both clients is not based upon whether, in the mind of the lawyer, the work he does for one client will be injurious to the interests of the other client. Rather, the question is whether the lawyer can fairly advise two clients with conflicting interests, one with the goal of publishing the truth to the public, the other with the goal of concealing the truth from that same public. And how many times has he done this to the Times?

-- Charles Carreon, Attorney at Law

He conceded, however, that any efforts to profile and undermine reporters, at the Times and elsewhere, were problematic. “In general, I don’t think it’s appropriate to try to pressure reporters,” he said. “If that did happen here, it would not have been appropriate.”

Although the agencies paid by his firm focussed on many women with allegations, Boies said that he had only been aware of their work related to McGowan, whose allegations Weinstein denied. “Given what was known at the time, I thought it was entirely appropriate to investigate precisely what he was accused of doing, and to investigate whether there were facts that would rebut those accusations,” he said.

Of his representation of Weinstein in general, he said, “I don’t believe former lawyers should criticize former clients.” But he expressed regrets. “Although he vigorously denies using physical force, Mr. Weinstein has himself recognized that his contact with women was indefensible and incredibly hurtful,” Boies told me. “In retrospect, I knew enough in 2015 that I believe I should have been on notice of a problem, and done something about it. I don’t know what, if anything, happened after 2015, but to the extent it did, I think I have some responsibility. I also think that if people had taken action earlier it would have been better for Mr. Weinstein.”

Weinstein also drafted individuals around him into his efforts—willingly and not. In December, 2016, Weinstein asked the actress Asia Argento, who ultimately went public in The New Yorker with her allegation of rape against Weinstein, to meet in Italy with his private investigators to give testimony on his behalf. Argento, who felt pressure to say yes, declined after her partner, the chef and television personality Anthony Bourdain, advised her to avoid the meeting. Another actress, who declined to be named in this story, said that Weinstein asked her to meet with reporters to extract information about other sources.

Weinstein also enlisted two former employees, Denise Doyle Chambers and Pamela Lubell, in what turned out to be an effort to identify and call people who might speak to the press about their own, or others’, allegations. Weinstein secretly shared the lists they compiled with Black Cube.

Hofmeister, speaking on Weinstein’s behalf, said, “Any ‘lists’ that were prepared included names of former employees and others who were relevant to the research and preparation of a book about Miramax. Former employees conducting interviews for the book reported receiving unwanted contacts from the media.”

Doyle Chambers declined an interview request. But Lubell, a producer who worked for Weinstein at Miramax decades ago, told me that she was manipulated into participating. In July, 2017, Lubell visited Weinstein’s offices to pitch him on an app that she was developing. In the middle of the meeting, Weinstein asked Lubell if they could have a private conversation in his office. Lubell told me that a lawyer working with Weinstein was already there, along with Doyle Chambers. Weinstein asked if Lubell and Doyle Chambers could write a “fun book on the old times, the heyday, of Miramax.” “Pam,” she recalled him saying, “write down all the employees that you know, and can you get in touch with them?”

A few weeks later, in August, after they had made the list, Weinstein “called us back into the office,” Lubell recalled. “And he said, ‘You know what, we’re going to put a hold on the book.’” He asked Doyle Chambers and Lubell to “call some of your friends from the list and see if they got calls from the press.” In early September, Weinstein summoned Lubell and Doyle Chambers to his office and asked them to start making calls to people connected to several actresses. “It got kind of intense,” Lubell recalled. “We didn’t know these people, and all of a sudden this was something very different from what we signed up for.” Several of the targeted women said that they felt the calls they received from Lubell and Doyle Chambers, and from Weinstein himself, were frightening.

Lubell told me that hours before the first Times story broke, on October 5th, Weinstein summoned her, Doyle Chambers, and others on his team, including the attorney Lisa Bloom, who has since resigned, to his office. “He was in a panic,” Lubell recalled. “He starts screaming, ‘Get so-and-so on the phone.’” After the story was published, the team scrambled to respond to it. Bloom and others pored over pictures that, like the ones featured in the Kroll e-mails, showed ongoing contact between Weinstein and women who made allegations. “He was screaming at us, ‘Send these to the board members,’” Lubell recalled. She e-mailed the photographs to the board ahead of the crisis meeting at which Weinstein’s position at his company began unravelling.

Since the allegations against Weinstein became public, Lubell hasn’t slept well. She told me that, although she knew that Weinstein “was a bully and a cheater,” she “never thought he was a predator.” Lubell has wondered if she should have known more, sooner.

After a year of concerted effort, Weinstein’s campaign to track and silence his accusers crumbled. Several of the women targeted, however, said that Weinstein’s use of private security agencies deepened the challenge of speaking out. “It scared me,” Sciorra said, “because I knew what it meant to be threatened by Harvey. I was in fear of him finding me.” McGowan said that the agencies and law firms enabled Weinstein’s behavior. As she was targeted, she felt a growing sense of paranoia. “It was like the movie ‘Gaslight,’” she told me. “Everyone lied to me all the time.” For the past year, she said, “I’ve lived inside a mirrored fun house.”

Ronan Farrow, a television and print reporter, is the author of the upcoming book “War on Peace: The End of Diplomacy and the Decline of American Influence.”
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Re: Harvey Weinstein’s Army of Spies: The film executive hir

Postby admin » Fri Aug 24, 2018 1:10 am

Cambridge Analytica-linked businessman helped start Black Cube, lawsuit claims
Vincent Tchenguiz also helped controversial 'private intel agency' apply for Israeli government grant for developing dual-use technologies; Economy Ministry won't say if it got one
by Times of Israel Staff




Black Cube's internet homepage (screenshot)

Vincent Tchenguiz, an Iranian-born British entrepreneur and property tycoon who until 2015 was the largest shareholder in the parent company of the scandal-hit data firm Cambridge Analytica, also played a prominent role in the founding stages of the controversial Israeli business intelligence company Black Cube, and provided it with vital funding, according to a 2013 Israeli lawsuit filed by lawyers for Tchenguiz.

Tchenguiz, whose family is of Iraqi-Jewish origin, fell out with the secretive Israeli company and its founders and sued it for fraud and other alleged offenses, seeking almost a million pounds in damages. The case, which received very little media coverage at the time, was ultimately settled out of court.

Black Cube, which was founded in 2011 and whose former honorary board president was the late Mossad chief Meir Dagan
, has been at the center of considerable international press scrutiny in recent months.

Many of the company’s reported behind-the-scenes activities — including its work in Romania, its work on an election campaign in Hungary (where it denies involvement), its involvement in the Harvey Weinstein scandal, and its activities relating to the Iran nuclear deal, when it allegedly conducted a “dirty ops” campaign against former Obama administration officials — have made headlines worldwide.

Vincent Tchenguiz (YouTube screenshot)

Cambridge Analytica and its parent company SCL Group, too, have been the subject of intense media attention, with the FBI and US Justice Department reportedly investigating the now-defunct Cambridge Analytica over its role in the 2016 election campaigns of US President Donald Trump and other Republican politicians, including the harvesting and alleged illegal use of personal data of tens of millions of Facebook users.

Black Cube — which calls itself a “private intelligence agency” and employs former members of Mossad and other Israeli intelligence units — has denied any links to Cambridge Analytica or any of its subsidiaries. (Last month, the British Parliament’s Culture, Media and Sports Committee issued a report alleging that Black Cube had engaged in election-related hacking in Nigeria on behalf of SCL-linked companies, citing testimony it heard in March by Cambridge Analytica’s former research director Christopher Wylie; however Wylie retracted this allegation in US Senate testimony in May, and it was also denied by Brittany Kaiser, who managed Cambridge Analytica’s project in Nigeria, in written testimony to the British committee.)

In the 2013 lawsuit, which was filed days after Black Cube had sued Tchenguiz in the UK for breach of contract and unpaid bills, Tchenguiz’s lawyers claim that their client played a prominent role in the founding stages of Black Cube, and provide documentation to support this assertion.

If Tchenguiz, SCL Group’s largest shareholder until June 2015, indeed played a such a role in Black Cube in 2011-12, this sheds new light on two mysterious companies that are alleged to have been involved in political influence campaigns worldwide.

The 2013 Israeli lawsuit was brought by a private company, Vincos Ltd., of which Tchenguiz was the beneficial owner. In the suit, filed in Tel Aviv District Court, Tchenguiz claims that the setting up of Black Cube was partly his initiative.

“Defendants 3 and 4 [Black Cube founders Dan Zorella and Avi Yanus] entered into a contract with the plaintiff [Vincos Ltd.] according to which defendant 3, defendant 4 and the plaintiff agreed to jointly establish a company that provides business intelligence research,” the complaint reads.

The late Mossad chief Meir Dagan (Miriam Alster/Flash90)

Furthermore, the lawsuit indicates that Tchenguiz provided vital early funding for Black Cube, with the option of making a larger investment at a later date. “The plaintiff intended to invest in the company in the future and agreed to fund various projects involved in the company’s development, according to the cost plus business model whereby the defendants would have their costs covered by the plaintiff and receive an additional 15 percent on top of that,” it states.

In addition, Tchenguiz allowed the UK branch of Black Cube to operate from a London office he owned for the nominal monthly rent of one British pound, the suit states.

For over a year, from December 2011 until December 2012, Black Cube prepared weekly reports for Tchenguiz, some of which were provided as exhibits in the lawsuit, describing the projects the company was working on and the number of hours it spent on each project. Every Sunday, company founders Zorella and Yanus spoke by phone with Tchenguiz or his representative, the complaint in the lawsuit claims. Tchenguiz was apprised of all the company’s activities, documents attached to the lawsuit show, not merely those that concerned his own affairs — underlining the extent of his involvement in Black Cube.

Tchenguiz also helped the company apply for a grant from the Office of the Chief Scientist in the Israeli Economy Ministry, under a program that incentivizes entrepreneurs to develop dual-use military and civilian technologies for commercial export.

A spokeswoman for the Economy Ministry refused to say whether Black Cube received the grant. (In an unrelated case reported last year by The Times of Israel, the Economy Ministry gave taxpayers’ money totaling some $270,000 to a company at the heart of Israel’s now-outlawed binary options industry in order to help it expand abroad, even though the ministry had been warned in advance that the binary options industry was blighted by fraud; the ministry failed for two years to publicize the grant, in breach of its legal obligations.)

David Geclowitz and Ron Weiner, employees of the Israeli private intelligence firm Black Cube, being brought to the appeals court in Bucharest, after their arrest on suspicion of spying on the country’s chief anti-corruption prosecutor, April 12, 2016. (screen capture: YouTube)

According to Israeli law, any Israeli company exporting technologies that involve military-related equipment, know-how or services must receive an export permit from the Defense Ministry. When queried in November 2017 by MK Tamar Zandberg (Meretz) as to whether Black Cube had sought and received such a permit, Avi Abuhatzera, an adviser to Defense Minister Avigdor Liberman, replied, in a letter seen by The Times of Israel, that the Defense Ministry had asked Black Cube whether it was exporting military products or know-how that fall under the law’s regulations. Black Cube had replied in the negative, Abuhatzera told Zandberg, and the Defense Ministry had concluded, on the basis of this reply, that the law requiring a military export permit did not apply to Black Cube.

While the company’s activities may have changed in the intervening years, documents filed in the 2013 lawsuit reveal that Black Cube applied for the Economy Ministry’s Magnet/Meimad grant, which was specifically geared towards military exports abroad, and that the Defense Ministry may have even been a client of Black Cube at the time of the lawsuit.

‘Not transparent enough’

On March 23, 2013, Vincos Ltd., a British company owned by Tchenguiz, sued the defendants B.C. Strategy Ltd., also known as Black Cube Israel, its daughter company B.C. Strategy UK Ltd (Black Cube UK), the company’s founders Zorella and Yanus, and an additional employee, in Tel Aviv District Court.

Tchenguiz accused the defendants of fraud, breach of contract and unlawfully enriching themselves. He sought £924,790 in damages.

According to the complaint, Tchenguiz says he met Zorella in 2010 when the latter was an employee of a business intelligence firm called Businessscope. Businessscope was founded in May 2010 and its initial directors were Shai Schiller, Itay Yonat and Doron Dabby, later to be joined by Gadi Aviran, all of whom are well-known figures in Israel’s WebInt (web intelligence) industry. (These latter four names are cited on the relevant Israeli corporate documents. Apart from the claims in the lawsuit, there is no evidence of which The Times of Israel is aware that Zorella was a Businessscope employee.)

According to the complaint, a company owned by Tchenguiz held a 17 percent ownership stake in Businessscope. On March 10, 2011, when the British Serious Fraud Office raided Tchenguiz’s home and office — on suspicions that he had conspired to cause the collapse of Iceland’s Kaupthing Bank in 2008 — Tchenguiz turned to Businessscope, he said, and specifically to Dan Zorella, to help him fight the allegations.

A view of Reykjavik, Iceland’s capital. (CC BY-SA 3.0 Andreas Tille/Wikipedia)

After a short period of dealing with Businessscope, according to the complaint, Tchenguiz felt the company was not being sufficiently transparent in its dealings with him.

Zorella had a short time before, on March 7, 2011, set up his own Israeli business intelligence company, which he called Zorella Ltd; he later changed its name to B.C. Strategy Ltd., aka “Black Cube.”

Tchenguiz, according to the complaint, said he paid Businessscope £21,000 to allow Zorella to work with Tchenguiz through this new company, Black Cube. Tchenguiz said he agreed to pay the operating expenses of Zorella’s new company, starting in December 2011, plus 15 percent profits.

According to the complaint, Vincos Ltd. paid Black Cube a total of £844,790 over a period of 13 months
— from December 2011 till December 2012.

Tchenguiz and Zorella had agreed that Black Cube would do research into Kaupthing Bank — a project they had dubbed “Athena” — as well as seek out new projects and clients. Black Cube’s work on behalf of Tchenguiz led the Serious Fraud Office to eventually in 2014 drop the case against him [paywall], pay millions of dollars in damages and publicly apologize to him.

Throughout 2012, Vincos Ltd. received detailed weekly reports of Black Cube’s activities and paid the company on the basis of these reports, according to Tchenguiz, who attached several pages of these reports to the complaint.

As asserted in the complaint, “the plaintiff periodically received from the defendants a detailed budget for the various projects Black Cube was involved in and the plaintiff paid the defendants on the basis of detailed descriptions of the company’s expenses which they sent him. In addition, almost every Sunday there was a phone conversation between the plaintiff and defendants in which they detailed all the work and activity that Black Cube had undertaken over the past week and the plaintiff approved payments to the defendants on the basis of these presentations.”

In addition, on February 4, 2012, Tchenguiz and B.C. Strategy signed an agreement, attached to the complaint, stating that for the next five years Tchenguiz had the option to acquire 49 percent of the company and to appoint himself as a director.

According to the complaint, however, Tchenguiz began to suspect that Zorella and Yanus had padded their reports and charged him for work they had never done. This caused Tchenguiz to stop paying them and immediately halt negotiations over the option agreement. He then sent a letter to Israel’s Economy Ministry saying he would no longer be investing in B.C. Strategy and was withdrawing his support for B.C. Strategy’s application for a grant under the Magnet/Meimad program.

On March 8, 2013, Black Cube’s lawyers sent Vincos a letter demanding payment of £336,708, and subsequently sued him in the UK, a development that was covered in the British press. Vincos sued the company in Israel on March 23, an event that received minimal media coverage. Both cases were ultimately settled out of court. In April 2013, the Guardian reported that Tchenguiz had settled his dispute with Black Cube and that “the terms of the deal were not disclosed but include an undertaking not to discuss further details with the media.”

Tchenguiz’s lawyers attached several pages of Black Cube’s weekly reports [see link] to the complaint.

Several of the names mentioned in these reports are still in the headlines in 2018, although there is not enough information available to determine the nature of Black Cube’s association with these entities. For instance, Black Cube researched the Icelandic law firm Logos, whose managing partner Gunnar Sturluson was also a board member at the Icelandic firm FL Group, a company that has been in the media spotlight for being a heavy investor in several of Donald J. Trump’s real-estate projects.

Other questions raised by the reports include:

Why was Black Cube interested in Iran sanctions?

What, if anything, did it have to do with an Egyptian gas deal?

And did Black Cube do work for Israel’s Defense Ministry, as the reports in the complaint suggest?

The Trump Soho was funded in part by Iceland’s FL Group (Seth Wenig/Associated Press)

SCL Group and Tchenguiz

SCL Group and Cambridge Analytica are part of a tangled web of companies that even a UK parliamentary committee has struggled to map, as the committee explained in a report last month entitled “Disinformation and ‘fake news’: Interim Report.”

“Much effort has been expended in trying to untangle the complex web of relationships within what started out as the SCL (Strategic Communications Laboratories) group of companies, in which the founder Nigel Oakes and Alexander Nix have been involved, along with a myriad of changing shareholders,” reads the report.

“Christopher Wylie told us, in March 2018, that everyone who worked for Cambridge Analytica was ‘effectively’ employed by SCL: ‘When I started in June 2013, Cambridge Analytica did not exist yet. It is important for people to understand that Cambridge Analytica is more of a concept or a brand than anything else because it does not have employees. It is all SCL, it is just the front-facing company for the United States.'”

The UK parliamentary committee cited a May 2017 chart created by investigative journalists Wendy Siegelman and Ann Marlowe that includes 30 companies interlinked within the SCL Group, but noted that the structure had since changed.

What is clear, however, is that from 2005 to 2015 Vincent Tchenguiz was SCL Group’s largest shareholder. During this period, in 2014 and 2015, SCL Group held meetings with Lukoil, Russia’s second-largest oil company, according to the New York Times. Lukoil is under US sanctions and has strong Kremlin ties.

Also in 2015, when Tchenguiz still owned shares in SCL Group, the company or one of its affiliates allegedly intervened in elections in Nigeria. In a section devoted to SCL Group, last month’s UK parliamentary committee report stated that “We received disturbing evidence, some of which we have published, some of which we have not, of activities undertaken by the SCL-linked companies in various political campaigns dating from around 2010, including the use of hacking, of disinformation, and of voter suppression…“

According to Wylie’s testimony to the British parliamentary committee, when Robert Mercer and Steve Bannon (later Donald Trump’s campaign director and White House chief strategist) were finalizing the establishment of Cambridge Analytica, “they got rid of Tchenguiz [as a shareholder in SCL Group]. The Mercer lawyers didn’t like Tchenguiz’s involvement. He had fairly sketchy business dealings that they didn’t want to be associated with.”

White House Chief Strategist Steve Bannon listens as President Donald Trump speaks during a meeting on cyber security in the Roosevelt Room of the White House in Washington, Tuesday, Jan. 31, 2017. (AP Photo/Evan Vucci)

It is unclear what business dealings Wylie was referring to. But UK Companies House filings reveal that Tchenguiz was for a time an investor in a company in which Ukrainian oligarch Dmytro Firtash, who is wanted in the US for bribery and other allegations, was also an investor, as described by journalist Ann Marlowe.

Black Cube, in response to The Times of Israel’s requests for comment, said in a statement: “This is an example of sensationalist reporting on Black Cube of absolutely no value. This story, which is from five years ago, has been dug up, twisted and is completely misleading the readers.”

Vincent Tchenguiz’s Consensus Business Group did not comment on its relationship with Black Cube but sent the following response with regard to SCL Group.

“Consensus Business Group invested in SCL in 2005 taking a 24% stake in the business. The investment was made on the basis that the company was intending to develop a major emergency response and strategic communication centre capability for clients.

“When SCL’s business model failed, Consensus Business Group lost interest in the investment and began negotiating an exit from the business in 2013. It finally sold its stake back to SCL’s management in 2015 at a loss.

“Consensus Business Group was a financial investor and not involved in the day to day management or operations of SCL. The investment in SCL was just one of many investments made by Consensus Business Group during the period from 2002 to 2008.”

Spies for hire

In July, Politico reported that Black Cube had secretly recorded representatives of Hungarian NGOs as part of a campaign to discredit the opposition in the run-up to Hungary’s national elections. (Black Cube has denied involvement.)

