Swine Flu Didn't Fly

For makers of the swine flu vaccine, 2009 was a year to remember. By June, CSL Limited's annual profits had risen 63 percent over 2008. GlaxoSmithKine's 2009 earnings spiked 30 percent in the third quarter alone, to $2.19 billion. Roche made a stunning 12 times more in the second quarter of 2009 than of 2008. But in 2010, drug companies may get their comeuppance.

On Tuesday, the Council of Europe launched an investigation into whether the World Health Organization "faked" the swine flu pandemic to boost profits for vaccine manufacturers. The inquiry, held in Strasbourg, France, vindicates a worldwide movement of insiders, experts, and elected officials who accuse the United Nations organization of misleading the world into buying millions of unnecessary vaccines.

"I have never heard such a worldwide echo to a health political action," Dr. Wolfgang Wodarg, an epidemiologist who formerly led the health committee for the Council of Europe, said at Tuesday's hearing.

Dr. Ulrich Keil, director of the WHO's Collaborating Centre for Epidemiology, hammered his own organization and WHO's flu chief, Dr Keiji Fukuda, for "producing angst campaigns".

"With SARS, with avian flu, always the predictions are wrong...Why don't we learn from history?" Keil said. "It [swine flu] produced a lot of turmoil in the pubic and was completely exaggerated in contrast with all the really important matters we have to deal with in public health."

Last year the World Health Organization predicted that H1N1 could infect two billion and claim hundreds of thousands of lives, while President Obama's science advisers said the outbreak could infect up to 120 million Americans and kill 90,000. But thankfully, H1N1 turned out to be a mild flu. The type-A influenza has taken around 14,000 lives worldwide, according to World Health Organization numbers from January 22. The CDC said in December confirmed US deaths had reached 4,000, although it recently estimated that due to underreporting, the true death toll could be as high as 16,500 - a tragic sum, but less than half of what the CDC attributes to seasonal flu-related illness. In most of the northern hemisphere, hog flu has been on the decline for some about three months. New transmissions are largely contained to North Africa and South Asia, according to the WHO.

Signs swine flu wasn't much of a killer grew throughout 2009, but WHO and most domestic health agencies around the globe chose instead to man the war bugles at full volume. The result was that governments poured tens of billions of dollars into vaccines. The US alone has spent $2 billion on the drugs and has allocated $7.5 billion in supplemental spending for H1N1 preparedness.

With the disease basically over, however, countries are stuck with millions of unused doses. French and German governments have had to cancel millions of orders of the vaccines due to falling demand and late-breaking news that European health authorities had recommended twice the necessary dosage. The CDC has dealt with the glut in another way. It now says all Americans should go and get the shot - a shift from its earlier recommendation that at-risk groups such as the young, sick, pregnant, and nurses seek injections first. But why should everyone get a shot when that the disease is petering out?

On January 22, WHO issued a statement calling allegations that it irresponsibly stoked H1N1 fears, "scientifically wrong and historically incorrect." The statement defends figures WHO publicized on transmission rates, mortality, and the virulence of swine flu.

"The world is going through a real pandemic. The description of it as a fake is wrong and irresponsible. We welcome any legitimate review process that can improve our work."

At the hearing, WHO's flu director, Dr Keiji Fukuda, denied the accusations against WHO.

"Let me state clearly for the record - the influenza pandemic policies and responses recommended and taken by WHO were not improperly influenced by the pharmaceutical industry."

Previously, WHO had offered scant response to allegations of corruption, but deigned to defend itself after the Council of Europe meeting was announced. The public meeting to examine accusations against WHO was set up by the Parliamentary Assembly of the Council of Europe (PACE), which represents 800 million people in 47 countries. The Council's January 26 meeting involved WHO officials, European drug-makers, and medical experts. PACE's findings are expected to be announced January 29 and will likely be followed by an in-depth study and recommendations to European governments.

The hearing is just latest in a series of investigations into WHO's propriety, which also include a 2009 Danish Parliamentary review of links between WHO expert - Albert Osterhaus - and makers of the swine flu drugs. Russian lawmaker Igor Barinov has also started an inquiry into WHO's ties to H1N1 drug makers. In France, Health Minister Roselyne Bachelot was forced to a Paris court on January 4th over swine flu campaign irregularities - including ordering millions unnecessary vaccine doses. Demonstrations over statistical improprieties have taken place in Scotland and Canada.

Inquiries into WHO misdoing are likely to plunge deep into the statistical methods for data collection, however, it takes no expertise to see that health agencies' data about H1N1 was wildly misleading.

In addition to bad guesses about how many would die, a study released December 7 by the Harvard School of Public Health found that the WHO also estimated the deadliness of H1N1 to be 40 to 250 times higher than it was.

Proving the drug industry squeezed WHO into selling swine flu is very difficult to establish, but the string of clues which points to this corruption is not hard to follow.

Pandemic or just plain Panic?

Swine flu took center stage in June of 2009, when WHO declared H1N1 the first "pandemic" in 42 years. This move caught the eye of every health authority from Tampa to Timbuktu and revved drug company engines. But to do it, WHO had to redefine the word.

One month after swine flu appeared in April, WHO rewrote the definition of "pandemic". Under the new meaning, a pandemic does not need to cause high numbers of death or illness. A month after changing the definition, with just 144 people dead from H1N1, the flu was given the WHO's highest threat classification: a "stage-six pandemic alert". By comparison, the mildest 20th Century pandemic killed a million people.

Before the change, WHO had classified a pandemic as a disease that has "simultaneous epidemics worldwide with enormous numbers of deaths and illness." After the alteration, the organization's website stated that, "Pandemics can be either mild or severe in the illness and death they cause." In May, WHO spokesperson Natalie Boudou told CNN that the original definition was an error.

The Los Angeles Times writer Michael Fumento called the redefinition "bizarre". "Such a declaration could render the term "flu pandemic" essentially meaningless -- risking lethal public complacency if a bona fide one hits," Fumento wrote.

Tom Jefferson, Formerly a general practitioner in the British Army who has worked for the well-respected Cochrane Collaboration for 15 years, Jefferson asked in July: "Don't you think there's something noteworthy about the fact that the WHO has changed its definition of pandemic?"

"The WHO and public health officials, virologists and the pharmaceutical companies... They've built this machine around the impending pandemic," Jefferson told Der Spiegel, a German magazine with a weekly circulation of 1 million. "There's a lot of money involved, and influence, and careers, and entire institutions. And all it took was one of these influenza viruses to mutate to start the machine grinding."

Yet the WHO stands by its decision to label H1N1 a pandemic, citing geographic spread and the virus' novelty as its primary reasons. Moving ahead, Fukuda said his organization "will definitely consider whether we can define things better." But some participants in Tuesday's meeting wondered what the WHO is waiting for, since complaints have poured in from all sides.

The Associated Press reported on May 19, 2009, that China, Britain, Japan and other countries had urged WHO to "be very cautious about declaring the arrival of a swine flu pandemic, fearing that a premature announcement could cause worldwide panic and confusion."

Critics say what was needed was not a frightful label, but hard scientific data to show how many people were getting swine flu. But on July 10, the WHO quit tracking cases of infection and told governments they should stop testing for individual cases, ostensibly because the speed of H1N1's spread had already been confirmed.

"Rational scientific independent advice should be supreme, but there was an imperative behind this which was a financial one," said Paul Flynn, a parliamentary representative in the UK who spoke at the Council of Europe's hearing.

Corruption in Health Organizations?

Critics of the WHO say they promoted bad data to help drug makers get rich selling vaccines. This attack implies drug makers have a network of influence within the decision-making structure of the organization, a suggestion various officials confirm.

One high-level, long-term WHO employee who preferred to remain anonymous for job security, described the WHO as follows: "WHO is infested by corruption. There is big corruption, like the management of H1N1, and there is small corruption; and between the big and the small corruption there is [corruption] in all imaginable forms. Unfortunately, it's not only the WHO."

William Aldis, a retired senior WHO official who worked on the bird flu crisis, said in a Huffington Post article from September 24:

"I am concerned WHO's communications is corrupted by the fact they push the buttons in the public's brains that will raise the most funds. That is incompatible with what the organization should be doing: serving the public with technically correct factual information, pure and simple."

Louise Voller, a journalist at the Danish Daily Information newspaper, has reported that pharmaceutical companies are present at meetings of WHO experts, and, that purportedly independent scientists hired by the WHO are also consultants to the drug companies that make the vaccines.