In 2016, two Israeli Black Cube employees were arrested in Romania for harassing and spying on the country’s anti-corruption czar and later pled guilty to the charges.

In this May 25, 2018 file photo, Harvey Weinstein, center, listens during a court proceeding in New York during his arraignment on rape and other charges. (Steven Hirsch/New York Post via AP, Pool)

Black Cube was also reportedly hired by disgraced movie mogul Harvey Weinstein to discredit women accusing him of rape. (A Black Cube board member later apologized for Black Cube having worked on Weinstein’s behalf.)

Other players

Black Cube is not the only Israeli company that has come under fire for reportedly exporting military-grade spy tools and techniques to deep-pocketed international clients.

In May of this year, the New York Times and Wall Street Journal reported that a now-defunct Israeli company called Psy-Group was being investigated by the FBI in connection with Special Counsel Robert Mueller’s probe into alleged illegal interference in the 2016 US presidential election.

Psy-Group, which operated in Israel under the name Invop Ltd, was a self-styled leader in “intelligence and influence” which boasted in its marketing material of its covert techniques and capabilities. Its founder and co-owner Joel Zamel was reported by the New York Times in May to have met with Donald Trump Jr. three months before the November 2016 US presidential elections, offering to assist his father’s campaign, and the company was reported to have drawn up “a multimillion-dollar proposal for a social media manipulation effort to help elect Mr. Trump.”

Former FBI director Robert Mueller testifies on Capitol Hill on June 19, 2013, (AP Photo/J. Scott Applewhite)

Meanwhile, an Israeli company called NSO Group that sells software that can hack into smartphones has drawn media attention lately because its software was reportedly used to target human rights activists in Mexico and a dissident in the United Arab Emirates. (NSO Group did not respond to a Times of Israel request for comment.)

Defensive Shield, another Israeli company that has reportedly exported Israeli military know-how to regimes abroad, is currently the subject of an ongoing Israeli police investigation over alleged corrupt practices abroad, police told The Times of Israel.

The Times of Israel is also aware of at least four Israeli military/intelligence companies that have overlapping ownership with now-outlawed fraudulent binary options companies.

One of Israel’s staunchest critics of the unregulated activity of former Israeli military and intelligence personnel abroad is opposition MK Zandberg, the chair of the Meretz party, who wrote in a November 2017 Facebook post (Hebrew) that “Black Cube is part of an entire Israeli industry that exports the weapons, security know-how and training of Israeli security forces, and that crisscrosses the globe for dubious goals. We are aware of the involvement of Israelis in ethnic cleansing, persecution of citizens and spying on journalists.”

Leader of the Meretz party MK Tamar Zandberg attends during a joint Knesset and Constitution Committee meeting at the Knesset, July 10, 2018. (Yonatan Sindel/Flash90)

“This shameful activity is made possible under the veil of extreme secretiveness justified by the prestigious halo of ‘security.’ But behind this veil we learn time after time there is just a lot of money that former generals are raking in at the expense of basic morality,” she charged.

In recent years, a shadowy spy-for-hire industry has sprung up in Israel, Dr. Avner Barnea, chairman of the Israeli Forum of Competitive Intelligence, told The Times of Israel in a phone interview, and it is giving legitimate Israeli companies a bad reputation.

Although many of these firms describe what they do as business intelligence, it is anything but, he charged. “Competitive intelligence is completely different from the reported, alleged activity of companies like Black Cube and Psy-Group,” he said.

“Competitive intelligence is intelligence that companies need to make business decisions — whether to adopt a new technology, tweak their product or take other decisions to achieve and sustain competitive advantage. Our industry, through SCIP (the Strategic and Competitive Intelligence Professionals Association), has a code of ethics and we never obtain information through illegal means or by impersonating someone we are not.”

‘No Israeli law enforcement’

Dr. Avner Barnea (LinkedIn)

Barnea described Black Cube, however, as a private investigation firm that, according to media reports, “seeks out information that is not open source in a manner that is illegal. They impersonate people they are not, create fake websites, and use other dubious means.”

(Black Cube has denied any illegal activity, saying it “always operates in full compliance of the law in every jurisdiction.”)

“In Israel it is against the law to impersonate someone else; you can face up to five years in prison for that,” said Barnea. “But many of these companies do this.”

Black Cube, said Barnea, applies the methods a state intelligence agency might use to combat terrorists or enemies to civilian life. Exacerbating the problem, said Barnea, is that Israeli police do nothing to curb this phenomenon. “There is no law enforcement in Israel, so companies can do anything they want,” he said.

In November 2017, the Israeli Bureau of Private Investigators filed a complaint against Black Cube with the Israeli police, alleging that it was conducting private investigations without a license and gathering evidence, within Israel, using illegal means. Black Cube has denied the allegations.

The Times of Israel asked the Israel Police whether it was investigating Black Cube. A police spokesman replied that “we do not provide information about the existence or non-existence of police operations and we neither confirm nor deny that such operations are occurring.”

Asked why such intelligence companies for hire seem to have sprung up in Israel, Barnea replied, “Israelis learn some of these techniques in the army. Some Israel Defense Forces veterans are happy to share their expertise with people who pay them a lot of money. There is no law enforcement on the one hand, and a lot of money to be made on the other. ”
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Re: Harvey Weinstein’s Army of Spies: The film executive hir

Postby admin » Fri Aug 24, 2018 1:14 am

Who are Robert and Vincent Tchenguiz?
Robert Tchenguiz, the Mayfair-based entrepreneur, has challenged his arrest by the Serious Fraud Office under a judicial review filed at the High Court. Here, we look back at how the brothers made their fortune, up to the SFO raids.
by The Telegraph
May 18, 2011



Robert Tchenguiz (left) and brother Vincent Photo: Geoff Pugh/Rex Features

At their height, Vincent and his younger brother Robert amassed a £4bn property portfolio. The pair, of which Vincent is the older, also held large stakes in Sainsbury's, SCI, and Mitchells & Butlers - they were listed as Britain's 78th richest men in 2008 - and everyone knew it.

Robert bought a £20m frescoed mansion in Kensington next to the Royal Albert Hall where his parties became legendary. Vincent, who once said he was "too rich to marry", was often surrounded by a select group of women and became a regular at Carpaccio, the London restaurant, and Annabel's, the Mayfair nightclub.

Vincent, even owns a yacht named "Veni, Vidi, Vici" (I came, I saw, I conquered).

The brothers amassed their fortune because they did more than build portfolios of bricks and mortar: they pioneered a new brand of financial engineering, too.

Vincent once said in an interview: "I am a financial technician. I operate in the property market but finance is the key."

They turned property into a financial asset that could be traded – and used as collateral – just like an ordinary commodity.

The brothers, who grew up in Iran, the sons of Jewish-Iraqi immigrants, were always ambitious. A big driver was their father, Victor, who ran the Iranian mint and was close to the Shah, but who lost everything when he fled to Britain after the revolution in 1979.

He sent both boys to American and Canadian universities and the top business schools.
Robert went straight into property, while Vincent had a stint in foreign-exchange trading before joining him.

In 1982 they set up Rotch, through which they borrowed money to buy property and then used the rent to service the debt. Showing remarkable confidence, the brothers went on spending sprees during the property slump of the early 1990s. Soon after they used a range of complicated financial tools, particularly securitisation, to service the debt.

They developed their own "black-box", or unique tactic, which was to use actuaries to value property. Instead of using rent reviews and other traditional methods, the actuaries made valuations from statistical models that include service charges and price appreciation.

Having started out on a couple of buildings in Croydon, the brothers did bigger and better known deals from buying the Shell-Mex House office complex on the Strand in the UK's biggest single property sale at the time, to teaming up with Bernie Ecclestone to bid for Selfridges.

As the global debt boom started, the bankers fell over themselves to lend. To start with they used Royal Bank of Scotland but their appetite for debt was too much even for RBS.

They were introduced to Kaupthing through Jón Ásgeir Jóhannesson, the Icelandic founder of Baugur Group, in which they discovered an institution that was as ambitious as themselves.

But then followed revelations that the Tchenguizs' exposure to Kaupthing was big enough to bring down not just the bank, but even Iceland itself. Suddenly the cheerful debt technicians had become in their own right a fully charged fault in the global crisis.

No one anticipated the scale of the debts. To start with, there were the staggering personal losses: at one stage during the crunch, Robert was dubbed the "$1bn man" for the paper losses he had incurred.

Iceland's investigation into its financial collapse noted a huge increase in loans to Robert's companies in early 2007 at around the time he became a board member of the bank's largest shareholder, an investment firm called Exista.

It says Robert was a part-owner of Exista, adding that a "sharp increase in facilities to Robert in the period January 2007 to October 2008 is interesting in this light".

The document goes on to describe how Robert "benefited from particular goodwill among the bank's management, making its facilities easier to access than otherwise".

Rather than start calling in Robert's loans when his companies were suffering margin calls in 2008, the bank carried on lending its key client more money.

At this time, the British regulator knew the bank was having liquidity problems and still allowed Kaupthing to set up retail operations attracting £2.5bn of deposits from UK savers in April – a move that is now under investigation by the Serious Fraud Office.

In the first nine months of 2008, in the throes of the credit crisis, Kaupthing awarded Robert an additional £170m to meet margin calls from its subsidiaries in Luxembourg and the Isle of Man, plus Morgan Stanley and Dawnay Day.

The bank eventually forced the firesale of stakes in Sainsbury's and M&B on the eve of its collapse, causing him hefty losses. Its winding-up committee is now involved in a tussle with Robert over his £643m stake in Somerfield, put up as collateral for part of the loans.

In turn, Mr Tchenguiz claims he is a creditor of the failed bank and owed £650m. He is likely to launch legal action based on the argument that the bank misrepresented its position. A source close to the Tchenguiz family said the bank entirely misrepresented its position and investors had no idea about the scale of Kaupthing's problems.

To make matters worse, on March 9, 2011, Robert and Vincent - whose property empire was forced into administration less than a week later - were arrested in London by the UK's Serious Fraud Office as part of their ongoing investigation in conjunction with Iceland's Special Prosecutor’s Office into the collapse of Kaupthing.

Both of the Tchenguiz brothers have denied any wrongdoing related to Kaupthing. They were released without charge.

Robert dismissed the raids as a "publicity stunt", adding: "The disproportionate and aggressive conduct of the SFO were designed to generate maximum publicity for its own ends given its uncertain future. I believe that my arrest was wrongful and I have therefore instructed my solicitor to investigate urgently whether it was and whether the searches were legal."

Vincent has since launched a judicial review against the raids, stating in legal papers that the SFO's actions were “unlawful” and “grossly excessive”.
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Re: Harvey Weinstein’s Army of Spies: The film executive hir

Postby admin » Fri Aug 24, 2018 1:30 am

Vincent Tchenguiz and Iceland's Kaupthing settle lawsuit
by Kirstin Ridley
October 31, 2017



LONDON, Oct 31 (Reuters) - Vincent Tchenguiz and Kaupthing said on Tuesday they had settled a 2.2 billion pound ($2.9 billion) lawsuit brought by the real estate mogul after a botched Serious Fraud Office investigation into the Icelandic bank’s collapse during the credit crisis.

UK-based Tchenguiz and his companies filed a High Court claim in 2014 alleging Kaupthing, professional services group Grant Thornton, two of its partners and an Icelandic lawyer conspired to instigate the SFO inquiry.

Kaupthing said it had agreed to make unspecified payments to the Tchenguiz Family Trust (TFT) as part of the confidential settlement. Tchenguiz said he had withdrawn proceedings against all other co-defendants.

“I am glad to have brought these proceedings to a close,” he said in a statement. “I now look forward to the future and can focus on my business.”

Iranian-born Vincent and his brother Robert, two of Britain’s most high-profile property entrepreneurs, have said the SFO investigation into the 2008 collapse of Kaupthing caused lasting damage to their reputations and businesses.

The SFO dropped its case in 2012 and the Tchenguiz brothers, who were both investigated and briefly arrested the previous year, received a 4.5 million pound out-of-court settlement and a full apology from SFO director David Green in 2014.

Grant Thornton, which has said consistently that it acted appropriately and in accordance with its responsibilities and legal obligations, said the case arose “wholly because we co-operated with the authorities” and welcomed its withdrawal.

After the SFO dropped its investigation, the Tchenguiz brothers blamed “external influences” for the events that led to their arrest and said they would pursue those they said were responsible and liable for the damage caused.

Soon after they were detained in 2011, Bank of America Merrill Lynch recalled a 124.6 million pound loan to Vincent Tchenguiz’s Peverel Group, pushing the property management business into administration.

Robert said in an email to Reuters that he was continuing with his separate litigation, but did not elaborate.

Vincent, whose property interests span both commercial and residential properties in the UK, has also just taken on a new superyacht, the 165-foot Da Vinci. ($1 = 0.7569 pounds) (Reporting by Kirstin Ridley; editing by Alexander Smith)
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Re: Harvey Weinstein’s Army of Spies: The film executive hir

Postby admin » Fri Aug 24, 2018 1:47 am

The Tchenguiz brothers win their legal challenge against the SFO
by Sigrun Davidsdottir



The High Court (Sir John Thomas, President of the Queen’s Bench Division, and Mr Justice Silber) has today declared that search warrants issued to the Serious Fraud Office were unlawful as they were obtained by misrepresentation and non-disclosure of the judge. – This is the beginning of the Summary of the judgment July 31 regarding the judicial review sought by Vincent and Robert Tchenguiz.

The story is that when the SFO presented their reasons in March last year for requesting a permission for house searches at the home and offices of the Tchenguiz brothers the SFO mispresented their material very badly. Ergo, the ruling is a heavy criticism of the SFO. I would also read the ruling as a criticism of judge Paul Worsley, who heard the SFO in March last year, although the two judges tread very lightly on that issue. But how could the SFO be so sloppy/bad/imprecice in its presentation? The issues the two judges differ on with the SFO are dealt with in para 122-124, quoted in extenso below. The judges add some sweetener to their bitter pill to the SFO: at the end of the judgment they go to some length in excusing/explaining SFO’s mistake by emphasising the SFO’s lack of human and financial resources.

Regarding Robert and his company R20 Lth, the Court concluded (comments in[] are mine; the “para” refers to paragraphs in the ruling):

“We regret to conclude that the Information did not properly present the transactions where criminality was suspected in the context of the financial markets in which they were undertaken. The background was straightforward, but it was never explained. The case that was made on the specific transactions was not in the respects we have identified accurately set out; it failed in the respects we have identified fairly to draw to the attention of the judge the points that weighed against the granting of the warrants.” (para 170)

“The failure to set out the background, lack of clarity in the presentation in the Information and in the oral evidence, the errors made and the failure to put the matters that weighed against the granting of the warrant have been set out by us in detail. At the hearing before the judge, the oral evidence given at the hearing was both unfair and inaccurate. The tone of that evidence was unjustified. We have no doubt that, if what was in the Information [submitted by the SFO to the judge in March 2011, when the permission for the searches was sought] had been presented in such a way that the background was properly explained, the errors were corrected and the matters that weighed against the grant of the warrant had been drawn to the judge’s attention, it would have made a real difference and he would not have granted the warrants.
This is very far from the case where the failures only might have made a difference; they plainly did, as the warrants would not have been granted.” (para 175)

“… it is apparent from what we have set out after a detailed examination of the materials over three days in court and a study thereafter of the evidence presented to us that a case of reasonable suspicion might have been advanced and presented by the SFO to the judge, at least in relation to the making of the Oscatello loan facility and associated arrangements (see paragraph 124 above) and the Money Market loans (see paragraph 136). This would have been a task that did not require corrections or additions by way of disclosure, but it would have required starting again and putting the presentation in a coherent, fair and analytical manner. Whether there was or is such a case of reasonable suspicion, if a case had been made in that way, would then have been for the judge to determine.”

“Although we consider such a case might have been made, we cannot accept the submission that it would be just to refuse to quash the decision of the judge. What we would be doing would be permitting the SFO in effect to justify what it had done by adopting a proper and analytical approach in this court and doing what it had manifestly failed to do when it went to Judge Worsley.” (paras 176‐177)

This is yet another victory for Vincent against the SFO – the SFO has already dropped all investigations into his affairs with Kaupthing – and completes his vindication in his dealings with the SFO. In a press release yesterday, Vincent said: “I will be seeking damages from the SFO – and from any other parties who contributed to the Court being misled. My claims will reflect the substantial personal and business costs and losses that have directly resulted from the actions of these parties.” The comment leaves an open question as to who else, beside the SFO Vincent will sue. The fact that Grant Thornton, an international advisory firm, played a large part in this whole saga might indicate who Vincent has in mind – but it remains to be seen.

Though Robert, as well as his brother, won his legal challenge against the SFO he has less to celebrate. The SFO has reiterated that its investigation into his relationship with Kaupthing is still ongoing. However, Robert has stated the following: “I now intend to pursue my claim in respect of damages I have suffered as a result of the SFO’s (Serious Fraud Office’s) illegal actions.” He also intends to bring proceedings against the SFO in respect to his arrest.

The ruling itself offers some insight into the mistakes the SFO made in handling this investigation, as well as the issues being investigated.

First some facts regarding Kaupthing: “On 8/9 October 2008, Kaupthing collapsed. According to the Information presented by the SFO it had €8bn in debts, 25% of which was owed by companies within the TDT [Tchenguiz Discretionary Trust; related to Robert Tchenguiz] and 12% by Exista Hf [owned by the Icelandic brothers Agust and Lydur Gudmundsson, with Robert as a board member the last few years], its largest shareholder.” – Robert Tchenguiz owed Kaupthing £1.6bn when the bank collapsed. The fact that Kaupthing’s largest shareholders were also its largest borrowers follows a familiar pattern from the other two Icelandic banks, Landsbanki and Glitnir.

As to the allegations made by the SFO related to Robert and the TDT:

105. As we have set out, five specific transactions were relied on as showing suspected criminality. Listed in chronological order, they were:

i) The Oscatello loan facility and the increases in lending under it

ii) Money Market loans [in total, Kaupthing made 36 money market loans to Oscatello, in total £345m; £143 million was repaid, but £156m was outstanding at the time of the collapse of Kaupthing. Explained in para 132 and following.]

iii) Pumpster [regarding Kaupthing loans to a company owned by TDT; the SFO alleges these loans concealed bad debt to Kaupthing at a time when Oscatello was insolvent. Explained para 138 and onwards.]

iv) Thorson [a TDT company; Kaupthing transferred almost £62m to Thorson’s account with Kaupthing Luxembourg 3 October 2008; para 151.]

v) Project Longboat and the PIK notes [transactions 13 November 208 related to Oscatello; para 157]

Here are some highlights from the judgment. The following refers to the allegation, see v) above, but as seen here these allegations were also a matter between the Kaupthing resolution committee and TDT:

After the collapse of Kaupthing, TDT companies entered into a series of transactions on 13 November 2008 through which the security previously pledged to Kaupthing for loans to Oscatello [structure owned by TDT with Kaupthing as a co-investor] were replaced by “Payment in Kind Notes”. Immediately after the transaction had been effected, the lawyers acting for TDT notified the Resolution Committee of Kaupthing that the transactions had taken place. The clear intention and effect of these transactions were to remove the assets, including interests in Somerfield Ltd, used as security for the loans by Kaupthing, to companies outside the Oscatello structure to prevent the liquidators of Kaupthing taking control of those assets and selling them in the then market conditions. [This is how the SFO presented these transfers.]

30. On 5 December 2008, the Resolution Committee began proceedings in the British Virgin Islands in respect of these transactions against Investec and the Oscatello companies. The pleadings signed by Mr Steinfeld QC alleged fraud. Grant Thornton prepared a report on this transaction on 14 January 2009. An interim application for the appointment of receivers was made to the courts of the BVI which was vigorously contested on grounds set out in an affidavit sworn by an officer of Investec. The proceedings were subsequently settled for £137m in June 2010; we were told by Lord Macdonald QC who appeared for RT and R20 [company belonging to Robert’s business sphere] that this payment represented the proceeds of the sale of the interests in Somerfield Ltd. All allegations of fraud were withdrawn as part of the settlement.