On Tuesday, WHO's Fukuda insisted that its swine flu scientists' were not tainted by their private sector associations. The reason, he said, is that before each meeting, scientists are asked to declare all possible conflicts of interest. "These documents are gone over and examined. If there is some potential conflict of interest we go back and talk with them."

WHO was initially set up to rely on funding from UN member countries, in recent years, this source has been rapidly overtaken by "voluntary contributions", which are provided by the private sector, national governments, and NGOs. According to WHO's 2008-2009 budget, $958 million was supplied by the UN, while three times as much -- $3.2 billion -- came from voluntary donations.

Dr. Wodarg told the Council on Tuesday that the shift towards public-private partnership which began in earnest in 2001 puts WHO officials under extreme pressure.

"Already then there were very critical voices against the influence. [WHO's] administration is made of people not well paid who can't fight against the pay of people in and from the industry - they are simply swept aside...[private] influence is rampant and that is why we can't understand why the WHO we used to love...has become unrecognizable to us."

Whether or not WHO officials are being bought off, clearly, the capacity and incentive of drug makers to lean on science are enormous.

Pandemic Profit

All US contracts for H1N1 vaccines went to just five companies: CSL Limited, Novartis, Sanofi Pasteur, GlaxoSmithKline, and MedImmune. All five also produced shots for either SARS or avian flu. When swine flu took full flight in the third quarter of 2009, these firms' earnings skyrocketed. But according to British MP, Paul Flynn, that was part of drug-makers plan.

Prior to winning any contracts, drug makers invested $4 billion in preparations for swine flu, he said. That investment may have gone to developing and patenting new, super-fast methods to create vaccines, such as using a bio-reactor to grow viruses, said Dr. Wolfgang Wodarg, former health expert for the Council of Europe. These patents were key to drug industry profits, since companies can charge much more for patented drugs than un-patented ones, Wodarg said.

"If you have a patent you can monopolize...and this is what industry did...The alternative is not to have vaccines patented...By decentralizing the production you could be as fast and you wouldn't have this small way you have to pass negotiating with one enterprise that has monopoly, or with four enterprises."

Food and Drug agencies in Canada, the UK, France, the US and elsewhere guaranteed vaccine manufacturers that they would be shielded from any lawsuits connected to the vaccines. This enabled companies to fast-track the testing process, reducing some trials to as little as 5 days.

Wodarg and others have also voiced concern that the hastily developed vaccines are not entirely safe. Adjuvanted vaccines, which contain a kind of immune booster shown to produce auto-immune responses in some children, were sold in parts of Europe and Canada, but banned in the US.

The private research group, Markets and Markets, estimated that the global, H1N1 vaccine market will be worth over $7 billion a year by 2011.

The incredible profits associated with outbreaks have sparked a wider shift in medicine from care to profit, according to Marcia Angell, M.D., former editor in chief of The New England Journal of Medicine and a senior lecturer at Harvard Medical School.

"Over the past two decades the pharmaceutical industry has moved very far from its original high purpose of discovering and producing useful new drugs. Now primarily a marketing machine to sell drugs of dubious benefit, this industry uses its wealth and power to co-opt every institution that might stand in its way, including the US Congress, the FDA, academic medical centers, and the medical profession itself."

Angell reports that the drug industry spent around 14 percent of sales profits on research and development in 2000, while spending closer to 35 percent on "marketing and administration". How that expenditure breaks down is not public knowledge, but 35% comes out to a lot of money. For instance, Pfizer, GlaxoSmithKline, and Merck alone made $287 billion in 2007, according to the 2008 Pharma Report by IMS, a market intelligence firm.

The larger question begged by health agencies' bad data, and the media's dutiful reporting of it, is this: if fears are overstated every time there's a flu outbreak, when the public really does need a vaccine, who will believe the boys who cried wolf?

What's more, should the European investigations conclude that the WHO deliberately incited H1N1 paranoia to levels beyond reason in order to help drug makers, the implication is that both the private and public sectors need better oversight before being given any greater control over health care.

What the TV doesn’t tell us about Haiti

The world’s TV is showing, as we might expect, a false picture of reality. In the case of Haiti, this is all the more outrageous given the circumstances. With barely disguised racism they paint the picture of a people who are suffering but "ignorant" and "barbarous", incapable of "keeping order" by themselves after the earthquake, necessitating a renewed colonial occupation, with a fresh US invasion.

Of course, no-one mentions the two-hundred-year sentence capitalism and imperialism imposed on the Haitian people for having carried out the only successful slaves’ social revolution in history. Still less do they tell us about recent events, like the significant workers’, students’ and peasants’ struggles against colonial occupation and Preval’s puppet government which developed in 2009.

A new super-exploited working class

The "globalisation" of capitalism, initiated in the 1980s and triumphant in the 90s, meant in the first place carte blanche to find places around the world to establish the most savage exploitation of the working class, without limits. China, with its miserable salaries and brutal super-exploitation, is the best example, but not the only one.

In Haiti, on a much smaller scale, something similar took place. In the last decade the US government forced Haiti to create "free trade areas" where they set up the latest-generation factories, primarily producing textiles. These textile mills today employ almost 30,000 workers and, in spite of the world crisis, they do not appear to be dying down. The secret is paying the lowest salaries in the world (even less than in China or in Latin American factories) and forcing an ever-more-infernal pace of work.

But capitalism, when doing this, has created what did not exist in Haitian society before: a new working class, young and "modern", amid a country falling behind with elements of barbarism and subject to a colonial-occupation political régime.

Significant working-class and student struggles

In 2009 this began to express itself in important workers’ struggles. As well as this "Molotov cocktail" was the important factor of the radicalised student movement, which supported workers’ mobilisations and also demanded an end to the occupation. Some layers of students were in conflict since April.

In May 2009 there began a working-class struggle with near-immediate political consequences, resulting on a direct assault on the government and the MINUSTAH (United Nations) troops, which lasted, with some gaps, until almost the end of the year. As they repressed these struggles the occupation troops, commanded by the forces of the "progressive" Brazilian president Lula, killed and wounded dozens of workers and students.

The struggle began with the demand for an increase in the minimum wage from 75 gourdes ($1.80) to 200 ($4.80) gourdes per day. At the same time as partial and all-out strikes, lasting up to two weeks, thousands of workers held daily demonstrations in the streets of Port-au-Prince together with the students.

By July this pressure had obliged the Congress to concede an increase in the minimum wage, up to 200 gourdes. But the Preval "government" vetoed this increase in the textile industry, the largest sector, keeping it at 125 gourdes ($3) per day. On 17th August the Congress accepted this veto.

Logically enough, all this politicised the struggle, resulting in a direct confrontation with the colonial occupation and its puppet government, lasting until August. Then MINUSTAH engaged in a brutal repression of the movement, banning demonstrations. Numerous working-class and student fighters were imprisoned. Many other activists "disappeared".

The "disappearances" were a serious defeat for the new workers’ movement. But it did not mean the end of the struggle against the occupation and the puppet government.

On 18th November was commemorated the the battle of Vertières, where in 1803 the Haitians decisively defeated the French troops. That day the students went out into the streets, provoking fresh clashes with the police and MINUSTAH troops.

To summarise: the situation in Haiti before the earthquake was not "social peace", nor resigned acceptance of colonial rule. Now, acting in its own self-defence, US imperialism wants to place more shackles on the Haitian population and its workers.

We must not let them!

China protests US arms sales, warns of 'serious' impact

China on Friday protested the US decision to sell 6.4 billion dollars in weapons to Taiwan and warned of "serious" damage to relations and cooperation with Washington.

China's Vice Foreign Minister He Yafai made an urgent official demarche to the US ambassador in Beijing, Jon Huntsman, in the early hours Saturday local time, Wang Baodong, spokesman for the Chinese embassy in Washington, told AFP.

"The latest US move to sell weapons to Taiwan, which is part of China, constitutes a gross intervention into China's internal affairs, seriously endangers China's national security and harms China's peaceful reunification efforts," Wang quoted the protest as saying.

"The US plan will definitely undermine China-US relations and bring about serious negative impact on exchange and cooperation in major areas between the two countries," he added.

China "strongly urges the US side to fully recognize the gravity of the issue, revoke the erroneous decision on arms sales to Taiwan and stop selling any weapons to Taiwan," he said.

China snapped off military relations with the United States temporarily after the last US arms package to Taiwan in October 2008.

Beijing considers Taiwan, where China's nationalists fled in 1949 after losing the mainland's civil war, to be a territory awaiting reunification, by force if necessary.