On how the SFO presented its case to Judge Worsley in March last year:

After short submissions from the in-house advocate the judge authorised the issue of the warrants. Nothing was asked or said as to whether the judge had been told matters that weighed against issuing the warrants.

51. The judge gave no reasons for his decision. [This is what I take to be a criticism of the Judge.] This is a matter of complaint which we consider as the second issue at paragraphs 202 and following.

The SFO has dropped its investigation not only into Vincent Tchenguiz but also into Kaupthing Singer & Friedlander manager Armann Thorvaldsson and another key Kaupthing employee Gudni Adalsteinsson. Former chairman Sigurdur Einarsson and CEO Hreidar Mar Sigurdsson are still under investigation. The following is an interesting indication of matters being investigated:

There was no allegation against RT or VT that they had tampered with or destroyed documents, though such an allegation was made in the Information against others.

The SFO greatly emphasised that Kaupthing kept on lending to Oscatello all through 2008 even if it seemed “under water,” as stated in an email from Gudni Adalsteinsson. However, the two judges felt this was a one-sided presentation – this is the core of their grave criticism of SFO’s presentation. The two judges take a different stance on the loans and that’s what they are pointing out here:

122. It was obvious that a forced liquidation of Oscatello at the time of the 19 December 2007 arrangements could, because of the nature of the security held by Kaupthing, in all probability have seriously damaged Kaupthing. It is not uncommon that a bank exposed to a company with a balance sheet of the type exhibited by Oscatello might have therefore a commercial rationale for lending more money in those circumstances, even if the company was insolvent; the bank would hope that the market would improve and that the loss that would result from a decision to terminate the lending and consequent insolvency would be averted.

123. In our judgment, the failure to set out these facts and to explain these matters in the Information and oral evidence, was a grave and material omission which resulted in the judge not being given a fair presentation of the key issue in the case – was this a case where Kaupthing made a wrong commercial decision in December 2007 by continuing to lend to the TDT companies in the hope that their exposure would be reduced by an improvement in the market or was this dishonest and collusive lending?

124. The failure to explain that issue in these relatively simple terms is entirely consistent with the overall presentation to the judge which did not set the issues out in an analytical manner.
It is with deep regret that we have reached this conclusion on what was done. Properly understood and explained, the materials which we have had an opportunity of examining during a three-day hearing before us and thereafter, might have provided grounds for reasonable suspicion on the basis of the matters to which we have referred at paragraph 118 and the matter to which we refer in paragraph 126.

It would then have been for the judge to be personally satisfied that it did. However that was not the way in which the matter was put before the judge. He was given an account that was not only wholly inadequate, but unfair.

This is how the judges view the case – the judicial review was not about the merits of the investigation but about procedures in obtaining permission for house searches etc. Below, the judges spell this out quite clearly:

176. However, it is apparent from what we have set out after a detailed examination of the materials over three days in court and a study thereafter of the evidence presented to us that a case of reasonable suspicion might have been advanced and presented by the SFO to the judge, at least in relation to the making of the Oscatello loan facility and associated arrangements (see paragraph 124 above) and the Money Market loans (see paragraph 136). This would have been a task that did not require corrections or additions by way of disclosure, but it would have required starting again and putting the presentation in a coherent, fair and analytical manner. Whether there was or is such a case of reasonable suspicion, if a case had been made in that way, would then have been for the judge to determine.

177. Although we consider such a case might have been made, we cannot accept the submission that it would be just to refuse to quash the decision of the judge. What we would be doing would be permitting the SFO in effect to justify what it had done by adopting a proper and analytical approach in this court and doing what it had manifestly failed to do when it went to Judge Worsley.

178. In any event, as Lord Macdonald correctly submitted as we have set out at paragraph 76, the merits of the investigation and continuing the investigation are not an issue in these proceedings. It is very important that proceedings of this kind are confined to the issues that strictly arise and are not utilised as a means of indirectly seeking the court’s view on an investigation. The question whether matters should be investigated is under our constitution the responsibility of the investigating and prosecuting authorities; the role of the courts is strictly limited. There would be highly undesirable consequences if it were otherwise

As the SFO has stated, its investigation regarding Kaupthing continues.


SFO drops its investigation of Kaupthing – the OSP Kaupthing case in Iceland
with one comment

by Sigrun Davidsdottir
October 15, 2012



The final nail in the Kaupthing coffin at the SFO: the investigation has been closed, due to “lack of evidence.” However, the SFO states in its press release today that the cooperation with the Icelandic Special Prosecutor will continue.

This has been a long and sorry saga after the fateful SFO house searches in March last year. Although several ex-managers of Kaupthing were investigated the main media focus here in the UK was on the Tchenguiz brothers, Vincent and Robert. The investigation into Vincent’s case was dropped this summer, with a full apology from the SFO.

Now, the whole investigation is dropped but no apology. This means that, amongst others, Robert Tchenguiz and ex-chairman of the Kaupthing board are no longer being investigated.

In Iceland, things are going better for the investigators. The Office of the Special Prosecutor has charged Kaupthing’s second largest shareholder Olafur Olafsson and the Kaupthing managers Sigurdur Einarsson, Hreidar Mar Sigurdsson and Magnus Gudmundsson in connection to loans to Sheikh Mohammad al Thani – loans that were used to buy a 5.1% share in Kaupthing in September 2001. It’s alleged that since Kaupthing financed the deal but let it be known that the Sheikh had much faith in the bank, it was an alleged case of market manipulation and also alleged breach of fiduciary duty as, according to the charges, the managers did not secure a repayment of the loan. The Sheikh has not repaid the loan and is being sued by the Kaupthing Winding-up board for non-repayment.

The interesting difference between the Icelandic OSP charges and the SFO approach is that the OSP charges relate to alleged misconduct of those in charge of the bank, aided by the shareholder. The failed SFO investigation was aimed at alleged suspect customer relationship. It’s much harder to prove that a client who got a good deal was breaking the law than to prove misconduct in issuing loans.

The al Thani case is now starting its journey through the Icelandic court system. In a report (in Icelandic) that Sigurdsson has lodged with the court he refutes all wrong-doing. He states that yes, there might potentially have been a criminal action relating to the al Thani loan – but the possible criminal action related to deeds done by two other employees – Eggert Hilmarsson and Halldor Bjarkar Ludviksson – whereas everything he himself did was complete in accordance with rules and regulation. – The interesting angle here is that Sigurdsson is pointing finger at two colleagues who have cooperated with the Icelandic investigation.
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Re: Harvey Weinstein’s Army of Spies: The film executive hir

Postby admin » Fri Aug 24, 2018 2:26 am

SCL influence in foreign elections
by parliament.uk
Published: 29 July 2018




205. The influencing of elections by foreign powers, through the distortion of facts, or by the micro-targeting of voters, to persuade them to vote in a certain way, or to suppress their desire to vote at all, has been a reoccurring theme throughout this inquiry. This chapter will explore the disturbing inter-relation between disinformation and the manipulation of election campaigns, concentrating on the work of SCL Elections, and associated companies.


206. The Committee received evidence about the role of SCL Elections, a company that Alexander Nix formed, as an offshoot of SCL Group, in 2011, and its role in foreign elections, including its use of misinformation, disinformation and micro-targeting, which may have crossed the line into unethical, or even illegal behaviour. A Channel 4 undercover investigation, broadcast in March 2018, filmed Mark Turnbull, former Managing Director of SCL Elections, and Alexander Nix, the then CEO of Cambridge Analytica, talking about using misinformation, dirty tricks and the manipulation of social media to influence elections around the world, and boasting of using bribery, honey traps and sex workers to discredit politicians and to influence the political outcome of elections in elections in several countries.257

207. Mr Turnbull also talked about the manipulation of social media companies, in order to distribute negative material on political opponents, done in such a way so as not to be identified as the source of the material:

You’re creating social media content that you’re putting out into social media and you’re just gently amplifying, by hitting influential people who have huge following on Facebook and Twitter, so they retweet, re-post, and so this stuff infiltrates the online community and expands, but with no brand, so it’s unattributable, untrackable. […] [W]e just put information into the bloodstream to the Internet, and then watch it grow, give it a little push every now and again, over time, to watch it take shape.258

208. Mark Turnbull described how they “ghosted in and ghosted out” of election campaigns.259 In a recorded telephone conversation with the Channel 4 reporter, Alexander Nix said that “we do incognito very well indeed, in fact we have many clients who never wish to have our relationship with them made public. […] And, we’re used to that, we’re used to operating through different vehicles, in the shadows, and I look forward to building a very long-term and secretive relationship with you”.260

209. When Alexander Nix first gave evidence to us, he described SCL’s political work:

We have been running election campaigns since 1994. We take on a number of national elections every year. That could be three, four, five, six, seven elections across the world in every single year for prime ministers and presidents. That could be in Asia, Latin America, Europe, Africa or beyond. […] We have a political division, but our political division is only, say, 20% or 25% of our entire business.261

210. The following election and referenda campaigns were mentioned by Mr. Turnbull and Mr. Nix, over the course of the Channel 4 meetings: Kenya, Kenyatta campaign 2013; Kenya, Kenyatta campaign 2017; Ghana 2013; Mexico; Brazil; Australia; Thailand; Malaysia; Indonesia; India; Nigeria; Pakistan; Philippines; Germany; England; Slovakia; Czech Republic; and Kosovo.262 Ex-SCL employees have also mentioned: France; Guyana; Gambia; Germany; Italy; Kenya; Malaysia; Mongolia; Niger; Nigeria; Peru; St Kitts and Nevis; St. Lucia; and Trinidad and Tobago. SCL may also have worked on the Mayoral election campaign in Buenos Aires in 2015 for Mauricio Macri, including delivering some target audience analysis work.263

211. We were told that, behind much of SCL Elections’ campaigning work was the hidden hand of Christian Kalin, Chairman of Henley and Partners, who arranged for investors to supply the funding to pay for campaigns, and then organised SCL to write their manifesto and oversee the whole campaign process. In exchange, Alexander Nix told us, Henley and Partners would gain exclusive passport rights for that country, under a citizenship-by-investment (CBI) programme.264 Alexander Nix and Christian Kalin have been described as having a ‘Faustian pact’.265 With the exclusive passport rights came a government that would be conducive to Mr. Kalin and his clients.266

212. Alexander Nix told the Committee that, at times, SCL Elections would undertake eight, nine or 10 elections a year, “and we are not limited by geography, so this really could be from the Caribbean to Asia to Africa to Europe or everywhere”.267 When asked about his involvement in the elections with Mr Kalin, including in St Kitts and Nevis, Dominica, St Vincent and the Grenadines, and the Referendum in St Vincent and the Grenadines, he responded:

I was familiar with Christian Kalin because he had worked in some of the Caribbean islands. I know he used to run a citizen-by-investment programme, certainly in St Kitts and possibly the Dominica. I do not know about the other countries.268

213. He told us that Mr Kalin “may well have made contributions towards the election campaigns, but you would have to talk to him about that. […] [M]y understanding is that he may well have financed some of the elections or given contributions towards some of the elections”.269 This chapter will explore the specific examples of misinformation, disinformation, and malign manipulation that the SCL Group, SCL Elections, SCL Social, and associated companies undertook in certain countries.

St Kitts and Nevis

214.SCL worked on a campaign to win the 2010 general election in St Kitts and Nevis, in the Caribbean, and, according to Freddy Gray, of The Spectator:

SCL practised the dirty trick—or ‘counter ops’—that Nix was caught bragging about to undercover reporters in [… the] Channel 4 expose. Nix was not exaggerating. One of the dirty tricks was a sting operation in St Kitts and Nevis. SCL filmed the opposition leader, Lindsay Grant, being offered a bribe by an undercover operative posing as a real-estate investor. Grant didn’t exactly help himself by accepting the bribe and even suggesting which offshore bank accounts the money could be paid into.270

215. According to evidence we received, this sting operation was arranged entirely by SCL, with the undercover operative—a temporary SCL employee—being paid around £10,000 by Alexander Nix, for the work that they had carried out. Alexander Nix told us that Christian Kalin had run a citizenship-by investment programme in St. Kitts and Nevis.271

216. When asked to comment on whether the sting on Lindsay Grant, orchestrated and filmed by SCL, happened, Mr Nix told us that that was nothing more sinister than the undercover reporting that Channel 4 was undertaking itself, and implied that both the SCL and Channel 4’s reporting were equivalent in nature. Nothing could be further from the truth. Channel 4’s investigation was legitimate journalism; SCL’s activities involved the offering of a bribe to an Opposition Leader, with the explicit intention of influencing an election.272 In the Channel 4 exposé, Mr Nix and Mr Turnbull talked to who they thought was a potential client, and voluntarily exposed techniques that they stated were standard procedure in the company.

217. Henley & Partners have held the exclusive passport rights for St Kitts and Nevis since before 2009. According to the article by Ann Marlowe: “For the bargain price of $150,000, approved applicants who donate to the island’s sustainable growth fund can now obtain a passport that, as of 2009, allows visa-free travel to over 100 countries, including the UK and the 26-nation European Schengen zone”. By 2014, passports had become St Kitts and Nevis’ biggest export (St Kitts does not require citizens to live there), with the revenue accounting for around 25% of GDP.273 Ann Marlowe wrote:

Many of the passport holders are from countries with unpopular passports who may otherwise have trouble obtaining travel visas—think Iran, China, Russia, Afghanistan, Pakistan. The firms say their well-heeled clients are seeking protection against unpredictable situations at home amid an era of terrorism fears and economic instability.274

Trinidad and Tobago

218. Evidence submitted by Christopher Wylie highlighted the fact that SCL was influencing the election by disseminating disinformation about the voting preferences of young adults, by fabricating content that they said had come from young people, and then acting on those views:

Trinidadian elections are affected by the population’s mixed ethnicity: political leaders from one group have difficulty in making their messages resonate with those outside of it. Working from this 2009 finding, SCL designed an ambitious campaign of political graffiti that disseminated campaign messages that ostensibly came from the youth. The client party was then able to adopt related policies and claim credit for listening to a ‘united youth’.275

SCL worked on elections in Trinidad and Tobago in 2010, where their main contact for organising payments related to the campaign appears to have been the disgraced former FIFA executive Jack Warner.


219. The Committee saw confidential evidence—a summary of a management meeting at SCL Group from 27 May 2015—in relation to an anti-Kirchner276 campaign in Argentina, describing “close proximity intelligence gathering efforts” and “information warfare”, and the use of “retired Intelligence and Security agency officers from Israel, USA, UK, Spain, and Russia”, and the creation of false Facebook and Twitter accounts to support the anti-Kirchner campaign.277 When questioned whether SCL Group had worked for an opposition party, or some other person interested in influencing politics in Argentina, against the Government, Alexander Nix replied, “That would be the appearance of that, yes”.278


220. Henley & Partners has been Malta’s exclusive passport agent since it helped to launch its citizenship-by-investment (CBI) programme in 2013. Henley & Partners was granted permission to control the selling of citizenship to eligible investors in Malta, at a cost of €650,000 per passport. As Malta is in the EU, this was especially valuable.279 We have evidence to show that Dr Kalin was meeting representatives from both political sides in Malta, with a view to mutually-beneficial arrangements. The evidence also shows that Christian Kalin asked SCL to introduce him to Joseph Muscat, the Leader of the Opposition at the time, in June 2011, and indicates that SCL had been advising Malta’s Labour Party for several years before the 2013 elections.280 It is believed that SCL, or its associated companies, worked with the Labour Party there, on the 2013 general election campaign in Malta.

221. Daphne Caruana Galizia, the Maltese investigative journalist, was investigating the Maltese CBI passport scheme, as well as organised crime in Malta. In October 2017, she was assassinated by a car bomb. On her blog, she wrote “The damage caused to Malta by the sale of citizenship is unquantifiable. Malta is not St. Kitts & Nevis. It is interlocked with the rest of the European Union and has a European economy. […] And the Maltese government is the only EU member state government with which they [Henley & Partners] have a contract”.281

222. In April 2018, a consortium of 45 journalists from 18 news organisations, including The Guardian, The New York Times, Le Monde, and the Times of Malta, published “The Daphne Project”, a collaborative effort to complete Caruana Galizia’s investigative work.282 A week after Daphne Caruana Galizia’s assassination, the Maltese Prime Minister Joseph Muscat attended a ‘Global Citizenship’ conference in Dubai, which was hosted by Henley & Partners, saying that Malta was ‘open for business’. Recently, Lord Ashcroft extolled the virtues of Malta, as the “best destination for ambitious UK firms” to have a post-Brexit presence in the EU.283

Nigeria and Black Cube

223. Black Cube, a corporate intelligence organisation, is “a select group of veterans from the Israeli elite intelligence units that specialises in tailored solutions to complex business and litigation challenges” and claims that “using our unique intelligence methodology, Black Cube enhances its clients’ decision making by providing otherwise unobtainable information”.284 Mark Turnbull told the Channel 4 news reporter: “We have relationships and partnerships with specialist organisations that do that kind of work.” He went on to say, “So that […] you know who the opposition is, you know their secrets, you know their tactics.”285

224. Alexander Nix later told the Channel 4 reporter: “We use some British companies, we use some Israeli companies.” One of the Israeli companies he said that Cambridge Analytica used was Black Cube.286 When asked in oral evidence to confirm this, Alexander Nix said: “I think in the transcript—because I did read this—he said, “Have you worked with Black Cube?” and I replied, “Yes”. I was totally mistaken. We have never worked with Black Cube”.287

225. When Brittany Kaiser gave evidence, she denied that she knew the Israeli cyber security contractors, but told the Committee that two people “came to the office for maybe an hour one day, and plugged something into a computer to show some pieces of information that they had obtained from the opposing campaign”.288 Christopher Wylie told us that “Black Cube was engaged to hack the now President of Nigeria, Buhari, to get access to his medical records and private emails. AIQ worked on that project.”289

226. We also received an extremely disturbing video from both Brittany Kaiser and Christopher Wylie. Mr. Wylie described the video: “people were being dismembered, were having their throats cut and bleeding to death in a ditch, being burned alive. There are incredibly anti-Islamic and threatening messages portraying Muslims as violent”.290 Jeff Silvester, from AIQ, wrote in evidence to us that AIQ were asked by SCL to promote the video with online advertising, but AIQ refused.291

227. Furthermore, a promotional case study of international projects includes a section on Nigeria, which explains how SCL encouraged potential opposition voters not to vote:

SCL was able to advise that rather than trying to motivate swing voters to vote for our clients, a more effective strategy might be to persuade opposition voters not to vote at all—an action that could be easily monitored. This was achieved by organising anti-election rallies on the day of polling in opposition strongholds. These were conducted by local religious figures to maximise their appeal especially among the spiritual, rural communities.292

228. Equally worrying is the fact that the SCL Group carried out work “for the British Government, the US Government and other allied Governments”,293 which meant that Mr. Nix and the SCL Group and associated companies were working for the UK Government, alongside working on campaigning work for other countries. Mr. Nix also told us that Christian Kalin was working for the UK Government at the same time.294 We published a Ministry of Defence approbation of SCL, after SCL provided psychological operations training for MOD staff, which revealed that SCL was given classified information about operations in Helmand, Afghanistan, as a result of their security clearances.295 Alexander Nix explained that SCL “is a company that operates in the government and defence space, it acts as a company that has secret clearance”.296


229. Alexander Nix appeared twice before the Committee, in February and in May 2018. His second appearance was after the Channel 4 undercover report had filmed him describing the work that SCL carried out in foreign campaigns: “These are just examples of what can be done […] and what has been done”. When we asked about the report, Mr Nix told the Committee that he had sullied his own reputation, by “exaggeration and hyperbole”, in order to win a client contract: “I alluded to services that we do not make and never made as a company. Yes, it was extremely foolish of me”.297 Given the evidence that we received through the course of this inquiry, it is hard to believe that Mr Nix’s admissions on Channel 4 were as a result of ‘exaggeration and hyperbole’, rather than based on his direct experience of overseeing many elections abroad.