The United States in 1979 switched recognition to Beijing. But Congress requires the administration to provide Taiwan weapons for defensive purposes.

Wang said that the weapons deal violated the 1982 communique between China and the United States, which said the arms sales to Taiwan "will not exceed, in qualitative or in quantitative terms," the level in the years before that.

State Department spokesman Philip Crowley earlier said that the arms sales were consistent with the three key communiques between the United States and China when they normalized relations.

Copyright AFP 2008, AFP stories and photos shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium

Blackwater's Youngest Victim

Every detail of September 16, 2007, is burned in Mohammed Kinani's memory. Shortly after 9 am he was preparing to leave his house for work at his family's auto parts business in Baghdad when he got a call from his sister, Jenan, who asked him to pick her and her children up across town and bring them back to his home for a visit. The Kinanis are a tightknit Shiite family, and Mohammed often served as a chauffeur through Baghdad's dangerous streets to make such family gatherings possible.

Mohammed had just pulled away from his family's home in the Khadamiya neighborhood in his SUV. His youngest son, 9-year-old Ali, came tearing down the road after him, asking his father if he could accompany him. Mohammed told him to run along and play with his brothers and sister. But Ali, an energetic and determined kid, insisted. Mohammed gave in, and off the father and son went.

As Mohammed and Ali drove through Baghdad that hot and sunny Sunday, they passed a newly rebuilt park downtown. Ali gazed at the park and then turned to his father and asked, "Daddy, when are you gonna bring us here?"

"Next week," Mohammed replied. "If God wills it, son."

Ali would never visit that park. Within a few hours, he would be dead from a gunshot wound to the head. While you may have never heard his name, you probably know something about how Ali Mohammed Hafedh Kinani died. He was the youngest person killed by Blackwater forces in the infamous Nisour Square massacre.

In May 2008 Mohammed flew to Washington to testify in front of a grand jury investigating the shooting. It was his first time out of Iraq. The US Attorney, Jeffrey Taylor, praised Mohammed for his "commendable courage." A year after the shooting, in December 2008, five Blackwater guards were indicted on manslaughter charges, while a sixth guard pleaded guilty to killing an unarmed Iraqi. American justice, it seemed to Mohammed, was working. "I'm a true believer in the justness and fairness of American law," Mohammed said.

But this past New Year's Eve, federal Judge Ricardo Urbina threw out all the criminal charges against the five Blackwater guards. At least seventeen Iraqis died that day, and prosecutors believed they could prove fourteen of the killings were unjustified. The manslaughter charges were dismissed not because of a lack of evidence but because of what Urbina called serious misconduct on the part of the prosecutors.

Then, a few days after the dismissal of the criminal case, Blackwater reached a civil settlement with many of the Nisour Square victims, reportedly paying about $100,000 per death.

Blackwater released a statement declaring it was "pleased" with the outcome, which enabled the company to move forward "free of the costs and distraction of ongoing litigation." But Mohammed Kinani would not move on. He refused to take the deal Blackwater offered. As a result, he may well be the one man standing between Blackwater and total impunity for the killings in Nisour Square.

On September 15, 2009, the night before the second anniversary of his son's death, Mohammed Kinani sued Blackwater in its home state of North Carolina, along with company owner Erik Prince and the six men Mohammed believes are responsible for his son's death. In an exclusive interview providing the most detailed eyewitness account of the massacre that has yet been published, Mohammed told his story to The Nation.

***

Mohammed Kinani, 38, is a gentle man, deeply religious and soft-spoken. When we meet, he takes off his hat as he greets me with a slight bow. He then presents me with a gift--a box of baklava--and insists that we try some right away. Before we sit down to discuss the events that led to the death of his son, Mohammed goes out of his way to assure me that no question is off limits and that he wants Americans to know what happened that day. It was as though he was telling me it was OK to ask him to relive the horror. "Those few minutes in Nisour Square, I will never forget; so whatever you ask me, I will answer with absolute clarity," he said.

Before we talk about Nisour Square, Mohammed tells me about his life. He was born in Baghdad in 1971 and grew up in a large home with his siblings, aunts, uncles and grandparents. His father, Hafedh Abdulrazzaq Sadeq Kinani, was a merchant who traded cars and auto parts. After high school, Mohammed enrolled at a technical institute in Baghdad but ultimately dropped out to take over the family business with his brothers. He avoided mandatory military service in Saddam's forces by paying his way out. He married a relative from his mother's side of the family and bought a home in Baghdad's al Adel neighborhood, and they had three sons and a daughter. Mohammed said his family despised Saddam, "a dictator who stole people's freedom."

Mohammed welcomed the arrival of US forces in Baghdad in April 2003. "On the first day the US Army entered Baghdad I was personally giving away free juice and candy in the street," Mohammed remembers. He and Ali would give out water and take photos with the troops when when Humvees passed by their house. "One of the soldiers even carried Ali on board one of the Humvees and took a photo with my son," Mohammed remembers. "My son loved the American Army."

In November 2006, as sectarian violence spread across Baghdad, Mohammed and his family were driven from their home by a prominent Sunni militia leader, and they moved into Mohammed's parents' home. Mohammed was devastated, but he also saw it as part of the price of freedom. "We cannot question God's plans," he says.

Before September 16, 2007, Mohammed had never heard of Blackwater. When he would stop at a US checkpoint, he would smile at the soldiers and thank them for being there. Ali enjoyed sticking his head out the window at checkpoints and telling Iraqi police, "I'm in the Special Forces." The police would laugh, Mohammed recalls, and wave him through, saying, "You're one of us." So when Mohammed found himself in a traffic jam that he thought was the result of a US military checkpoint at Nisour Square, nothing seemed out of the ordinary to him.

To pick up his sister, Mohammed would have to pass Nisour Square twice. The first time he passed, he noticed it was extremely congested. There was a construction project nearby and Iraqi police lingering on the roadside directing traffic. Eventually, he and Ali picked up Jenan and her three children and began the return journey.

A few blocks from the square, they encountered two Iraqi checkpoints and were waved through. As they approached the square, they saw one armored vehicle and then another, with men brandishing machine guns atop each one, Mohammed recalls. The armored cars swiftly blocked off traffic. One of the gunners held both fists in the air, which Mohammed took as a gesture to stop. "Myself and all the cars before and behind me stopped," Mohammed says. "We followed their orders. I thought they were some sort of unit belonging to the American military, or maybe just a military police unit. Any authority giving you an order to stop, you follow the order." It turns out the men in the armored cars were neither US military nor MPs. They were members of a Blackwater team code-named Raven 23.

As the family waited in traffic, two more Blackwater vehicles became visible. Mohammed noticed a family in a car next to his--a man, woman and child. The man was staring at Mohammed's car, and Mohammed thought the man was eyeing Jenan. "I thought he was checking my sister out," Mohammed remembers. "So I yelled at him and said, 'What are you looking at?'" Mohammed noticed that the man looked frightened. "I think they shot the driver in the car in front of you," the man told him.

Mohammed scanned the area and noticed that the back windshield of the white Kia sedan in front of him was shattered. The man in the car next to Mohammed began to panic and tried to turn his car around. He ended up bumping into a taxi, and an argument ensued. The taxi driver exited his car and began yelling. Mohammed tried to break up the argument, telling the taxi driver that a man had been shot and that he should back up so the other car could exit. The taxi driver refused and got back into his vehicle.

At that point, an Iraqi police officer, Ali Khalaf Salman, approached the Kia sedan, and it started to slowly drift. The driver had been shot, and the car was gliding in neutral toward a Blackwater armored car. Salman, in an interview, described how he tried to stop it by pushing backward. He saw a panicked woman inside the car; she was clutching a young man covered in blood who had been shot in the head. She was shrieking, "My son! My son! Help me, help me!" Salman remembered looking toward the Blackwater shooters. "I raised my left arm high in the air to try to signal to the convoy to stop the shooting." He said he thought the men would cease fire, given that he was a clearly identified police officer.

"As the officer was waving, the men on the armored cars started shooting at that car," Mohammed says. "And it wasn't warning shots; they were shooting as in a battle. It was as though they were in a fighting field. I thought the police officer was killed. It was insane." Officer Salman managed to dive out of the way as the bullets rained down. "I saw parts of the woman's head flying in front of me," recalled his colleague, Officer Sarhan Thiab. "They immediately opened heavy fire at us."

That's how the Nisour Square massacre began.

"What can I tell you?" Mohammed says, closing his eyes. "It was like the end of days."