230.The work of SCL and its associates in foreign countries involved unethical and dangerous work, and we have heard worrying accounts of SCL employees being put in grave danger. Paul Oliver Dehaye described the work that Dan Muresan, an employee of SCL, had to do, while employed by SCL: “He was working for Congress, according to reports from India, but he was really paid for by an Indian billionaire who wanted Congress to lose. He was pretending to work for one party but was really paid underhand by someone else”.298

231. We received disturbing evidence, some of which we have published, some of which we have not, of activities undertaken by the SCL-linked companies in various political campaigns dating from around 2010, including the use of hacking, of disinformation, and of voter suppression, and the use of the services of Black Cube, an Israeli private intelligence service, whose work allegedly included illegal hacking. We also heard of the links between SCL and Christian Kalin of Henley and Partners and their involvement in election campaigns, in which Mr Kalin already ran or subsequently launched citizenship-by-investment programmes, involving the selling of countries passports to investors. SCL’s alleged undermining of democracies in many countries, by the active manipulation of the facts and events, was happening alongside work done by the SCL Group on behalf of the UK Government, the US Government, and other allied governments. We do not have the remit or the capacity to investigate these claims ourselves, but we urge the Government to ensure that the National Crime Agency thoroughly investigates these allegations.



257 Exposed: Undercover secrets of Trump’s data firm, Channel 4 News, March 2018.

258 Exposed: Undercover secrets of Trump’s data firm, Channel 4 News, March 2018.

259 Exposed: Undercover secrets of Trump’s data firm, Channel 4 News, March 2018.

260 Exposed: Undercover secrets of Trump’s data firm, Channel 4 News, March 2018.

261 Q735

262 Information from Channel 4.

263 Confidential evidence/meetings with ex-SCL employees.

264 Alexander Nix, Q3381

265 What was it really like to work for Cambridge Analytica, Freddy Gray, Spectator podcast, 4 May 2018

266 How Cambridge Analytica fueled a shady global passport bonanza, Ann Marlowe, 1 July 2018

267 Qq816, 3334

268 Q3381

269 Qq 3388–3389.

270 ‘Revealed: Cambridge Analytica and the passport King’, Freddy Gray, The Spectator, 27 March 2018, accessed June 2018.

271 Q3381

272 Exposed: Undercover secrets of Trump’s data firm, Channel 4 news, March 2018.

273 How Cambridge Analytica Fuelled a shady global passport bonanza, Ann Marlowe, Fast Company, 1 July 2018.

274 How Cambridge Analytica Fuelled a shady global passport bonanza, Ann Marlowe, Fast Company, 1 July 2018.

275 Background papers submitted by Christopher Wylie

276 Cristina Kirchner was President of Argentina from 2007 to 2015

277 Confidential evidence shown to the Committee, 5 June 2018

278 Q3399

279 Malta is not for sale website, accessed 23 July 2018

280 Henley asked SCL/Cambridge Analytica to introduce it to Joseph Muscat in 2011, manueldelia.com, 8 April 2018

281 No wonder Henley & Partners have broken out into a cold sweat, Running Commentary: Daphne Caruana Galizia’s Notebook, 12 May 2017

282 The Daphne Project, The Organized Crime and Corruption Reporting Project (OCCRP), accessed 1 July 2018.

283 Lord Ashcroft: Special Report – Malta makes a strong case to host the EU outposts of British companies after Brexit, Lord Ashcroft, Conservativehome, 28 June 2018.

284 Black Cube website, accessed 12 July 2018

285 Channel 4 transcript of exchanges, not published

286 Channel 4 News transcript of exchanges, not published

287 Q3406

288 Q1617

289 Q1299, also verified by another source

290 Q1299

291 AggregateIQ (FKN0086)

292 Background papers submitted by Christopher Wylie, published 29 March 2018

293 Q819

294 Q3384

295 Background papers submitted by Christopher Wylie, published 29 March 2018

296 Q688

297 Q3378

298 Paul-Olivier Dehaye, Q1374
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How Cambridge Analytica fueled a shady global passport bonanza
A controversial billion-dollar citizenship-for-sale business led the elections firm to conduct clandestine campaigns across the Caribbean, insiders say.
by Ann Marlowe
Fast Company



Sven Hughes, SCL’s former head of elections, disagreed with the campaign tactics of then-CEO Alexander Nix. “I said to him, ‘You’re going to get someone killed.'”[Photo: Flickr user Cindy Shebley]

In 2010, as elections neared in Saint Kitts and Nevis, a grainy hidden-camera video was uploaded to YouTube. In the anonymously produced clip, voters across the small Eastern Caribbean island nation saw prime minister candidate Lindsey Grant in a hotel room, listening as a British-accented property developer promises him a $1.5 million payment in exchange for a bargain price on a plot of government land.

“What we’re after is making sure you get into power,” says the developer, whose face and voice are obscured. In return, “you will help us. . . how does that sound?”

Grant, a Harvard Law School-educated lawyer running on an anti-corruption platform, appears reluctant, but eventually pushes the bribe higher, to $1.7 million. The video cuts to white text on black: “He sold his country and the people’s land just to win power.”

The video went viral in Saint Kitts, and the incumbent prime minister, Denzil Douglas, was soon re-elected for a fourth term. Douglas denied any knowledge of the sting operation, but across the Caribbean, speculation swirled that it was the work of a clandestine London-based political consultancy: SCL Group.

The now-defunct Anglo-American firm has gained notoriety for its harvesting of Facebook profiles and shady campaign tactics, but the storm of controversy has been building for decades. Before its younger sibling, Cambridge Analytica, worked for Donald Trump, SCL Group claimed to have built a portfolio of political work in three dozen countries, deploying its “behavioral change” tactics in sometimes shaky democracies.

In the Eastern Caribbean, where SCL quietly operated in at least six countries, some of its work had an indirect objective: Assisting a lucrative trade in passports. The sales are legal, and lucrative, with the world’s rich thought to spend over $2 billion on “citizenship by investment,” or CBI. But reporting and interviews with industry insiders show how a nexus of buyers, officials, citizenship agents, and consultants has helped enable criminals and ignited political wildfires that continue to rage even now.

In at least five Caribbean nations, the company’s campaigns were backed by Christian H. Kalin, the chief executive of Henley and Partners, a London-based firm that markets and sells second passports, and helped support politicians thought to be sympathetic to Henley’s interests. With a friendly politician in office, according to people familiar with the arrangement, Henley could then become that country’s primary passport merchant, giving it the right to earn lucrative commissions on every sale.

Where SCL worked on campaigns, in some cases with support from Christian Kalin.
View a world map of its elections work. [Map: Wikipedia / Infogram / Fast Company]

“It was a particular way of achieving his strategic objective, which was to supply money and supply campaign provision to put in to power the government that would be conducive to both him and his clients,” Sven Hughes, who worked on the campaigns as SCL’s head of elections from 2009 to 2010, told Fast Company. To win elections, he said, SCL’s then-CEO Alexander Nix regularly turned to questionable techniques, including the hidden-camera video.

Well before the 2010 campaign in Saint Kitts, Henley and Partners worked with Denzil Douglas’s government to turn the country into a citizenship Mecca. For the bargain price of $150,000, approved applicants who donate to the island’s sustainable growth fund can now obtain a passport that, as of 2009, allows visa-free travel to over 100 countries, including the U.K. and the 26-nation European Schengen zone. In Dominica, a similar passport can now be had for $100,000. For those interested in investing in real estate, the passport fees are even lower.

Funds from the passports are now a major source of revenue and investment for these countries, filling holes left by weakening exports and the impacts of hurricanes and climate change: By 2014, passports had become Saint Kitts’s biggest export, with the revenue thought to account for 25% of GDP. Neighboring islands and over 30 countries around the world have set up similar CBI programs, and the U.S. has a related investment scheme, the EB-5 visa. (The use of the EB-5 by Trump son-in-law Jared Kushner’s company is now under federal investigation.)

But Saint Kitts and Dominica offer two of the world’s cheapest, largest, and oldest CBI programs. And, unlike some rich countries that require aspiring citizens to actually reside there, Dominica, which is just 290 square miles, and Saint Kitts, which is only 105 square miles, do not.

Many of the passport holders are from countries with unpopular passports who may otherwise have trouble obtaining travel visas—think Iran, China, Russia, Afghanistan, Pakistan. The firms say their well-heeled clients are seeking protection against unpredictable situations at home amid an era of terrorism fears and economic instability.

Saint Kitts and Nevis [Photo: Flickr user Boss Tweed]

But the investment programs have also proved popular with a Who’s Who of fugitives and fraudsters. Convicted felons Paul Bilzerian and Roger Ver gave up their U.S. citizenship and now use Saint Kitts passports. Ross Ulbricht, the founder of the illicit marketplace Silk Road, now appealing a life sentence handed down by a U.S. court, was attempting to obtain Dominica citizenship when he was arrested.

Overseas tax evasion is estimated to cost the U.S. as much as $100 billion annually, but Washington’s concerns are larger than taxes. It was a series of “Iranian nationals” seeking to evade global sanctions whom the U.S. Treasury cited in 2014 when it added Saint Kitts’s passports to a watch list, warning financial institutions of their role in “illicit financial activity.”

Alexander Nix [Photo: Sam Barnes/Web Summit via Sportsfile]

The following year, in testimony to the U.S Senate armed services committee, John Kelly, then Marine Corps general and current White House chief of staff, said the passport programs “could be exploited by criminals, terrorists, or other nefarious actors.” Kalin, a wiry Swiss economic citizenship impresario known as “the passport king,” admitted in an interview with 60 Minutes last year that the Saint Kitts program, which his firm helped design and relaunch in 2006, “tended for some time to attract quite a few people that I would never let into the country.”

Like data about the passports—it’s not publicly known how many are out there and who holds them—the precise role of firms like Henley and SCL has also remained mostly in the shadows, the subject of allegations of dirty tricks, kickbacks, and hidden commissions that have circulated across the Caribbean for years. Then in March, as allegations by former SCL employee Christopher Wylie and Channel 4’s reporting documented a litany of misdeeds by the company, details of the Kalin-SCL relationship first began to emerge in a report in The Spectator.

In an interview with Fast Company, Hughes, the former SCL elections head, said that Kalin was “heavily involved” in the campaigns. As part of the partnership, the Henley CEO would supply financing from unknown investors, provide talking points for candidates, and discuss with them various development projects they could expect once in power. “That might be the building of an airport, that might be building a deep seaport, that might be real estate,” said Hughes. It isn’t clear if any such projects materialized.

During all of the campaigns, according to the former SCL employee, Alexander Nix deployed the same kind of underhanded tactics that the future Cambridge Analytica CEO would later brag about to an undercover reporter for Channel 4 News. Hughes, who said he refused to be involved in Nix’s techniques, decided to leave the company after the CEO’s methods began to imperil the safety of his on-the-ground foreign campaign staff. “I said to him, ‘You’re going to get someone killed.'”

In response to questions from Fast Company, Henley and Partners emailed a statement saying that neither the firm nor Kalin “has ever provided funding for any election campaign, and there has never been any form of connection between the granting of any government mandate we have received and any election.” However, as part of its citizenship-by-investment business, Henley “naturally sometimes also interacts with political leaders of opposition parties that are interested in the topic of investment migration for the purpose of their economic-policy agendas.”

Henley’s relationship with SCL, the firm said, was not a “formal working relationship.” Rather, shortly before the 2010 election in Saint Kitts, Nix was introduced to Kalin by the government of the time, “as he was to many other firms and consultants working with the government on economic, political, or social issues in the Caribbean.”

Where Cambridge Analytica (SCL Group) worked on elections

Nix would become Cambridge Analytica’s CEO when the firm was founded in 2012, with backing from the U.S. hedge fund billionaire and Trump donor Robert Mercer. The company, which declared bankruptcy in May, is now under investigation by British and American authorities.

Under questioning from British lawmakers last month, Nix acknowledged that he and Kalin had a “relationship” during SCL’s campaigning in the Caribbean, and that “he may well have made contributions towards the election campaigns.” Pressed on the nature of their relationship, Nix said that Kalin didn’t work on the campaigns, but “certainly had an interest in the outcome of the elections.”

Nix also told lawmakers that the claims he made in the Channel 4 video about deploying bribes and stings during elections were fabricated and “foolish.” Rather, it was he who had been the victim of an “entrapment sting” by the television network, he said.
Representatives for SCL did not respond to a request for comment.

Timothy Harris, the prime minister of Saint Kitts, said his government would await the outcome of the British investigation before commenting on SCL’s and Kalin’s work in Saint Kitts. “The electorate needs to know who and what they are voting for and should not be manipulated through the use of clever analytics,” Harris said in an emailed statement to Fast Company.

Harris encountered SCL’s work in 2015, when he was running for office against Denzil Douglas on a pledge to reform the country’s passport program: Nix, according to a report in the Guardian, turned to a team of Israeli hackers to obtain the candidate’s private emails and medical records.

Harris won that election, and amid global scrutiny of the country’s citizenship investor program, Henley and Partners was dismissed as the country’s main passport seller. In 2014, Henley also lost its position as the primary agent for Dominica’s passports, after SCL’s second attempt to unseat incumbent Prime Minister Roosevelt Skerrit failed.

Cambridge Analytica’s website boasts of its 2010 victory in Saint Kitts and Nevis. View full size here [Screenshot: Cambridge Analytica]

Despite its boasts of having never lost an election, SCL often lost in the Caribbean. The elections firm worked on unsuccessful political campaigns in Dominica, Grenada, St Lucia, and Antigua and Barbuda, where it was accused of spreading deliberately false stories. An unsuccessful campaign for the then-governing party in Trinidad in 2013 has drawn the scrutiny of the country’s attorney general.

Ahead of 2010 elections in Saint Vincent and the Grenadines, Prime Minister Ralph Gonsalves complained that SCL had illegally brought in foreigners on tourist visas to work as political consultants, an accusation echoed in the recent firestorm over Cambridge Analytica’s work for Donald Trump. The fourth-term prime minister—who is alone among the region’s heads of state in resisting citizenship-by-investment programs—also accused foreign actors of spreading a barrage of false stories about him during the campaign.

According to an SCL presentation seen by the Times of London, the firm had launched a “targeted digital attack” against Gonsalves. “Within three weeks every single reference to him on the first two pages of Google . . . referred to the candidate’s horrific track record of corruption, coercion, rape allegations, and victimization,”
SCL said in the documents. SCL’s $4 million bill for its work in Saint Vincent that year, according to one series of emails, included $100,000 for “counter operations.”

It was after that campaign that Hughes cut ties with SCL. Nix’s shady, under-the-radar tactics, he said, often left him and SCL’s team of on-the-ground campaign workers in danger. “He’d come in, do one of these leaks, and then fly out and leave the rest of us to pick up the pieces, which left us in a very compromised and sometimes dangerous position.”

Hughes, who is now the CEO of his own London-based communications consultancy, Verbalisation, now sees other dangers in the campaigns he helped run. “Is it acceptable to secretly guide elections with secret money and secret guidance in small countries and overturn the democratic process? Whether or not that’s criminal action or whether or not that’s unethical action, it certainly needs to be investigated.”


Concerns about the passport programs aren’t confined to the Caribbean. When reporter Daphne Caruana Galizia was killed in a car bombing in Malta in October, she’d been investigating her country’s own controversial passport sales, and examining links between the government of Prime Minister Joseph Muscat and Henley and Partners. (The firm has been Malta’s exclusive passport agent since it helped launch its CBI program in 2013.) “The damage caused to Malta by the sale of citizenship is unquantifiable,” Caruana Galizia wrote on her blog about the country’s so-called golden visas. “Malta is not St. Kitts & Nevis. It is interlocked with the rest of the EU.”

At the time of her murder, which remains under investigation, Caruana Galizia was facing dozens of defamation lawsuits, including from Henley as well as the cofounder of Malta’s Pilatus Bank, Ali Sadr Hasheminejad. The son of one of Iran’s richest men, Hasheminejad has been linked to money laundering and other corrupt activities with officials in the prime minister’s inner circle. He was also one of Henley’s most prominent customers: the firm helped him secure a Saint Kitts passport in 2009. (When federal agents arrested him in March at a Washington, D.C. airport on charges of evading U.S. sanctions against Iran, he was carrying four passports.) A spokesperson for Henley said that the firm had no relationship with Hasheminejad, and that it had rejected a proposal of his to collaborate on Malta’s passport program.

Since Henley lost its position as the primary agent for marketing Dominica and Saint Kitts passports, another London-based citizenship firm called CS Global Partners has risen in its place. Founded and led by a former attorney at Henley and Partners, CS Global is said to have been financed in part by a British-Indian investor named Dev Bath. Bath, who served as a director at the firm for over a year, remains a consultant to the company. His LinkedIn profile doesn’t mention CS Global, and describes him only by his title, “Special Representative of St. Kitts and Nevis,” which furnishes him with a diplomatic passport to the country.

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Bath has also hired Lanny J. Davis, the longtime D.C. lobbyist and former special counsel to President Bill Clinton, to help promote Saint Kitts and Dominica passports. In one 2013 advertorial extolling the benefits of investor citizenship, Davis quotes his client, who “became a resident of Saint Kitts many years ago and has become a well-known global business leader.”

Last year, Davis’s lobbying work on behalf of Saint Kitts raised eyebrows in Parliament, particularly around the question of who paid him and his law firm more than $96,000. His services—lobbying U.S. and Canadian authorities to lift their restrictions on the country’s passports—”comes at no cost to our government,” Prime Minister Harris told the National Assembly in 2015. Indeed, as public filings indicate, Davis’s fees were paid by CS Global.

Prime Minister Timothy Harris [Photo: Flickr user Saint Kitts and Nevis Photo Stream]

In an email to Fast Company, Davis said he had ceased representing Bath and Saint Kitts over a year ago. “Dev Bath and CS Global perform a valuable service,” he added. Bath declined to comment for this story.

In recent months, one of Bath’s longtime business partners has thrust the country into a fresh storm of bribery allegations. Peter Singh Virdee, a property magnate also of British-Indian descent, had sought to secure solar energy contracts in the Caribbean as part of a renewable energy venture. In one 2016 phone call, disclosed in a British court in May, Virdee described to an associate the need to entertain the prime minister of Saint Kitts and his entourage in London that evening, “so be ready for a big bill.” In another conversation, Virdee, who also holds an Antiguan passport, said that Saint Kitts’s prime minister had asked for a watch and a pair of shoes.

In a preliminary judgment, the U.K.’s National Crime Agency stated that “the claimants were ready and willing to pay bribes, and had given at least one gift to a Caribbean politician.” Virdee, who was arrested in January 2017 at Heathrow Airport on separate charges of a plot to evade millions dollars in carbon credit taxes, has denied any wrongdoing.

Bath and CS Global have not been linked to the allegations surrounding Virdee. But when asked about Virdee’s association with Bath and Saint Kitts, a spokesperson for the Prime Minister’s office said that “a historical business relationship that involves CS Global and the country’s CBI program” is now “under review.”

Amid the allegations, Prime Minister Harris denied any impropriety, and in May called for an investigation into the government of his predecessor Denzil Douglas. Douglas, now leader of the opposition, called for Harris to resign. “As a small Caribbean nation, we are fast losing our reputation,” he said in a recent address, “and the lifeblood of this country is being sucked from it as corruption runs amok, and there seems to be a return of the image of Devil’s Island.”

Douglas–who himself has admitted to once meeting Virdee in the presence of Henley & Partners–is currently embroiled in his own passport scandal: It was recently revealed that he also holds a diplomatic passport from Dominica.
The second passport is now being examined by Saint Kitts’s High Court.


The governments of the Caribbean and the passport firms insist they have stepped up their reviews of applicants and closed loopholes. (In one notorious instance, Saint Kitts had to recall 5,000 passports, because for years the documents did not include the owner’s place of birth.) Continuing reforms, the Prime Minister’s office said in an email, showed that “we are moving in the right direction.” The new vetting process for prospective Saint Kitts citizens, a CS Global spokesperson said, “is among the most strict in the world.” In May the European Union removed the country from an economic black list, citing the government’s commitment to reforming its passport program. (As of March, Dominica remains on a so-called gray list.)