Mohammed would later learn that the first victims that day, in the white Kia, were a young Iraqi medical student, Ahmed Haithem Al Rubia'y, and his mother, Mahassin, a physician. Mohammed is crystal clear that the car posed no threat. "There was absolutely no shooting at the Blackwater men," he says. "All of a sudden, they started shooting in all directions, and they shot at everyone in front of them. There was nothing left in that street that wasn't shot: the ground, cars, poles, sidewalks; they shot everything in front of them." As the Blackwater gunners shot up the Rubia'ys' vehicle, Mohammed said, it soon looked like a sieve "due to how many bullet holes it had." A Blackwater shooter later admitted that they also fired a grenade at the car, causing the car to explode. Mohammed says the Blackwater men then started firing across the square. "They were shooting in all directions," he remembers. He describes the shooting as "random yet still concentrated. It was concentrated and focused on what they aimed at and still random as they shot in all directions."

One of the Blackwater shooters was on top of an armored vehicle firing an automatic weapon, he says. "Every time he would finish his clip, he would throw it on the ground and would load another one in and would start shooting again, and finish the new one and replace it with another." One young Iraqi man got out of his car to run, and as he fled, the Blackwater shooter gunned him down and continued firing into his body as it lay on the pavement, Mohammed says. "He was on the ground bleeding, and they're shooting nonstop, and it wasn't single bullets." The Blackwater shooter, he says, would fire at other Iraqis and cars and then return to pump more bullets into the dead man on the ground. "He sank in his own blood, and every minute the [Blackwater shooter] would shoot left and right and then go back to shoot the dead man, and I could see that his body would shake with every bullet. He was already dead, but his body was still reacting to the bullets. [The shooter] would fire at someone else and then go back to shoot at this dead man." Shaking his head slowly, Mohammed says somberly, "The guy is dead in a pool of blood. Why would you continue shooting him?"

In his vehicle, as the shooting intensified, Mohammed yelled for the kids to get down. He and his sister did the same. "My car was hit many times in different places. All I could hear from my car was the gun shots and the sound of glass shattering," he remembers. Jenan was frantic. "Why are they shooting at us?" she asked him. Just then, a bullet pierced the windshield, hitting Jenan's headrest. Mohammed shows me a photo of the bullet hole.

As gunfire rained on the SUV, Jenan grabbed Mohammed's hair, yanked his head down and covered him with her body. "My young sister was trying to protect me by covering me with her body, so I forced myself out of her grip and covered her with my body to protect her. It was so horrific that my little sister, whom I'm supposed to protect, was trying to protect me." Mohammed managed to slip his cellphone from his pocket and was going to call his father. "It's customary that when in agony before death, you ask those close to you to look after your loved ones," he says. Jenan demanded that Mohammed put down the phone, reminding him that their father had had two strokes already. "If he hears what's happening, he'll die immediately," she said. "Maybe he'll die before us."

At that moment, bullets pierced the SUV through the front windshield. A bullet hit the rearview mirror, causing it to whack Mohammed in the face. "We imagined that in a few seconds everyone was going to die--everyone in the car, my sister and I and our children. We thought that every second that passed meant one of us dying." He adds, "We remained still, my sister and I. I had her rest her head on my lap, and my body was on top of her. We'd sneak a peek from under the dashboard, and they continued shooting here and there, killing this one and that one."

And then the shooting stopped.

***

Ali and his father were inseparable. Ali's older brothers called him "Daddy's favorite," and the family affectionately called him by his kid nickname, Allawi. "He was the closest of my sons to me. He was my youngest and was always indulged," recalls Mohammed. "He would sleep on my arm. He's 9 and half years old but still sleeps on my arm. He has his own room, but he never slept alone." When the boy turned 9, Ali's father thought, "This can't go on--him sleeping on my arm as his pillow. So I said, 'Son, you're older now; go sleep like your brothers, in your bed in your room. It doesn't work anymore; you're getting older. You're gonna be a man soon.'"

"As you wish, father," Ali said. "He always said that," Mohammed recalls. "As you wish, father." Ali left the room, but Mohammed looked over and saw the shadow of Ali's feet under the door. "So I called him in, and Ali opened the door and said, 'Daddy, I'm Allawi, not Ali,'" Mohammed remembers. "He was telling me that he's still young." Mohammed gave in, and Ali slept in his arms again. "He never had a pillow besides my arm," says Mohammed.

As he sat in his severely damaged SUV, Mohammed thought that, in the midst of horror, a miracle had blessed his car. We are alive, he thought. As the Blackwater forces retreated, Mohammed told Jenan he was going to go check on the man who had been repeatedly shot by Blackwater. "I was deeply impacted by that man they continued shooting at," Mohammed recalls. As he exited his car, Mohammed's nephew yelled, "Uncle, Ali is dead. Ali is dead!" Jenan began to scream.

Mohammed rushed around to Ali's door and saw that the window was broken. He looked inside and saw his son's head resting against the door. He opened it, and Ali slumped toward him. "I was standing in shock looking at him as the door opened, and his brain fell on the ground between my feet," Mohammed recalls. "I looked and his brain was on the ground." He remembers people yelling at him, telling him to get out while he could. "But I was in another world," he says. Then Mohammed snapped back to consciousness. He put Ali back in the car and placed his hand over his son's heart. It was still beating. He got in the driver's seat of his car, tires blown out, radiator damaged, full of bullets, liquids leaking everywhere, hoping still that he could save Allawi's life. Somehow he managed to get the car near Yarmouk Hospital, right near the square. He picked up Ali and ran toward the hospital. He nearly collapsed on the road, and an Iraqi police officer took Ali from his arms and ran him into the hospital.

Mohammed checked that the other children were safe and then dashed to the hospital. "I entered the emergency room, and blood was everywhere, dead people, injured people everywhere," he remembers. "My son was in the last bed; the doctor was with him and had already hooked him with an IV line." As Mohammed stood by Ali's bed, the doctor told him that Ali was brain dead. "His heart is beating," the doctor said, "and it will continue to beat until he bleeds out and dies." The doctor told him that if there were any hope to be found, it would require taking Ali in an ambulance to a neurological hospital across town. The fastest route meant that they had to pass through Nisour Square. Iraqi police stopped them and told them they could not pass. "The US Army is here and won't let you through," the officer told them. The driver took an alternate route and was going so fast the ambulance almost crashed twice. When they got to the hospital, Mohammed offered to pay the driver--at least for the gas, which is customary. The driver refused. "No, I would like to donate blood to your son if he needs it," he told Mohammed. A few moments later, Mohammed stood with a doctor who told him there was nothing they could do. Ali was dead.

Mohammed wanted to take his son's body home with him, but the hospital regulations required that he get papers from the police. So Mohammed had to leave. He spent hours tracking down the right authority to sign off. Finally he was able to take Ali's body to prepare him for a Muslim burial. That night there was no electricity in Baghdad, so they had to run a generator to keep air-conditioning going to protect Ali's body from the sweltering heat. The next morning they took Ali to the southern holy city of Najaf to be buried at the family plot. "As Muslims, we believe that Ali died innocent with no obligation," says Mohammed. "My son died at an age where there were no strings attached. My son was young and innocent, so he flew up [to heaven] like a white dove. This is what's making it easier on me. I always tell my wife that your son is a bird in heaven, he's with God and when we die we will be united eternally." Mohammed looks down and then up. "I still thank God for everything. I thank him because we were six in that car, and he's the only one to go. Although that one is piece of my heart, it happened and I can't change it. I have my other kids that I will raise, and hopefully I'll be able to keep them safe."

***

After Ali's death, some of Mohammed's friends came to him and asked him if the death had changed his attitude toward the Americans. It hadn't, he told them. "I honestly separate distinctly between Blackwater and the American people and the American government," he says. "I honestly love America and the American people. What happened to my family is totally isolated from the American people and government."

Mohammed carries with him a letter to his family signed by Gen. Ray Odierno, commander of US forces in Iraq, dated June 25, 2009. The letter is the result of an extraordinary gesture made by the Kinanis after Ali's death. The US Embassy offered to provide a $10,000 condolence payment to the families of the victims of Nisour Square, making clear it was not a remedy for what happened and not a substitute for any potential legal action against the shooters. Initially Mohammed refused the money, but the embassy pursued his family, urging them to take it. They eventually did, but with one condition: that the US military accept a $5000 donation from the Kinanis to the family of a US soldier killed in Iraq. Mohammed's wife, Fatimah, delivered the gift to the US Embassy. "My wife labeled it as a gift from a mother who sacrificed a son on the path to freedom, a gift from Ali's family to whichever US military family the embassy chose, to any soldier's family that was killed here in Iraq, who lost his life in Iraq for the sake of Iraq." Soon thereafter, Fatimah received the letter from General Odierno. "Your substantial generosity on behalf of the families of fallen American soldiers has touched me deeply," Odierno wrote.