Still, some worry that recent discounts for some passports and a growing applicant pool will drive CBI programs to cut corners. David Jessop, former head president of the London-based nonprofit Caribbean Council, wrote last November that growing competition among the citizenship-by-investment programs risked “becoming a dangerous race to the bottom.” He cited “the sometimes-questionable comments and defensive public relations exercises undertaken by some agents selling CBI programs” and “the questions that remain about the due diligence processes some governments pursue.”

Last year, as part of efforts to raise money to rebuild infrastructure heavily damaged by Hurricane Maria, some Caribbean nations began to drastically cut their passport fees. In Dominica, Antigua, Barbuda, and Grenada, an investor passport can now be obtained through a $100,000 donation to a national fund. And investors seeking to obtain citizenship from Dominica, Saint Kitts, Antigua, or Grenada also have a new option: For an investment of at least $200,000 into a government-approved real estate project, a customer can obtain a passport for about $50,000, half the typical price.

(Paolo Zampolli, a businessman who holds an honorary ambassadorship to the U.N. from Dominica–and who takes credit for introducing Donald Trump to Melania Knauss in 1998–has also claimed some credit for kickstarting this newer passport option: He introduced Dominica’s ambassador to the U.S. to the head of Dubai-based Range Developments, a property firm that now markets the real estate investment program in Dominica and Saint Kitts.)

Scott’s Head, Dominica [Photo: Konstantin Krismer/Wikimedia Commons]

In Saint Kitts, the application process now typically takes three to four months, but an accelerated process also allows clients a guaranteed outcome—including issuance of the passport— in 60 days or fewer. In October, after other impacted islands lowered their prices, Saint Kitts also set up its own Hurricane Relief Fund and reduced the price of citizenship through its real estate investment option, from the standard of rate of $150,000 to just $75,000 for a family of four.

The new fund has brought in record numbers of applicants: Over a five-month period, according to rough statistics released by the prime minister, the island of 50,000 people attracted 1,200 investor passport applications. In April, the head of Dominica’s CIU program said that the country had seen between 1,500 and 2,000 applications over the course of the last year.

The Saint Kitts fund was “a win-win for applicant and country,” Micha Emmett, CS Global Partners CEO, said in a press release. But Douglas, the former prime minister, blasted it as “a blatantly opportunistic move”: Since Saint Kitts had emerged relatively unscathed from Hurricane Maria, the fund had effectively undercut recovery efforts on other islands, he argued.

Opposition parties in both countries continue to raise questions about the programs, including about how much revenue they have earned and where that money is. As of 2014, Saint Kitts’ Sugar Industry Diversification Fund, to which most aspiring citizens had donated, had reached $1.5 billion in Eastern Caribbean dollars, or about U.S. $550 million. However, according to an estimate by Dwyer Astaphan, former minister of national security and tourism, the total donations to the fund should have amounted to a number closer to around $611 million. The discrepancy is due to the passport agents’ override commissions, he alleges, estimating that passport consultants have pocketed some $61 million.

The programs and accounts of the sugar industry fund remain under an independent review, a spokesperson for Harris said it in a statement. “Final numbers have not yet been determined, and as such, any suggestion of a discrepancy is at best, premature.”

In Dominica, opposition leaders have also cited a gross discrepancy between the passport revenues publicly reported to the Treasury—around $9 million between 2014 and 2015—and likely estimated revenues of $30 million that year. Representatives for Dominica’s passport program did not respond to requests for comment, but a spokesperson for CS Global said that all funds received under the program are “regularly outlined and reviewed by Parliament for distribution in the national budget.”

Dominica and Saint Kitts also do not disclose comprehensive data about their normal or diplomatic passport holders. For instance, Dominica’s January 2017 Official Gazette listed the 2011 passport recipients: 288, compared with a total island population of around 80,000. In February 2017, as revelations emerged that the government had sold diplomatic passports to alleged criminals, public frustration over the passport sales boiled over into violence. After demonstrations in the capital Roseau deteriorated into vandalism, police in riot gear used tear gas against the crowd.

In the wake of the protests, a number of people were arrested, including an opposition Member of Parliament, an opposition Senator, and two other opposition politicians. Prime Minister Roosevelt Skerrit accused “irresponsible politicians” with the opposition of conducting a “concerted and orchestrated campaign against the citizenship by investment program.” Skerrit also promised reforms to the way the country reviews prospective citizens, and expressed regret, he said, “at the unfortunate turn of events with respect to a few persons holding diplomatic passports becoming persons of interest to foreign countries and external security organizations.”

Cleaning up the Eastern Caribbean passport mess likely requires larger sociopolitical changes that are unlikely to occur soon. One measure, however, might be close to a quick fix: laws against non-citizens paying for or participating in election activities. Of course, this would still not prevent holders of investor passports from participating. But it might help preclude quickie carpetbagging of the type practiced by firms like Cambridge Analytica.

Meanwhile, both islands’ passport programs continue to flourish, thanks to tight relationships with industry partners. In April, Dominica appointed Nuri Katz as its ambassador to the Russian Federation, whom a government press release identifies as “a founding member of a number of businesses in Canada, Russia, and Ukraine.” (Katz holds a number of passports.) The government’s announcement about his appointment, however, does not mention his occupation, which suggests a conflict of interest: Katz is also president of Apex Capital, another prominent passport firm. The company is currently offering several real estate investment options in Saint Kitts and Dominica.

Ann Marlowe, a visiting fellow at the Hudson Institute, is a writer and financial investigator in New York. Follow her at @annmarlowe.

With additional reporting by Alex Pasternack (@pasternack).
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Re: Harvey Weinstein’s Army of Spies: The film executive hir

Postby admin » Fri Aug 24, 2018 3:46 am

A bomb silenced Daphne Caruana Galizia. But her investigation lives on
The Daphne Project reveals the story so far behind the murder of a Maltese journalist
by Juliette Garside in Malta
Tue 17 Apr 2018 12.01 EDT Last modified on Wed 18 Apr 2018 07.28 EDT



Investigators at the scene of Daphne Caruana Galizia’s murder. Photograph: Darrin Zammit Lupi/Reuters

The explosion was so loud it shook the windows of the family home.

In a cold panic, Matthew Caruana Galizia ran to the front door, barefoot. “That moment, opening the door, the dogs barking, the light, I just thought I was going to collapse on to the floor.”

The neighbours were already outside. He sprinted past them, down the dirt track that leads to the village road, barely aware of the stones cutting into the soles of his feet. Halfway down he saw the column of black smoke.

In front of him were the remains of a burning car, his mother’s. She had been inside it.

The murder six months ago of the journalist Daphne Caruana Galizia sent shockwaves around the world.

How was Daphne Caruana Galizia murdered? – video

In Malta, the prime minister, Joseph Muscat, and his party stand accused of allowing corruption to go unpunished, of weakening the police and the judiciary, of allowing an environment in which her killing became possible.

But it goes deeper than that. The European Union must now decide how to deal with its smallest member state – an island that appears to have become a magnet for criminals and kleptocrats, and that some MEPs fear has become a gateway for dirty money into the rest of the continent, including the UK.

The profound questions raised by Caruana Galizia’s murder have become the focus of a new collaboration: the Daphne Project.

With the support of her family, a group of 18 international media organisations, including the Guardian, Reuters and Le Monde, has come together. Led by Forbidden Stories, whose mission is to continue the work of silenced journalists, the group has spent months piecing together Caruana Galizia’s story and pursuing the investigations she was working on when she was killed.

Today, the project launches with the story of her murder, of the men facing trial for the crime, and the enduring mystery of who ordered it, and why.

Daphne Caruana Galizia. Photograph: Jon Borg/AP

The murder: 16 October 2017

Daphne Caruana Galizia had spent her last morning working at the dining room table opposite her eldest son, Matthew, 32. The air was still and heavy with the scent of wild fennel. The densely planted garden of her hilltop home in the northern village of Bidnija muffled any noise from the road. She was absorbed in her work, and the hours passed unnoticed.

Just before 3pm Caruana Galizia hastily gathered her things – she was late for an appointment at the bank. She rushed out, came back for some forgotten cheques, then climbed into her car.

As the charcoal grey Peugeot 108 headed south out of the village, she was being watched. For her killers, the moment had come; a bomb placed under the driver’s seat was detonated by remote control.

The road on which Daphne Caruana Galizia was driving when her car exploded. Photograph: Dan Kitwood/Getty, for the Daphne Project

A neighbour, Francis Sant, who was driving in the opposite direction, recalls a first explosion, which sent out white smoke and debris. Moments later, there was a second, much larger blast and the vehicle caught fire, before careering off the road into fields.

In an interview for this project, Sant said: “I am going to say something that I have never said before. Because I felt that I shouldn’t say it … I even heard her screaming … But as soon as she screamed she became a ball of fire.”

As Matthew sprinted towards the scene, he remembers seeing a crater in the road. Trees were on fire. He could see glass, and plastic, and pieces of flesh.

He couldn’t see the car but he could hear it; the horn was blaring. He followed the noise and the smoke, all the while hoping it was not his mother’s vehicle.

But then he recognised the licence plate. Circling, looking inside, there was nothing but orange fire. No sign of a body, no silhouette.

He searched the ground for a stick to prise open what was left of the doors when he heard police sirens. “I was looking on the ground for something, and then I saw a leg. And I remember thinking to myself like OK … there is a leg on the ground, there are body parts up there, obviously no one could have survived this, so it’s pointless.”

The wreckage of Caruana Galizia’s car. Photograph: Rene Rossignaud/AP

Soon, his mother’s sister arrived, and then, after some frantic phone calls, his father and two younger brothers.

The family hunkered down in Bidnija, staying indoors for two weeks, avoiding the television crews. The days passed in a blur.

But it was Matthew’s precise recollection of what his mother was doing in the minutes before she was killed that led to an apparent breakthrough in the murder inquiry.

The police investigation

On 4 December last year, in an early morning swoop on the seedy port area of Marsa which involved soldiers arriving by boat and a Swat team storming in from the road, police arrested three men widely reported in Malta as being known to the police: brothers George and Alfred Degiorgio, aged 55 and 53 respectively, and their associate Vincent Muscat, 55.

The brothers were ordered at gunpoint to lie on the ground. Muscat was handcuffed to an iron railing. Footage of the raid, shot from a soldier’s head camera, was released to the press.

The focus of the operation that day was a large, rusty shed overlooking Valletta’s Grand Harbour. Known locally as the potato shed – it was once used for storing vegetables – the structure now shelters the colourful rowing boats of the Marsa Regatta Club.

One end is fenced off. It contains weightlifting benches, a barbecue and a secure room with a metal door and shutters. Suspended from the ceiling are a Spider-Man toy, fishing tackle, and the severed heads and tails of marlin fish.

The shed where officers arrested the three men. Photograph: Dan Kitwood/Getty, for the Daphne Project

This is where officers arrested the men – and where they suspect the murder was planned.

“They used to come here at the beginning or the end of the day,” said one man who knew them. “Sometimes, they had visitors at night. They were the kind of people who, even in the middle of summer, they give you a chill.”

The evidence that led police to suspect these men was compiled by Insp Keith Arnaud, a homicide detective who knew Daphne and had once tried to arrest her.

His case has been set out in meticulous detail in testimony for an examining magistrate, who is deciding whether the accused should stand trial.

Reviewed by the Guardian, the testimony shows how police zeroed in on the arrested men with help from the FBI and a team of forensic specialists from the Netherlands.

They assumed the bomb had been triggered remotely, and had probably been linked to a mobile phone, so the question was: who was making calls that day, and from where?

The evidence was provided by a major piece of FBI computer processing, undertaken in the US, and complicated by the fact that the Vodafone mast in Bidnija was “off grid” at the time of the murder.

Thousands of calls redirected to other masts had to be sifted through before investigators believed they had found what they were looking for: the numbers of two devices that appear to have been used to detonate the bomb.

Detectives believe the sim cards for the phones were bought almost a year before the murder, on 15 November 2016. The two numbers only ever communicated with each other.

Further analysis revealed one of the sim cards was used in a basic Nokia handset; the second, which Arnaud calls “the god device”, was attached to a circuit board like those used to switch on lights or central heating by remote control. Or, in this case, it seems, to detonate a bomb.

Having apparently found the method for triggering the device, Arnaud’s team was unsure who had pressed the button.

The intelligence services were already monitoring George Degiorgio’s personal phone, in connection with another investigation.

Arnaud told the magistrate he was able to match the location data from George Degiorgio’s personal number with another device, thought to have been one of three “burner” phones acquired for the job. Over a period of weeks, they found the burner phones signalling to the network from the same masts as personal numbers used by the three accused.

The data provided by the FBI showed that the night before the killing, all three burner phones were active in Bidnija. And at 1.41am, the circuit board sim was switched on.

After that, the suspects headed their separate ways, Arnaud told the court. According to his account, Alfred Degiorgio spent the night in Bidnija and the other two left the village.

By 6.15am on the day of the murder, George’s phones were allegedly signalling from the potato shed in Marsa. Shortly after that, they were said to be transmitting from the coastline around Valletta.

Police matched the locations with CCTV footage and spotted a small cabin cruiser with a distinctive green hood. The boat, called the Maya, was registered in Alfred’s name, but the phone data led police to believe it was George at the helm that afternoon.

Marsa Docks in Valletta. Photograph: Dan Kitwood/for the Guardian

At 2.55pm, the Maya stopped, idling along a sheltered stretch of water beneath a neoclassical war memorial known as the Siege Bell. Minutes later, it is alleged, there were two phone calls to the boat, both from Bidnija. The first lasted 44sec; the next, 1min 47sec.

Arnaud’s testimony to the court explains: “If you look into why there were two calls, it matches perfectly with what Matthew Caruana Galizia said when he told us that when his mother left the house, she forgot the cheque book.

“In our opinion … the spotter saw the victim come out, he informed the person at sea to prepare himself, the victim went into the house again, the call ended, but two minutes later it took place again.”

At 2.58pm, a text message was sent to the “god device” containing a code designed to activate the circuit board in the bomb.

The murder of Daphne Caruana Galizia: how police believe events unfolded ...

Within minutes of the blast, Arnaud told the court, George was messaging his girlfriend: “Buy me wine, my love.” She replied: “OK.” At 4pm, CCTV shows the Maya cruising back towards its mooring.

The police case relies upon the evidence provided by the phones, and more information may be forthcoming.

The wider investigation

A sweep of the harbour floor by army scuba divers led to the recovery of eight phones said to have been used by the accused.

The Guardian understands that all the devices were sent to Europol in the Netherlands for analysis several weeks ago.

Alongside the examining magistrate hearing police evidence against the alleged bombers, another magistrate, Anthony Vella, is investigating the murder. Europol, the FBI and a Maltese telecoms expert are reporting directly to him.

The family’s hopes of discovering who ordered the killing rest with Vella, because they fear police will not pursue evidence that might lead to politicians. A source close to the investigation said police were focused on finding the bomb maker, and tracing any possible links to organised crime.

Vella is “a very thorough, meticulous, no-nonsense person”, says the family’s lawyer, Jason Azzopardi. “The fact that these international experts are answerable to the magistrate is the way it should be because this case has reverberations that go beyond the shores of Malta.”

The three suspects have said nothing since their arrest. George, known by the street name ic-Ciniz (the Chinese), simply pulled out his identity card and placed it on the interrogation room table during police questioning. Alfred, or il-Fulu (the Bean), would not even confirm his name.

The Guardian understands that detectives suspect the men had been tipped off before their arrest. When officers came for them in Marsa, the phones they had allegedly used were already on the seabed, and George had his partner’s mobile number written on his hand.

The Nationalist MP and former opposition leader Simon Busuttil is concerned that the raid appeared staged: “The assault was fully filmed and everything looked pre-set for maximum propaganda effect. Footage of the assault was quicky circulated on the media and looked like something out of a Marvel action film – theatrical.”

All three men entered not guilty pleas and accepted legal aid, but declined to speak to their lawyers.

They have yet to stand trial, and any suggestion they were acting on orders remains speculation.

Certainly, Caruana Galizia had many enemies and many critics. She took aim at anyone she believed needed to be held to account – mobsters, business people, even the current leader of the Nationalist party, with which she had been closely aligned.

Caruana Galizia’s second son, Andrew, lays the blame at the feet of the ruling Labour party.

“Maltese citizens are completely naked when they interact with their state,” he said. “There’s no independent institution in between the citizen and the government. Her assassination became possible for that reason.”

In the aftermath of the attack, and without the consent of the family, the government offered a €1m (£870,000) reward for information leading to the killers. Despite the arrests, it remains on the table.

In a statement emailed by his spokesman, the prime minister said: “An investigation is ongoing into those who ordered the killing. I trust the Maltese police will investigate this case with full professionalism, and without fear or favour.”

Muscat added that the murder had “shocked and outraged” him.

“No prime minister would want a journalist to be murdered under any circumstances. This was an attack on our society and such a senseless act particularly affects a country our size. This murder does not reflect on the Maltese people, who enjoy a liberal, open and democratic society. The government is clear that the police will have whatever resources they need to pursue and prosecute those responsible.”

'Journalism was her life': Daphne Caruana Galizia's family speak out - video

The stakes for both Malta and the EU remain high.

And for a family torn apart by the murder, there is anger, bewilderment, and an overwhelming feeling of loss.

Matthew’s brother Paul, 29, flew in from London on the night of the murder and was confronted by a sight he will never forget.

Their peaceful valley was, he says, unrecognisable: the familiar fields were floodlit, the road choked with police and television crews.

As Andrew puts it: “It felt like the world had collapsed and no one was safe any more. Apart from my mother being taken away I also felt that my country had been taken away.”

A book on freedom of expression hangs on a burnt tree at the scene of the murder. Photograph: Darrin Zammit Lupi/Reuters


15 November 2016: Sim cards for mobile devices allegedly used to trigger the bomb are purchased.

10 January 2017: The trigger sims are activated for the first time, in the area of Żebbuġ. One is placed inside a Nokia handset and used to send four text messages to the other, placed in a circuit board. After 20 minutes, the sims are switched off.

19 August: Three burner phones believed to have been used by the bombers are activated within 20 minutes of each other.

21 August: Trigger sims are switched on for the second time, and two text messages are sent between them. This appears to be a second test run.

End of September: White rental car seen for the first time in the vicinity of Bidnija. Over the coming weeks it is spotted many times, parked near a lookout point.

15 October: All three burner phones are located in Bidnija. Alfred Degiorgio’s personal phone and the device said to be his burner phone appear to remain there all night and most of the following day.

16 October:
1.41am - Trigger sim is switched on. It signals from Bidnija, where Caruana Galizia’s car is parked outside her home.

8am - The Maya is filmed on CCTV leaving Valletta’s Grand Harbour. Phone data suggests only George Degiorgio was on board.

8.30am – The Vodafone mast in Bidnija goes off grid and is closed for maintenance until 6pm.

2.55pm - CCTV shows the Maya stopping in sheltered water beneath the Siege Bell war memorial.

2.58pm – Text message is allegedly sent from the boat to the circuit board sim, detonating a bomb placed under the driver’s seat of Caruana Galizia’s car.

3.20pm – Phone data shows the Maya heading back towards the harbour.

3.30pm - George Degiorgio sends a message from his personal phone to his partner: “Buy me wine, my love.”
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Re: Harvey Weinstein’s Army of Spies: The film executive hir

Postby admin » Fri Aug 24, 2018 4:15 am

Part 1 of 3

Witness: I: Alexander Nix, Chief Executive, Cambridge Analytica
Oral evidence: Fake News, HC 363
Digital, Culture, Media and Sport Committee
Tuesday 27 February 2018
Ordered by the House of Commons to be published on 27 February 2018.
Members present: Damian Collins (Chair); Paul Farrelly; Simon Hart; Julian Knight; Ian C. Lucas; Christian Matheson; Rebecca Pow; Giles Watling.