After Ali's death, the thought of suing Blackwater didn't cross Mohammed's mind. He readily cooperated with the US military and federal investigators, and he believed that justice would be done in America. But when he would go to the US Embassy, Mohammed recalls, he would get "hammered there. They all wanted me to shut up so they could defend Blackwater." He says an embassy official tried to convince him that there had been a firefight that day, not a massacre. Mohammed was unfazed by what he considered a grand lie and continued to cooperate with the US investigation. Then, he says, Blackwater stepped in.

In a letter to ABC News threatening a defamation lawsuit for a story the network had done about Nisour Square, a Blackwater attorney denied that Blackwater had killed Ali, claiming instead that he was killed by "a stray bullet" possibly fired by the US military "an hour after Blackwater personnel had departed the scene." The letter claimed Ali was killed by a "warning shot" that "ricocheted and killed the nine-year-old boy." It said it was not "even possible" Blackwater "was responsible."

Then an Iraqi attorney working with Blackwater approached Mohammed. But he wasn't just any lawyer. Ja'afar al Moussawy was the chief prosecutor of the Supreme Iraqi Criminal Tribunal, which prosecuted Saddam Hussein and other leading officials. He was the Iraqi lawyer.

Mohammed agreed to meet with Moussawy and Blackwater's regional manager. When Mohammed arrived at the Blackwater headquarters in the Green Zone, there was a lunch spread laid out on the table. Moussawy asked Mohammed if he wanted to eat, and Mohammed said he would, "to show you that I have nothing against you personally." Mohammed says he told them, "My problem is not with any of you, rather with the guys who killed my son." After lunch, the manager asked Mohammed to tell him what happened in the square that day. Mohammed did. The manager then said he had an offer for him.

"We want to give you $20,000," Mohammed recalls the Blackwater manager saying.

"I'm not taking a penny from you," Mohammed told him. "I want no money."

Mohammed asked for a blank piece of paper and a pen. "Look I have the paper and I can sign and waive all my [legal] rights. All my rights, I will sign away now, but under one condition: I want the owner of Blackwater to apologize to me publicly in America and say, 'We killed your son, and we're sorry.' That's all I want."

The Blackwater manager asked Mohammed why it was so important to have an apology. Mohammed reminded him of Blackwater owner Erik Prince's Congressional testimony two weeks after the Nisour Square shootings. In his testimony, Prince said his men "acted appropriately at all times" at Nisour Square and that the company had never killed innocent civilians, except perhaps by "ricochets" and "traffic accidents." At that hearing, on October 2, 2007, a document was produced showing that before Nisour Square the State Department, Blackwater's employer, had coordinated with Blackwater to set a low payout for Iraqi shooting victims because, in the words of a Department security official, if it was too high Iraqis may try "to get killed by our guys to financially guarantee their family's future."

Mohammed said he wanted Prince to publicly reject this characterization of "Iraqis as mercenaries." The Blackwater manager, he says, told him Blackwater does not apologize. "You killed my son!" Mohammed exclaimed. "What do you want, then? Why did you bring me here?"

Mohammed then confronted the Blackwater manager about the letter to ABC News. "I told him that Blackwater was trying to stain the reputation of the American Army" by blaming Ali's death on US soldiers. Mohammed recalls asking, "Aren't you an American company, and this is your national army? Why would you do this to your own?" Mohammed says he threw the pen and paper at the Blackwater manager and left. In a statement to The Nation, a Blackwater spokesperson confirmed that the company had offered Mohammed a "condolence payment" and that he declined it.

It was then that Mohammed decided that his best recourse would be to cooperate with the US criminal investigation of the incident and to sue Blackwater in civil court the United States. "I want Blackwater, who refused to apologize, to get what they deserve according to the rule of law," Mohammed says. "I had no other option but to go down the legal path, to have justice applied--something that will be comforting to victims' families and something that might deter other criminals from committing the same act."

***

Mohammed's American lawyers contend, as did federal prosecutors, that the Blackwater men disobeyed orders from superiors not to leave the Green Zone, which ultimately led to the shooting at Nisour Square, and that they did not follow proper State Department guidelines for the use of force, instead shooting unprovoked at Mohammed's car and the other civilians in the square. They also allege that Blackwater was not guarding any US official at the time of the shooting and that the Nisour Square killings amounted to an offensive operation against unarmed civilians. "Blackwater was where it shouldn't have been, doing something it was not supposed to do," says Mohammed's lawyer Gary Mauney. They "weren't even supposed to be in Nisour Square, and if they hadn't have been, no shootings would have occurred."

Unlike the other civil suits against Blackwater, which were settled in federal court in January, Mohammed's case was filed in state court in North Carolina. It is also different because Mohammed is directly suing the six Blackwater men he believes were responsible for the shooting that day. The suit also argues that Prince and his network of Blackwater companies and affiliates are ultimately responsible for the conduct of the men at Nisour Square. The Blackwater shooters "weren't doing anything related to their work for the government," Mauney says. "After the events happened, Blackwater came out and said, 'We support what they did. We think it was justified.' They ratified the conduct of their employees."

Moreover, Mohammed's lawyers contend that the evidence that was ruled inadmissible in the criminal Nisour Square case because it was obtained in exchange for a promise of immunity and reportedly under threat of termination is valid evidence in their civil case. Several statements by Blackwater guards who were at the square that day directly bolster Mohammed and other Iraqis' claim that it was an unprovoked shooting.

Perhaps the most potent piece of evidence in Mohammed's case comes from one of the men he is suing. Jeremy Ridgeway, a turret gunner on the Raven 23 team that day, pleaded guilty to killing an unarmed civilian. In his sworn proffer that accompanied his guilty plea, Ridgeway admitted that he and the other five defendants "opened fire with automatic weapons and grenade launchers on unarmed civilians...killing at least fourteen people" and wounding at least twenty others. "None of these victims was an insurgent, and many were shot while inside of civilian vehicles that were attempting to flee" the Blackwater forces. Ridgeway also admitted that Raven 23 had "not been authorized" to leave the Green Zone and that after they departed, they "had been specifically ordered" by US Embassy officials to return. "In contravention of that order," they proceeded to Nisour Square. Ridgeway admitted to shooting and killing Dr. Al Rubia'y in the Kia sedan, adding that another Blackwater shooter launched an M-203 grenade, "causing the vehicle to erupt in flames." He acknowledged that "there had been no attempt to provide reasonable warnings to the driver." As the Raven 23 convoy exited the square against the flow of traffic, Ridgeway admitted, Blackwater forces "continued to fire their machine guns at civilian vehicles that posed no threat to the convoy."

Evidence in the criminal case also reveals that three other men on the Raven 23 convoy--Adam Frost, Mark Mealy, Matthew Murphy--were "horrified" at what their colleagues had done in the square that day. In a journal entry he wrote after the shooting, Frost recounted returning to the Green Zone, where he and Murphy confronted the men who did the killings at Nisour Square. "We started to curse at them and tell each other how fucked up they were," he wrote. "We could not believe what we had just seen." Murphy told the grand jury his colleagues were shooting "for nothing and for no reason." Mealy described two of the defendants, Evan Liberty and Paul Slough, giving each other high-fives, "patting each other on the back and bragging about what a great job they had done." In his testimony, Murphy described what he had seen that day as "pretty heinous shit."

Frost, who prosecutors say did not fire his weapon at Nisour Square, wrote in his journal that he "prayed for comfort to be given to those families that we had broken." When the FBI launched its investigation of the shooting, Frost said he was "strongly encouraged," though not ordered, by Blackwater management not to answer its questions. He said a Blackwater manager had told him that the company was already fully cooperating with the State Department and had been honest in detailing the shooting. "I thought to myself, you fuckers have been anything but honest with the State Department and their investigation," Frost wrote.

Mauney and his partner, Paul Dickinson, believe that these statements and others like them, along with the accounts of scores of Iraqi witnesses and forensic evidence, paint a case of overwhelming guilt on the part of the Blackwater shooters who killed Ali Kinani and the other Iraqis that day. "I think it's important for folks to know that Blackwater has not won," says Mauney. In addition to Mohammed, Mauney and Dickinson represent five other families impacted by Nisour Square, including those of two others killed by Blackwater. "They've come here with a heart full of belief in the US justice system," says Dickinson. In late January on a visit to Baghdad, Vice President Joe Biden announced that the United States would appeal the dismissal of the criminal cases, saying the judge's ruling was "not an acquittal." Blackwater's lawyers have said they believe the appeal will fail.