Questions 621-848


I: Alexander Nix, Chief Executive, Cambridge Analytica

Written evidence from witnesses:

– Cambridge Analytica

Examination of witnesses

Alexander Nix, Chief Executive, Cambridge Analytica

Q621 Chair: Good morning. Welcome to Alexander Nix to this further session of the Digital, Culture, Media and Sport Committee and our inquiry on fake news and disinformation. During the course of our investigation so far, it has been clear to us that understanding of data analytics and behavioural patterns online is key to understanding the way that messaging works. That is why we were particularly keen to talk to Cambridge Analytica, which is one of the leading companies in the world—I think it would be fair to say—in understanding the way in which data analytics and behaviour activity works online.

We have a range of questions that we want to ask you, Mr Nix, about that. We are also this morning publishing the letter you sent to me on 23 February following the evidence session we had in Washington, in which you raised some concerns about things that were said about Cambridge Analytica at that hearing that you wanted to correct for the record. I am publishing that letter this morning, but I wanted to start by asking a couple of questions relating to that letter and to clear up a few things.

One of the issues you raised in the letter in response to Mr Matheson’s question was to state that Cambridge Analytica had never had any involvement in the EU referendum campaign. To quote for the record for people who may not have seen the letter, you say, “Cambridge Analytica had no involvement in the referendum, was not retained by any campaign, and did not provide any services (paid or unpaid) to any campaign.” That is what you said in your letter. We are publishing that today but I wanted to be clear. You will understand why this confusion has arisen about Cambridge Analytica’s role, because there have been public statements made by you that did associate you with the referendum campaign and with Leave.EU in particular. Why are those previous statements not correct but what you say now correct instead?

Alexander Nix: Let me start by saying thank you for the invitation to come and speak to this Committee. Fake news is a credible threat to the public and indeed to the industry that we work in, and we are pleased to try to help in any way that we can.

We have been very consistent for the last two years about our involvement, or lack of involvement, in the EU referendum. There was one statement only, which was put out erroneously, that indicated that we were involved in the campaign. It was drafted by a slightly overzealous PR consultant who worked for us, and referenced work that we hoped and intended to undertake for the campaign. Subsequently, work was never undertaken. The moment that that statement went out we were absolutely crystal clear to all the media outlets that we were not involved and that it had been released in error, and we tried to correct the press again and again and again. Unfortunately, and somewhat ironically, this was an example of fake news that was disseminated and spun out virally. By the time it had penetrated the internet it became a matter of fact even though there was no fact behind it.

Q622 Chair: So that I am clear, is this the statement? I will read from it. Tell me if this is the statement you are referring to: “Recently Cambridge Analytica has teamed up with Leave.EU—the UK’s largest group advocating for a British exit… from the European Union—to help them better understand and communicate with UK voters. We have already helped supercharge Leave.EU’s social media campaign by ensuring the right messages get to the right voters online”. Is that the statement you are referring to?

Alexander Nix: That is the statement, and this was a statement that was prepared in anticipation of working with that organisation and was released, unfortunately, ahead of any work starting. Again, it was an error. We were very vocal about that at the time and we addressed it head-on immediately when we realised that it had been put out.

Q623 Chair: I have seen that quotation in an article for Campaign magazine, which is in your name.

Alexander Nix: That is where it was put out.

Chair: Yes. It is an article in your name and it is still on their website today, so why have you not asked them to withdraw it if that statement was put out in error?

Alexander Nix: I cannot speak to that personally, but I am sure that we have asked them. I can double-check for you.

Q624 Chair: I think we all understand that sometimes an over-eager press officer might say the wrong thing. It is quite different when the leading figure in a company signs off an article that goes out in their name and the key fact in that argument is wrong. It does not just refer to an anticipated relationship. It says that you have already worked for them, “We have already helped supercharge Leave.EU’s social media” messaging and, in particular, references the growth in the Facebook page for the campaign. Presumably that refers to work that has been done not just things you hope to do.

Alexander Nix: While your point is valid—we have addressed it head-on again and again—the facts of the matter are that we did no work on that campaign or any campaigns. We were not involved in the referendum. While we could dwell on this, I think we should probably look at the facts of the matter, which are that we were not involved, period.

Q625 Chair: What you are saying is clear. Unfortunately, the question will still keep coming up because people will reference this and think it is odd that a statement was put out that was totally untrue, when it refers to not just work you hope to do but work that you have already done. This will not be news to you, but in the Newsnight programme that you were interviewed in, they had had footage of a Cambridge Analytica employee sitting in a press conference with Leave.EU. It was Brittany Kaiser, and she talked about the fact that she would be working on running large-scale research for Leave.EU. That was in 2015. Was that work undertaken? Did she do that as a Cambridge Analytica employee or was that done in a personal capacity?

Alexander Nix: It is not unusual, when you are exploring a working relationship with a client, to speak in public together about the work that you hope to undertake. That was simply an example of that.

Q626 Chair: She was talking about work that they hoped to do, but that work was not done.

Alexander Nix: Exactly right.

Q627 Chair: When we talk about you or your organisation, when you say that work was not done and there was never any work done, does that apply to not just Cambridge Analytica but all your affiliate companies and companies in your group as well?

Alexander Nix: That is absolutely right. No company that falls under any of the group vehicles in Cambridge Analytica or SCL or any other company that we are involved with has worked on the EU referendum.

Chair: Any associates or anyone?

Alexander Nix: Or any associates.

Q628 Chair: In April 2017, Andy Wigmore, the communications director at Leave.EU, put out a tweet in response to some news from the Conservative party about the people it had hired to advise it on the last general election for its digital campaign. He says, “You should use Cambridge Analytics—we did apparently can highly recommend them”. Why would he have said that?

Alexander Nix: You are going to have to speak to Andy about that. I cannot begin to second-guess why he would have said that. My understanding is that he subsequently changed that statement, but, again, you would have to speak to him.

Q629 Chair: He also put out another tweet saying, “Leave.EU campaign brings in US voter data and messaging firm Cambridge Analytica”. That was a separate tweet.

Alexander Nix: I do not know the date of that, but I can only assume that at the time he was vying to be the designated leave campaign and that by associating himself with a data analytics firm such as ours, which had quite a high profile for our work in the United States in the US presidential primaries, he was hoping that would give him additional credibility through association.

Q630 Chair: That was in November 2015 and that was presumably after the press conference that Brittany Kaiser took part in as well. Again, that would suggest that there was a working relationship between Cambridge Analytica and Leave.EU at that time.

Alexander Nix: I do not know how to explain this to you more clearly: we did not work with them. However you look at this or however it appears to you or whatever tweets other people have said about the situation, we did no paid or unpaid work. We had no formalised relationship with them. We did not work on the EU referendum with that organisation or any other organisation.

Q631 Chair: The reason I think it is important that we ask these questions is that we are publishing a written statement from you that seems to correct the record on this point. The reason the questions keep coming up is that what you have said today is clearly challenged by what you have said in the past, or statements that have gone out in your name in the past, and what people like Andy Wigmore have said and what other employees at Cambridge Analytica have said in the past as well. We are now being asked to believe that the version of reality that was portrayed at the end of 2015 and 2016 is false, and the current statement is that there was no work of any kind done by either Cambridge Analytica or any associates during the referendum. They are at such odds it is not unreasonable that these questions keep coming up.

Alexander Nix: You are looking at that in isolation. As I said before, that press release went out in error. After it went out, we were very quick to go to the press and to correct it and to say to them, “This was a mistake. For the record, we are not doing any work. We have not been retained or contracted by any of these organisations”. We consistently put this message out over a two-year period. One press release you are referring to was instantly corrected, and we have been consistent in our messaging ever since, so I do not think your line of inquiry is entirely fair.

Q632 Chair: It is an article, not a press release, in your name, and it is still on the website of the organisation that published it, in your name. It has not been taken down.

Alexander Nix: That is out of our control, clearly.

Chair: You could have made a request to them.

Alexander Nix: We have made several requests to leading newspaper publications to retract statements that we have been involved with this. We have told news outlets, and we have put out our own press releases, but unfortunately we are not always successful in these entreaties.

Q633 Chair: It is normal for companies, when they are pitching for work—and from what you said it sounded like you were in the process of pitching for work for Leave.EU even if it did not come about. Probably a fair interpretation of the article we have been discussing is that you anticipated that you were going to be hired to do some work for them and that did not happen. What sort of work was done in order to pitch? Normally you go out and see prospective clients and you pitch to them and show them what you can do and the value you could add if you were hired.

Alexander Nix: That is exactly right. We have a political division. It is not uncommon for us to go and speak to political parties. Indeed, in this country I think I have spoken with every political party—or at least been approached by Labour, Liberal Democrats, UKIP, SNP, Conservatives—on how we might be able to help them with their campaigns, various different campaigns, and to present our services, talk about our track record, our extensive 27-year history in managing election campaigns around the world, the technologies that we have developed to help campaigning and make it more efficient and then to talk about how our services might be most relevant to the clients that we are seeking to assist. I think that is pretty common practice.

Q634 Chair: I used to work in the advertising industry many years ago, part of the “Mad Men” style mass messaging industry that you say is now dead. What was normal there is that you would produce draft campaigns. You would say, “If you hired us, these are some of the advertisements that we would run for you.” Given that what you do is for many people, and probably for many of your clients, quite a new area of activity, do you create demonstrations, saying, “This is a sample of the sorts of work we would do for you based on our understanding of this issue and the understanding of your audience. Here are some examples of the work we would do if we were hired”?

Alexander Nix: Unlike the “Mad Men” days of advertising where it is creative-led, so you can draw on the imagination to come up with these sorts of examples, our communications are rooted in data and in science. As a result, in order to produce these things there is considerably more time and effort and work involved and we also need access to the appropriate datasets. It would be almost impossible for us to provide a client with a meaningful demonstration of what we might be able to do for them unless we have access to their data and have spent a lot of time modelling. More often—I would say that this is always is the case—we will simply show them work from other projects that we have worked on, to give them an understanding of the sort of work that we might be able to deliver to them.

Q635 Chair: In your discussions with Leave.EU, did they say that they had a dataset that they could make available to you in order to assist targeting in that campaign?

Alexander Nix: I am not sure that they did have a huge dataset or any dataset. I would have to revert to you on that. I think the idea was that we would help them go out and capture their data for them.

Q636 Ian C. Lucas: I have a quotation in front of me, dated 8 February 2017, from Bloomberg Businessweek: “We did undertake some work with Leave.eu, but it’s been significantly over-reported”. Are you saying that that is not correct, you never said that?

Alexander Nix: What I am saying is that the work we undertook was exploring a business relationship together.

Ian C. Lucas: You explored a business relationship but you did not begin a business relationship?

Alexander Nix: That is correct, sir.

Q637 Ian C. Lucas: Do you know who Arron Banks is?

Alexander Nix: I do know who Arron Banks is.

Q638 Ian C. Lucas: Have you read this book?

Alexander Nix: I know I have not.

Q639 Ian C. Lucas: It is called The Bad Boys of Brexit and it was sent to me by Arron Banks. Do you have a copy in your office?

Alexander Nix: That is correct. I was given a copy as well.

Q640 Ian C. Lucas: Can I suggest you read it, Mr Nix, because on 22 October 2015, according to this book, Mr Bank says, “We have hired Cambridge Analytica, an American company that uses ‘big data and advanced psychographics’ to influence people”. Are you saying that is incorrect?

Alexander Nix: I am saying that is incorrect.

Q641 Ian C. Lucas: Were you aware of that statement?

Alexander Nix: I saw the statement in the book.

Ian C. Lucas: You said you had not read it.

Alexander Nix: I have not read the book. I have seen the pages relevant to Cambridge Analytica.

Q642 Ian C. Lucas: You are aware of that statement.

Alexander Nix: Yes, I am aware of that statement.

Q643 Ian C. Lucas: Do you think that improves the business reputation of Cambridge Analytica?

Alexander Nix: Unfortunately, that is something that is out of our control. We have spoken to Mr Banks about this statement, and we spoke to Mr Wigmore about some of the statements that he made. We told them that we disagreed with them and that they were not true. I believe that they retracted some of their statements. The book came out, and it was already published by time I knew that that statement was going to be included in it. There was very little that I could do at the time to change that.

Q644 Ian C. Lucas: You could have sued, couldn’t you? You could have sued if it was damaging to the reputation of Cambridge Analytica.

Alexander Nix: I could have but I did not think that was adequate use of time and resources.

Q645 Ian C. Lucas: What he says is not true?

Alexander Nix: That is not true.

Q646 Ian C. Lucas: He is a liar.

Alexander Nix: It is not true.

Q647 Ian C. Lucas: He not only says that he used Cambridge Analytica; he said, specifically, that he hired you.

Alexander Nix: That is not true.

Q648 Ian C. Lucas: There are no financial payments from Leave.EU to Cambridge Analytica or any of associates?

Alexander Nix: Let me be absolutely crystal clear about this. I do not know how many ways I can say this. We did not work for Leave.EU. We have not undertaken any paid or unpaid work for them, okay? There is nothing else I can add to that that is going to clarify that statement in any more detail.

Q649 Ian C. Lucas: Mr Nix, I am sorry, but I am going to quote back to you what you said, which is, “We did undertake some work with Leave.EU”. It is in the quotation, and you have just said exactly the opposite. Which is true?

Alexander Nix: I was using the word “work” to mean that we met with them to discuss an opportunity. That is working. Unfortunately, having meetings, even if they do not lead anywhere, is still work but it does not entail the sort of relationship that you are trying to suggest existed between their organisation and our company.

Q650 Ian C. Lucas: Would you disclose your bank statements to show that no payments have been made from Leave.EU to Cambridge Analytica?

Alexander Nix: Yes, I would. I would be pleased to do that.

Ian C. Lucas: I would be very grateful if you would send those to the Committee so that we can check them.

Q651 Simon Hart: Why are you so desperate to distance yourself from Leave.EU?

Alexander Nix: I am not.
I am desperate to make sure that the facts of the matter are crystal clear, because that is the purpose of this inquiry, although I thought the purpose of this inquiry was that I could help inform the Committee on how data and targeting are used in communications.

Q652 Chair: Absolutely, and believe me we do want to come on to that. It is just that because you raised this in your letter to us we feel this is something we have to bottom out with you.

Simon Hart: Keep going. You were just getting to the end of that.

Alexander Nix: I was simply saying that we were trying to establish the facts.

Q653 Simon Hart: You suggested that the work that was involved was around preparatory discussions that might or might not have led to some form of contract. As a way of expanding on the answers you gave to Mr Lucas, what went wrong? Have you any idea why you did not get the job? Have you any idea why Arron Banks is apparently so determined to argue that you did? I do not understand how something so simple could become so complicated.

Alexander Nix: Deals fall down or transactions fall down for all manner of reasons. It could be price, or it could be personalities.

Q654 Simon Hart: What was it in this instance?

Alexander Nix: There simply was not the appetite to move forward.

Q655 Simon Hart: By you or by them?

Alexander Nix: I think by both parties. We did not feel that the marriage value of Cambridge Analytica working with Leave.EU, and clearly vice versa, was going to bear a fruitful and successful relationship.

Q656 Simon Hart: Yet it would seem that Leave.EU are, according to you, making claims now that suggested that that relationship did exist. Why, if there was not the will go forward and if there was not the will to enter into any sort of contract, do you think that they are misrepresenting the truth or, as you put it, commenting inaccurately?

Alexander Nix: I cannot possibly speculate on Arron Banks or Andy Wigmore or anyone else’s motivations. That would be an unfair question.

Q657 Simon Hart: A final point on this, and I think we will come back to the data element. There is a sense of irony in the way you seem to have found yourself to be the victims of misinformation being peddled online, which is arguably one of the accusations that is made about your company since you assist people in playing to the fears of vulnerable sections of the electorate in order to alter their voting plans. Do you set a moral compass anywhere in the manner in which you advise clients on vulnerable-voter sections in order to try to move them from one position to another? Do you see that as a positive contribution to society or do you just say, “They are paying the bills, therefore we will provide whatever it is they want”? Where does the social responsibility sit in all this?

Alexander Nix: I think that is another entirely unfair question that stems from a total misunderstanding about what it is that we are trying to do and how we help our clients. We are trying to use data and technology to allow campaigns to engage with voters in a more informed and relevant way. We are trying to make sure that voters receive messages on the issues and policies that they care most about, and we are trying to make sure that they are not bombarded with irrelevant materials. That can only be good. That can only be good for politics, it can only be good for democracy and it can be good in the wider realms of communication and advertising.

Q658 Simon Hart: It is not an unfair question to simply report the fact that some people consider the manner in which the data is used for electoral purposes is quite subliminal. It is arguably manipulative. I am simply asking for comment; I am not expressing a view myself. Quite a lot of political parties wish they could afford your services, I suspect, but they do not. I am simply asking whether there is any element of this that causes you concern. If you are trying to nudge—we were all watching the presentation you made yesterday, where you are trying to help people move from one voting position to another. It is not anything that is particularly drastic; it is just moving a couple of notches on the dial. Do you have any comments about whether it is unusual when you see a political party using the advice that you have given perhaps to alarm certain sections of the voting community into taking a position on the basis of what, in the old-fashioned term, would be subliminal advertising? Is that an unfair accusation?

Alexander Nix: Let’s start by establishing the fact that the use of big data and predictive analytics in political campaigns was something that was really championed by Obama’s campaign in 2008. They were the ones who made the significant advances in what is known now as micro-targeting—the use of data to start to look at the electorate as very small groups of people, hopefully, ideally as individuals as opposed to homogeneous masses, and to start to serve them most relevant messages. Again in 2012, the Democrats pioneered the use of addressable advertising technology in order to improve the way that they use this data to target people as individuals.

As Mr Collins well knows, they have been using these sorts of techniques in the realm of advertising to personalise advertising for many years—decades even—as they seek to build relationships between brands and their consumers such that you do not get blanketed with generic messaging but everything becomes more relevant to you. That is an entire industry that is moving in this direction. It is not Cambridge Analytica. All we have simply done is look at the industry—the advertising industry—and at what is going on in the political industry, and we have taken the best practices and in a very short of time we have replicated them and, I would like to say, improved on some of these techniques and methodologies and served them up to a different political party in order to help them have an equal chance of competing in a free and fair democracy.

I think part of the issue is that our candidate is somewhat polarising and so people see the work that we did in a negative light, and they refuse to accept the fact that Clinton’s machine was twice the size or three times of anything that we were doing for Trump. She had hundreds of data scientists and digital practitioners working for her. They were using very similar techniques, and they were targeting the audience in a very similar way, yet they do not come under the limelight and they do not get the scrutiny that we get simply because of the candidate involved.

I think if you look at the industry and you say to yourself, “Is it good for politics that you can make communications more relevant, that you can start to run a national campaign that involves millions or tens of millions or even hundreds of millions of voters and you can start to treat that campaign as you would a small mayoral election or a local election in the UK and you can start to speak to press releases about very local concerns that are relevant to them?” Whether it is speeding cameras or regulation of parking permits or whatever it is—things that matter as opposed to blanket messaging—that has to be good to make politics more personal, more individualised and more engaging.

Q659 Simon Hart: Last question, and I should know the answer to this: were you involved in the 2017 election here?

Alexander Nix: No.

Q660 Simon Hart: 2015?

Alexander Nix: As a rule of thumb, we do not involve ourselves in politics in the UK.

Q661 Chair: You said as a rule of thumb, but have you?

Alexander Nix: I have been with the company for about 14 years and I have never worked on a campaign in the UK, simply because, as a predominantly British campaign, we think it would be complex and possibly divisive to ask our employees and staff to support a particular political party in the country that they reside in.

Q662 Chair: Following up, you took umbrage at one of Simon’s questions about playing on people’s fears, but you gave a presentation about your work for the Ted Cruz campaign where you demonstrated that, based on the psychological profile of the audience, you might use an advertisement that played on a woman’s fear of being attacked in her own home to support the gun lobby. You might say that techniques like that are used by other people, but is that not a good example of the sort of campaign that Mr Hart was referring to?

Alexander Nix: Both sides used fear of spending and fear of economic exclusion as arguments for staying and remaining in Europe. I think presenting a fact that is underpinned by an emotion is not fearmongering. If you believe that yourself, it is very sensible. I think there is an argument to say that, in the particular instance you are talking about, there are people who look to the second amendment for self-protection. In fact, I would say there are quite a lot of people who fall into that bucket.

Q663 Chair: In that example there that you gave, fear was the emotion that you were playing on.

Alexander Nix: You are looking at the drivers that are going to influence the decision making.

Chair: In that case, the driver that was selected in that example for that decision maker was fear.

Alexander Nix: The fear of being unable to protect yourself.

Chair: The answer to that question is yes?

Alexander Nix: Yes, in that case.

Q664 Christian Matheson: Who is Brittany Kaiser?

Alexander Nix: Brittany Kaiser is an employee of Cambridge Analytica.

Q665 Christian Matheson: Is she still an employee?

Alexander Nix: As of three years, I believe—three or four years.

Christian Matheson: Is she still an employee?

Alexander Nix: She is still an employee.

Q666 Christian Matheson: She spoke, representing Cambridge Analytica, at a panel on the launch of Leave.EU, did she not?

Alexander Nix: I believe so.

Q667 Christian Matheson: Representing Cambridge Analytica.

Alexander Nix: Representing our proposed involvement as a company that was going to support Leave.EU.

Q668 Christian Matheson: She said at the time that, “The most important part of this referendum is appealing to first time and apathetic voters”.

Alexander Nix: Yes.

Q669 Christian Matheson: We have had the press release put out by the junior press officer—that was scotched straight away—but your involvement with Leave.EU continued up until the very launch and her speaking at that launch.

Alexander Nix: She was not speaking as a consultant to Leave.EU, she was speaking as a representative of Cambridge that was seeking to do some work for Leave.EU.

Q670 Christian Matheson: Did she get paid for being on that panel?

Alexander Nix: No, she did not.

Q671 Christian Matheson: We had the tweet from 29 November, which again was quickly being scotched by Andy Wigmore, but a couple of months later, on 10 February 2016, you were quoted in Campaign magazine as saying, “Recently Cambridge Analytica has teamed up with Leave.EU… to help them better understand and communicate with UK voters. We have already helped supercharge Leave.EU’s social media campaign”. I know you are unhappy with the line of questioning, but it is yet another piece of evidence, is it not, Mr Nix, that is contradictory to the statement that you have given in your letter to the Chairman?

Alexander Nix: I think it is the same piece of evidence that has already been brought up, so rather than go round the houses and have exactly the same conversation that we had 20 minutes ago, we have probably addressed this one.

Q672 Christian Matheson: My fear is that there are several individual pieces of contradictory evidence that provide a weight to each other.

Alexander Nix: No, there are two pieces of evidence that suggested an association, and we have addressed them both.

Q673 Paul Farrelly: I want to try to close this opening line of questioning in my own mind, because I fear that I am hearing the English language changing in my ears as this session has gone on. You firstly described that you were not working for someone, but by “work” you meant that you had meetings about working for someone, which to my mind does not count as working for someone, so that rather confused me. We have two sets of characters: you and Mr Banks. I use the book as a coffee mat in my office, because we were all sent unsolicited copies of it during the election. Mr Banks is saying, “Hey, we are hiring Cambridge Analytica”, and you are wanting to be Cambridge Analytica working with Leave.EU, so you are both going around professing love for each other and your intention to get hitched. Then you say there was no marriage value in this. What did you mean by that?

Alexander Nix: That we did not get hitched, to use your metaphor. To use your metaphor, we dated each other, we had a couple of dinners but we did not get married. Again, how can I spell this out to you? It is pretty obvious.

Q674 Paul Farrelly: I am continuing your metaphor. I do not know what a marriage value is, so perhaps you could help me. There was no marriage value in it for you. What do you mean?

Alexander Nix: The idea that when two parties come together, the sum of the relationship is better than the individuals staying on their own.

Q675 Paul Farrelly: I am still confused as to why your relationship broke down.

Alexander Nix: I am sure, as experienced businesspeople, you understand that there are often situations where you engage in conversations about working together with clients and they do not lead to a relationship being formed. Unfortunately, this is the nature of business.

Q676 Paul Farrelly: Could you spell it out? Did they not think you could deliver or were they not prepared to pay the rate that you wanted? Could you be a little bit clearer?

Alexander Nix: I cannot be more clear because I cannot recall. This was four years ago or three years ago. It was one meeting three years ago that did not lead to business. We do dozens of meetings every day and some of them lead to contracts and some of them do not, so I cannot be more clear. All I know is that we met some representatives from Leave.EU, we had some discussions, but no business was taken forward.

Q677 Paul Farrelly: It also led to a presence on a launch platform for something that is pretty seminal in the recent history of this country, but your memory is not very clear.

Alexander Nix: At the time we were preoccupied with some fairly important work in the United States and other countries as well.

Q678 Chair: Mr Nix, you are very clear in saying that Cambridge Analytica received no payment for any work relating to the referendum. Is that also the case for SCL, your parent company?

Alexander Nix: It is not our parent company, but that is also the case, yes.

Q679 Rebecca Pow: I want to look at the system that you used—I think you might describe it as a trait-profiling system, the OCEAN system—and at how you gather data and what you include. Could you very briefly explain the OCEAN method to us?

Alexander Nix: Obviously, depending on which territory you are operating in, there are different means to gather data depending on the legislative environment available. In a country such as the United States, we are able to commercially acquire large datasets on citizens across the United States—on adults across the United States—that comprise of consumer and lifestyle data points. This could include anything from their hobbies to what cars they drive to what magazines they read, what media they consume, what transactions they make in shops and so forth. These data are provided by data aggregators as well as by the big brands themselves, such as supermarkets and other retailers. We are able to match these data with first-party research, being large, quantitative research instruments, not dissimilar to a poll. We can go out and ask audiences about their preferences, their preference for a particular purchases—whether they prefer an automobile over another one—or indeed we can also start to probe questions about personality and other drivers that might be relevant to understanding their behaviour and purchasing decisions.

Q680 Rebecca Pow: I think the stated commercial aim of the SCL Group said that you then collate all this information to micro-target people with all your analysis in order to influence their long-term behaviour. Can you give an example or a couple of examples of where this has been very successful?

Alexander Nix: Let me try to route this into something that is a bit more relatable. If you were an automotive company and you were seeking to advertise your product to an audience, just knowing whether that audience was more interested in the engine and performance of the vehicle, as opposed to the safety features or the boot space or anything else, is going to be very relevant to how you communicate with them. That is an example of one or two data points. If you can expand on that and start to really understand what it is that you, as an individual, care about in purchasing decisions—purchasing a car for instance—you can start to tailor the product to the individual and start to tailor the communication in a similar way. Then you can talk about, in the case of somebody who cares about the performance of a vehicle, how it handles and its metrics for speeding up and braking and torque and all those other things.

Q681 Rebecca Pow: I assume you are gathering all this data on the British population as well.

Alexander Nix: Obviously there is a different set of regulations in the EU as opposed to the US. The EU is an opt-in data culture as opposed to an opt-out data culture, as is the case in the United States, so the datasets that we have in the UK, for instance, are not the same as those that we have in the US.

Q682 Rebecca Pow: Does any of the data come from Facebook? I have read that you have said that within so many “likes” you can almost predict what somebody is going to think about something, or indeed possibly how somebody might vote, and that you might know more about them than, say, their partner or spouse or work colleague does within a few simple steps. Is that right?

Alexander Nix: I have read a similar article. It was not published by us or written by us, I should say. It was written by an academic active in the space, so I cannot comment on whether that is true or not. We do not work with Facebook data, and we do not have Facebook data. We do use Facebook as a platform to advertise, as do all brands and most agencies, or all agencies, I should say. We use Facebook as a means to gather data. We roll out surveys on Facebook that the public can engage with if they elect to.

Q683 Rebecca Pow: But you can put your micro-targeted messages, as you were saying, on Facebook as advertisements to try to persuade people or nudge them in one direction or another.

Alexander Nix: We are platform-agnostic. We will match our offline data segments with any platform out there. Facebook obviously is an extremely prevalent platform and has an incredible global reach so it is a go-to platform of choice for many or most agencies, but if there are other more-targeted platforms, we would use those.

Q684 Rebecca Pow: We had a gentleman before our panel called David Carroll, who was an associate professor of media design in the States. He said that there is no indication of where Cambridge Analytica obtained its data for any of your rankings. Do you not feel people ought to know where you are getting your data from and then what you are doing with it, how you are sharing it, whether you are processing it or even whether people ought to have a right to be able to delete it?

Alexander Nix: In the United Kingdom, individuals, as governed by EU law and data protection regulation, are entitled to make a subject access requests and, as they will be able to under GDPR with all companies, they will be able to ask for their data and have that data removed from those companies’ databases. We are fully complicit with the law and the legislation that is currently in place.

Q685 Rebecca Pow: Do you see yourselves as being an all-powerful presence with all the knowledge and data that you have and that it is not surprising people are trying to find out whether you are doing anything perhaps you should not do in the way of influencing elections? You do seem to be in a position where, with all your knowledge and your powerful data, you could do that.

Alexander Nix: It is very flattering that you suggest that people might see us as having these incredible powers. What we are doing is no different from what the advertising industry at large is doing across the commercial space. We are a small technology company that is trying to develop best-in-practice technologies. We are not a political agency, and we do not have a political ideology. We work on as many elections each year that are left of centre as are right of centre. We only work for mainstream political parties; we do not work for fringe actors. We only work in free and fair democracies. The science of political campaigning goes back hundreds of years and what we are doing is a very natural evolution to what has been done before, and what is being done by many other people as well.
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Part 2 of 3

Q686 Rebecca Pow: Doesn’t the very fact that you are working on political campaigns mean that you must be influencing them, given that your remit is to influence people’s long-term behaviour?

Alexander Nix: All campaign management consultancies or agencies are there to help their customers or their clients, as a good advertising agency is there to help the brands that it represents. We are there to make sure that our candidates are able to communicate with the electorate in the most relevant and effective way. That is what campaign consultancies do, as most of the people in this room should well know because of their involvement in politics.

Q687 Ian C. Lucas: Do you share data between, for example, SCL and Cambridge Analytica?

Alexander Nix: SCL is a very different company to Cambridge Analytica. It is a different company that has different employees who sit in a different office. It has a different board and a different board of advisers. It has different datasets, and it has different clients. The short answer is no. The only relationship between Cambridge Analytica and SCL is some shareholders. Apart from that, they are completely separate entities.

Q688 Ian C. Lucas: There would never be circumstances when you would transfer data from SCL to Cambridge Analytica?

Alexander Nix: We could transfer data from Cambridge Analytica to SCL, but because SCL is a company that operates in the government and defence space, it acts as company that has secret clearance—X-list accreditation in the UK—so we could not transfer data the other way.

Q689 Ian C. Lucas: You could transfer data from Cambridge Analytica to SCL, you said?

Alexander Nix: Certain data, yes.

Q690 Ian C. Lucas: Are there any individuals who work for both organisations?

Alexander Nix: There are individuals like myself who, at a high level, sit on a board of both organisations, but there are no employees who work for both organisations.

Q691 Ian C. Lucas: Is it your understanding that if I lawfully give one of those businesses information about me, another one of those businesses can use that information?

Alexander Nix: I said certain data. There are certain data that we can go out and commercially—I am talking about the United States, by the way.

Ian C. Lucas: I am talking about the UK.

Alexander Nix: In the UK that is not our practice.

Q692 Ian C. Lucas: It is not your practice. Is that because it is unlawful?

Alexander Nix: We do not share data. No, it is simply because there is a different legislative environment here.

Ian C. Lucas: So it is because it is unlawful.

Alexander Nix: In America, we can go out and acquire data. In the UK, we can still work with data, but as a data processor not as data controller. We can work with client data. I am sure you are familiar with the distinction between the two. We never own these data; we are simply processing these data on behalf of our clients.

Q693 Christian Matheson: Very briefly on that—going back to the answer you gave to Mr Lucas about not having any common employees, just common shareholders—the registered representative with the Information Commissioner for Cambridge Analytica is Jordanna Zetter. Does that sound right?

Alexander Nix: Sorry, the registered representative for—

Christian Matheson: With the Information Commissioner.

Alexander Nix: Right.

Q694 Christian Matheson: Is it not the case that she is also publicly named as the Operations Executive for SCL Elections Ltd and Cambridge Analytica?

Alexander Nix: Jordanna has been acting as the liaison in an administrative capacity for helping the ICO with some of their inquiries into data and data protection. We have a data compliance team who are undertaking the work. Her role is more about co-ordination and administration.

Q695 Christian Matheson: You would stand by the position that there are no common employees or employees who spend time working for both?

Alexander Nix: Jordanna’s employment is with Cambridge Analytica.

Q696 Ian C. Lucas: Can I come in on that? That is a very important role, full stop, but particularly in an analytics company—the person in charge who is lawfully responsible to the Information Commissioner.

Alexander Nix: There is a misunderstanding. She is not the person in charge. Ultimately, the CEO is in charge and our data compliance team is in charge. She is simply the liaison who passes messages between the two bodies.

Q697 Christian Matheson: What is the difference between owning the data and processing it?

Alexander Nix: In the UK, if we were to undertake work for a big corporate, their data would be owned by them and they would always be the data controller. They would have control and responsibility for their data. They could bring us in to work on their data, but we would never take receipt of that data and we would never own that data. We would simply come in and perform analytic function on that data. Their data would remain their data.

Q698 Rebecca Pow: This is just a small point related to data. I believe I asked you whether you gathered the data from Facebook and whether you were using all that information. I think you said you did some surveys. Could you expand a bit more on what those surveys are, what you are asking people and how you are gathering the data? Do you keep that data on surveys carried out on Facebook or does Facebook keep it?

Alexander Nix: I cannot speak to Facebook, but as far as I am aware the process works a bit like an opinion survey. If I want to find out how many people prefer red cars or yellow cars, I can post that question on Facebook and people can agree. They can opt in to answer a survey and they give their consent and they say, “I prefer a yellow car” and then we can collect that data. That is no different to running a telephone poll or a digital poll or a mail poll or any other form of poll. It is just a platform that allows you to engage with communities.

Q699 Rebecca Pow: Are they a big part of your data-gathering service?

Alexander Nix: When we work for brands, whether it is in the UK or in the US or elsewhere, we often feel the need to probe their customers and find out what they think about particular products or services. We might use Facebook as a means to engage with the general public to gather this data.

Q700 Simon Hart: Let me ask a very quick question on the Facebook survey opt-in option that you were describing. If you are asking somebody what kind of car they prefer and they opt in, does that facilitate access to other data that may be held by Facebook, which is irrelevant to car colour, or is it only the data you collect on car colour that is relevant? Nothing else that is part of the data held by Facebook would be available to you.

Alexander Nix: You are absolutely right—no other data. As far as I am aware, Facebook does not share any of its data. It is what is known as a walled garden, which keep its data—

Q701 Simon Hart: People are not in any way accidently giving you consent to access data other than that that you specifically asked for.

Alexander Nix: That is correct. People are not giving us consent and Facebook does not have a mechanism that allows third parties such as us to access its data on its customers.

Q702 Simon Hart: Even with its customers’ consent.

Alexander Nix: Even with its customers’ consent.

Q703 Chair: I have taken one of your surveys. It was found through your website. I think it was a profiling survey that is linked to the OCEAN model. The incentive to take the survey is to understand more about your psychological profile. When you complete the survey—this is where I bailed out of the process—it invites you to complete the survey and get the information back you want by logging in with your Facebook log-in at the end of the process. If someone does that, what data are they allowing you to share from their Facebook process? What is the purpose of the Facebook log-in at the end of the survey?

Alexander Nix: Logging in with Facebook is a fairly common practice in the digital realm. It simply saves you the time of putting in your name and e-mail address and so forth, such that we can then send you that report on the survey that you have just taken.

Q704 Chair: Does that give you the right to access any other data points from my Facebook profile?

Alexander Nix: No, absolutely not. Absolutely not.

Q705 Paul Farrelly: I just want to clear up two things—I am sure we want to pursue the use of Facebook. You mentioned that SCL Group, or whichever of the companies it is—you can perhaps be more precise—has X-list accreditation for work with Government and defence. Can you explain that? I have not come across an X list before. Forgive my ignorance.

Alexander Nix: Not at all. I am sure you are not ignorant at all. SCL is a behavioural communications agency that was set up specifically to service the government space. We do an awful lot of work in the UK, but it is principally in the US, working with Government Departments such as the DOD, State, Pentagon and so forth. We are trying to use an understanding of group audience behaviour to address often hostile actions. Specifically, that includes programmes of counter-terrorism and counter-radicalisation. We are looking at how we can use an understanding of audiences to address problems in the drug trade, in children and women trafficking, programmes of social change, Government information programmes, a huge number of health programmes—trying to understand how we can encourage people to live more healthy lives.

Q706 Paul Farrelly: Is this all in the US, not in the UK?

Alexander Nix: It is in the US, the UK and globally. Obviously, the US is a larger market for this kind of work.

Q707 Paul Farrelly: Are all the various SCL entities involved in this?

Alexander Nix: That is correct.

Q708 Paul Farrelly: What does SCL stand for?

Alexander Nix: Historically, going back some 14 or 15 years, it stood for Strategic Communication Laboratories. It has been abbreviated now.

Q709 Paul Farrelly: One more loose end. To Rebecca Pow’s question about Facebook, where she said that with a certain number of likes you could know someone better than this, this or this, you attributed that to some professor somewhere.

Alexander Nix: I do not think I attributed to anyone by name.

Paul Farrelly: No, you said it was something that had been written by a professor.

Alexander Nix: I think I said by an academic, but that is my understanding, yes.

Q710 Paul Farrelly: You said that yourself in a speech to the fabulously titled Online Marketing Rockstars conference in 2017. You made those claims about Cambridge Analytica’s capability.

Alexander Nix: Could you read that out, please?

Paul Farrelly: You claimed, “With 10 Facebook likes, Cambridge Analytica can predict an individual’s behaviour better than their work colleague might. They only need 70 to make”—that is you—“behavioural predictions better than a friend, 150 to understand a voter better than their parents”. With 300 likes you claimed your organisation can, “predict a person’s actions, thoughts and feelings better than their spouse”.

Alexander Nix: Those are not my words. I am familiar with that text. That was the text that your colleague Rebecca was quoting from but those were not Cambridge’s words. That was a statement that was made by an academic who spent a number of years, I believe at Stanford University, looking into this area. That was his work, and that was his statement. I do not know why that has been attributed to Cambridge.

Q711 Paul Farrelly: You have not made those claims on Cambridge Analytica—

Alexander Nix: That is not my statement, period.

Q712 Paul Farrelly: Did you quote it?

Alexander Nix: No, I did not quote it. I have never memorised those statistics in order to include them in a quotation.

Q713 Ian C. Lucas: Is Cambridge Analytica a Facebook developer?

Alexander Nix: No.

Q714 Ian C. Lucas: What is your relationship with Facebook?

Alexander Nix: We are a client of Facebook. We purchase advertising through Facebook, as every other digital agency does.

Q715 Chair: Mr Nix, I would like to clarify one or two things that you have said, and I have one or two things about Facebook before we move on to other topics. You were asked earlier about Jordanna Zetter’s dual role working with SCL and with Cambridge Analytica. Was that dual role created in response to the inquiries from the Information Commissioner or was she working on that dual role before those inquiries were made to your company?

Alexander Nix: As far as I am aware—and I would be pleased to circle back to the Committee to confirm this—Jordanna Zetter is employed by our office in London to work for Cambridge Analytica. She has no formal role with SCL Group, which is based out of Arlington, Virginia, in the United States. I think, as far as I am aware, she has never even visited those offices and has no relationship with them. She was simply asked to help with the ICO’s inquiries into data and data protection. She kindly agreed to act as a liaison in that respect. Should they have any questions—I am not sure that they do or did, but again I would need to confirm that for you—for SCL in the United States, she would pass them on and be the conduit of that, simply because they do not have a relationship with those people. It is purely an administrative role. She is not a senior member of staff.