As we wrap up the interview, Mohammed Kinani gathers up all the photos he has brought to show me: pictures of Ali and his other children, pictures of his wife and of his severely damaged car. He stops and stares at a school portrait of Ali. We look at a video on his laptop of his home--the one currently occupied by the Sunni militia leader--and then he pauses and clicks on another video file. The screen pops up, and there is Ali, hopping around a swimming pool with his cousins and siblings. With a wide smile, Ali approaches Mohammed's cellphone camera and says, "I am Allawi!"

Mohammed tells me, "I wish the US Congress would ask [Erik Prince] why they killed my innocent son, who called himself Allawi. Do you think that this child was a threat to your company? This giant company that has the biggest weapons, the heaviest weapons, the planes, and this boy was a threat to them?" he says. "I want Americans to know that this was a child that died for nothing."

Taser Bracelets for Airline Passengers Next on NWO Agenda

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Blair or Bliar? Former UK PM faces Iraq inquiry

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Breaking News: Solar Flare To Hit Earth in

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Pasco's Homeless Speak Out (Update)

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Secret Banking Cabal Emerges From AIG Shadows: David Reilly

Jan. 29 (Bloomberg) -- The idea of secret banking cabals that control the country and global economy are a given among conspiracy theorists who stockpile ammo, bottled water and peanut butter. After this week’s congressional hearing into the bailout of American International Group Inc., you have to wonder if those folks are crazy after all.

Wednesday’s hearing described a secretive group deploying billions of dollars to favored banks, operating with little oversight by the public or elected officials.

We’re talking about the Federal Reserve Bank of New York, whose role as the most influential part of the federal-reserve system -- apart from the matter of AIG’s bailout -- deserves further congressional scrutiny.

The New York Fed is in the hot seat for its decision in November 2008 to buy out, for about $30 billion, insurance contracts AIG sold on toxic debt securities to banks, including Goldman Sachs Group Inc., Merrill Lynch & Co., Societe Generale and Deutsche Bank AG, among others. That decision, critics say, amounted to a back-door bailout for the banks, which received 100 cents on the dollar for contracts that would have been worth far less had AIG been allowed to fail.

That move came a few weeks after the Federal Reserve and Treasury Department propped up AIG in the wake of Lehman Brothers Holdings Inc.’s own mid-September bankruptcy filing.

Saving the System

Treasury Secretary Timothy Geithner was head of the New York Fed at the time of the AIG moves. He maintained during Wednesday’s hearing that the New York bank had to buy the insurance contracts, known as credit default swaps, to keep AIG from failing, which would have threatened the financial system.

The hearing before the House Committee on Oversight and Government Reform also focused on what many in Congress believe was the New York Fed’s subsequent attempt to cover up buyout details and who benefited.

By pursuing this line of inquiry, the hearing revealed some of the inner workings of the New York Fed and the outsized role it plays in banking. This insight is especially valuable given that the New York Fed is a quasi-governmental institution that isn’t subject to citizen intrusions such as freedom of information requests, unlike the Federal Reserve.

This impenetrability comes in handy since the bank is the preferred vehicle for many of the Fed’s bailout programs. It’s as though the New York Fed was a black-ops outfit for the nation’s central bank.

Geithner’s Bosses

The New York Fed is one of 12 Federal Reserve Banks that operate under the supervision of the Federal Reserve’s board of governors, chaired by Ben Bernanke. Member-bank presidents are appointed by nine-member boards, who themselves are appointed largely by other bankers.

As Representative Marcy Kaptur told Geithner at the hearing: “A lot of people think that the president of the New York Fed works for the U.S. government. But in fact you work for the private banks that elected you.”

And yet the New York Fed played an integral role in the government’s bailout of banks, often receiving surprisingly free rein to act as it saw fit.

Consider AIG. Let’s take Geithner at his word that a failure to resolve the insurer’s default swaps would have led to financial Armageddon. Given the stakes, you might think Geithner would have coordinated actions with then-Treasury Secretary Henry Paulson. Yet Paulson testified that he wasn’t in the loop.

“I had no involvement at all, in the payment to the counterparties, no involvement whatsoever,” Paulson said.

Bernanke’s Denials

Fed Chairman Bernanke also wasn’t involved. In a written response to questions from Representative Darrell Issa, Bernanke said he “was not directly involved in the negotiations” with AIG’s counterparty banks.

You have to wonder then who really was in charge of our nation’s financial future if AIG posed as grave a threat as Geithner claimed.

Questions about the New York Fed’s accountability grew after Geithner on Nov. 24, 2008, was named by then-President- elect Barack Obama to be Treasury Secretary. Geither said he recused himself from the bank’s day-to-day activities, even though he never actually signed a formal letter of recusal.

That left issues related to disclosures about the deal in the hands of the bank’s lawyers and staff, rather than a top executive. Those staffers didn’t want details of the swaps purchase to become public.

New York Fed staff and outside lawyers from Davis Polk & Wardell edited AIG communications to investors and intervened with the Securities and Exchange Commission to shield details about the buyout transactions, according to a report by Issa.

That the New York Fed, a quasi-governmental body, was able to push around the SEC, an executive-branch agency, deserves a congressional hearing all by itself.

Later, when it became clear information would be disclosed, New York Fed legal group staffer James Bergin e-mailed colleagues saying: “I have to think this train is probably going to leave the station soon and we need to focus our efforts on explaining the story as best we can. There were too many people involved in the deals -- too many counterparties, too many lawyers and advisors, too many people from AIG -- to keep a determined Congress from the information.”

Think of the enormity of that statement. A staffer at a body with little public accountability and that exists to serve bankers is lamenting the inability to keep Congress in the dark.

This belies the culture of secrecy obviously pervasive within the New York Fed. Committee Chairman Edolphus Towns noted during the hearing that the bank initially refused to disclose even the names of other banks that benefited from its actions, arguing this information would somehow harm AIG.

‘Penchant for Secrecy’

“In fact, when the information was finally released, under pressure from Congress, nothing happened,” Towns said. “It had absolutely no effect on AIG’s business or financial condition. But it did have an effect on the credibility of the Federal Reserve, and it called into question the Fed’s penchant for secrecy.”

Now, I’m not saying Congress should be meddling in interest-rate decisions, or micro-managing bank regulation. Nor do I think we should all don tin-foil hats and start ranting about the Trilateral Commission.

Yet when unelected and unaccountable agencies pick banking winners while trying to end-run Congress, even as taxpayers are forced to lend, spend and guarantee about $8 trillion to prop up the financial system, our collective blood should boil.

(David Reilly is a Bloomberg News columnist. The opinions expressed are his own.)

Justice Official Clears Bush Lawyers in Torture Memo Probe

For weeks, the right has heckled Attorney General Eric Holder Jr. for his plans to try the alleged 9/11 conspirators in New York City and his handling of the Christmas bombing plot suspect. Now the left is going to be upset: an upcoming Justice Department report from its ethics-watchdog unit, the Office of Professional Responsibility (OPR), clears the Bush administration lawyers who authored the “torture” memos of professional-misconduct allegations.

While the probe is sharply critical of the legal reasoning used to justify waterboarding and other “enhanced” interrogation techniques, NEWSWEEK has learned that a senior Justice official who did the final review of the report softened an earlier OPR finding. Previously, the report concluded that two key authors—Jay Bybee, now a federal appellate court judge, and John Yoo, now a law professor—violated their professional obligations as lawyers when they crafted a crucial 2002 memo approving the use of harsh tactics, say two Justice sources who asked for anonymity discussing an internal matter. But the reviewer, career veteran David Margolis, downgraded that assessment to say they showed “poor judgment,” say the sources. (Under department rules, poor judgment does not constitute professional misconduct.) The shift is significant: the original finding would have triggered a referral to state bar associations for potential disciplinary action—which, in Bybee’s case, could have led to an impeachment inquiry.

The report, which is still going through declassification, will provide many new details about how waterboarding was adopted and the role that top White House officials played in the process, say two sources who have read the report but asked for anonymity to describe a sensitive document. Two of the most controversial sections of the 2002 memo—including one contending that the president, as commander in chief, can override a federal law banning torture—were not in the original draft of the memo, say the sources. But when Michael Chertoff, then-chief of Justice’s criminal division, refused the CIA’s request for a blanket pledge not to prosecute its officers for torture, Yoo met at the White House with David Addington, Dick Cheney’s chief counsel, and then–White House counsel Alberto Gonzales. After that, Yoo inserted a section about the commander in chief’s wartime powers and another saying that agency officers accused of torturing Qaeda suspects could claim they were acting in “self-defense” to prevent future terror attacks, the sources say. Both legal claims have long since been rejected by Justice officials as overly broad and unsupported by legal precedent.

A Justice official declined to explain why David Margolis softened the original finding, but noted that he is a highly respected career lawyer who acted without input from Holder. Yoo and Bybee (through his lawyer) declined requests for comment.

St. Petersburg's Self-destructing Economy Part 1

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U.S. Drops Plan for a 9/11 Trial in New York City

The Obama administration on Friday gave up on its plan to try the Sept. 11 plotters in Lower Manhattan, bowing to almost unanimous pressure from New York officials and business leaders to move the terrorism trial elsewhere.

“I think I can acknowledge the obvious,” an administration official said. “We’re considering other options.”

The reversal on whether to try the alleged 9/11 terrorists blocks from the former World Trade Center site seemed to come suddenly this week, after Mayor Michael R. Bloomberg abandoned his strong support for the plan and said the cost and disruption would be too great.

But behind the brave face that many New Yorkers had put on for weeks, resistance had been gathering steam.

After a dinner in New York on Dec. 14, Steven Spinola, president of the Real Estate Board of New York, pulled aside David Axelrod, President Obama’s closest adviser, to convey an urgent plea: move the 9/11 trial out of Manhattan.

More recently, in a series of presentations to business leaders, local elected officials and community representatives of Chinatown, Police Commissioner Raymond W. Kelly laid out his plan for securing the trial: blanketing a swath of Lower Manhattan with police checkpoints, vehicle searches, rooftop snipers and canine patrols.

“They were not received well,” said one city official.

And on Tuesday, in a meeting Mr. Bloomberg had with at least two dozen federal judges on the eighth floor of their Manhattan courthouse, one judge raised the question of security. The mayor, according to several people present, said he was sure the courthouse could be made safe, but that it would be costly and difficult.

The next day, the mayor, who back in November had hailed the idea of trying Khalid Shaikh Mohammed and four other accused Sept. 11 plotters in the heart of downtown Manhattan, made clear he’d changed his mind.

The Obama administration official said the decision to back out of plans for a New York trial had broad support but had not yet been made public.

Jason Post, a spokesman for Mr. Bloomberg, said Friday night that the mayor would have no comment until the Obama administration had made an official announcement of its intentions.

Told of the administration’s decision, a spokesman for Mr. Kelly said, “We were not aware of that.”

But the spokesman, Paul J. Browne, said of Mr. Kelly: “He is of the mind that such a decision would give us some breathing room, but that New York has to remain vigilant because it remains at the top of the terrorist target list.”

“It is obvious that they can't have the trials in New York,” said Senator Charles E. Schumer, New York's Democratic senior senator.

Mr. Bloomberg’s remarks on Wednesday set off a stampede of New York City officials, most of them Democrats well-disposed toward President Obama, who suddenly declared that a civilian trial for the 9/11 suspects was a great idea — as long as it didn’t happen in their city.

By Friday, Justice Department officials were studying other locations, focusing especially on military bases and prison complexes, and no obvious new choice had emerged.

The story of how prominent New York officials seemed to have so quickly moved from a kind of “bring it on” bravado to an “anywhere but here” involves many factors, including a new anxiety about terrorism after the attempted airliner bombing on Christmas Day.

Ultimately, it appears, New York officials could not tolerate ceding much of the city to a set of trials that could last for years.

“The administration is in a tricky political and legal position,” Julie Menin, a lawyer who is chairwoman of the 50-member Community Board 1 that represents Lower Manhattan, including the federal courthouse and ground zero, said of President Obama and his Justice Department. “But it means shutting down our financial district. It could cost $1 billion. It’s absolutely crazy.”

Ms. Menin said the turning point for her came when she heard Mr. Kelly’s security plan and cost estimates: hundreds of millions of dollars a year. “It was an absolute game-changer,” she said. She wrote a Jan. 17 op-ed article for The New York Times proposing moving the trial to Governors Island off Manhattan; that idea did not catch hold, but the article escalated the outcry against a Manhattan trial.

When the Justice Department announced in November its plans to try Mr. Mohammed and four alleged accomplices blocks from where the World Trade Center stood, Mr. Bloomberg hailed the location as not only workable but as a powerful symbol.

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US arms sales to Taiwan raise tensions with China

China has cancelled all military exchanges with the US in a sign of its anger at the proposed sale of advanced missiles and helicopters to Taiwan.
Beijing has also imposed sanctions on the companies selling the arms.

“We made the decision out of considerations on the severe harm of the US arms sales to Taiwan,” said Defence Ministry spokesman Huang Xueping in a statement.
“The US plan will definitely seriously disturb the relations between the two countries.”

China condemned the proposed sale of advanced missiles and helicopters to Taiwan and warned the US that it will have a "serious negative impact" on ties between the two countries.

Vice foreign minister He Yafei said the US arms deal with Taiwan would lead to an "aftermath both sides would not prefer" and called on Washington to reverse its "erroneous" decision.

Beijing regards Taiwan as a renegade province that is still part of its territory.

Mr He said China was "strongly indignant" about the £4 billion package of weapons, which includes 114 Patriot anti-missile missiles, 60 Blackhawk helicopters and two minesweepers, which was submitted to the US Congress for approval on Friday.

"The US plan will definitely undermine China-US relations and bring about a serious negative impact on exchanges and co-operation in major areas between the two countries," said He in a statement.

Under a 1979 Act of Congress, Washington is legally obliged to help Taiwan defend itself.

The row is the latest sign of the increasingly fraught relationship between Beijing and Washington.

Earlier this month, the two powers clashed over internet freedom, following Google's threat to shut down its Chinese operation after the company said it had been the victim of cyber hacking.

President Obama's decision later this year to meet the Dalai Lama, who China regards as a dangerous separatist, has also angered Beijing. Trade ties remain strained too, with the US continuing to insist that the Chinese currency the Yuan is undervalued.

Now, the arms sale raises the prospect of China curtailing military links with the US. Beijing could also retaliate by blocking any move to impose further UN sanctions on Iran's nuclear programme.

On Friday, US Secretary of State Hillary Clinton warned China that a nuclear-armed Iran would destabilise the Middle East and so threaten the supply of oil China needs to power its economy.

Taiwan has been ruled by its own government since the Chinese Communist Party took control of mainland China in 1949. Taipei says it needs the latest US military technology to counter the threat posed by the estimated 1000-1500 missiles aimed at the island by China.

While relations between Taiwan and China have warmed over recent years, with increasingly strong economic links between the two, Beijing continues to demand that Taiwan accept unification with the mainland.

China suspends military contacts with U.S. over Taiwan arms

China suspended on Saturday military contacts with the U.S. over its plans to sell $6.4 billion worth arms to Taiwan, the official Xinhua agency reported.

China's Defense Ministry condemned the plans, which the Obama administration announced to the Congress on Friday, to sell weapons to de facto independent Taiwan, which China considers part of its territory.

The ministry said as quoted by the agency that "the Chinese side decided to suspend planned mutual military visits."

Chinese Vice Foreign Minister He Yafei told U.S. Ambassador Jon Huntsman earlier on Saturday that the planned arms deal could affect bilateral ties, triggering "consequences both sides do not want to see." He demanded the sale be cancelled.

The United States seeks cooperation with China on a host of issues, including Iran and North Korea's nuclear ambitions, efforts to fight the global financial crisis and climate change.

The two countries' bonds are already strained by a standoff over Internet censorship, trade and currency disputes, human rights and Tibet.

Beijing briefly cut off military exchanges with Washington in 2008 after the then Bush administration announced plans for arms sales to Taiwan.

Beijing has not ruled out use of force against the island, which split from the mainland in 1949.

The U.S. arms package for Taiwan would include 114 Patriot (PAC-3) anti-missile systems, 60 UH-60M Black Hawk helicopters, 12 Harpoon Block II Telemetry missiles, 2 Osprey Class mine hunting ships and a command and control enhancement system, according to the Pentagon website.

U.S. regrets China's response to arms sales

WASHINGTON/BEIJING (Reuters) - The United States said on Saturday it regretted China's announced cuts in bilateral contacts and its plans to punish U.S. companies involved in a $6.4 billon arms package for Taiwan.