Q716 Chair: If you were able to confirm that in writing we would be grateful for that, and also whether that liaison role was in place before the Information Commissioner’s investigation commenced.

Moving on to Facebook, in response to other questions you drew a distinction between being a data controller and a data processor. Could you explain a little bit more to us about that distinction between those two roles?

Alexander Nix: Again, this is certainly not my area of expertise. I run the leadership team, not the data compliance team. My understanding of how this works in the United Kingdom is that the brands that we work with remain the controllers of their own data. That is, if you are a large retail brand and you have collected a lot of data on consumers, you own and are responsible for that data and for looking after it and securitising it and protecting it and all the regulation that governs it. These brands are allowed to engage with companies and agencies such as Cambridge Analytica in order to help them to process or model this data. We perform an analytic function as a subcontractor or as a contractor on this data. We do that work for them, often on their own servers within their own data ecosystem and then we leave. We do not control that data, and we do not have a copy of that data.

Q717 Chair: You said in your letter to me that, “Cambridge Analytica does not gather” data from Facebook.

Alexander Nix: From Facebook?

Chair: Yes.

Alexander Nix: That is correct.

Q718 Chair: The actual quote from the letter is: “On 8 February 2018 Mr Matheson implied that Cambridge Analytica ‘gathers data from users on Facebook.’ Cambridge Analytica does not gather such data.” But from what you said you do, do you not, through the surveys?

Alexander Nix: Yes, I think I can see what has happened here. What we were trying to say in our letter is that we do not gather Facebook data from Facebook users. We can use Facebook as an instrument to go out and run large-scale surveys of the users, but we do not gather Facebook data.

Q719 Chair: By that do you mean that you do not have access to data that is owned by Facebook?

Alexander Nix: Exactly.

Q720 Chair: You acquire data from Facebook users through them engaging with surveys and other things.

Alexander Nix: Exactly right.

Q721 Chair: Is your engagement, either directly or through any associate companies you may have, just through the placing of surveys or are there other tools or games or things that are on Facebook that you use to gather data from Facebook users?

Alexander Nix: No, simply through surveys.

Q722 Chair: We referenced earlier the presentation you gave at the Concordia Conference in 2016 about your work for the Ted Cruz campaign. Were you hired to work for Donald Trump on the basis of your work with Ted Cruz? I imagine you could not have been working for two candidates in the same race, so did you start—

Alexander Nix: Actually we were working for two candidates in the primaries. We were working for Dr Ben Carson’s campaign and for Ted Cruz’s campaign, and we were seeking to work for Donald Trump’s campaign throughout the primaries as well but the Trump campaign did not wish to engage with us other than on an exclusive basis. We had two clients who we were well established with and we were not willing to give those up, so we said to the Trump campaign that, “In the event that you win the primary let’s reopen the discussions that we started almost a year beforehand”.

Q723 Chair: The work that you did for the Trump campaign was obviously after Ted Cruz’s campaign had ended. Is that right?

Alexander Nix: Immediately after Trump won the primary—Cruz coming to second to him—we reopened a dialogue with the Trump campaign about how we could take all the technology that we developed, largely for the Cruz campaign, and pivot it across to Trump to give him the same or similar capability.

Q724 Chair: Is that what you did?

Alexander Nix: That is exactly what we did.

Q725 Chair: In your presentation you said that the Cruz campaign relied on a sort of tripartite strategy where the campaigns were based on understanding behavioural communications, which is where the OCEAN survey and psychological profiling comes in, data analytics—data from multiple sources where it is available—and then ad data to place the messaging. Is that the same approach you used for Donald Trump’s campaign?

Alexander Nix: We would have liked it to have been, but it was not the same approach, simply because when we joined the Trump campaign we had about five and a half months before polling to build or re-engender the entire analytics capability that Clinton’s team had and that we had been giving to Cruz. We simply did not have the time and resources to be able to go into the same depth of services that we provided to the Cruz campaign, which we had been working on for very many more months. It was a very extended and protracted programme. We made the decision to focus on the data and analytics elements of the campaign and the tech, digital and data-driven TV elements of the campaign. We did not have time to bake in or to incorporate the behavioural approach, the psychographics that we had used on the Cruz campaign.

Q726 Chair: Why not? You said that the psychographic information is based on surveys you have done, which means you believe you have an accurate model for understanding every voter in America. Presumably that database could be migrated to support other campaigns as well. It is not data specific to a particular campaign, is it? It is generic profiling of people.

Alexander Nix: Yes, but then you have to take these data and contextualise them into the campaign that you are working on. Everything that we did for Cruz in that regard was centric around Cruz. We would have to then replicate that for Trump and that would have just been the most enormous piece of work.

Q727 Chair: In that case, I don’t understand why you were hired. You have made it quite clear in your presentation on your work for Ted Cruz that your model is based on the combination of these different elements. The ad data is about message targeting—the media placement bit of it—but the smart bit is the merging of psychological profiling and data analytics. In fact, what you do here in this country is based on that too. That seems to be your USP. Why would none of that psychological profiling have been used to augment the data in the Trump campaign when that is the way you work?

Alexander Nix: As I said before, the reason it was not used was because we simply did not have the time and resources to include it. If we had had that opportunity, we would have. We did not and we are just trying to be transparent about that fact. To say that the smart bit is simply that would be doing an injustice to the 40 or so PhD data scientists who spent 100 hours a week for five months crunching data and numbers in order to develop the very accurate and insightful models that they did for the Trump campaign.

Q728 Chair: The way you sold yourself and what your company did was based on the combination of these elements together. If I was someone in the room that day—the way these conferences work is that you are effectively there pitching yourself and your company in the hope of winning new business and new clients on the back of it. You have a very clear model and it is quite interesting that one of the three supports of that stall has been taken away to go and work on another high profile campaign. It seems very strange.

Alexander Nix: You can only provide a client, whether it is political or brand, with the services that you are able to deliver within the constraints of the project timelines that you are presented with. You are absolutely correct that, in an ideal world, not only would we have liked to have delivered the services that I spoke about in that presentation but many other services that we have developed across the engagement space, as digital and television in particular, but we simply did not have time. Unfortunately, unlike running a brand campaign where you are selling automotives or toothpaste or something where you don’t have the same time pressures, we have a finite amount of time. You have to choose which technologies in your arsenal are going to be the most important and that can be deployed most effectively, and we made a decision.

Q729 Chair: In that presentation I think there is a slide on data analytics where you describe that data is sourced from multiple sources and any marketing company will know that there are companies that specialise in data analytics to analyse consumer behaviour. I think on your chart you had logos of different companies. I think Experian was one and Nielsen was one. You had Facebook on there as well. Again, just to confirm on this, is that because you are highlighting the fact that you can gather data from Facebook?

Alexander Nix: Collect data through Facebook—that is exactly right, yes.

Q730 Chair: Does any of your data comes from Global Science Research company?

Alexander Nix: GSR?

Chair: Yes.

Alexander Nix: We had a relationship with GSR. They did some research for us back in 2014. That research proved to be fruitless and so the answer is no.

Q731 Chair: They have not supplied you with data or information?

Alexander Nix: No.

Q732 Chair: Your datasets are not based with information you have received from them?

Alexander Nix: No.

Chair: At all?

Alexander Nix: At all.

Q733 Ian C. Lucas: Can I go back to an answer I think you gave earlier? I just want you to confirm something. Did you say that you had never worked on any political campaigns in the UK?

Alexander Nix: I said that I personally had not been involved in any political campaigns in the UK. I have been with the company for about 14 years and, as far as I am aware, in the last 14 years we have never worked on any campaigns in the UK.

Ian C. Lucas: That is Cambridge Analytica and—

Alexander Nix: Cambridge Analytica was only formed in 2012, so this would have been a company that I worked for prior to forming Cambridge Analytica, which was called SCL.

Q734 Ian C. Lucas: By political campaigns, that means general elections. What about for candidate elections for political parties within the UK?

Alexander Nix: Again, as far as I am aware, since I have been in the company we have never worked—we don’t seek to work in the UK, for the reasons I discussed earlier. We don’t see the UK as a commercial market of interest for SCL or—

Q735 Ian C. Lucas: That really puzzles me because there are lots of other businesses that might do work for different political organisations within the advertising sector or within the information sector. Why is it that you are so involved in politics in the US but you are not involved in the UK?

Alexander Nix: I think I have addressed this already but let me explain it again for you. First, we only entered the US market in 2012. We have been running election campaigns since 1994. We take on a number of national elections every year. That could be three, four, five, six, seven elections across the world in every single year for prime ministers and presidents. That could be in Asia, Latin America, Europe, Africa or beyond. We entered the US market relatively recently. We saw a commercial opportunity to bring some of the technologies that we had developed to that market, particularly to help with Republican politics because they were losing the tech arms race, if you like, to the Democrats and that is where the opportunity existed. We have no more interest in servicing the US political market than we do helping political parties in Africa or Asia. Specifically in regards to the UK, as I said before, originally we were a British company with most of our staff based in the UK, and we felt that it would be unfair on our staff for senior management to make a decision about which political party the company supported, especially if that was at odds with the political views of our employees, so we did not want to put them in that awkward position.

Q736 Ian C. Lucas: That is very thoughtful, because lots of other businesses don’t do that in the UK. Could you tell me who your clients are in the UK?

Alexander Nix: We work for brands in the UK. Although the current impression is that we are a political consultancy, I have tried to explain to this Committee that we are not a political consultancy. We are a technology-driven marketing firm, and the majority of our business is in the brand space. We work for big and small brands, trying to help them market and sell their products and services to consumers around the world. We also have a government and defence division, which I am very proud of and which does enormously important work in saving lives all over the world in campaigns about issues that really matter. We have a political division, but our political division is only, say, 20% or 25% of our entire business.

Q737 Ian C. Lucas: Given your thoughtful approach with your employees about not getting involved in political campaigns, what led you to start to discuss with Leave.EU about getting involved in probably the most contentious political campaign in British history?

Alexander Nix: It was only an exploratory discussion and, as I have said to the Committee already, we have these sorts of discussions with all parties in the UK. Without exception, every single party has approached us, and every single party has asked about our services. We have had these discussions. Some of them have been more protracted than others and we have never engaged with anyone—not on my watch—but it does not mean we are not interested to understand more about their needs and concerns, to understand more about the technology they are embracing and to see what the market is like. This was an example of that. In the end the decision was made not to move forward.

Q738 Ian C. Lucas: You are not a partisan political outfit.

Alexander Nix: I don’t think we would be particularly good at our job if we were partisan. We try to be objective. We try to walk into a country and service our clients with the best, most cutting edge technology and methodologies available for communications and campaigning.

Q739 Ian C. Lucas: Why was Steve Bannon on your board?

Alexander Nix: Steve Bannon was on our board to help a British company to understand a new market that it was trying to penetrate. I can’t think of many people who would be better to help a company enter a market, particularly into the Republican space, than somebody who had extensive experience of the commercial and business landscape through his time at Goldman Sachs and the like, who understood the media landscape through other experiences, and who also had a very attuned political knowledge.

Q740 Ian C. Lucas: I can’t think of anyone who is a more partisan political figure.

Alexander Nix: I can’t speak to your—

Ian C. Lucas: Okay, but it does not sit easily with the fact that you are non-partisan in one country but you are massively partisan in another.

Alexander Nix: In the United States, the practice is not to switch sides. You either work for the Republicans or you work for the Democrats. You don’t do one election for one and then change sides. That is how the convention is. In other countries, we always give our previous clients first bite and first sight of our services, but if for any reason they do not wish to engage with us, we are at liberty to go and work for opposition parties and sell our services to them.

Q741 Chair: You might be interested to know, Mr Nix, that various people are watching the evidence session. It is being broadcast and people are tweeting about it. Julian Assange has tweeted about it, sharing a link to the session where people can watch it. Has Cambridge Analytica or any of its associate companies ever worked on campaigns to distribute information that has been sourced from WikiLeaks?

Alexander Nix: We have no relationship with WikiLeaks. We have never spoken to anyone at WikiLeaks. We have never done any business with WikiLeaks. We have no relationship with them, period.

Q742 Chair: That was not quite the question I asked, which was whether you had ever been involved in advising on or organising campaigns to distribute information that has been sourced from WikiLeaks.

Alexander Nix: We have never been involved in organising or advising on campaigns that distribute data or information from WikiLeaks.

Q743 Chair: Arron Banks has also been following the session and tweeting about it. He has invited himself to come and give evidence to the Committee, which we might well take him up on—Mr Lucas suggested that earlier on. If Mr Banks is still watching, if he wants to keep his diary free over the next couple of weeks, we may well be in touch. What he says in his tweet about your negotiations—this potential marriage or courtship that failed—is that, “CA wanted a fee of £1m to start work & then said they would raise £6m in the states. We declined the offer because it was illegal.” Is what he is saying correct?

Alexander Nix: Absolutely incorrect.

Q744 Chair: That is the second time he has lied, according to you.

Alexander Nix: Mr Banks is at liberty to say whatever he likes, but I don’t have to agree with it.

Q745 Chair: What he has said in that message is totally untrue?

Alexander Nix: That is totally untrue.

Q746 Simon Hart: I have a quick question on the attitude to your staff and not wishing to put them in a difficult position when it comes to choosing campaigns. Do you apply the same principle to which brands you choose to represent? Do your staff have a say? They may feel more comfortable with some brands than others. Do you consult them over that?

Alexander Nix: We always give our staff a choice about which projects they would like to work on. If anyone for any reason does not feel comfortable working on a particular brand, we are happy to offer them the opportunity to work on a different brand. If, for instance—and I keep using the example—you don’t believe that the automotive industry is necessarily good for the environment, you do not have to work on it. You can go and work on selling bicycles.

Q747 Simon Hart: Likewise, UK employees working on the Trump campaign could also choose—

Alexander Nix: All our employees have that opportunity.

Q748 Chair: I wanted to ask you something about data that I meant to ask you about earlier. You gather data from various sources, including from Facebook through the survey tools you have on the platform. Do you retain that data and information unless you receive a request to hand it back or to destroy it?

Alexander Nix: In a country like the United States, we retain that data. Some of that data is purchased and some of that data is licensed, so then you need to either return it or delete it or refresh it.

Q749 Chair: When you talk about data being purchased, who are the people you have purchased it from in that case?

Alexander Nix: It is possible to go out and purchase commercially available datasets. There are people who make a living from selling data in the United States.

Q750 Chair: Could you give us an example of a company?

Alexander Nix: This would be people who collect data off their customers, for instance.

Q751 Chair: Given that Facebook is such a major platform, would that include customer Facebook data that has been gathered by other people that you can buy?

Alexander Nix: I don’t know. My understanding—you would have to speak to Facebook and I know you have spoken to Facebook—is that they do not share any of their data, and it would be bad for their business model, I assume, if they did.

Q752 Chair: Yes. That is certainly what they said to us in their evidence session. You would hold data that you have acquired on people in America in particular. That data would be used in different campaigns. You might gather that data as part of one piece of work you are doing for one client, and you might even use that data in another campaign if it was relevant to that campaign.

Alexander Nix: Yes. At a high level, yes, but it depends on the data agreement that is signed with the person that you acquire or license that data from. Different datasets might have different licensing regulations.

Q753 Chair: In that presentation, you cited the Iowa caucus as being a campaign you have worked on. Could data that you used working for Ted Cruz in Iowa have been used in the Trump campaign as well?

Alexander Nix: Hypothetically, it could have been, yes.

Q754 Chair: We have talked a lot about profiling, both psychologically and through data analysis. The third pillar of your presentation was about ad data and ad placement. Do you advise clients not just on how to reach people and what message they should see, but also how frequently they need to be contacted about a message in order for it to be persuasive?

Alexander Nix: Yes, we do.

Q755 Chair: Do you advise on the architecture for distributing that information as well? We have taken a lot of evidence about networks of accounts on Facebook and Twitter in particular that are used and set up to reach audiences and target audiences with information. Would you advise people on how those should be set up?

Alexander Nix: Do you mean physical architecture or are you talking about the balance between different channels and how they are weighted?

Chair: I suppose it is a combination of those things. If you are saying that you give advice on how frequently someone needs to see a message and, let’s say, that Facebook is going to be one of the chosen media in order for that message to be seen, do you advise on how that message should be delivered by Facebook? You could just set up a Facebook page with some information on, you could use advertising to supplement the reach of that, or you could use the interaction of other accounts and other pages to bring audiences to that page. Is that the sort of advice you give clients as part of advising them on not just what they should say, but how frequently they need to say it?

Alexander Nix: It is either the advice that we would give them or the work that we would undertake on their behalf.

Q756 Chair: We have looked at the role of bot accounts, in particular on Twitter. Is that something that you would advise clients on, how to set up networks of bot accounts to augment messages and make sure that people see them frequently?

Alexander Nix: Absolutely not. That is not something we engage with. It is not something that we would engage with. It goes against everything that we are trying to achieve. What we are trying to do is make sure that the most relevant messages hit the right audiences. The idea that you could use bot accounts to spread messages is contrary to everything we are set up to do. That goes back to the area of blanket advertising and spamming people with irrelevant information. That is not what we do.

Q757 Chair: Twitter were very clear when they gave evidence to us that bot accounts can be used for good and bad. There is a bot account in my constituency that tweets the weather every day, which is a perfectly harmless service that someone is providing. The question is what they are for, but clearly any one of these accounts is used to target information at people you want to receive it. It is a targeting tool, not just a broadcasting tool. Is that the sort of advice you give people on how to use these networks of accounts in order to reach the right people?

Alexander Nix: No, it is not. It really isn’t, because there would be no need to invest in our services if that was the implementation or the engagement process that you were seeking to use. What we are trying to do is get away from everything that could be construed as mass communication, spamming or large-scale media engagement. We are trying to make our communications more personal—really personal. We are trying to build the individual relationship between the brands and their customers. I agree with you that bots can be used for good, but it is generally not a technology that aligns with what we have been set up to do and what we have been doing for the last 10 years.

Q758 Chair: If you had a client and you were advising them on how to reach their audience and the frequency with which they need to reach their audience with a message, and Twitter and Facebook were the chosen platforms through which that communication would take place, how would you go about planning and developing that campaign and delivering it?

Alexander Nix: What we are trying to do is look at an audience and segment that audience into as many different groups as possible such that we can begin to identify what each of those subgroups in the target audience care about most in relation to a specific product or service or, indeed, political candidate or campaign. Then we start to tailor messaging that can be made most relevant to the concerns, issues, hopes and fears of those particular people, so that we can give them the facts of the matter in the most relevant and personal way. It is about breaking messages down into multiple messages and then nuancing them to make them more relevant.

Q759 Chair: I understand the message creation; I am asking about the message delivery. How do you deliver the message to somebody with the media that you use?

Alexander Nix: In the instance of Facebook, we are able to take these offline segments, and we can match them to cookies and target the specific adverts that we have made for that group of people, whether it is 100 people or 100,000 people, and serve that message to them through their cookies.

Q760 Chair: Through cookies on any site?

Alexander Nix: On Facebook or any other platform.

Q761 Chair: Given that Facebook is a closed platform, how do you do that? Do you go to Facebook and say, as other advertisers would do, “We have got this campaign. We want to target Facebook users. This is the profile of the people we want to target”?

Alexander Nix: Exactly that. It is an anonymised match based on a target profile that we have developed through our data analytics.

Q762 Chair: Then you just pay Facebook in the ordinary way for targeting those people?

Alexander Nix: Exactly that.

Q763 Chair: Do you gather data that enables you to plan campaigns that might be targeted at people who have certain religious beliefs or come from a certain ethnic background or hold certain political opinions?

Alexander Nix: In our campaigns we are trying to get away from demographics. We are trying to look at people based on their fundamental drivers and, in the case of politics, this is about who is likely to be supporting a Republican versus a Democrat and what issues are most relevant to those audiences. I don’t think that targeting in the way that you have implied is going to help us.
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