Barack Obama | China

While China said the arms sales "damaged" its national security and reunification efforts with Taiwan, the Obama administration defended the package sent to the U.S. Congress on Friday as boosting regional security.

"We regret that the Chinese government has announced that it plans to curtail military-to-military and other security-related exchanges and take action against U.S. firms that supply defensive articles to Taiwan," said P.J. Crowley, the State Department's chief spokesman.

"We believe our policy contributes to stability and security in the region," he said.

China opposes all U.S. arms sales to Taiwan, which it regards as part of its territory. For the first time, it said would impose unspecified sanctions on unnamed companies involved in arms sales to Taiwan and scale down contacts with the United States unless it canceled the new arms package.

China's Foreign Minister Yang Jiechi said the United States had "damaged China's national security and great task of reunification (with Taiwan)," the official Xinhua news agency reported early on Sunday.

Yang, traveling in Cyprus, said China and the U.S. had held many discussions about the arms sales, but the U.S. had ignored China's demand that the sales be stopped.

The United States should "truly respect China's core interests and major concerns, and immediately rescind the mistaken decision to sell arms to Taiwan, and stop selling arms to Taiwan in order to avoid damaging broader China-U.S. relations," Yang said.

Among the sales, subject to congressional review, would be Black Hawk utility helicopters built by Sikorsky Aircraft, a unit of United Technologies Corp.; Lockheed Martin Corp-built and Raytheon Co.-integrated Patriot missile defenses; and Harpoon land- and sea-attack missiles built by Boeing Co..

Representatives of Sikorsky, Raytheon and Boeing either had no immediate comment or did not respond to questions left for them. A Lockheed spokesman referred a caller to the Defense Security Cooperation Agency, which formally announced the sales plans. An agency representative could not immediately be reached.

Boeing, the No. 1 U.S. exporter, has big commercial interests in China, the world's most populous market, including commercial aircraft sales. United Technologies also has significant sales in China, where it sells Carrier brand heating and air-conditioning, Otis elevators and escalators and other products.

The other arms makers appear to have more limited exposure to Chinese sanctions.

CHINA NAMES NO COMPANIES

The dispute deepens rifts between the world's biggest and third-biggest economies. Although they are cooperating on counter-terrorism, nuclear arms control, climate change and other major security issues, Beijing and Washington are at odds over trade as well as China's tight control of its currency, dissent in Tibet and the Internet.

Since 1949 when Nationalist forces fled to Taiwan after losing the mainland to Communist rebels, Beijing has demanded Taiwan accept unification, threatening to use force if necessary.

"The United States will shoulder responsibility for the serious repercussions if it does not immediately reverse the mistaken decision to sell weapons to Taiwan," Chinese Vice Foreign Minister He Yafei told U.S. ambassador to China Jon Huntsman in comments reported on the ministry's website (www.mfa.gov.cn).

China's Defense Ministry said military exchanges would be put on hold and Beijing postponed vice ministerial-level talks on security, arms control and non-proliferation.

"China will also impose corresponding sanctions on U.S. companies that engage in weapons sales to Taiwan," the Foreign Ministry said, without naming any companies. A spokesman for the Chinese embassy in Washington did not immediately respond to a request for comment.

But Beijing has shown no sign of trying to use its huge pile of U.S. dollar assets to pressure Washington, or impose broader trade penalties -- both steps that would undercut China's own economic strength.

BROADER RISK

The feud could damage broader diplomacy between the two permanent members of the U.N. Security Council. Washington has sought China's backing in its nuclear standoffs with Iran and North Korea and in fighting climate change, and is preparing for a world summit on nuclear weapons in April.

China's official Xinhua news agency said in an English-language commentary that the arms sales "will cause seriously negative effects on China-U.S. exchanges and cooperation in important areas, and ultimately will lead to consequences that neither side wishes to see."

The sales in effect constitute the second half of a package that former President George W. Bush had approved as early as 2001. The notice of a potential sale is required by law and does not mean a deal has been concluded. Congress has 30 days to block such sales, though it has never done so.

Taiwan's President Ma Ying-jeou told reporters the weapons would give "Taiwan more confidence and a sense of security to go forward in developing cross-Strait relations".

Under Ma, Taiwan has sought to ease tensions with the mainland and expand economic ties. But it worries China could develop an overwhelming military advantage.

Taiwan says China has 1,000 to 1,500 short-range and mid-range missiles aimed at the island.

U.S. officials have said Taiwan, which lags China in the balance of military power, needs updated weapons to give it more sway when negotiating with Beijing.

In coming months, President Barack Obama may meet the Dalai Lama, the exiled Tibetan leader whom China calls a dangerous separatist. Beijing is sure to condemn such a meeting.

Chinese President Hu Jintao is expected to visit the United States later this year. Both sides praised an Obama visit to China in November as showing deepening cooperation.

The two countries traded angry words about Internet policy after the search engine giant Google Inc. this month threatened to shut its Chinese google.cn portal and pull out of China because of censorship and hacking attacks.

(Additional reporting by Ralph Jennings in Beijing; Kelvin Soh in Taipei; Paul Eckert, Adam Entous and Arshad Mohammed in Washington; editing by Andrew Roche, Paul Simao and Anthony Boadle)

FBI investigates another alleged 'Ponzi-style' scheme

Federal prosecutors and FBI agents in South Florida are investigating allegations of yet another massive investment fraud in which thousands of investors across the United States and Canada are said to have lost $170 million.

The investigation began last month after a 50-page preliminary report about the "Ponzi-style" scheme was sent to a Miami federal judge by a court-appointed special master. The report called for sweeping criminal investigations by U.S. and Canadian law enforcement.

"The unassailable fact [is] that thousands of investors/owners, and by extension their families in the U.S. and Canada, as well as other countries, have been financially destroyed," says the report by Miami lawyer Thomas Scott, a former federal judge and U.S. attorney.

Investors allegedly sank those now-missing millions into time share units and other property owned by the EMI Sun Village Resort and Spa in the Dominican Republic. But the money actually went to fund the lavish lifestyle and gambling debts of the resort's developers, court papers say.

"That money has now been almost completely lost", the report says. "The investors' plight is tragic. The cause of that plight is criminal."

Scott could not be reached for comment. His report says there is evidence of racketeering, fraud, securities violations, money laundering and tax evasion.

Scott's report, which reads like an indictment, says the Sun Village scheme was a "two-tier criminal enterprise." It points the finger at Frederick and Derek Elliott, a father and son team of resort developers from Canada, and James B. Catledge, a Nevada-based investment guru whose company, Impact Inc., peddled Sun Village property.

"Catledge and his group, along with the Elliotts, created, developed, marketed, and sold a Ponzi-style scheme, bilking millions upon millions of dollars from investors," the report says.

Catledge, a major Republican Party donor who dined with President George W. Bush in 2008, is described in the report as "the main architect of the Ponzi scheme."

Still, the report says "the fatal blows to the investors" were the result of the Elliotts' gross and fraudulent "mismanagement and/or essential theft of investor monies."

Scott recommended to U.S. District Judge Alan S. Gold that he refer the Elliotts, Catledge, and a string of underlings, attorneys and corporations to law enforcement for possible prosecution.

Frederick Elliott, who once owned a home in the 700 block of Southwest 158th Terrace in Sunrise, his son and 22 affiliated companies are defendants in a Miami federal civil-racketeering lawsuit that gave rise to Scott's report. The suit was filed last March.

James Moon, the Elliotts' Miami lawyer, declined comment. But in a blistering reply filed last month, he asserted that Scott's report is peppered with "factual inaccuracies, improper legal conclusions and misleading and grossly prejudicial statements."

Moon asked Judge Gold to flush the report, remove it from the court's website and revoke Scott's appointment as special master. A hearing is set for Feb. 1.

Catledge, who in 2008 contributed more than $100,000 to the Republican National Committee, John McCain's presidential campaign and other Republican causes, is not a party to the suit. But he was briefly a plaintiff in a companion lawsuit last year, now withdrawn, that claimed he and his Impact Inc. sales team were also the Elliotts' victims.

Catledge has retained criminal counsel, Las Vegas celebrity lawyer David Chessnof. Chessnof's client list includes magician David Copperfield, Britney Spears and Martha Stewart.

"Mr. Catledge maintains that he is a victim, and as a result attempted to bring to the courts his concerns about the Elliotts. He categorically denies engaging in any criminal conduct," Chessnof said Thursday.

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